Updates for Startup School 2019 and Office Hours with Kevin Hale
Kevin Hale: Welcome to the podcast!
Craig: Hi!
Kevin Hale: You are running Startup School this year, me and Adora are hosting and the main instructors for Startup School. So many people know about Startup School; we've talked about it on the podcast before. What's different in 2019?
Kevin Hale: 2019 is a reaction to all the stuff that we learned from 2018, and so I'm gonna talk about some stats. Last year we had over 15,000 people register and participate in Startup School, and we had about 5,000 graduate from that graduating class. We had about 391 of them end up getting interviewed for the last batch, and then we accepted over 60 companies. It represented 30 percent of the batch. The Startup School now represents the single largest source of companies that have been accepted into a YC batch, which is super exciting.
Craig: Mm-hmm.
Kevin Hale: Because the founders in Startup School are so different than what I think a lot of people think a YC company is. So more numbers there are: um, 83 percent of people who started doing Startup School were pre-launch, so no traction whatsoever. 52% were working full-time, so the other 40% was only part-time. Sixty-three percent were single founders, which was very surprising to us—so not so many teams—and then 59 percent were international. And so for us, I wanted to make a new version of Startup School that was going to be a better fit for all those different groups of people, because I felt like the last one probably wasn't a perfect fit.
Craig: Mm-hm.
Kevin Hale: And so we shifted the content so it's more focused on helping you understand ideas, evaluating them the way an investor would sort of think about them. So that way, if you are spending time on a startup part-time, or you're by yourself, or you're trying to figure out like how to build an MVP, you have the tools necessary, and you have the things that we help our companies do evaluate, for example, a pivot or evaluate which of the ideas is worth spending time on. The other thing we did was for all these single founders—we realized there's like holy crap, it's like over six thousand people who are all trying to do a startup. Yeah.
Kevin Hale: And we constantly tell people like finding a co-founder is the best thing you can do for a startup. And so we're like, why don't we just help them do that?
Craig: Mm-hm.
Kevin Hale: And there's a super important for us because like we're finding increasingly teams are being created, and other people are asking for equity to help them find co-founders. Other people meaning other investors, or incubators, programs, etc. And for us, we actually feel like the only people you should be giving equity to for co-founders is to other co-founders. So we're gonna make that free. We're building a directory, we're allowing you to state that you are looking for a co-founder. And then the group sessions that you'll do during Startup School, you'll be matched up with other single founders that are meeting. So you'll get to meet, talk, and again we don't expect that you're going to solidify a team during Startup School, but you at least will start introductions and start building that relationship, which is needed, and figure out if you're gonna be a good fit or not. And we're really, really excited about that because we think that's like one of the best things we can do to help all these single founders.
Craig: Hmm.
Kevin Hale: And the last one is for all these international people. Last year we did the tapings weekly at our office, and we invited people to come and attend the live tapings. People are flying from all over the world; it was incredibly popular. But we felt really guilty because it was like that's always money and time we take for people to come for a one-hour session. We're partners; we are humbled that people think that that's worth it and valuable.
Kevin Hale: Part of what we're gonna do is we looked at the data for what are the top 18 cities that people attended or participate in Startup School, and we're going to go out there. So we're gonna record some lectures, and we're gonna host Startup School meetups. Partners are going to be in attendance; you can ask and meet with them one-on-one, and it's gonna be at 18 different cities, and it's gonna be, I think, super exciting that these people are well—one, kind of get to interact with us and we get to interact with them, which I think is always energizing for us.
Kevin Hale: But the second thing is like Startup School creates structure and community. And I think when you're meeting other people who are going through the same thing—from the very first Startup School when it was just like a mini-conference—everyone was always excited about the energy of being in a room with other people, right, who are having a shared experience or shared ambition. And so I want to give that opportunity to as many people as possible, not just the ones who can make it to San Francisco. Well, in addition to that, the online community allows you to meet people near you as well. So like when you're finding a co-founder, for instance—
Craig: Yes, definitely.
Kevin Hale: Actually, we have a fairly sophisticated matching program for the group session. So you're matched with people based on your time zone, your level of progress, your sort of preferences that you put into the software, etc. So Kyle Corbett, he's the person from the software team working on Startup School software, did an awesome job basically looking through the data, doing a regression test, and just proving that we're gonna have a really good group session.
Kevin Hale: The other thing that we're doing is we initially had it for last year; it was like you got into a group with like 20 other startups and you followed them all the way through. Unfortunately, a lot of people just drop off over time, and so those aren't people you can count on. What we've changed instead is that you're always going to be matched up with people who are actively participating in Startup School; and that's just determining your group is gonna change a little bit. Your group is gonna change every week actually; you'll meet more people, get more people to build into your network, get more advice, but also like you're always gonna match up with people who are serious about this, which I think is also going to improve the quality of the program for ya.
Craig: Yeah, I hope so.
Kevin Hale: And just to clarify for people listening and watching, we always put all this content on YouTube; it's not paywalled, that's not behind anything.
Craig: Absolutely!
Kevin Hale: Yeah, so we believe—and the thing is, like I actually think the lectures are the least important part of Startup School. Like it's one thing that like brings a lot of tension; it helps build up the brand, but those lectures are a way for people to understand and like get help, you know, if they can't commit to a ten-week program. But if you have the ambition and passion and a desire, the ten-week structure in terms of how we set up group discussions, the assignments, the way we hold you accountable by putting in—like we into our software—all that is actually the most powerful thing that can help your startup. And so again, we're happy to give away all the lectures for free; it's something that we've always done for YC.
Kevin Hale: And so this other part is the part that we're trying to figure out how to scale, and the lectures are going to be a little bit shorter this year. Now they're about 20 minutes. We're kinda taking a cue from what's popular from this YouTube generation.
Craig: Yes!
Kevin Hale: And so I think you can watch—people just drop off on the hour-long sort of lectures. Some people who are serious, they kinda really love it. What we want to make sure is that like you're gonna spend 20 minutes and it's going to be the highest quality 20 minutes that you're gonna get. We’re also—I've given instructions to all the people doing lectures that we're focused more on practical, tactical information and then try to back up stuff with as much case studies as possible.
Kevin Hale: So therefore, it would always just feel like, I'm winding on watching a lecture, and then you're not gonna feel like, I don't know how to apply this.
Craig: Totally!
Kevin Hale: Yeah. And so I think that'll be a really nice difference because some lectures I felt like for companies who were really early, they're just like, I'm so far away from even thinking about this stuff.
Craig: Yeah.
Kevin Hale: And so like to me, I was like, okay great, we have room to like make a lot of great content to help people with first principles. Right? It's inspiring, but not always relevant. Yes. Like those are the ones you go back to once you like you have things going wrong. And I think we have enough of that inspirational content, and there's probably enough of it being created by lots of other people.
Craig: Yeah, everyone else.
Kevin Hale: Yeah, absolutely.
Craig: Our answer, just to be clear, signups are open right now. When are they open until?
Kevin Hale: They're open until July 22nd, so pretty much right up until it starts on that day. That's when I release a video, like an orientation, and then the first lecture is recorded on the 25th, and then we release that live to the public on the next day, on Thursday, so down the 26th.
Craig: Yeah, right, cool. So let's get to some relevant and important advice.
Kevin Hale: Okay. We have a bunch of office hours questions for you.
Craig: Great!
Kevin Hale: Many of them, I think for whatever reason, maybe it's the mood, the startup school announcement, are about the early days. So, we can start with this very simple question: in the early days of Wufoo, how did you give a great customer experience like the basic beginning days?
Kevin Hale: So it's actually relatively easy to provide a good customer experience. Like I think the default is people expect to not get a response, that it's going to be a really slow response, and the response that I'm going to get is not relevant.
Craig: Mm-hm.
Kevin Hale: So those are the three ways that you can really sort of fix snoring is make sure you respond to every single person that has a question or a problem issue. Second, we responded on average seven to twelve minutes. And then the third one is the person that's responding to your question is most likely probably going to be someone that worked on the software; it was an engineer.
Kevin Hale: Yeah. And so in the early days of Wufoo, it was like the founders—we were answering all customer support for the first two years. And we just got really disciplined and diligent; we said like this was going to be a number one priority for us, that if people are taking a chance on us, that we—they deserve the respect of like getting a good response. And we want to get that feedback.
Kevin Hale: And so that made a huge difference. One is that the people building the product, like got all this awesome feedback on like how to improve it. You also have the right sort of feedback loop, where it's just like, ah, I’m tired of getting this question.
Craig: Yeah.
Kevin Hale: Exactly! I have to do something about it. And the result also is that we started doing a lot of stuff to help people help themselves. And so I would say Wufoo from the early days had some of the best documentation, screencast tutorials, help tips.
Kevin Hale: And then we also got very diligent about like— and passionate about billing; really simple, intuitive interfaces. And that meant actually it was really hard to add features to Wufoo. It was really hard to like add a button or piece of copy, etc. because we just knew that like, oh that results in extra customer support.
Craig: Yeah.
Kevin Hale: Or complexity. And so how can we do this with smart defaults or ways that we do this so that like we do it with as few different controls or manipulations as possible? And the result is a software that just kinda like mostly just works right out of the gate for you.
Craig: Hmm.
Kevin Hale: Kinda is doing what you want by default, if possible. And that anything that we felt like was not worth that trade-off, we would say like, hey, you have to go somewhere else for that kind of complexity because eventually people would graduate. And we would know where we are in terms of like the life cycles, like people’s form dates.
Kevin Hale: Like at some point you need to get a developer and build your own app. Like you need—if you need something really complicated.
Craig: Yeah!
Kevin Hale: And I like that part about your talk recently when you were describing how Photoshop was putting the stroke in red and that was prompting users to learn the settings. And you did something similar in Wufoo.
Craig: Yeah!
Kevin Hale: So in that case, I do this talk to the batch about affordances. And so I talked about like basically there's an affordance of something really ugly, especially in a design app or a photography app, like Adobe Photoshop. And so when you put a border on something, the default was like this three pixel dark red line.
Kevin Hale: And the affordance of that is like designers want to change it—they'll do whatever it takes to change that default. And what it does is it naturally gets them to learn how to use the settings and find the properties, etc. And they don't even know they're doing it.
Kevin Hale: Like they're being kind of annoyed about this one thing, but they're actually learning all the skills and all the things that will help them change all the other settings in Photoshop, which I think is really a brilliant, intuitive thing. And so for us—and we've we tried to do that in a lot of other places—and a lot of that had to do with just helping discover certain functions or features that would be hidden behind tabs that were unnatural to sort of find or to think about.
Kevin Hale: And what we would do is we would call things—we would call like the default form “Untitled Form.” No one would want to like have their form called that, so they default like naturally wanted to click on that. And as a result, it revealed all these extra settings that were kind of like candies exactly.
Kevin Hale: And they don't even realize that they were learning something. So to me, I always like that interface that like teaches people without them realizing they're being taught. I don't think there's many people who like signed up for a new piece of software, and they get tossed into a walkthrough tour, and they're like, “Oh, I'm so excited! I’m all about the wizard!”
Craig: I don’t know what you’re talking about.
Kevin Hale: The people who are the best at this are video games.
Craig: Yeah.
Kevin Hale: They do a phenomenal job. And the people who are worse at this is like B2B underpriced software. Like I think they don't realize like how important it is to get that storytelling and that natural feeling, right?
Craig: Mm-hm.
Kevin Hale: They just think like, oh I just see someone else has this forced walkthrough; we should just do this as well—not realizing it's like the mindset of your user is like panic trying to evaluate this, like something's gonna solve my immediate problem.
Kevin Hale: And so like it’s not gonna put up with any weird forced walkthrough or maze—that's part of your business model, offering expensive training.
Craig: Yeah.
Kevin Hale: So in the very early days of Wufoo, there’s a question from Sunil Tesh. They asked, how is Wufoo 10x better than the market when you just got started? One of those response time on customer support; what were the other ways?
Kevin Hale: So I wouldn’t call that a 10x improvement—like that's probably—it’s like, oh, that’s a good improvement. But I don’t know if anyone was just like, oh, I want to switch for great customer support. That's great customer support is actually a good one for improving retention, and it’s something I also tell people about in terms of like that’s a great user experience.
Kevin Hale: And most user experience features—like a lot of people like to be forward on them—especially designers. It's like it’s really beautiful; it’s really easy to use, intuitive. And the problem is those words—other words that like no other competitor or no other company will ever say the opposite of—and therefore when you use it, it means nothing.
Kevin Hale: Yeah. So they only help with retention. So as far as conversion is concerned, when we built Wufoo, it was in like 2006, and that is the era where like Gmail just kinda came out. And so this edge of the world where Ajax was brand new, and then the idea of building a modern web app that felt kinda like a desktop came into being.
Kevin Hale: And so all the other form builders at the time was literally—it was like a page refresh for every change you want to make, and so it made that process of creating a form really, really difficult. So one thing is like we changed the level response. Matsuda: You could build forms really quickly.
Kevin Hale: The other thing we did on top of that was build an interface that was like simple drag-and-drop; like it was WYSIWYG. Like so other people’s form builder is a really interesting user interface challenge because it's an interface that builds interfaces.
Kevin Hale: So there’s all this weird kind of complexity. So you have to kind of show what is the difference between like my interface, the tool that’s helping you build, and the interface I’m trying to actually create.
Craig: Mm-hm.
Kevin Hale: And so a lot of the aesthetic weirdness of Wufoo had to do with like this all does crazy colorful stuff; this is Wufoo. And there's stuff that you're building that's probably this drab gray and white form like this. It was really easy to distinguish between the two.
Kevin Hale: And so being able to drag-and-drop and be like hey, what you know you want as a non-technical person is like I need to collect the name, email address, a bunch of questions, etc. So you know what you're looking for. You've seen other people do it, and you want to copy what you've seen.
Kevin Hale: A lot of other apps at the time had this different kinds of approaches. One of them was just like, hey, we're database application builder, and so they would start with being like what's this the structured data that you need, telling me how to do all this stuff.
Kevin Hale: And so what end up having is like you had to know too much about development to build the forms instead of being like hey, I just need to copy what I want, and can you just magically make it work?
Kevin Hale: And so that magic was the big thing that was changed. And when we started Wufoo, we were able to prove that it was going to feel that fast by releasing actually an interface demo. So the very first thing that we launched—so I think we got into YC for winter 2006, we rubbed the first lines of code in January of that year—we launched an interface demo in early February.
Craig: Meaning a video?
Kevin Hale: No, no, it was like an interactive. Okay, so what you all you could do was like drag and drop the fields that you want, and then pretend like you're gonna hit save; like you look like you're changing all the settings for it.
Kevin Hale: And then you hit save, and what it came up prompted was just like, hey, you've just completed the interface that move. Oh, if you’re interested in using this builder for other forms in the future, sign up. Okay? We got over a hundred thousand people who went through that demo and gave us emails in that interface prototype.
Kevin Hale: Basically, it showed people kinda like drop boxes. Like on video demos, like, oh, this is what it should feel like, this is what it should look like. And so by making it so it was like no signups to feel what the change was gonna be like for us, that like help people be like, oh, I can imagine myself using this or I can imagine myself giving this to someone else, and that they could use it, yes, and not have me build this really tedious thing, which is a form.
Craig: Where were you distributing that at the time?
Kevin Hale: We had started a blog, so when we first got started in entrepreneurship, we realized we do nothing. Yes, sir. And we had attended a talk at South by Southwest by Jason Fried. It's called "Doing Big Things with Small Teams," and they mentioned that 37signals had been blogging for years before they finally released Basecamp, their first product.
Kevin Hale: And so they had an audience of huge, you know, hundreds of thousands of people who followed them before they launch. And so when they got started, they were not starting from zero.
Craig: Mm-hm.
Kevin Hale: And their piece of advice they had was like build an audience first. And we're like, we don’t have an audience and we don’t have a product, so let’s you know, start doing that!
Kevin Hale: Yeah, so that night we registered a domain called particletree.com, and then we just started writing about stuff that we didn't know anything about. Like literally we would research stuff about entrepreneurship, about design, and about business—like the three things we’re like this is all going to need to know as right to start a startup, like a technical startup.
Kevin Hale: And so we would research the stuff, and we’d write these beautiful essays; it was something like part of my expertise I knew like I studied modern American literature, I was energy for my newspaper, and I was like I'd know publishing; I know how we can write this stuff so that it’s clear for people.
Kevin Hale: Yes, and so that’s how I start, and we build that readership to a hundred thousand subscribers. This was like the heyday of delicious and Slashdot, and so good content got spread around pretty easily. And it’s actually Paul Graham had recognized us from our blog.
Kevin Hale: That’s why I think we got in—that was like our proof that we got stuff done right; you can at least make something someone wants. Maybe it’s an essay. So we’ve been riding on that blog for multiple years—about two years—and so when we launched this prototype, we launched it on the blog.
Kevin Hale: Hey, we’ve you know, we’ve taken all these skills, and we’re starting to build a company, we’re building this product. Come check it out. So we had all these readers who were developers and other entrepreneurs who actually are ideal customers coming in to try a thing.
Kevin Hale: And number one, they're not starting; it was not like they were coming in and be like, I’m evaluating, and I don’t know if I trust this company or whatever. They’re like these guys have been writing and have been generous for multiple years. I already trust them; I’m excited about using this thing that they’ve been so generous about.
Craig: Alright!
Kevin Hale: So that changed the relationship, but also allowed us to like out of the gate, yes, be able to start ahead of the curve that other people like wait until they finally build a product, right? Or at that time like launch in TechCrunch or something, right?
Craig: So you create that early pop. Did you guys have any interesting referral mechanisms or Region word-of-mouth?
Kevin Hale: So when we finally launched Wufoo, it has by its very nature, could spread itself. So what we had is arm—we had a freemium product and on the free plan on the confirmation page it would say it was powered by Wufoo, so we just had like naturally—like as people created forms and shared it with other people on our behalf, they would see, oh great!
Kevin Hale: The second thing is we built this innovation is allow forms to be embedded on other people’s websites. So that was like a new thing; like people would embed weird chat widgets and other images and galleries and stuff, but embedding a form was unique.
Kevin Hale: Hmm.
Craig: Right.
Kevin Hale: And so we had signed it so that Weaver forms could be embedded, so you could, you know, not redirect them; you put them on your own website. What it meant was like a Wufoo form that says powered by Wufoo was put on all these different websites as well.
Craig: Okay.
Kevin Hale: And would link also back to us. Okay, so upon completion it does it a jump reload in the page and then you see the logo. Well, you would see on the confirmation page, but also on the free plan if you embed it, you would see that this form was created.
Kevin Hale: Okay, and both of those things would mean that like our users were spreading the gospel on our behalf, and that sort of helped. Secondly, confirmation emails also had, etc., so there’s all these like nice mechanisms that allowed that to sort of work.
Kevin Hale: We had the reputation from the blog, and then we had really great word-of-mouth as a result, like the product just worked really well; people like were satisfied with customer sort to help them deal with whatever sort of are weird features.
Kevin Hale: And I think it was the design of it because it was so strange; like it’s a very casual app for something that’s meant for like a lot of business and like, yeah, mister logics would stuff. Sure! It’s like red and yellows, like McDonald's colors; the mascots are weird t-rex has all this weird kind of like things that if you look at MailChimp software, that you will recognize that is cute and what, etc.
Kevin Hale: It was a personality of an app that you’re like, oh, I would like to be friends with whoever made it. But what it did was made people smile when they used it and was easy to remember to recommend it to other people’s like hey, here’s an app that I actually don’t—it doesn’t make me want to kill myself, remind me that I’m working in a cubicle, right?
Craig: Yeah, unlike all the other apps.
Kevin Hale: It is a five, which was all gray and blue, very boring and kind of dull.
Kevin Hale: Yeah. Those little things that show that there’s actually a human behind the screen go so far, especially in the early days.
Craig: Definitely!
Kevin Hale: I think definitely for sticking out. Yeah, because if someone’s evaluating a bunch of different tools, then it’s like, oh, what are you gonna do to stick out?
Kevin Hale: And so if everyone’s comparing you against a checklist of stuff, man, it’s gonna be like, it’s gonna be hard to be like if they’re only maximizing this stuff. And so in the early days, Wufoo didn’t have a checklist of all the things that have, so we had to rely on one, this extreme ease of use, and then also this friendliness.
Kevin Hale: Mm-hmm.
Craig: Totally!
Kevin Hale: Right? Like it’s like, oh, I’m here and then while there’s a lack of jargon, and the help kind of talks to me a way that’s very human rather than in a way that like it’s like a robot talking to a developer, etc.
Kevin Hale: And so that humanizing element made it be like, oh, I can trust this app to be given to my non-technical people. Yeah, and Wufoo’s support is so good that they’re not gonna bother me.
Craig: Wufoo got easily recommended by technical people all the time.
Kevin Hale: So to back up and given, I know like some of the Startup School content coming out, let’s talk about even just coming up with the idea for Wufoo. I know it’s a big thing for people getting into Startup School; some people like sort of have an idea where did the idea come from and then how did it evolve during YC?
Kevin Hale: So before I get started, I just want to make it clear if you don’t have an idea or a bunch of ideas but you don’t know what to pick, Startup School is gonna be great for you. We’ve actually got lectures dedicated to that topic, and so I think that’s gonna be helpful.
Kevin Hale: And then if you’re working on an idea and you’re like, I don’t know if it’s really working, and it’s really pivoted, we’ve got a lecture for you as well. For us, we actually pit—like back in the day you could pitch multiple ideas; it wasn’t like a separate question for what other ideas you had; you could put multiple in the same application.
Kevin Hale: Yeah, something like that word like—or you can submit multiple. And so when we got accepted for an interview, we had—we had two ideas we’d submitted, and we had to actually ask the head of time. We’re like, oh, we had submitted two ideas, which one should we prepare? And they had responded very quickly, and they were like just prepare for both of them.
Kevin Hale: So we’re like, okay cool! Thanks! So we do all this work, and we come into the room, and the first idea they meet—they meet there goes, no, no, no. We're not interested at all.
Craig: Like they knew immediately.
Kevin Hale: One, we like just described it like no, we don’t want to.
Craig: What was it?
Kevin Hale: It was an affiliate link marketplace.
Craig: Base?
Kevin Hale: Yeah. Okay, not very interesting. Like about, you know, there are big businesses doing that, but like I’m glad we didn’t go down that road; I don’t think that would have been unsatisfying.
Kevin Hale: And then this other one was not actually Wufoo; the way we described it, we called it a new type of content manager with something we called reversible forms. So the idea was that like oh you know the form that you fill in on the backend of WordPress, that's a form, and then the comments form is also a form.
Kevin Hale: So what if you made it so that forms could be like private or public? We called it reversible; we made all this new jargon. That’s why we decided to describe it—a horrible way to subscribe!
Craig: Right?
Kevin Hale: And pitchy kind of looked at us, and just like, oh wait, you’re talking about—there’s like I think you’re building a form builder, right? And we, of course, I had already like researched a little bit of the market; we’re like we don’t want to build a form builder. We’ve seen the other products in the space; they’re boring; they look terrible; that’s not space we want to be. Content managers at that time were the hot thing; it was like Movable Type and WordPress; they were like blowing up.
Kevin Hale: We thought like they’re doing interesting stuff in the product space; we want to be in there. And then what we didn’t recognize until a little bit after that interview was like, oh, that’s the whole point; like that’s the opportunity—all these people are bad in this space.
Kevin Hale: And obviously, they're being supported; you know, there’s enough people doing it, but like no one has really conquered it. Yep! And so for us, like that pivot happened in the middle of the interview, and we were—we had in a single line; we didn’t even explain the idea very well, etc.
Craig: Right.
Kevin Hale: And so it’s actually one of the big passions about why I’m doing Startup School is like I worry that people think that companies like mine back in the day cannot get into YC. And even though we constantly try to say is like we do take single founders; we do take people without an idea; we mostly focus on the team. A lot of people just like hear what happens at demo day, and they hear these teams with crazy traction; they think like if I don’t have that, how can I possibly get it?
Kevin Hale: And the answer is like, you don’t need that! And with Startup School, I hopefully will make people feel more comfortable that like, oh, there’s a program that explicitly says you can come here to get help with that. And then actually we're able to use that information that relationship with those founders during Startup School to actually say like, hey, yeah! We want to take you in!
Kevin Hale: Actually, most of the Startup School graduates that we took—many of them were like pre-traction. And many of them had very, very little traction that we took, and some of them were pivoting after they got accepted into the batch.
Craig: Actually, well that’s what I wanted to talk about, so like not to name names, but we’re in the middle of the batch, our—you know—the first third of the batch right now, people are summer batch.
Kevin Hale: Yeah.
Craig: People are restarting; they’re completely pivoting, trying again, like all the polish that people project onto YC companies that get in that are in the batch, it’s not always true; sometimes the pivot happens a week before demo day.
Kevin Hale: Yeah.
Craig: Yeah! And then they still will be able to raise, because number one, most investors invest in teams, and number two, if you do the storytelling and if the idea is sound enough, it makes sense. Those two combined—that a great team and an idea that is well thought out and told really well to people—that's enough to get people excited, because like what I am as an investor is trying to figure out is like can I imagine a world where this team with this idea I'm going to succeed? That’s actually the baseline for like seed investment.
Kevin Hale: It is not that like I have to have a crazy amount of proof that this is gonna be a ten billion dollars or I'm not interested in all.
Craig: Mm-hmm.
Kevin Hale: That is not Y Combinator's model. Like we would like that; we would like teams to be, but we are humble and honorable enough and part of the shotgun model is based on the fact that is like we actually can’t accurately predict who’s going to be a ten billion dollar company, right?
Kevin Hale: So we invest in two hundred companies in a batch—several hundred a year, yeah. So, talking about Wufoo as an unsexy idea, do you have a mental model for finding unsexy markets or products that people can use?
Kevin Hale: A mental model? Um, I don’t think about it like that. Like here's the thing: if you are a really great product technical team, yeah, you’re entering an unsexy space, that’s good! Because you’re entering a space with less competitors. But those who are like great product teams, but entering in like consumer spaces, it’s like my god, that is a crazy mad max arena!
Craig: Yeah!
Kevin Hale: Where a lot of good people are vying for that stuff, and it gets really, really difficult. And so to me, entering a tedious boring space is about mindset—about like what’s your mission? And the best advice I’ve got I’d heard about this, it actually comes from Ben Chestnut; he’s the founder of MailChimp, and he says it’s like I don’t like people who are obsessed with like only doing what they love.
Kevin Hale: That’s like a recipe for being unhappy! Like you’re like if I don’t love it, I’m not going to do it. Because like number one, like that’s not practical oftentimes in life, and also you kinda sound like a brat, right?
Craig: Ha!
Kevin Hale: It’s like, oh, so you won’t do anything; you won’t do the hard stuff; you won’t do anything that’s difficult, etc. He actually says the skill you most want is like figuring out how to love whatever it is that you do.
Kevin Hale: And so that is—that’s like it doesn’t matter if I’m building a form builder, I’m making a weird widget, or I’m writing a piece of like boring email copy or marketing or doing whatever to start. Like I have figured out a way to like make it my own, and I will do the best version of it.
Kevin Hale: A lot of Wufoo’s personality has come out; it was like, oh, I have to make this like confirmation billing receipt. Alright, I can do this the really boring, tedious way where I will hate it all the way through, or I can figure out—I was like, oh, where can I put some sparkle and magic in here so therefore I’m proud of it?
Craig: Mm-hm.
Kevin Hale: And we Wufoo—you’re easily gonna be like, oh, no one wants to bake form building their life’s work. But to me, I was like, oh, this is a body of work that I am so proud of because like everything in it was something we’re like, oh, I put some attention to detail, and at a fundamental level, it just worked!
Kevin Hale: Yeah, geez, problems are also like usually huge markets there.
Kevin Hale: So like if you want to make money and you can like bring yourself to do that, like that’s like a great motivation.
Kevin Hale: Yeah, and I think often— I mean, you’ve read Man’s Search for Meaning, right?
Craig: Oh, yeah, that’s great!
Kevin Hale: I mean, it’s terribly sad, but it’s great. And this idea is core to it, but also the fact that, you know, like people love getting good at games—full-stop! And so getting—making the best form builder—that’s huge!
Kevin Hale: And then also, I think it’s helpful for people to just imagine what it is like to win whatever game they want to play and just play it out in their head and then you can just keep pushing.
Kevin Hale: It’s actually a big part of the philosophy in religion, and like that deals with like mindfulness.
Craig: Hmm.
Kevin Hale: You know, like sweeping the temple, it is like you can do it in a way that is like not mindful, not present or you can do it in a way where it’s like oh I’m paying attention, I’m learning stuff about myself in the world and actually being there.
Kevin Hale: And so, yeah, I don't know, like I think founders who figure out how to be happy working on what sounds like not sexy, those people usually have the right mindset in their head about work, about how they think about stuff.
Craig: Definitely!
Kevin Hale: And so like I get excited about it.
Craig: Let's just, I mean, just having a customer-driven mindset makes a huge difference.
Kevin Hale: Alright, so shifting a little bit to slightly later stage.
Kevin Hale: Civil Raj Ganesh asks how do you know if you've achieved product market fit?
Kevin Hale: So for Wufoo, what was the point?
Craig: I don’t think you did; you ever get there?
Kevin Hale: I don’t think there’s any given point.
Craig: Okay, so I’ll tell you this: Wufoo is such a different company than most because we only raised $118,000 for the whole life of the company. So back in 2006, Y Combinator was only giving $18,000, and then we only raised from two angels $50,000 each, and that was that.
Kevin Hale: And Wufoo was a company that only had ten employees when we got acquired—not five and a half years later—and we had done that on purpose.
Kevin Hale: And we had profit-sharing. So when we gave equity to the employees—were like we’re not gonna give stock options; we shouldn’t give you equity. But the result of that is that it’s gonna be really hard to get that equity; you have to really sort of earn it, because by that time we had to risk a lot of like the growth mechanics of Wufoo.
Kevin Hale: Like the revenues were just basically almost doubling every year, and so with the profit-sharing, my salary was actually doubling every year.
Kevin Hale: The thing is we couldn’t think of any place to put the money that would help it grow faster or will make it better; that was like literally how efficient we were.
Kevin Hale: And we had talked to so many other companies, and actually after we got acquired by SurveyMonkey, we actually were really relieved because we looked at all the other stuff that they tried and we’re just like yeah, the more there’s like nothing out like it. Our business was the kind it’s like the market is so huge, and it’s just nice and steady.
Kevin Hale: And so I believe there’s a type of billion-dollar company where it’s like if you can figure out how to do this craft and do this work for ten years, no, no—it’s inevitable. And so increasing burn like crazy and spending a bunch of pay marketing—you could have spent a ton of money on that.
Kevin Hale: So Facebook was really brand new at the time; Twitter just got invented. So there wasn’t—to me, Google, Google, right, but no one’s searching form builder.
Kevin Hale: We did—we were successful at getting a lot of SEO traffic. Yeah, the way we did that was we built a form gallery, and so every different type of form you could build, there was like a dedicated landing page that was like, hey, you can have a contact form in like one second and one click.
Kevin Hale: So that was really successful for us for people with searching that way; there’s no need to buy an ad for that, and it was one of the things that was a trade-off, like what do we want from the culture of our company?
Kevin Hale: I got to choose based on our growth rate and the mechanic of the company, and we had interviewed—like again, our roots was with this blog to learn about all this stuff. So we researched things like what was the literature saying about best practices for management, hiring, etc., and so a lot of—and then we interviewed tons of other entrepreneurs and asking them just like at various different stages of the company.
Kevin Hale: Especially in the early days of like YC, talking to tons of other founders, and we would find out was like what made people happy, what made people not happy and hiring like crazy was consistently everyone was like when my company got to a certain stage, and I had this many people around me that I didn’t even know who they were, I hated it.
Kevin Hale: And so for us was like, do that, yes! Let’s not make it so that this management thing and bringing on people that we're not passionate and care about is not gonna be a part of it.
Kevin Hale: And so like that became a core mission: make us efficient. And the profit-sharing helped reinforce that, and then those values got helped everyone be on board for like why everyone should do customer support in the company.
Kevin Hale: Who’s like, hey know, if we have to bring on more people to do this stuff, like that eats away at our own success, eats away at the culture that we don’t want to change too much, etc. So all of it was reinforcing.
Craig: Well, so yeah, I was gonna say just trying to get back to the question. Yeah. When do you know if you’ve achieved product market fit?
Kevin Hale: So, as a result I feel like there's never really been a clear definition for it, but the ones that talk about like breakaway startup success, they say product market fit is one where it’s like you feel out of control—like you’re no longer driving the boat.
Kevin Hale: I don’t feel like we were ever at that point, but I would not say that we were not at product market fit. So that’s like the weird thing; like we were—we were not a company that was gonna have an inflection point that was going to grow to some exponential rate.
Craig: Right.
Kevin Hale: Well, we were a company that was in charge of our own destiny, and we were not trying to figure out where the new customers gonna come from or who’s gonna beat us, etc. And so it was a very different kind of life, but it’s like I felt like we had product market fit, but it was controlled.
Kevin Hale: So to me it’s like it’s just different. Like there’s an argument that you make is—the path that we have, and that I have to talk to companies about this—like you might have a growth pattern that’s not going to justify venture capital.
Kevin Hale: And we were really lucky to recognize that, and we did not give up extra equity to get money to try to see if like are there other avenues of birth or females that would make that happen.
Kevin Hale: And the result is all the founders had so much equity in the company and that our employees who got equity actually had equity in the company—not just like options and shares, or just a tiny fraction.
Craig: That’s fantastic!
Kevin Hale: And so when the exit happened, our exit like equivalent for us is something that would have been three times larger for some other company in terms of returns back to the founders, etc. So that’s like a whole different thing that you can anybody, and I think a lot of people don’t talk about it.
Craig: Well, I mean that’s like very much related to what I was saying before as I could think about this game that you’re about to enter into and what does it actually look like to win that game?
Kevin Hale: And I think for many, many, many years, I think we lose returns—we’re still like one of the top returns back for YC as a result.
Craig: Yeah, a dollar for Daria!
Kevin Hale: Yes, totally! Exactly! And so that’s something to keep in mind; it is like a company like mine is considered a big win for YC also. But it requires discipline of the founders, yeah!
Kevin Hale: And also recognizes a different Channel. That being said, my type of company is so rare—actually this is not the comment; it’s not like it’s a choice; it’s actually not many companies have the luxury of being able to grow that.
Kevin Hale: I felt like we were really lucky to have that path and recognize it, and not create a bunch of extra burn and give up extra equity. Many people who might have that be a path, they’re like oh, I gave up all this; I cleaned out all this you know and then I increase my burn that like I don’t have a chance to go back.
Craig: Definitely!
Kevin Hale: To do this other path! Definitely!
Craig: Know if that’s—that’s another angle of it, but most companies who are successful actually are once that—oh, you figured out there's a rocket ship; they’re the ones you mostly hear about.
Kevin Hale: But I would say like those are actually more common for YC than the ones who are like steady growth and eventually be big.
Craig: So would your advice then be just run the experiments incredibly cheaply to figure out?
Kevin Hale: I think you should always be frugal. I think any partner at YC will say you should always be frugal—that's number one. Number two, understand fully, number one, why you're giving up the equity and why you're increasing the burn. Those are two big sacrifices, and so you should have a very strong level of confidence that giving up those two things are actually going to result in growth.
Kevin Hale: I think a lot of people will give them up prematurely.
Craig: Mm-hmm.
Kevin Hale: Thinking it will result in growth, and so when that happens, it’s usually a tragedy—almost always a tragedy that happens. And so this was why I'd like our biggest advice that’s kind of ignored is treat every fund raised as if it’s your last.
Kevin Hale: People just think that’s the point of this game; unfortunately, the only product market fit I had is a very different kind—an extremely rare kind that you normally don’t hear about. The kind that you mostly hear about, those ones where it’s like, oh my god, we have something that’s so good for the market that we can barely hold on, and we have to hire like crazy, etc.
Kevin Hale: And so if you have to ask the question, you definitely don’t have it; that’s number one. And number two, don’t give up everything to try to achieve it; like again, it’s one of those things where like, you know kind of right away whether it’s gonna work.
Craig: Well, they had a little addition to this question.
Kevin Hale: Okay.
Craig: Alright, which was, on the other hand, how do you know if your product just isn’t even noticed yet?
Kevin Hale: And so, I mean I think you could lump this into the category of like do you have a hundred people that love it? But what would you say to that?
Kevin Hale: So there are two things—and actually you should refer to Don Caldwell’s content—so he did a video on the YouTube about I think pivoting a little bit, and then also he actually did like a tweet storm about a bunch of ideas on how companies get locked into too much like being really diligent.
Kevin Hale: And I actually think it’s extremely difficult to know when to give up because there’s no shortage of stories of founders who like they just kept at it and then finally something clicked right.
Kevin Hale: And there’s others, or there’s plenty of stories where it’s like we finally gave up and changed, and then that thing went right; it was like yes! So to me I actually feel like there’s no good answer!
Craig: Yeah!
Kevin Hale: Quite honestly, it’s like this is where you need a little bit of luck, and the question is like you kinda are actually asking your own self is like what are you gonna be happy with?
Craig: Right.
Kevin Hale: So if you are just like, man, I just want a company that like I’m proud of, etc. then there’s a certain level growth that you people you can want. If your goal is like I want a company that is going to be a rocket ship, then yeah, you need to basically be like, alright, is it a rocket ship? Right? A rocket ship is a rocket ship!
Kevin Hale: And then there’s a certain point where you want to say it’s like, well, it’s not a rocket ship. And that point is usually before you run out of money, and I would—I would recommend that you want like when you start getting down to nine months of runway, you should start seriously asking yourself how about like what would have to change definitively for me to know that this is a rocket ship?
Kevin Hale: Yeah.
Craig: Well, figuring things out!
Kevin Hale: What would have to figure out? And then you’d like time box it, because like once you run out of money, it’s game over. And then the lower the money gets, the lower the leverage that you have to ask up from somewhere else they bought, help buy more time.
Kevin Hale: Well and you’re just shrinking the amount of time you have to run experiments. So you can’t—you’re not finding anything out; you’re not learning.
Kevin Hale: They asked one more question that I think is also quite common for early-stage founders, people doing Startup School—how do you even get the size of a market?
Craig: Oh! How do you gauge the size of the market?
Kevin Hale: That’s a little bit of research. I feel like in whatever space that you’re in, you’re gonna have a rough understanding of it—like basic demographics. There’s tons of research studies on all these different industries.
Kevin Hale: Usually, companies themselves, especially big ones, are touting how big the market or what the opportunity is, so I feel like that’s easy to find. I think more importantly, what you’re trying to figure out is like—and I talked about this in an early YouTube video—it’s like understanding does my model even make sense? Is it plausible that I can be become a billion-dollar company?
Kevin Hale: And what I talked about is you’re just trying to figure out like, oh based on how much you charge or the average amount of revenue you’re gonna get from someone, how many customers do you have to have to get to one hundred million dollars in revenue? And I do this with all my companies.
Kevin Hale: I actually had two that pivoted this batch after we read through that exercise; they were like, oh, my company’s not a really bad model; it’s not gonna work—either because I need to increase how much I’m charging, or I need a really great acquisition strategy to get at those numbers.
Kevin Hale: And then once you have the number, the question is, does this market even support that? And as an investor, I’m usually thinking, is like okay, if they need to capture more than ten percent of the market just to get to that hundred million dollar revenue, that’s probably not possible.
Kevin Hale: But yeah, I’ve seen numbers where it’s like, oh, we need to get like a hundred thousand customers, but then like the number of customers in the market is like 150 thousand only, and therefore it’s like, oh, that's gonna not be plausible.
Kevin Hale: I mean you see stuff all the time: it’s like, well, if we get everyone in America, we’re gonna be a total hit, so you shouldn’t do that.
Kevin Hale: I actually think you always want to do this bottom-up calculation, and then for consumer apps, there’s probably always going to be a lot of people; the bigger part of that equation that you're focused on is like I don’t get at these like two or three hundred thousand people that’s needed to make this consumer startup worth a billion dollars, yeah!
Craig: So if you—if your answer is I’m gonna pay for every single one of them, man you now have to give up so much equity in your company to do that. So the ones that we get excited about, once we figured out, I figured out a trick for people to recommend me to do this for free or like have other people act as my sales on my behalf.
Kevin Hale: Hmm.
Craig: Mm-hm.
Kevin Hale: So for this last section, yeah, let’s go into some hardcore Startup School advice. So a lot of people are gonna churn; fewer people than the average, mmm—way fewer—but people will churn. What kind of mentality should someone adopt to ensure like at least completion, but hopefully success in Startup School?
Kevin Hale: So for us, so at the end of the program, but we have people do is apply to YC, YC, and then when you apply, you’re also applying to get this $15,000 equity-free grant. So the most promising startups from Startup School, we give out those grants simultaneously; we look at those applications, also consider them for the YC core program, so It’s like a two-for-one in that application.
Kevin Hale: The minimum requirements for applying for that is you have to complete eight out of ten weekly updates. So basically, every week we send out a thing that we say like hey, how many users have you talked to, and what have you learned?
Kevin Hale: Or like how much revenue—like what is your main KPI? Like whether it’s engagement or revenue, like how much have you done? And again, it’s not that it has to go up every single time, but you have to at least submit the updates.
Craig: Mm-hm.
Kevin Hale: If you don’t submit the updates, you don’t get considered for group office hours because you’re not active, etc. So that’s like—that's the minimum; it’s like you spend ten minutes a week right writing an update about what you’re doing on your startup and what progress you’ve made.
Kevin Hale: So that's like, you know, that basic requirement; the seek requirement. Yeah, and I would like to think that like if you’re thinking about your startup, and for most people that I know who think about their startup, it’s like non-stop, this should be an easy thing to do.
Kevin Hale: The reason people don’t do that is because like the truth really sucks.
Craig: Yep.
Kevin Hale: Um, and so it’s a large thing that we actually do with our own YC companies is I have to get them to be like you as an entrepreneur have been born with like some kind of broken gene that makes you more optimistic than other people.
Kevin Hale: But what that means is you’re gonna lie to yourself! I’m here to fix that gene; like I’m a CRISPR!
Kevin Hale: And so I hope you look at the honest truth about where you really are at in your startup. And so that update is like there to help you see that when you’re finally honest about like oh, you know what my KPI is revenue, and since I’m pre-launch, it’s zero. And then the next week, it’s zero again.
Kevin Hale: Yeah, I gotta show you something. I gotta change something, or I need to speed up, etc. And sort of like what you want is to look at Startup School and be like for this ten weeks, hmm, I’m gonna go through these exercises, I’m gonna ask these hard questions of myself and my co-founder and this is why it's—Startup School I think is also great for companies who are already working on a startup because it goes back to these first principles, and then be honest about those answers; that’s number one.
Kevin Hale: Number two, participate in the group sessions. So like every week, we’re gonna match you up with six to eight other people on Thursday evenings is kind of what we figured out was the ideal time for everyone across all time zones, and you’re gonna talk about your startup, and actually those group sessions are very simple.
Kevin Hale: You actually are practicing talking about what you do. It’s what we mostly do in YC is fixing your narrative and storytelling, because people come in, and they’re so bad at talking about what they’re doing.
Kevin Hale: And because it’s not clear, people can’t understand; if they can’t understand, they can’t get excited. If they can’t get excited, you can’t grow and you can’t recruit, and you can’t get people to invest, etc. So fixing that story is the most important part.
Kevin Hale: And so we’re giving you an opportunity to do that with lots of people. And actually we have software that when you’re in the video sessions and you’re saying like, hi, my company is this, this is my one-liner, people will be able to now say to you is like I understand what you’re building, I’m excited about the problem you’re working on, and then are you the kind of team that like I would want to work for?
Kevin Hale: So getting understanding it’s like how do you project and present yourself, because well, because those three things are a lot of what we’re trying to evaluate.
Kevin Hale: A lot of people I feel like I talked to you about their company, it’s low energy; they’re not passionate. And those aren’t people that attract other people because anyone that’s going to build a billion-dollar company, they need to be able to attract other people to this.
Kevin Hale: And so I think Startup School is also successful for the people who are committed to that process of like I’m going to try to get real feedback, I'm gonna practice talking about my company, I’m gonna fix my narrative and get it to the end where people like hear what I’m talking about, they immediately get excited and that its own, and it’s so exciting, and I do such a good job that people are attracted to me.
Craig: Last question! A high percentage of these people are solo founders, say they are looking for a co-founder. What would be your advice given it's a relatively short period of time on vetting co-founders?
Kevin Hale: Okay, getting a co-founder is like getting married to someone! Love it! Like even way more intense!
Craig: Ugh, totally!
Kevin Hale: And you know, you don’t have usually sex to relieve the tension or fix a bunch of things or smooth things over or a different job. You have usually a chemical that’s helping fix a lot of things that are problems.
Kevin Hale: And so I actually think it’s like you should treat it very similar to like what would you get married? Like you don’t immediately like talk to someone, figure out a bunch of characteristics, and on the first date go like let’s get married!
Craig: Yes!
Kevin Hale: So what you’re actually doing when you value co-founders is you’re dating.
Kevin Hale: And the dating should be small, number one, is like do you understand each other? Do you have complementary skills, right? Like do you like just talking with them? Do you think that you would like to spend more time with them? So that’s like the first question, because you had to spend a whole lot of time.
Kevin Hale: So that's the big thing is like oh, I would just practice that like oh I like discussing talking, etc. The second stage would be is like oh, okay, do I—is there some kind of small thing that we can do for each other?
Kevin Hale: I always start with small favors. It’s like oh, I’ll research this question, and I’ll get back to you. Or like, oh, I’ll look at that, or I’ll send you some recommendations, etc. Like how are they reliable in terms of exchanging small stuff, and then you move on to like, alright, let’s have a conversation about like hey, do you want to work more long-term?
Kevin Hale: Do we want to like commit more resources to that? Like I think you can time box everything and work your way up. And so the dating is super important.
Kevin Hale: I think founders—single founders are unsuccessful when they are kind of desperate about it.
Craig: Yep!
Kevin Hale: That’s the same problem in normal dating.
Kevin Hale: Yes! Actually the second thing is it can’t be all take; it’s like oh, I have a great idea, and I’m looking for a technical co-founder to do all the work.
Kevin Hale: You have to be good at selling yourself, unlike what your contribution and what you’re gonna be able to do, etc. and if it’s—if your concrete is non-technical, then like, you know, there’s good examples of this. Alexis Ohanian is my favorite example of a non-technical founder; he did everything else right! He’s like I’m gonna smooth this over for you, and that’s something that can be really appealing—that someone who just like is like, I know I’m gonna have to build this.
Craig: What about—what—I mean given that you compared to dating, dating multiple people in the beginning, that’s totally fine at Startup School, I’m so loud!
Kevin Hale: Uh, yeah! I think you should probably have conversation with lots of people.
Kevin Hale: Like you never really know. I feel like the only reason I did my startup is because I met my co-founders. I never thought about entrepreneurship. Like I was supposed to get my MFA and teach art to hippies!
Kevin Hale: I feel like making money was the farthest thing from my mind!
Craig: Yeah.
Kevin Hale: And I would say like college Kevin would like really punch myself in the face and call me a sellout if you knew what I was doing now!
Craig: Alright!
Kevin Hale: Awesome! So Startup School signups are available where?
Craig: They’re open at startupschool.org, and registrations are up until July 22nd!
Kevin Hale: Awesome! Alright, thanks for coming in, man!
Craig: Thanks, Greg!