Lenny's Podcast: Product | Career | Growth - Lessons from 1,000+ YC startups: Resilience, tar pit ideas, pivoting, more | Dalton Caldwell (Y Combinator, Managing Director)

Starting point is 00:00:00 Seeing everything people apply to YC with, people all kind of have the same idea. One of these themes is simple pragmatic advice. Sell shit, make money. One of my mantras is just don't die. Being coached and being reminded of the fundamentals and basics puts you in the right mindset. You have this concept of tar pit ideas. Seems like an unsolved problem. You'll get all this positive feedback from the world.

Starting point is 00:00:21 And people have been starting that startup since the 90s. Recently, you put out a request for startups, 20 categories of ideas that YC wants to fund. We're trying to mix up some of the, the information diet about what kind of ideas people might be contemplating. They aren't currently. A lot of people say you're the king of the pivot. A good pivot is like going home. It's warmer. It's closer to something that you're an expert at. Are there other patterns you find across startups that do well? There's a lot of founders that come this close to it all being over and through sheer will kind of just keep it going. Today, my guest is Dalton Caldwell. Dalton is managing director

Starting point is 00:00:57 and group partner at White Combinator, where he's worked for over 10 years. across 21 different YC batches, including working closely in the earliest days of Instacart, Retool, Brex, Deal, DoorDash, Webflow, Replet, Amplitude, What Not, Razor Pay, and 20 other unicorns. Prior to Wight Combinator, Dalton was the co-founder and CEO of Aimeem, which was acquired by Myspace, and co-founder NCO of App.net, which was an early ads-free competitor to Twitter. Dalton has seen and worked with more startups than nearly any human alive, and in our conversation, we get incredibly tactical and deep on the startup journey. Why it all comes down to simply not losing hope and not letting your startup die, what to do

Starting point is 00:01:41 when your startup is struggling and how to know when it is time to give up, what makes a great pivot and signs its time to pivot, had actually talked to customers, why every single startup goes through a point where they feel like all hope is lost, why investors say notice, startups, what most often leads to startups failing, why you need to avoid over delegating early on, plus startup ideas that you should avoid, and also 20 ideas Dalton is looking to fund. Also, so many great stories and lessons, this episode is action-packed. With that, I bring you Dalton Caldwell after a short word from our sponsors. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting

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Starting point is 00:04:34 That's V-A-M-T-A.com slash Lenny. Dalton, thank you so much for being here and welcome to the podcast. Yeah, thanks so much, Lenny. I'm really excited to talk to you today. It's going to be great. So to prep for this podcast interview, I asked a bunch of founders that worked with you during YC, what advice you shared with them along the journey,

Starting point is 00:04:57 that was most transformative to the way they think about product, the way they think about building their startup, the way they operate. And there's a bunch of themes that emerge, and I'm going to touch on a number of these themes. One of these themes is just how often you get to like very simple, pragmatic advice, and how much of your message is just like sell shit, make money, don't run out of money. Why do you think founders need to hear this advice, which is seemingly simple and obvious?

Starting point is 00:05:22 Have you ever seen in like NBA back? basketball or college basketball where they have the coach mic up and it shows what they're actually saying in the huddle. You ever listen to what they actually are saying? They're like, okay, we need to really focus and get the ball and win this game. Like if you actually listen to what the greatest, smartest, most successful athletes are talking about, like if you listen to what Tiger Woods is saying to his caddy, it all sounds like pretty mundane stuff.

Starting point is 00:05:54 They're not, it's not like what Tiger's, Tiger Woods is talking about. about with his catty is some, you know, impossible to decipher jargon. It's like, yeah, you really need to keep your head down on this one. It's things like that. And I think the reason this is true is that even if you're the best in the world, being coached and being reminded of the fundamentals and basics is what puts you in the right mindset and that you already know everything, right? You're at the top of your game.

Starting point is 00:06:26 if you make it to the elite levels of being a startup founder, or basically doing anything that's really hard psychologically. And so, yeah, one of my mantras is just don't die. Just keep your startup going. Just keep going. And I say that over and over again. And honestly, that is often what people tell me is the most impactful thing I said. It's not that I set some ninja 5D chess move that they never would have thought of before.

Starting point is 00:06:54 it's just the constant affirmation that continuing to keep going and doing high-quality reps is the game. I know that you'd give a talk that's exactly called that, how not to die. Just to pull in the story a little bit more,

Starting point is 00:07:09 what is the general advice you share there for people that also don't want to die? The way to summarize that is if you look at all the startup stories that we have at YC and all the companies we funded over all the years, the underlying theme is that rationally, the founders should have given up at some point.

Starting point is 00:07:31 And so again, let's talk about Airbnb, obviously something you know a lot about. You know, when they probably should have shut down like three or four times before they got into YC. It objectively wasn't working. They were basically ruining their lives. They were disappointing their parents. Everything was wrong. And it was a pure.

Starting point is 00:07:51 it was a purely irrational act for the founders of Airbnb to keep working on their goofy startup. And so, and again, that's just one story. If you look across the portfolio of YC and non-YC companies, there has to be this irrational, you know, intention to keep going even when the world tells you it's not working and you feel completely defeated. And you likely have to go through this many times and have these near-death experiences. And then you get lucky and then you look like an overnight success. Right?

Starting point is 00:08:27 And so that's that is the theme. That is a summary. And I provide lots of data, lots of stories there. But this is one of those things that the longer I had this job, the more I really, really believe this is true. What's your advice kind of on the flip side of that where there's a lot of startups, especially these days that are just super struggling, have been added for a while. Their mental health challenges, they're really, they'd be very very. very sad if they had to shut this thing down, but often it's probably the right move. What's your advice to folks of deciding, okay, actually does make sense to give up in this

Starting point is 00:09:00 case? I think this is a nuanced question, and it's hard for me to say something on a podcast that it'll actually be useful to people. But here's a couple of thoughts. One, are you still having fun? Do you still enjoy doing what you're doing? Do you enjoy spending time with your co-founders? You know, like, is this actually a fun? fun thing you're doing. And if the answer is yes, I would tend to lean on the keep going. And then if it's more of, wow, this is actually profoundly affecting me a negative way and my relationships with people in my life and my team, you know, I don't really want to work

Starting point is 00:09:37 from my co-founder anymore and things like that, then I would lean on that probably don't do it anymore. Something that a lot of the folks that turn it around have in common is they actually do love their customers and they love their product. And again, in the Airbnb story, again, you know it really well, but they really liked Airbnb. And they liked working with each other. And they liked the first hosts that they met and they knew all their names. You know what I'm saying? Like they were actually, they loved their startup, even though it was going to add. And so that's kind of, to me, a signal to keep going is that you really, really love what you're doing and the people you're doing.

Starting point is 00:10:16 it with and you love your customers and you love the problem versus when you're just like, yeah, I can care less about any of those things. I'm just having a bad time. Harder to be encouraging in that situation, you know? And this is a fixable situation. You know, you can make it more like the thing you love, can't you? Yeah. This is actually very practical and great advice. Like, this is something people can sense. Okay, am I actually enjoying this? I want to keep doing this versus like, man, such a drag that I have to keep running the startup. Is there anything you could say to folks that are just like, I can't stop because it'll feel like I failed.

Starting point is 00:10:49 If it's really going poorly, if you're having a really bad time, it's no big deal. No one will remember that you, that you shut down your company, probably in 10 years or 20 years, like time. As long as you have integrity,

Starting point is 00:11:02 as long as you're an honest person, as long as you handle yourself well through good times and bad, people will remember you fondly. And it's, you know, better. We have such a short life. There's only so many years we get to, to have our careers, doing something that makes you miserable, and the only reason you're doing

Starting point is 00:11:20 it is to avoid losing face, and you know when you're hardest not going to work, I don't know, that seems like a pretty big opportunity cost on literally your life, right? Yeah, that's exactly what I tell founders all the time. Life is short. There's no need to force yourself to work on this. Yeah. And I really like your point of just like, is it still enjoyable? Do you like working with your founders? Kind of following the threat of the struggle train a little bit more. One of the founders that was that worked with you during YC. His name is Danny Albertson shared a story how during one of the batches of YC, one of the founders raised his hand and asked you, what is wrong with our batch?

Starting point is 00:11:58 Everyone is struggling. Nobody is doing well. What have we done? What have we done wrong? And you shared a story about Brex that made everyone feel a little better. Does that ring a bell? And if so, can you share that? Definitely happen.

Starting point is 00:12:09 And I think the story is the story of the winter 17 batch. And in the winter 17 batch, I funded. something like, I don't know, 35, 40 companies in my group, so we subset them into groups. So it wasn't like a lot of companies. And I knew all of them really well. And founders can't help but compare themselves with other founders all the time about who's doing well and who's not doing one. And there was this one company in my group dispatch was called Viond. That was their name at the time. And it was like a VR headset thing from these Stanford dropouts. And they basically showed up to group office hours and were just ashamed. And they're like, our idea is horrible.

Starting point is 00:12:49 You know, we might want to shut our company down. This is like really embarrassing. Like they just, I had to like beg them to not give up basically. And if you would have asked people in the batch what the worst company was, I think they would have said this one. Yeah, not because like they were like bad people, but it was just like the founders themselves seemed like despondent about how it was going. And then, And, funny enough, this is in the story, too, there was another startup also in my group called Cashew, which was this P2P for the UK, P2P Venmo, excuse me, in the UK, and it was going really poorly also and not growing. And so if you just took this snapshot in time in the middle of the

Starting point is 00:13:31 batch of like, who is definitely not doing well, it would clearly have been this Veyond company and this cashew company. And so to catch the chase, Veyond changed their idea and got really excited about it and renamed to Brex, and this was Brex, which is like a decacorn. And Cashew changed their idea and renamed to something called Retool. And so out of my 35 companies, the ones that objectively seemed the worst in terms of like everything is going bad were by far in retrospect the most successful companies in that group. Wow. Wait, so you're saying Brex was a VR headset company. They thought it was really high-tech.

Starting point is 00:14:15 They wanted to do a really high-tech startup. And so they were like, we're going to build a new VR headset. And they were good programmers, but they just didn't know anything about optics or the things you might want to be an expert in to build a headset. Wow. That's an amazing story. It's a great segue to another theme that emerged from talking to founders about advice that you've shared. A lot of people say, tell me, you were kind of the king of the pivot of helping people figure out how to pivot. I'm curious just what you've seen makes a good pivot.

Starting point is 00:14:45 Usually, a successful pivot gets warmer instead of colder from what you're an expert at and somehow builds on what you learned on the prior idea. Right. And so in the case of Brex, it was they had worked on a fintech company in Brazil when they were younger. And so I'm like, you need to work more on the thing you know all about and not the thing you know nothing about. And that was what worked for them. In the case of Retool, it was the same thing. They built similar internal tools, both at their internships, as well as for Kashi. They had all these dashboards they built to, like, operate their Venmo competitor.

Starting point is 00:15:28 And so they knew a lot about what to build. In the case of post hoc pivoting into their idea, they knew a lot about analytics and had strong opinions about it. And so it was much closer than what the original idea is. In the case of Zip, Rijul knows a lot about a lot of things. And he knew a lot about the crazy picturement process at Airbnb because he worked there. And so

Starting point is 00:15:55 it was kind of like, a good pivot is like going home. It's warmer. It's closer to something that you, and it never occurred to you that this thing you know all about would be a good idea. Or maybe you consciously, you're like, I don't want to work. on this because I'm burnt out on it. Like sometimes you have to, someone, someone has to get over this barrier they have on why they don't want to work on a certain idea. These are amazing. I like how modest you are. I'm like, oh, here's like a big idea. And then

Starting point is 00:16:23 you just give very tactical items to look for. So essentially a good pivot in your experiences, you're getting closer, warmer, towards something you have experience, actual experience in. And two, it builds on something you've done. Essentially the core idea of a pivot, right, where you're like... In the example of the segment, which is obviously a really big successful company, they started with something to tell your professor you were confused in class. It was like software that they sold to universities. And then they ended up pivoting to something kind of like a mixed panel competitor after like two years.

Starting point is 00:16:56 And it's because they learned about how analytics works running their first idea. And then no one wanted to adopt their mixed panel competitor. And so they were like, we should make this JavaScript thing that you embed on your website, they can send events to multiple endpoints at the same time so that way people would be willing to try our mixed panel competitor side by side with mixed panel to show that it's better. And then they were like, oh yeah, no one actually wants that. They just want this JavaScript to send events to different locations. And so there's no way those founders could have started with the final idea. You know what I mean? There was no universe where they would have made up the idea

Starting point is 00:17:32 for segment because they didn't know anything about how analytics worked. But because they were grinding for multiple years and became experts on these things is a side effect of their earlier ideas, they had to put really good, unique insights. I think that's a really important point there is you don't need to necessarily have that experience before you start the company could come from trying to build the company. Exactly. A big question, people are always wondering is like, should I pivot? Like, is this the time to pivot?

Starting point is 00:17:57 Is this should I keep trying this idea? What's your advice there of just like, okay, now you should really be thinking about something else? Again, this is one of those where I like to give very bespoke nuanced advice on a case-by-case basis to the folks in YCE. But again, just to give you a preview of how I would think about it, I would look at how many more ideas the founder has on how to make it grow. Like, if it's not going well and you're out of ideas, that is usually a good time to pivot.

Starting point is 00:18:25 But when there's a, you know, you have like half a dozen or a dozen really good growth ideas that you haven't tried yet. And yet, try them. Right. Like, hey, give it a shot. Again, in the Harry v story, right, they, they, they, they, they, they, they, tried all sorts of stuff, including cereal and conventions. They had a bunch of zany ideas on growth, and they didn't run out of them.

Starting point is 00:18:45 And so I think when you, I think when there's still gas on the tank on an idea, that might be a reason to stay at the course. And when literally the founder's like, yeah, I don't know, I guess maybe we should pay influencers or something. When that's the kind of ideas they're coming up with, that might be a better sign to pivot. That is incredibly helpful. Coming back to Zip real quick, they went through, I think, six.

Starting point is 00:19:07 different pivots before they landed on this idea that is now a billion dollar business. Is there anything from that specific journey that you found really interesting? Because they went in so many different directions, like accounting marketplaces and... Yeah, I think in the example of the Zip founders, they were both such great experts. And, you know, I knew Rijol really well. He actually worked with me at YC as a visiting partner. And so I was really close to Rijul, and he had done this marketplace called Flight Car when he was younger, which was, you know, raised a series B.

Starting point is 00:19:36 It didn't work out, but it was a really cool company. And I had a lot of confidence in his competence on running a business and executing fast and just having great instincts. He really knows the fundamentals. And the problem was they weren't as clear on what market to go into is still with me. And so I actually suggested to do something in their case. And this is very bespoke. But my suggestion was to start by look. at what companies are publicly traded and or owned by private equity that are large

Starting point is 00:20:14 and that also are hated by their customers and to try to intentionally find where there's a knowable big market within a comment combined with the software is horrible and they kind of did that like they basically found out about all this procurement software and what the state of the art was. And that was the prompt. Again, maybe he told you this. That was basically the process. He did tell me that I love that example and a piece of advice so much.

Starting point is 00:20:45 I don't know why more people don't do this. Basically find a large incumbent with very low NPS and try to disrupt them. So straightforward. Yeah. I mean, I can't promise that works for everyone. But again, in the very bespoke situation with Rjul, it worked really well because he actually knew exactly. Like once he locked in on that prompt, oh, man, he ran a master class.

Starting point is 00:21:09 You know, like they did, they did an A plus job. It was really good. Also, Lou, his co-founder, credit to him too. Of course, like, sorry, yeah, we got to give Lou the shout out. Lou did an amazing job. I just didn't know Lou as well before he did YC, but you're right. We got to give Lou the credit. As watching your chat with Michael Seibel talking about pivots, and either you or he

Starting point is 00:21:26 used this phrase of you want to move towards the mountains and the desert to find the gold of a new startup idea versus the middle of the city, you're unlikely to find gold in the middle of San Francisco. Is there anything along those lines that you can share? Yeah, I think maybe this pertains into what we see from applications and interviews, which is from where I sit, seeing everything people apply to YC with and what they interview with and whatnot. People don't, people all kind of have the same idea.

Starting point is 00:21:59 Like basically, imagine this. Imagine your information consumption where you're listening to the same podcast, wink, wink, you're reading the same people on Twitter, you're reading the same blog post. Basically, you have the same information diet of all these other founders. And your friends are all the same people. Does it seem surprising then that you would all end up with similar startup ideas or similar philosophies on what makes a good startup idea? Of course you are.

Starting point is 00:22:26 So this is the metaphor on cities, is that if you just are following the same principles and have the same information flow into your brain, you're going to come up with the same ideas as everybody else. And so the prompt here is to try to go more off the beaten path, either from your personal experience, like in the case of Brex and Retool or whatnot, there was no one else trying to build marketplaces for FunkoPops. You know, go deeper in your own personal interest or experience

Starting point is 00:22:53 to find something that just your exact peer wouldn't come up with in exactly the same way. And again, the Zip example, I don't think other people were trying to build wonky procurement software. That was just that that was not an idea that we saw much of. And so again, the prompts to people is try to mix up what your information diet is or what areas of expertise you have and mind that well versus just having all the same thoughts as everybody else.

Starting point is 00:23:22 And so again, let me give one more example. A few years ago, startups around trucking were super new and fresh because no one was doing them and they worked really well. And then it became completely conventional wisdom to do like trucking related startups. I'm not trying to diss anyone. But you'll see things that become fashionable really quickly because someone found success in this unfashionable space. And then it becomes fashionable. This is a good segue to something I definitely want to spend time on, which is you have this concept of tarpid ideas, which are essentially ideas people all kind gravitate towards and get stuck in and either pivot into and then can't pivot out of or try to pivot out of.

Starting point is 00:23:58 And essentially it's just like consistently bad startup ideas that people continue to try to start. Can you just talk about this? And then what are some examples of just like bad startup ideas that people should stop trying to start? For people that are familiar with this terminology from us, sometimes they get defensive and don't get what we were saying. So let me, by definition, it is only a tarpitt if it seems like it's not. Like if it's just a regular idea that is hard, that is not a tarpid. The weird aspect of what we call a TARPID idea is an idea that a lot of people come up with and then it seems like an unsolved problem and you get lots of positive feedback for.

Starting point is 00:24:38 Right. And you have a really good set of arguments that it's a really good startup idea. And that's different than a bad startup idea. You get what I'm trying to say? A bad startup idea is like, I don't know, somebody that is obviously bad or something where you just can't get any positive feedback on. but some of the most common tarpette would be something like building like an app to coordinate with your friends to decide where to go out at night or where to meet up with people,

Starting point is 00:25:06 which is a really, it's coming from a good place. Like it's a good idea. If you ask your friends, hey, would you like an app for us to coordinate to hang out more so we can be friends? I'm like, yeah, I would love that. Like you'll get all this positive feedback from the world. And people have been starting that startup since like the 90s. And so you can validate it.

Starting point is 00:25:27 Like part of being a true tarpet is that you can get good initial validation. Do you get what I made? And so anyway, and honestly, I worked on Tarpon Ideas myself as a founder, which is a music discovery. This is something I did in my first startup. That was, you know, music startups are hard. And trying to be like, oh, we're going to fix music discovery. This was classic things where you can get lots of positive feedback and even get users to work on those things.

Starting point is 00:25:53 But there are aspects of it that make it. a very hard idea. So does that make sense? Absolutely. I'm also guilty of this. I had the startup called Local Mind that allowed you to talk to people, checked in in various locations around the city on 4Square and Gala back in the day and asked him how's going. And everyone, when they used it, they're like, holy shit, this is the most incredible thing I've ever seen. I could see what's happening at this bar that I'm about to go to. And then they never use it again. Do you remember when 4Square clones was all anyone worked on for two years?

Starting point is 00:26:22 They told us, 4Square is going to own this. There's no way this idea your building is going to be its own thing. And now, yeah, four square is a B2B business. Yeah. And all the four square clones, if they didn't pivot out of doing what they're doing, wouldn't it work? So anyway, that's a tarpette. It's just something that's super appealing and a lot of people do it.

Starting point is 00:26:39 And you can kind of get validation. And that's why is it a tarput? Is it draws you land and you get stuck? Because it seems like it's like a good idea and you get all this positive feedback. Kind of along these lines. I was talking to a founder recently and she's asking me, what causes an investor to say no to you when you're trying to raise money from them? And I know every investor has a very different perspective on what turns them off to a startup.

Starting point is 00:27:03 But is there anything that you find is just like here, if you do these things, investors will say no. Maybe my best advice here is for founders to put themselves in the shoes of investors and just imagine what their life is like and how if you are in their shoes, you would make decisions. And so given this framework, a lot of investors just don't make that many investments. And Hasper, what we talked about earlier, life is short. And so there's lots of things that an investor that in their hearts thinks it's like pretty good. And like, oh, like, I like this person and I like their pitch. But I only am going to do a few investments. And so even though I really like a lot about this, I'm going to say no.

Starting point is 00:27:47 And I often think that founders think that there's some. secret truth that's being held from them on why someone says no or like they're you know like they want more feedback i need feedback that's like well the feedback is we didn't want to invest and and it really is just that and and so i think if you put yourself in the in the shoes of an investor of like hey i only can do a few of these a year i have very limited budget they're really just trying to pick the things that they're either personally most excited about or things that they think can be truly phenomenally big in some way or, you know, again, I know you do investments too. So it's it's that you only get so many shots as an investor.

Starting point is 00:28:30 And so anything that doesn't seem like this is the one, this is the one I want to do is a no. And that that's actually why they're saying no versus this you did, you know, oh, you, you had a bad Zoom setup or something. You know, oh, we didn't, we didn't like what color your shirt was. We said no. I don't think that's, I don't think that's how this actually works, you know? I think that's such a good piece of advice that it's not necessarily they don't believe in what you're doing. It's they have better options and they're waiting for something that hits a higher bar just because because they have a lot of options.

Starting point is 00:29:00 Yeah. Because again, and if you if you ask someone, well, put yourself in an investor shoes. Wouldn't you be making decisions the same way? Usually founders are like, yeah. Like they come if you if you do that exercise, a lot of this starts to make way more sense. Specifically when you're evaluating startups. I wasn't going to go into this, but I think it might be interesting is market size. how do you think about the importance of a large town as an investor YC?

Starting point is 00:29:25 I think it really depends on what stage you're investing at. And it's absolutely critical the later stage you get. If you're going to invest in a very high valuation, it is really important. The earlier you go, the less it matters. And some of the most phenomenally good startups, if you were really a panandic about it, the tam would be like tiny. Like the tam of Uber would be like nothing, right? Like how the tam of Airbnb would have been nothing. The tam of I was a I funded razor pay which is I think the largest payment processor in India and the tam of that was tiny because no one was using credit

Starting point is 00:30:08 cards in 2015 in India. So you had to believe that the size of the credit card industry in India would like 100x. Well guess what happened? You know what I'm saying? And so so I'm not saying that having a large market someday doesn't matter. Of course, it does eventually. But trying to be super pedantic about market size when it's like a pre-seed company or someone applying to YC is not, you know, it's just not something I put a lot of thought. And you get whatnot. Ooh, what's the tam of the collectible, funcopop industry?

Starting point is 00:30:40 I don't know. I don't think it's that big, man. I don't know if you do that house when you invested. But I, you know, things pretty small, but I wasn't worried about it. That was like the last thing I was worried about. It makes so much sense that at YC you don't think about it that much because of, as you said, many startups pivot anyway. So if you like the team. And I'm not saying it's not important.

Starting point is 00:30:58 I just, it's not. And the things I'm worried about is like, hey, how do you get users? Hey, how do you grow? Things like that. Like, are you making something people want? Those are the things I'm really worried about as opposed to, ooh, I ran an Excel model and I'm worried this might not be a big enough tam. That's not at the top of my list. I think it's important to acknowledge that a lot of investors are very, like YC, I think,

Starting point is 00:31:18 I think is unique in a lot of ways where you invest very early and you help people through this journey. A lot of investors are very focused on TAM. So you may find you're getting turned down because they don't think there's a big enough market for you to build a big business, right? Yeah. Or that you're asking them to believe a crazy leap of faith that, again, they can say, well, it's theoretically possible you'll be able to sell more than Funko Pops. And I understand that that is your pitch, but I have other opportunities that are less risky. You know, I'm saying. Like, it's not because a lot of founders make the argument that the Tam is big. And you can say, wow, that's a really interesting argument. And I have no, I have no, you know,

Starting point is 00:31:57 I'm not going to argue with you about it. But no, I'm not going to. And so again, it's, it's hard to get someone to engage in a debate about Tam. Even if you have, you know, even if you have some proof points, ultimately a lot of investors just don't like that risk. Fair enough. Fair enough. Going a slightly different direction. someone else that worked with you. Another Lenny, Lenny Bogdanov, who started a company called Milk and then he was head of growth at Open AI for a bit. He asked me to ask you about things product leaders and startups should watch out for. Does that ring a bell? I don't remember the specific office hours, but I understand the question and I of course remember

Starting point is 00:32:38 Lenny. I think that the advice that he's referencing here is just how important it is to not overdelegate and for the founders to stay close to things, as well as watch out for the trap of hiring super senior people with fancy resumes really early in a startup. I think that's what he's referencing there. And again, this is definitely one of those very basic things that we find ourselves repeating a lot where they're like, yeah, yeah, I get it. Like don't overdelegate. We get it at adults. And then like two years later, they're like, wow, we overdelegate it. We need to go clean that up. So that is probably the best product advice. And the folks that are really great at product, the founders that are, are always deeply in the weeds on product and still care a lot and are still talking to customers, no matter how late stage it gets.

Starting point is 00:33:26 Again, I'm sure you experience this in Airbnb culture, but you know, you can't delegate caring about your users and you can't delegate caring that the product is great. That is so critical. To make this even more real, what are, what is it that you see them do? It's they hire a PM too early. They hire a senior salesperson too early. What are the? Yeah, I think it's, I think that you get. pushed often by investors to hire executives or to scale the team or we need you know we need we

Starting point is 00:33:51 raise all this money you got to spend it you know we got to you got to show you're serious about growth and building a world class organization whatever stuff like that and so you end up with super nice people with super shiny resumes from from big tech companies oh wow they they did this amazing thing at google and then you hire them and then you wake up one day and you're like oh wow everything went wrong it's that really anyone's fault It's just that you took your eye off the ball, and this is what happens to first-time founders a lot. How do you as a founder then have time to do all these things? Is there any guidance you give just like don't over-delegate, don't over-hire?

Starting point is 00:34:31 But also, you have 24 hours in a day. Is it just fine the time prioritize well? Or is there more to it? I think if you just care a lot about your customers and you care a lot about the product, your instincts are pretty good on what to spend time on. And so, for example, spending tons and tons of time, like hanging out with investors and networking, it's probably not, it's probably the thing that I would be cutting. You know what I'm saying?

Starting point is 00:34:59 Like, it's what we talked about other. If you really love what you're doing, no one needs to tell you how to reprioritize your time. Your intuition will be correct on what you should be spending all your time on, which is being obsessed with product. I love that advice. This episode is brought to you by Koda, and I mean that literally. I use Koda every day to help me plan each episode of this very podcast.

Starting point is 00:35:23 It's where I keep my content calendar, my guest research, and also the questions that I plan to ask each guest. Also, during the recording itself, I have a Kota page up to remind myself what I want to talk about. Koda is an all-in-one platform that combines the best of documents, spreadsheets, and apps to help you and your team get more done. Now is the perfect time to get started with Kota, especially its extensive planning capabilities. With Kota, you can stay aligned and ship faster by managing your planning cycles in one location. You can set and measure OKRs with full visibility across teams and stakeholders.

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Starting point is 00:36:39 Coda.io slash Lenny Okay, so one of your former, one of your colleagues, currently colleagues, not former colleagues,

Starting point is 00:36:47 Gustav was on the podcast previously. His episode is, I think, the fourth most popular episode of all time currently, so no pressure.

Starting point is 00:36:54 Oh, cool. I don't know if I can feed with that. All right. I think you can. So I asked them what is often the most common reason

Starting point is 00:37:02 a startup fails. And his answer was, they don't talk to customers, they don't find product market fit, nothing else matters if they can't do that. And so his advice is talk to customers more often. So two questions here.

Starting point is 00:37:14 First of all, just is there anything else you would add to why do startups fail? I know we talked about some of these already, but just what comes to mind there. I completely agree with what Gustav said, but to look at this from a different frame, I think is that the founders lose hope. And when you and your heart is like, yeah, we're failing. Like once, I can see it when I'm meeting with a founder, when they've resists, designed themselves that they're failing. Versus when like, we got one more move in us.

Starting point is 00:37:45 We got one more try. Like you can see in their eyes when they feel like there's more ideas or there's some last ditch, hell, every thing. It doesn't always work, but it's almost like you have to not accept that you're going to fail. And as long as you don't accept that that's going to happen,

Starting point is 00:38:05 there's usually a lot more moves you can try to save the company. What maybe it's to get profitable. Maybe it's to like do some others anything. Maybe it's, you know, to launch a new product. And so it's pretty rare, I would argue, that the cause of death is that they had lots of firepower and they were feeling really positive and they just ran out of money. That's actually like more rare than founders think. It's much more common that they still have some money left.

Starting point is 00:38:31 I'm not saying a lot, but some money. And they're just like, yeah, I'm done. I'm out of ideas. I don't want to do this anymore. And again, fair enough. you know but you get what I'm saying like I think founders are afraid that they're going to run out of money and that's why they're going to shut down and it's way more common that they like their idea doesn't work and they have a big fight with their co-founder and then they can't agree on

Starting point is 00:38:51 what to work on and then they just like are like I don't want to do this anymore and they shut down that is the most common cause of death is something that sounds like that story that is so interesting and again this comes back to your core advice don't die just don't die we talked about this already of just like sometimes it's actually okay to die. And I guess just to refresh that lesson is if you're not having fun anymore, maybe it's okay. Yeah, and you're out of fighting news. You're like, I'm just, I'm done.

Starting point is 00:39:18 Like, if you know in your heart that you're done, you don't have to keep going through the motions. No one benefits you. And you've also seen enough cases now. You've shared a few of these where they, all hope was potentially lost, but they kept going. And then they turned into a huge success story. And I think most people don't see those examples. I guess is there anything you can share just like how often. that happens, how often you see that turn around?

Starting point is 00:39:40 I would argue that if we define it, is the company had a near-death experience where it was going poorly, and the founders seriously wondered if it was all going to be over 100% of the time people go through that. You know, where the founders are like, yeah, I guess we're done. I guess we should pack it in. And at least you feel that way at some point in your startup journey.

Starting point is 00:39:59 I mean, everyone goes through that. And again, there's gradations, people that actually, truly got down to very, very hard situation. it's still a high percentage, like maybe 50%. I mean, you can ask founders, there's a lot of founders that come this close to it all being over and through sheer will kind of just keep it going, you know? That is really empowering, I imagine, for many founders hearing this,

Starting point is 00:40:24 of just knowing every single founder goes through, okay, I think it's actually over. Yep. Following on this real quick, the advice that Gustav shared, which is about talking to customers, I'm just going to keep trying to pull wisdom out of your head. do you have any advice for just how to effectively talk to customers? We're always hearing talk to customers, build things they want. Easier said than done.

Starting point is 00:40:44 You get a lot of asks. You get one customer asking for a lot of stuff. There's a big company that's like build this thing. We'll buy, pay a million dollars. Just do you have general guidance of just like what to pay attention to and what to build versus avoid? Yeah, I think what I talked to to aspiring founders about this a lot. They're like, yeah, yeah, yeah, yeah, I talk to customers. We get it cool.

Starting point is 00:41:04 And I'm like, cool, whoa. How many customers do you talk to? And they're like, wow. And they get really quiet. And so I think this is one of those things like, hey, you should have a healthy diet and exercise every day or whatever where people know it. And that doesn't mean they do it. And so I think to start with, you have to get out in the world and talk to people in person. And you can't just hide behind your keyboard and call that talking to customers. Right. And I think a lot of folks, their inclinations are to like, you know, build a landing page and buy some Instagram ads and try to get people to sign up for something.

Starting point is 00:41:38 And again, maybe that's something. But I think a lot of the reason people do that is they're just shy and they don't want to put themselves out there because it's a little awkward to go talk to people. And you kind of have to sack yourself up to go out in the physical world, get people to meet with you, get them to take you seriously, show them a product you're building. And so again, to be very tactical here. you can do a self-assessment. In the past month, how many in-person physical meanings have I had with potential customers?

Starting point is 00:42:11 Maybe you've done a lot. I don't know, listener, maybe you have, but, you know, it's shocking how many companies I talk to. They're like, well, we're focused on raising our pre-seed round before we talk to customers, like things like that. And again, I think the core, the core thing going on is just social anxiety and, like, looking stupid. And I think you just got to get past that. You know, you just got to start doing it until it doesn't feel bad anymore. But, you know, think about how stupid the Airbnb founders must have felt they were like,

Starting point is 00:42:46 hey, you should rent out your house and I'm going to come and sleep in your house and here's an airbed. Like, I guess the whole thing is a little awkward, right? So you got power through the awkwardness of talking to people. And once you start doing it, it's actually kind of fun. And so once you get used to overcoming this awkwardness. I think people do much better at talking to customers. When someone does this self-evaluation, is there a heuristic that tells you this is enough? What do you look for? Is there a number of like how many per week, how many per month?

Starting point is 00:43:17 Yeah, I don't know if I know a good number. I think it's look at your calendar and there should be, you know, 20 or 30% of your time that the calendar says something like customer meeting, customer call, like meeting with food, meeting with this person. And when the calendar is not that or it's all, you know, again, what you're actually doing is just buying ads to try to validate your idea. I don't think that's talking to customers, you know? I think that's something else. That's an awesome heuristics. So roughly fifth of your time, at least should be talking to customers. Yeah. And again, it depends on the idea space you're working on, some or more, some or less. So, yeah, I just, it should be a fair amount of time and nothing substitutes for an actual

Starting point is 00:43:59 conversation versus just staring at analytics dashboards. Makes so much sense. So Airbnb is a classic example of they went to New York and talked to their host and things like that. Is there another startup that comes to mind that did this really well? I've found just a really cool way and hustle to talk to customers. Well, again, if you, some of the companies we talked about, I mean, for Brex, they were just talking to other people in their batch, and that worked extremely well.

Starting point is 00:44:23 Same with Retool as they just sold it inside of the YC network. I think with Zip, they were just beasts. at getting companies on calls with them to ask them about procurement. And I think they had way more than 20% of their time. Like when you looked at their calendars, oh, man, I think they were talking to customers a lot to build their first product and kind of pre-selling it before they built it. Same with Postdoc.

Starting point is 00:44:47 I guess that's a different go-to-market. They launched this open-source thing to start with. And it was, their calendars are filled with people that were trying to implement the first open-source version of Post-Dog or were so excited about it. people on Hacker News were excited about it. And they had this huge influx of people that were excited that post hoc existed and had lots of feedback and by reports.

Starting point is 00:45:10 Like it wasn't always positive, but they never lacked for people that wanted to talk to them once they launched that, which was very helpful. On Zip, I actually have a lot of their story in one of my series on how to build a B2B startup. And what they did actually, as you know, is they just called DM'd people on LinkedIn and asked them for advice on, hey, we're trying to understand. how you enjoy your current procurement products, and then they ended up being early beta testers. And I think they did 100, like hundreds of these.

Starting point is 00:45:37 Oh, yeah, no, it was a numbers game. They were just grinding at this. And so, yeah, that was very good. The other classic YC story is the Colson Collision, I think it's called, or the Colson Install. Oh, Colson Install. Okay. Can you tell that story briefly?

Starting point is 00:45:53 The Colson Install is what often happens with customers is that They say, yes, I want to buy your product. And then they do not implement it. They just go quiet. They're like, there's no implementation. And this is very bad if you're selling software to someone. If they never implement it, they're going to churn. And you're not, you know, you basically failed on the one yard line.

Starting point is 00:46:15 Okay. And so they kind of developed this tactic to be like, oh, well, you know, I'm at the neighborhood. You know, I'll drop by your office to help you implement Stripe and kind of just like create. Again, it was a little awkward like we talked about earlier, but you, you'd be like, yeah. I'm in the neighborhood.

Starting point is 00:46:32 Like, how about I draw by? And then they would show up. And they'd be like, cool, cool. Can you like pull up your text editor? Oh, yeah, cool. All right. Hey, can I drive? Can I have the keyboard?

Starting point is 00:46:42 And they would just sort of like install stripe into the customer's website, you know, smiling being like charming and charming guys. And then we like, oh, that's cool. Okay. Well, like, can we like roll out the website now? And they basically would kind of not go away until you, finished the implementation of Stripe. And again, it was actually helpful because they were doing all this white glove service

Starting point is 00:47:04 to get it implemented. That was very effective. And I think the takeaway from that story is even when you get a yes, you're not actually done with sales, you have to finish the last mile to get the thing implemented. And they were very good at that. That was an incredible story. And now they're like, I don't know, $100 billion in business. And that's how it all begins.

Starting point is 00:47:24 Yeah, I was an early Stripe customer at my startup. And yeah, Patrick would like, We used Google Talk at the time. Patrick would be sending me messages like on a weekly basis, just like check an end. And so again, it's funny how successful these folks get. But yeah, Patrick was very hands-on with all of his customers. It was extremely available.

Starting point is 00:47:43 Like, I can say that because I was one of them. Yeah. And I'm sure he had social anxiety going through all that. That wasn't a comfortable thing to do. Just like keep pushing people to install your software and deploy. Oh, surely not. It's just you've got to do. Like, if you want your startup to work, this is just what you got to do.

Starting point is 00:47:58 You know? I'm not the territory. This is going to be just a way broad question, and I don't know if you'll have an answer, but are there other just patterns you find across startups that do well? This is like maybe the $64th million question of just founders and what they do that ends up leading to success. I don't think personality types matter as much.

Starting point is 00:48:18 I've seen very quiet people, very extroverted people, very, you know, you name it. I've seen all sorts of personality types. So for me personally, I don't think that there's a right. or I don't think there's a personality type that people should copy and be like, I need to be like this person. You know, I need to be like Steve Jobs. I need to be like Elon.

Starting point is 00:48:36 You know, I don't really believe in that because there's just so much variation. Like Tony from DoorDash is so different than a lot of folks. And Regul is so different and Grant from whatnot. These are all very, very different people. Patrick is a different kind of person. Ryan from Flexport.

Starting point is 00:48:51 Like these are just very different personality types. But the thing that I, would argue folks that build really big companies have in common is they just really want it. And they really believe in themselves and they really believe they can make it work. And that there's somehow deep in their internal psyche, there's something that's like, I'm the one and I won't take, I won't accept this not working. And even though objectively there's all there's all this data coming in, this isn't working, this is bad, you know, my employees want to quit, my executives want to quit, you know,

Starting point is 00:49:33 whatever it is, somewhere deep down in there, they're like, oh yeah, I'm going to make this work. This is, this company is going to be big and they, and they just believe. And it's almost like that internal gravitational force inside of them is so large. It kind of warps the world to bend to that will and people start to believe it because they believe it so much. And they convince their employees to believe in. They convince everyone around them that this is going to happen for them. And so again, this is not a personality treat. I'm arguing this is like a core belief. So interesting. And it connects so much to what we've been talking about. Just don't die. Don't lose hope in what you're working on. A founder hearing this might feel like, man, I don't know if I'm like so

Starting point is 00:50:20 convinced this is going to work. In your experience, how much of this is internally they're so certain and convinced versus externally they need to show this confidence. Well, I think it's internally they're convinced. I mean, I'm not sure it's external. But, and this is the big but, no one has this at the early stages when they don't have a good idea and they don't have customers and like it's objectively not working. And so again, I know a lot of founders like, well, I don't feel that way. Oh, no, maybe I'm, you know, maybe I'm an imposter and I shouldn't do a startup. Well, of course you don't feel that way if you haven't talked to any customers and haven't built a product, like, you know. But what, what usually happens is you pivot to a good idea,

Starting point is 00:51:01 where you start with a good idea that you care about and customers you care about and you launch it. And the better the product does, the more obsessed you get with your own company. Like I think in the case of Stripe, I don't want to, you know, tell Patrick's story for him, but I recall him saying at some point, he wasn't as sure that Stripe was going to work until they were like a year or two in. And then once it started working, and then he, you know, They really believed in it. But if it wasn't like he woke up one day, I'm like, Stripe is the thing.

Starting point is 00:51:28 It's going to be, it's going to work. I think you build conviction and you have this like network effect virtual cycle where you get more conviction, the more customers reflect back to you and data reflects back to you that you're on the right track. This is exactly what Scott Belski shared in our episode when I asked him, when to pivot is do you have more conviction? This is going to work or less conviction over time.

Starting point is 00:51:54 And so I like that connection. we just made there. Okay, so we've talked about all these ways startups fail, bad ideas, tarpet ideas. I want to go to the flip side and talk about good startup ideas. So recently you put out a request for startups, which is essentially 20 categories of ideas that you want to fund that YC wants to fund. Can you share some of these ideas that you're excited about? And basically you're looking to fund and looking for founders to work on.

Starting point is 00:52:21 Yeah. And so we put out the request for startups just to inspire people. to maybe apply with ideas that aren't the ones that we always see. It's not like prescriptive. Like we will only fund ideas on those lists. It's not that at all. It's just sort of, remember what I talked about earlier with information diet? We're trying to mix up some of the information diet about what kind of ideas people might

Starting point is 00:52:40 be contemplating. They aren't currently. And so a couple of the ones that we put out there, one of them I made one about ERPs, which is, you know, enterprise resource planning software. And I did that because I get so few applications on that. and they're usually pretty good, and I just would love to see more people look at that and learn about what ERPs are,

Starting point is 00:53:01 just because it's so rare that people apply with that. And now I have a feeling we're going to see a lot more applications working on that. And so it kind of worked as intended, which is to introduce this idea space to founders that didn't even know what an ERP was. Now they'll go learn about it. Another one is, you know, we'd like to fund open source companies,

Starting point is 00:53:18 and so that's one of the RFSs where, you know, if more people applied to YC with open source ideas, I think we'd be pretty excited about that. And maybe founders didn't realize that that would be somebody we'd want to find. Same with space companies. Yeah, we've had a lot of success with space companies. You know, several of the folks

Starting point is 00:53:37 that are actually going to space right now that aren't SpaceX are YC companies. And so I think sometimes founders feel like those ideas are too bold and ambitious. But no, you know, I love more people apply with space companies. And so think about it that way, where we're just trying to put out,

Starting point is 00:53:52 we're trying to plant seeds of idea spaces that perhaps someone subconsciously filtered out is what might be a good startup idea. And, you know, hopefully that creates a new set of startup ideation for the person. And we're going to link to this page in the show notes for folks that want to explore. I'll get up a couple more real quick.

Starting point is 00:54:13 A way to end cancer. No big deal. Spatial computing, new defense technology, bringing manufacturing back, America. So a lot of like hard science, deep tech stuff, which is, which is maybe a new, I don't know. I know, I imagine you guys have invested in this in the past, but it feels like we totally have, right? So these aren't like, oh, we've never invested in these before. It's more of like, hey, it'd be cool. If we saw more applications along these lines, it would be nice. Because it currently feels a little bit under, you know, there could be more startups working on this stuff. Yeah, instead of the tarpet ideas. A couple more real quick, better enterprise glue. Yep. I like that idea. Say more about that. What does that look like? The software to connect all these business systems is usually pretty brittle and janky.

Starting point is 00:55:00 And there's been lots of good startups founded to solve this problem. I think there's still a lot more room for improvement. And likely LLMs will improve, we'll probably be able to create better and better blue. So all sorts of software systems can talk to each other. So again, very broad idea. But yeah, I think we'll see a lot of very successful companies where that's the kernel of the idea they start with. Awesome. One last one, small fine-tuned models as an alternative to gigantic generic ones.

Starting point is 00:55:25 Yep. Sweet. And so we'll include this link in the show notes and folks can click on each of these and you basically, there's a lot more explanation of what it is you're thinking about there. Awesome. Okay, just a couple more questions. One is just your background. So from what I've read, in the early 2000s, you were basically hanging out with some of the biggest success stories of today, folks like Zuck and Reed Hopkins. Hoffman, Sam Altman, Elon, Sean Parker. This is before they really became anyone. And they all became very successful. I'm curious just what, looking back at that, what you've noticed is consistent across these folks that end up being really successful over time.

Starting point is 00:56:06 Back in 2003, being in Silicon Valley and being interested in startups, they're just, it was a really small space. There just weren't that many people that were into this stuff. And so I remember a cold email. Reid Hoffman when LinkedIn was like 12 employees and he just responded and he's like, oh, let's have lunch. He was just like a guy and everyone else that was doing, I guess you could call it social networking, that was sort of the people that I knew. There was a few conferences you would go to and there'd be like 30 people there. It reminds me of stories about the homebrew

Starting point is 00:56:41 computer club. I'm not saying this is cool, but when I read stories about what it was like when the home group computer club existed, it was a very small number of people that all knew each other, there were real, like, weirdo outsiders that were into this stuff. Okay. And so that's what in the post.com boom, Bay Area startup scene, that's legitimately what it felt like. And so I didn't think a lot about the personality traits of these people. They were all, again, they were all pretty different people. But what they had in common is the folks that are now the really big names just had a lot of staying power. Right. So when I met Sam, he had dropped out Stanford to work on Luke, which is hilariously a way to find people around you to hang out with.

Starting point is 00:57:25 Interesting theme here, huh? He was cool. He was this really young guy, and he just kind of did that. It wasn't huge. And then he got into other stuff and ended up working at YC and ended up getting involved in hard tech. And it's now kind of like reinvented himself as the big mind behind AI, which is, which again, awesome. But if I think about who he's, was back in the day, he was, yeah, he was like a 23-year-old working on a thing for feature phones to find friends in your neighborhood. Their customer was Boost Mobile. I bet you could go find the commercials for loops that Boost Mobile put out on YouTube. Those are actually pretty funny. Have you seen those commercials? No, but I'm going to go check it out. Anyway, it's

Starting point is 00:58:07 pretty funny. So yeah, like that's the real story. And then yeah, I remember I was in downtown at Palo Alto at the time. And you, some of the folks I was friends with were friends with Sean Parker. And this was actually before Sean Parker went to Facebook. He was part of Napster. And so one of my friends was like, oh, we need to get my friend a ride to the airport. And so I ended up giving Sean Parker a ride to the Oakland airport. And again, what was he like? I don't know. He just basically said in the backseat on the phone the whole time. But again, my point is I wasn't like, wow, these are going to be really big successful people that one day will be important in the world,

Starting point is 00:58:44 it just felt like a bunch of nerds that really liked the internet and computers kind of doing things that they were interested in and were just obsessed with this. Like there was no, they weren't like, gee, should I move to New York? Oh, gee, should I, maybe I should go to law school. Like it was people that were very bought in

Starting point is 00:59:04 to sustain working on internet companies. And so you'll see these folks, just reinvent themselves multiple heras, right? Okay, like Reid Hoffman, right? He was a worked at PayPal, right? And then he did LinkedIn and then he was like a VC and like, like, he's kind of had like all these different eras where it's the same person, but it's almost like a different figure, right? There's a lot of interesting lessons there. One is that your career is long and you will have the opportunity to do many things and you can continue to shift. Like in my example, this is my fourth career. I realized I was an engineer, then a founder, then a product

Starting point is 00:59:40 manager and now whatever this job is. And I think that's really common. I think the other, again, is the personality types point, which I didn't comment on, but I think it's so important that you can be super introverted and be super successful. You can be super extroverted and be very successful. And I think the key there is use your skills and strengths to achieve the same things. You don't have to be the amazing presenter on Steve Jobs type stage. You can do the same thing in a different way. And then the other point there is, again, coming back to you just need to be really excited. and enjoy the work you're doing, because that'll drive you forward

Starting point is 01:00:13 and make you be successful. So I like that that, I love that the story is kind of a summary of so many of the things you've shared so far. There's other two other fun stories. Maybe pick one or the other one is you sold your startup to MySpace, and your job was basically to save MySpace.

Starting point is 01:00:28 And then the other is you're the reason Andrewson Horowitz missed out on Instagram. Yeah. And couldn't invest. So which are those would you want to share? Well, it's kind of the same story. Okay. Great.

Starting point is 01:00:39 And the way that it's the same story is my second company, basically I sold my first company in MySpace. It was the music company that I worked on. And they recruited a new CEO who was formerly the C.O. A Facebook called Owen Van Nata. So again, hilariously part of the same little circle of people. And Owen was like, okay, we need to fix MySpace. Rupert Murdox got the juice.

Starting point is 01:01:08 He wants me to fix it. like we're going to turn we're going to we're going to do it so come up with some ideas and kind of the best idea that I could come up with at the time was doing something around mobile photo sharing something kind of like twitter but for photos and I figured with my space is user base that would work pretty well this was like in 2010 so it was right as the app store was getting big and I had a lot I had a lot of success in the app store with Imeem it was one of the top music top downloaded music apps and so I was like wow the app store is really good and I was really into apps being the thing. And at this time, Facebook was a little early on. They were trying

Starting point is 01:01:43 to do cross-platform mobile apps, if you recall. And their apps were not great. This was, again, ancient history. And so that was sort of like my plan. And then immediately, Juan Van Nata was fired. And so I didn't even really get onboarded. And so I just like left. I think I worked in my space for like a month because the person that acquired my company got fired. And there was like, I think the whole word chart got fired, so I don't even know. I didn't even know who to talk to. It was really great. It was a great experience.

Starting point is 01:02:12 You know what I'm saying? I wasn't really sure who my point of contact was at that point. I don't think they knew either. It was just a message. Tom. Just message Tom. No, no, he was long gone. Seriously, I know you're kidding.

Starting point is 01:02:21 But no, like, literally, I don't know who was left at that point. Great. Tom was long gone. And so I was like, well, I should just do a new startup and I should work on something like what I was thinking about. And I ended up, yeah, starting the company and quickly was able to raise an angel around because people remembered my company from the first one. And the major investor we had was Andrewson, Orowitz. This is one of their first board seat investments, like Mark Andreessen was on my board. And, you know, again, that I have my own set of stories about that,

Starting point is 01:02:55 but it was, it was interesting experience. And we launched it. And I think we got half a million or a million users, like you can go find tech printshar articles about it. And it was, we launched an Android and iOS, and it was mobile photo sharing. And actually it was growing pretty well. Okay. And then what happened is there was another portfolio company called Bourbon, which was originally a four square clone that was built by these two guys. And they decided to pivot out of that and into what was pretty similar to my thing. You know, again, fair enough. That's just how this works. And they did something smart. Again, this is me talking.

Starting point is 01:03:33 I don't know what their version of story is, but what I think they did that was smart is if you looked on the paid app store charts, the number one app was hipstomatic. And hipstimatic cost money. And what do we know about what people want? They want things that are free that cost money, right? And so they basically built a pretty legitimate knockoff

Starting point is 01:03:51 of the hipstimatic filters combining it with a social graph. And they launched it and it pretty quickly took off. So, of course, this is Instagram, right? And so it took off really quickly and like, you know, that was like a wild experience for me to be like, oh, this seems familiar. And basically because Andrewson Horowitz had like invested in my company was on the board, even though they were investors in Instagram, that was like a conflict and they didn't do the deal. And then for whatever reason, this became like a big source of like Silicon Valley gossip, which is like, wow, I can't believe this happened. And so it was just a really weird experience for me as a founder to be right in the middle, something that became culturally so important.

Starting point is 01:04:36 I imagine there's a bullseye in your back from A16Z for a little bit. Oh, I don't actually think they care. I don't think they held it against me because, like, what did I do wrong? It's true. I started a company. Like, you know what I'm saying? Like, obviously there was some frustration, but I was like, I was like, I was, like I was a guy who had a company that they invested in. I don't know. I didn't feel like they,

Starting point is 01:05:01 I didn't feel much higher for them. I think it's, this is just how, this is just how life works. Yeah. I wonder if they changed their conflict policies after that at all. I don't think so. This, I think this happened, I think this happened multiple other times. But those aren't my stories. And by the way, I don't know if you mentioned the name of your startup. It's called pick, pick, please. Yeah, it's called pick please. Yeah. Great. Okay. So for the final phase, before we get to our very exciting latent ground, I have these two segments, recurring segments, a failure corner and contrarian corner.

Starting point is 01:05:33 We can do both or we can pick one or the other. Failure corner, share a story of something, a time in your career where you failed and when you learned from that experience. Contrarying Corner, what's something you believe that a lot of, that most other people don't believe? Yeah, I think for Contrarian Corner,

Starting point is 01:05:47 I know where I would start and I think it's relevant for your listener. Like, I think this is relevant to this. And so, again, maybe, and you could argue this isn't contrarian. But here's what I think. I think growth and growth hacking and doing all this analytics, AB testing stuff is a total waste of time for very early startups.

Starting point is 01:06:10 And that one of the weird things about having lots of startup advice on the internet, again, this is one of the reasons we started making videos at YC is a lot of the advice was catered towards later stage companies. Like, oh, here's how you set up your board and here's how you, motivate your sales team. It was all aimed at series A, series B founders and not for seed stage founders. The problem was seed stage founders would consume all the later stage advice and get really confused. And so the anti-pattern I see is there are lots of founders that are very familiar with your awesome work, which again, I really recommend.

Starting point is 01:06:41 I like it. But when you have no customers and you're reading, you know, Lenny's guys on how to set up split testing and how you did growth at Airbnb, oh, man, that is so dumb. That is so not helpful. And so you see this inclination away from getting a first customer, getting one customer, and talking to that person. And instead, they have like all this really complex growth hacking theory. I think this also happens if you worked in big tech where your product already has scale. And so, you know, if you work at Facebook and your job is to launch new little features, yeah, of course you should make heavy use of analytics and AV testing and split testing and feature flags.

Starting point is 01:07:21 Like, yeah, yeah, yeah, it makes sense. but when you have no users, what are you doing? So do you think that's contrarian? What do you think? I'm just trying to argue this advice applied to a startup that's too early is like actively not helpful. I think it's contrarian for many people 100%. I also 100% agree with it. It makes me feel like I need to at the top of my post share.

Starting point is 01:07:45 Here's who this is for if you're earlier than this, ignore it. If you're later than this, ignore it. I mean, again, I'm not saying you do anything wrong, but imagine if, the OG Airbnb founders took all of your current advice and applied it when they had like four users and they knew their names and they were like trying to run complicated growth hacking split testings. Yeah. Maybe just to clarify it when you talk about growth, growth hacking. So obviously when you're starting something, say a consumer app, you need to get a bunch of users somehow. What's your sense of just like when you say don't do this sort of thing, but this is okay, what kind of falls in those

Starting point is 01:08:19 buckets? I think it depends on the idea. I think in the case of whatnot, they obviously, it was a consumer app and they needed to get users, but they were very intellectually honest on the metrics for how you get a marketplace off the ground. And they didn't just go dump all their money into Instagram ads. And like they effectively knew they needed to focus on buyers and on the buy side and build momentum on the buy side. They really understood marketplaces. And so for consumer, I think it's having a sophisticated view of how you get the. consumer company off the ground. I think if you look at the Facebook story, them getting 100% penetration on the Harvard campus first instead of launching overall. Again, good strategy.

Starting point is 01:09:02 Would recommend that strategy. So again, the way to extrapolate that is know what your comps are of what companies your archetype is and then look at what they did on the zero to one and ignore what they do today. Right? Don't pay attention to what Facebook does today if you you're a brand new startup founder, pay attention to Facebook when they were getting their first thousand users. What were those tactics? I feel like this should be its own episode where we just go into how to get your first thousand users. I know there's a video actually we'll link to that Gustav made with YC's advice on how to get your old users. Did you want to visit Failure Corner or not? Or shall we move on? I failed at tons of stuff. Is an investor, I make lots of bad

Starting point is 01:09:48 investments as well as good ones. I think in my startups, I pivoted, a lot and a lot of things I did didn't work out. And so again, I just gave you a specific story with Pickley's, right? You just heard a specific story there. I guess what I learned is that you just can't let it get to you too much and you got to keep going. And that if you keep going, no one really remembers those as much and it doesn't really define you. And it shouldn't, you know, fear of failure shouldn't dominate all of your thoughts. And instead, you should use your energy and positivity to keep trying to do good work, right? Because back in the day, if I would be like, well, you know, I guess starting trying for me, I guess tech isn't for me, I wouldn't

Starting point is 01:10:30 have had a career doing any of this stuff. I wouldn't be working in YC. I wouldn't be advising companies, right? So I always had to have in my life a lot of optimism and energy and use that energy and motor to keep me going and it served me really well, right? Even if lots of stuff I tried didn't work and continue to not work. Again, obvious stuff I know, but yeah, that doesn't mean it's not true, even though it's obvious. I feel like that's a recurring theme here. And I love that it's another version of just how not to die. There's like the startup itself that shouldn't die.

Starting point is 01:11:05 And then there's your just drive and motivation to keep going and try new things when things don't work out. I love all the recurring themes and messages for people here. Dalton, is there anything else you want to leave listeners with before we get to a very exciting lightning round? Yeah, I guess the final thought is, you know, if someone wants to do a startup and doesn't know where to start, just to give you permission to talk to potential customers and try to pre-sell something before you write code and have those conversations. I think so many folks don't know where to begin on starting a startup. And my tactical advice is start doing customer validation first versus building a PowerPoint debt. versus trying to raise money versus like all these other things, I think a lot of people don't use that strategy.

Starting point is 01:11:57 And basically, if you find people that are really excited and you do line up customers, that is a great green light that it is time to do a startup, right? That can get you down the path. So, yeah, I think that's my final. And then with that, when does the building come in? Is it build a by your talk in, build it before you? Yeah.

Starting point is 01:12:13 It depends on basically. Build it once you have some conviction, and you're like, oh, I think I would have a customer. I think at least one person would use this thing I want to build. At least one. I love it. I love the simplicity and pragmatism of all of your advice. Dalton, welcome to the very exciting lightning round.

Starting point is 01:12:30 I've got six questions for you. Are you ready? Let's do it. What are two or three books that you recommend most to other people? I think a lot of founders are afraid of doing sales and they don't know how to do sales and they think they need these really experienced sales coaches and they need all this training. And I'll be like, well, go on to Amazon and find the most popular. sales books like getting to yes that everyone reads and just read those and that'll get you

Starting point is 01:12:55 80% of the way there. You know what I'm saying? They want to hire someone for millions of dollars to give them sales coaching. I'm like, well, have you read these really basic sales books? And they're like, no. And so I think that's a low cost way to go on Amazon, getting to yes and a few other of the top sellers. I forget the names. And just read those. And that is your crash course on how to be great sales. Awesome. There's also this book called Founding Sales that I imagine you're familiar with. Pete Kazanjee was on the podcast talking about that and that's something I always recommend because it's just like how founders can do sales. Start there. Start there. Great. We'll link to that. Do you have a favorite recent movie or TV show that you really enjoyed? This may be warping what you're

Starting point is 01:13:34 asking for, but I like to watch old shows a lot. And so I keep rewatching like the Sopranos and the wire and it always is different to me every time and I, you know, things like that. I think here's a silly answer. I've been really enjoying watching old episodes of Columbo, which was a television in show from the 70s and 80s. I don't know why. I don't even know if this is instructive, but it is, for some reason,

Starting point is 01:13:56 I'm really into that right now. It's very old episodes of Colom. You're an old soul, Delta. I guess. I don't know. It just feels like a time machine to a different time

Starting point is 01:14:05 when I watch these things. Definitely. Maybe one of the most unique answers yet. Fair enough. Columbo. Well, again, I guess I'm not trying to give you an answer where I sound super clever.

Starting point is 01:14:15 I'm actually telling you the one answer. So that's actually what I'm watching. It does actually sound very sophisticated and clever. Do you have a favorite interview question that you like to ask, I guess, founders in this context? I don't really believe in trick questions. And I think I just start with, hey, so tell me about what you're working on or what if you learned since you started. None of these are trick questions, but I think you can get the most honest and interesting answers by asking the most straightforward basic things and having that be like a blank slate for their answers to draw. on. You know what I'm saying? So I like the most simple prompts and let them take the conversation

Starting point is 01:14:55 where they want to go. I know this probably is a very big question, but just what do you look for in their answer that gives you a sense of this is a good or bad answer? For YC interviews? Yeah. And I know this is like its own podcast episode. I think evidence that they actually have thought about it. Like as per I said earlier, that they've done research, that they have opinions, that they care about it. Right? Sometimes when people answer questions are like, you can just tell that it's really superficial and they haven't put much care or soul into their answers, you know? Awesome.

Starting point is 01:15:32 Do you have a favorite product that you recently discovered they really like? Like my whirring and my Apple Watch and all that good stuff. Like I've been a fan. There's a Y-C-Golini called SciFox S-I-P-H-O-X I just sign it for and they do at home blood testing. and basically I'm trying to sync that at-home blood testing thing into all my other devices. I think, I don't know, I really enjoy all the stuff that Apple

Starting point is 01:15:58 and other startups are working on and YC companies are working on around personal health. And so, yeah, those are products I'm into. Cy Fox, okay, and wait, then you do like a needle and stuff and you take your own blood? It's this little tiny needle. It doesn't hurt at all. And it takes a few drops of blood and you do it at home,

Starting point is 01:16:14 you mail it in, and then it has all these blood tests. It's actually really cool. Yeah. And I just discovered that it's one of those cases where I saw it. I saw it and then I later was like, oh, wait, that's a YC company. Like basically I became a customer and was pleasantly surprised that it's a YC company. And I think I found it. So it's SIPHOXHealth.com.

Starting point is 01:16:38 Yeah, it really rose off the tongue, right? Yeah, that's the name of it. Very cool. Okay, I see the little needle. Okay, great. Go Syfox. Okay, two more questions. Do you have a favorite life motto that you often come back to find useful in work or in life, share with friends?

Starting point is 01:16:55 Just check in with yourself that you're having fun and that you enjoy what you're doing. And if you don't, you should probably make a change, whatever that is. And again, if you're a founder, you're in control, right? You can change your own company. But I think a lot of people go through life and they don't ask themselves this question. Am I having fun? Am I enjoying? do I value what I'm spending my time on?

Starting point is 01:17:18 And I think that you just can go back to this over and over and over again. It's a good prompt on how to decide what to do with your life. Easier said than done to change that in many cases, but it always starts with realizing, okay, this isn't actually what I'm doing. Yeah, and bitty to yourself. Yeah, I'm not really enjoying this. And then trying to do like, well, how can I fix it, having that conversation with yourself?

Starting point is 01:17:41 Yeah. It reminds me of a Steve Jobs quote where if you wake up, day after day. Like, it's okay to wake up some days being like, I don't want to be doing this. But if it's every day and continues to happen, then that's a sign. You should change it. Exactly. Final question. You and Michael Seibel have been doing this incredible podcast together. If somebody wanted to check out the podcast and dive in, is there an episode that you love most that you think they could start with? It depends. Some of the episodes are more for folks that already have a startup and they're dealing with like problems. I don't know, some of the episodes about investors or things like that.

Starting point is 01:18:18 Like it's very clear that the audience for those is current startup founders. And there's a lot that are just more life advice, how to make decisions and think about. And those have strangely become very popular and got a lot of views with non-startup founders, which just applies on a surprise. And so I'd recommend those for folks in the audience that are not currently startup founders. I don't know. Life tips from top founders, I think is the term of billionaires. Is that one?

Starting point is 01:18:43 Yeah, yeah. I think that was pretty popular. So what I'd be looking for is diagnose, am I a current founder and I have founder problems, or am I just looking for general philosophy type questions? And I really like those philosophy ones. We have one for high school students. And it's aimed. The audience is here's advice for high school students that are interested in startups.

Starting point is 01:19:02 Here's some tips that you should be thinking about. Again, pretty narrow target audience. But I love that episode because we're really trying to speak directly to that audience. And, you know, I think it's pretty. you advise. Dalton, you are wonderful. Thank you for sharing so much wisdom. This is action-packed. I'm really excited for founders to listen to this. I think it's going to make a big dent in a lot of people's lives. Two final questions. Where can folks find out if they want to reach out and follow up on some of this? And how can listeners be useful to you? I'm on Twitter slash x.com. Dalton C

Starting point is 01:19:30 is my username. And also my LinkedIn is pretty good. It's pretty popular. I don't know. Just search for my name on LinkedIn. And yeah, I love to see. you all there. And then how can folks be helpful? I mean, honestly, it's just great when folks want to apply to YC and do a startup. And so feel free to dive into other videos and apply to YC. And something that's really special about my job is I get the privilege of getting to fund companies that they already know me from videos and they're shocked that I'm exactly the same as like effectively. Like effectively, they're like, wow, you're just that guy from the videos I've been watching. And it's so cool that you're just exactly like you seem in the videos. And so basically, yeah, if people like what I

Starting point is 01:20:17 have a say and they like the videos and apply to I see, it would be, I would love to fund their companies. Dalton, thank you so much for being here. Sure thing. Thanks so much, Lenny. Appreciate it. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lenniespodcast.com. See you in the next episode.

Lenny's Podcast: Product | Career | Growth - Lessons from 1,000+ YC startups: Resilience, tar pit ideas, pivoting, more | Dalton Caldwell (Y Combinator, Managing Director)

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