Y Combinator Startup Podcast - Building Confidence In Yourself and Your Ideas | Dalton & Michael Podcast

Episode Date: March 20, 2024

One trait that many great founders share is conviction. In this episode of Dalton & Michael, we’ll talk about finding confidence in what you're building, the dangers of inaccurate assumptions, and a question founders need to ask themselves before they start trying to sell to anyone else. Apply to Y Combinator: https://yc.link/DandM-apply Work at a Startup: https://yc.link/DandM-jobs

They will take something, you know, Anonymous ArtVark 42 as like gospel and base their entire life philosophy around it. Don't do that. All right. Welcome with Dalton Plus Michael. And today we're going to talk about how fast is too fast for moving a startup. I'll start with the story. I was talking to a YC company. Could have been this batch.

Could have been a previous batch. Yeah. Let's anonymize it. We don't want to... Probably every batch, to be honest. Common story. And a summary of what they told me was, we got into IC with this idea. We called 25 companies, mostly startups, of course, over the last two weeks.

None of them want to buy our product, which doesn't exist. It's just an idea. And so we decided to pivot. And so can you help us? People may not know why we think that's funny. Okay, please explain. This is funny to us because that was very low effort. Yes.

Trying to contact 25 people and being like, well, I guess we're done. I guess no one wants it. Is so low effort as to be funny to us. So carry on with the story. What was interesting to me about this was that like these two founders had a vision in their head. And the second that the path and the startup didn't line up with. this vision in their head, which was that, well, I think this idea sounds good. Well, I see fun of this idea. So everyone I talk to must think this idea is good. They got a little freaked out.

But then the second thing that I love is that like the instinct to talk to startup founders, it was like I want to vet this with startup people often because I feel like it's easier to sell them, even though this isn't a problem that startups have. The overarching thing was like, this was not even rigorous thinking. Like, no. Like, where these people used to work, if some, when they hired, said this to them, they would, like, laugh at them. Yes. They're doing it themselves.

Yeah. Why do they do this? The version of this, I see a lot, is people, the way they start with their company is to cold email a bunch of people on LinkedIn. They're like, okay, we're doing our startup. We're going full time. Well, so cool. Well, what are you doing?

Well, we LinkedIn in mailed. We spammed a thousand people. And we only got three responses. So I guess no one wants this. Yes. And that doesn't work, friends. Like, that's not sufficient. No.

This is very superficial validation that people are doing, right? And so I think people do this because no one told them differently. Actually, here's another for you on this topic. I think that a lot of people are trained as PMs and they're trained to do user research. Yes. And being trained to do user research, I remember taking a user research course in college, is you're trained to sort of like interview people

rather than sell products to them. Yep. And if you can't even interview people, you're not really sure what to do. And so I think my argument is if you've been trained to be a PM or trained to a user interview research, you struggle with getting first customers

because the skills that you learn to do this research don't help. I also think that if you come from a big company, either in product or engineering, more often than not, you've never solved your own problem. Like, you're working on other people's problems. And so I think that your instinct when you start a company is like almost a consulting insight, I need to go around, I need to talk to a lot of people, I'd figure out what their problem is, and I have to solve it.

Which I think is tricky because it resembles what you did in Big Co, but it probably doesn't represent what the founder of your Big Co did. to start their big company. It's like, who should you copy? Like yourself, employee 10,000? Or what about employee one? What did that person do? So, you know, you talk a little bit about this concept of when people pivot quickly.

They're not building the muscle of building conviction. Like, talk to us about that. You know, we have a few different metaphors. I'll mix them. So one of the metaphors is what constitutes a high quality rep? Yes. What constitutes completing a full pivot cycle. Yes.

And to learn anything, you need to complete it all the way. Yes. So again, like being like, we built a product. We spammed 10 people on LinkedIn. None of them replied, let's throw it all in the trash. I am arguing that is not a high quality rap. No. You didn't do anything.

You didn't really do anything. You didn't learn. It was sort of just like a waste of everyone's time. You did spend time. So that's fair. Okay, you waste a time. And so, congrats.

The metaphor I sometimes like to tell people when they're pivoting is the most important customer is yourself. And the founder psychology thing you want to do is build conviction in your own mind that this thing is worth working on. Yes. And so it's not to make investors happy or your YC partner happy. Yes. Or whatever.

It's to convince your brain that more time spent on this idea is time well spent. Another way I like to think about that. is to convince yourself this customer is worth helping. Yeah. Like you're going to enjoy spending time with this customer. And I find a lot of founders kind of want to skip that part. Convictionally. Yeah.

Oh, I just want to be in this industry. I just want to, I just want them to buy my thing. I don't want, I don't like, don't talk to me. I don't really care about just buy my thing, make my number go up. And I want to raise my series A. It's like, and so in terms of like founder personality traits or things you can develop, I think a lot of times how good of a programmer you are is one thing, how good you are at sales, how good you are at fundraising.

All these things are like, you know, important to. But someone that has low conviction and struggles to ever build conviction on anything, even if they're great at all those other factors, not going to make it. Isn't that crazy? Versus there's people that are worse at some of those other things. Imagine this was like a baseball card of their skills. Not the best programmer, not the best salesperson, not the best fundraiser. but very high conviction and able to focus their energy one direction in a superhuman way,

those people didn't succeed. Case in point, Justin Kahn. Let co-fender. I totally agree. And what's funny is like every good startup team has at least one of those people. You need one. Yes. Yes.

You need that. And the too cool for school teams where it's like, oh, no, like I can't be too into anything, right? Yeah. Like, my bar is super high. It's like, sorry, you'll just, you'll pivot to you run out of speed. And so, like, let's talk about exactly what conviction means. I think it doesn't mean believing in things religiously exactly. It's more of not letting yourself get blown off course.

So this happens to us a lot. We've seen this at YC. A founder is working on an idea. They think it's going well. They go to fundraise. The fundraise is hard. What happens if you're not high conviction? Yep.

Got to pivot. They give up. So if just meeting within investors causes you to give up on your idea, by definition, I'm arguing you don't have high conviction because you're blown off course. If every time you talk to a new customer, you decide to change your product, that is low conviction. You do not have conviction. Let's go back to the investor one. The thing that I hate about that investor one is that if you look at the history of really big companies,

so many of them, most investors thought that the idea was horrible. Yes. So it's like empirically, a lot of investors thinking your idea is horrible is not necessarily a bad sign. Correct. It's not necessarily a good either, by the way. No, no, no. We're not arguing, hey, if it's bad, then it must be good. We're not saying that.

It's more of a neutral. It's not a key indicator either way. But when you take it as a key, when it's the only key indicator. Yeah. Oh, it's so. It's almost like when you spend all your time trying to triangulate what other people say is good, And that's how you decide what startup idea to work on, you're going to have a bad time. So I think that I've been trying to unpack why do people do this.

And more specifically, like, why do people kind of think logically and rationally in their job and then come to their startup and just their quality of thinking decreases by 90%. And, you know, you have I talked about this before. You know, a big thing is fear. And in the context of the YC batch, I noticed a big thing specifically related to fear is literally like fake information. You know, I had a company told me like, oh man, well, we started looking at this problem and realized it's going to take a little while to build. And, you know, we looked at our batch and 75% of the companies already have launched products that are growing. And we were like, wait.

Wait, wait. Pause. I was like, he said it with such conviction for a second. I was like, wow, that's a good job. We're killing. 75% already watched. The badge hasn't started yet. And then I was like, wait, like, why do you, like, why do you think that?

And they were like, I just assumed. I was like, wait. Just make a shit out. Yeah. And I was like, you can look. And this is what's funny for the founders that read a lot of Twitter or Reddit or blogs is they will take something, you know, anonymous ArtVark 42 say as like gospel. and base their entire life philosophy around it.

Don't do that. Especially when you can look up the real answer. You can tell which company, when you're in the YC Badge, you can tell which companies are launched, which ones are. The other one was, well, an alum told me I won't be able to raise without $10,000 in MR. And it was interesting because I had to sit down with this founder

and say really simply, some companies entered the batch with a post-list. launch product with users, some companies learned to the batch with an idea. If you were a rational investor, would you judge those two different companies with the same exact rubric? No, of course not. And I was like, okay. And if an investor did, would you not call them kind of dumb and maybe you wouldn't work with them? We're like, yeah. So then why are you doing that? Of course, the expectations are different from something that comes into the batch with just an idea. But I think that these kind of false expectations create the fear and then the fear creates the bad thinking.

And then it's like, once you're in bad thinking, you're kind of fucked. I love that technique that you just mentioned. I like to do this one sometimes too when someone is trying to get a first customer. Yeah. Which is like, okay, in your past job, your team evaluated different software to buy, right? Yes, yes. And I'd be like, so you have actually. been on the other side of the customer conversations a lot.

Yeah. So which of the sales tactics that you're trying would have worked on you? Like, how often do you respond to cold emails on LinkedIn? Yes. Oh, never. Okay. With your name kind of poorly replaced in the template. Is that?

Like. And suddenly their brain, the gears in their brain re-engage were like, oh, we evaluated things all the time and we would do this and I had these. Like, like, so basically, you're actually an expert at understanding your customer. because you bought a lot of software on the other side of the table. Yes. What if you just tried to come up with tactics

that would have worked on you and would have made you buy your product? And they'll stop and be like, I never thought of that before. Yeah. And so that's actually a really great technique is to remember back when you've been on the buy side for stuff.

Yes. And think about what would have appealed to you or got you over the line. And then that screens out a lot of this junk because the low effort pivots if you run this thought experiment they'd be like oh yeah I would never buy this I think what's so funny is like

when the founder has that realization oh I actually am an expert in this like oh I can actually lean on my expertise the thing I often say next is like and that's why we funded you like yeah like it's like almost like they didn't realize that we funded them because they knew something about the topic

they were pitching and then when they want to pivot really clack we're like wow now you're moving into an area you know nothing about and we have to like Hey, remember? Remember, you know, you know stuff? Like, others will respect that too, like your customers. So, no, I think this is, it's so tricky because fear really just fucks everything. But I do think this is one of the reasons why I like the new IC Standard deal.

Because I think that before founders would be like, well, if I don't reason Dema Day, I'm fucked. And now I can just see to them. It's like, look. imagine you don't raise a indemnity. You have half a million dollars. You're fine. Like, there is no gun. The only gun to your head is the one you're lifting.

Because you keep putting over and over again, and you never build conviction. Like when you're low conviction, money ain't going to. No, money's not your problem. So sometimes it's like, hey, founders, just put the gun down. All right. So we often encounter these companies, and we've talked about this before, companies that get into pivotitis, right? Got a bad case.

Bad case of pivotitis, right? And I think what's interesting is that. that like a company that will build something, learn over a period of time and then pivot, will often pivot from a place of knowledge and like actually continue to make forward progress. But we also see a different version. How would you describe that version? Yeah. Have you heard the term random walk people?

So random walk is where you use like a random number generator to decide which direction you go. And basically when you random walk, you actually never get anywhere. Like imagine a starting point and then you walk one direction and you roll the dice and you choose a different direction and you do that over and over again. Yep. You never get anywhere. That's kind of like emailing 25 startups and asking them if they like your idea. A little bit. It's a little random, right?

Do that again. And then do that again. Yeah. And what happens is imagine you're like, you know, in a rowboat in the middle of the ocean trying to get back to land. If you just keep changing direction every once in a while, you're never going to get back. You're going to be lost at sea. And so you kind of have to get on a vector that even if you have to change a little bit, there's some forward progress you're making in some specific direction.

And I think that what we see that's so unfortunate is that when you do that random walk enough, you just run out of energy. Yep. And, you know, I always see it like somewhere in like one and a half to two years. If you don't feel like you've learned anything and you've spent two years kind of doing the thing, one, your experience isn't going to be good. Two, you won't feel like he used the time well, but three, it's going to be tired.

And for no good reason. You can be tired for no good reason. Well, you've never sunk your teeth in anything. So it's like you feel like you've been running a race. But if it's like, so what have you learned? They're like, well, learn what not to do. Yeah. Like it's harder, it's kind of hard to articulate why that was a good use of your time.

Yes. No. And I think that what's sad is that oftentimes those people have a very bad memory of startups, right? Yeah. And I wish they didn't. Like, the folks who learned and didn't succeed are often motivated to go out and do it again or go work in a company in that space. Like, this is an additive experience in their life, even if their shop didn't work. The ones that either random walk, like, they realized, man, this probably wasn't to get used to my time. So anyways, I think that the last point I always like to bring up here is another version of this kind of random walk or email 25 people then pivot is like launch a product that will help no one. Yep. And then pivot. And in the founder's mind, they'll say, well, I launched an MVP and nobody wanted it. And we talked about this earlier. It's like, is it an MVP?

Yeah. MVP is one of those terms. where people say it so much, it's assumed that there's an agreed upon definition. Yeah. But when you ask for details, I am not convinced there's an agreed upon definition of MVP. So what's your definition of MVP?

Well, you know, I think that I used to not assume I had to define it narrowly. But now that I think about it, if you can't get anyone to use your MVP, it's probably not an MVP. Well, it's not the V. We're missing the V, which is fire. Yeah. Like basically if it doesn't work for anyone, yeah. If it's hard to argue that is viable. No. And like shouldn't an MVP, it seems like the cool thing about an MVP is you can do things that don't scale and cheat. Like you can make it, you can kind of will it to work for one person, right? So the fact that it doesn't work for one person usually means that like you weren't even trying to make it work for them. Like you were trying to do something else. This is a this is something that comes up a lot when I'm reading applications or in interviews for specifically. Specifically developer tools.

You ready? Yes. Yeah. It'll be like, oh, cool. So I built this tool and it helps you code and you're way more efficient and it's better and it's, you know, we're building our MVP and like we're emailing people on LinkedIn now. What is the question I asked them? Do you use it yourself?

Yes. I will say, great. So tell me about your usage of it. Yeah. And they'll be like, uh, they'll be like, okay, so let me get this straight. This is helping programmers and you're outselling it. You're trying to get stone cold strangers to use it.

But it's not good enough for you to use yet, right? Is that what you're saying? Usually it's like, well, it doesn't have. Like, they can list the thing, well, it doesn't have this, this. And I mean, like, I would never use it. And so the argument, the earnest point is you should at least be able to use your own tool. Yes. And be proud to use it or feel like it's providing some value.

The V and the V. It's viable for you. Yes. And if you can't even get your, you can't bring yourself to use your own product. it's a little weird to be trying to sell it to people. More than a little. More than a little. And so that should be the bar for a lot of folks,

is that they are willing to use their own product. Yes. Right? That's a good bar for a movie. Especially if it's solving your own problem, then like at a minimum. Yeah, that doesn't apply. There's some, that doesn't apply in some cases.

But for a lot of things, at a minimum, you should be able to use it. So, yes, so once we started looking at it this way, I started realizing like how many companies never build an MVP. Because that's like, it's typically seen as kind of like the first real baby step, right? And how many folks never get there?

They never made one customer happy. And sometimes when I talk to founders who have these big, high-fluid plans, like I bring it back to like, can we just one? Can we just go? One. You know, the path to 10 million happy users. Yeah, let's talk about that later for today. How about one? One.

And, you know, you can't do that. Like, you can, you can, everyone can do that. Yeah. So maybe the long story short here is that, one, it's going to take maybe longer than you think. So don't have expectations that screw you up. Two, fear makes you think real bad. Like, don't let fear turn a really smart person into a not very smart person. Three, man, it helps to solve your own problem.

and then to be your first customer. Yeah, that's a good bar. At least you can say you did that. Yeah, if you're doing a random log, maybe you start. And then four, like, understand that, like, you're got to do, you called it a good rep. Make the analogy, because in lifting, like, make the analogy. Yeah, I think it would just be in any kind of exercise or movement if you want to build strength. You want to, like, have good form.

Yeah. And you won't get better if you're forming. is bad or you might even injure yourself actually. Right? Like if you want to learn, I don't know, how to swing a golf club, and your form is bad, A, you probably won't learn.

And B, you might injure yourself. Yeah. And you're not gonna have fun. And you're definitely not gonna have fun. And so you kind of wanna have good form when you're trying to do something that's hard. We're in a good rep. I like it.

All right, man. Great shot. Cool. Thanks, man.