Demystifying Y Combinator

[TRANSCRIPT]

0:00:09 - (Matt): Welcome to podcast awesome, where we chat about icons, design, tech business and nerdery with members of the Font awesome team.

0:00:24 - (Dave): Awesome don't make something awesome.

0:00:35 - (Matt): I'm your host, Matt Johnson, and today I'm joined by Font awesome founders Dave Gandy and Travis Chase as they recount their story of being accepted into the Silicon Valley tech accelerator y Combinator. They share some of the things that they learned, mistakes they made, and at the end, they even give a little bit of advice to aspiring y combinator entrepreneurs. When I think of Y Combinator, and I honestly don't know much about it other than what you've told me, what comes to mind is that comedy series on HBO, Silicon Valley, when I think y Combinator.

0:01:17 - (Matt): So why would somebody want to do y combinator when they could just get to work and work really hard at their, like, what's the value of it? Secondarily, I guess, is it anything like Silicon Valley?

0:01:31 - (Dave): So first up, the most important question. Yes, there are many things about it that are similar to Silicon Valley. As a matter of fact, when we were at YC, that was Silicon Valley's first season. That show was their first season, and it was so much fun to kind of be out there and be in the middle of it because neither Travis nor I are from Silicon Valley and that's not really our home. But it was just so much fun to be out there when that was going on because you got to see the echoes of truth, right? None of it's based on any specific thing, but there's this general understanding of a lot of it is very fair, kind of a lot of the jokes and a lot of the criticism. There's a lot of fairness going around there to some of it's unfair, but in large part, it's a really good lampooning of some pre comedic situations.

0:02:15 - (Matt): We're making the world a better place.

0:02:17 - (Dave): Yeah. Where everybody has to say that, right? Everybody has to say, we're making a world a better place.

0:02:22 - (Matt): Are you really maybe within your company.

0:02:26 - (Travis): Or your addressable market size is $1 billion?

0:02:30 - (Dave): $1 billion. And the thing is to write those are actually good, relevant, important questions. Right. It's not so much the billion dollar answer that's the important one. It's the fact that you've recognized, you've thought about it enough. You see that there's a size that this business could become. It doesn't mean that you actually think it's going to be that in a week or whatever, but there's a notion of being able to think big enough because there's this weird problem that we've got in the world where we can get so focused in our individual lives, where we are right now, that we have a hard time seeing outside of it. And so that question, that billion dollar question, is really more a question of how can you imagine the world could be with what you're doing? And that's the important part. The important part is that you've been thoughtful about. It's not that that's the answer that's going to be correct, it's that you've been thoughtful about it and that you can think big enough where you can come up with a very reasonable answer, that question.

0:03:20 - (Dave): Because that's the exact kind of stuff we used to struggle with. We used to struggle with it because it seemed like such a dumb answer at the size we are, aren't we just making this stuff up? And the truth is. Yes. What did you think a startup was?

0:03:32 - (Matt): That's all it is.

0:03:33 - (Dave): That's all it is, right? All a startup is is something that's a lie that people believed long enough that it became the truth. And I say that I'm kind of making a joke there, right? It's not actually a lie, but it's something that doesn't exist yet. And because you believed in it and you kept at it, the important part wasn't just the imaginary fairy belief in something, right? It was the fact that you worked at it to see it become real. You saw the world, how it could be, and then you had developed enough control over it with your own skill set that you could see it happen so you're not dependent on somebody else. This is stuff that you can do yourself.

0:04:06 - (Dave): And so that question is so valuable for nerds like Travis, and I'm a designer, he's a developer. The question, the billion dollar question, is important not because of the answer. It's important because this is the way that if we're going to run our own business, we have to start thinking along these lines, right? Because we don't have the third heat, right. We don't have the business co founder. Right. Designer, developer, business co founder. It's just the two of us. And so we've got to pose as that, which means we've got to put ourselves in that place and be able to genuinely answer that question. Well, it's a good important question to be answered. The question of was, why combinator? Like, what is it?

0:04:43 - (Dave): And is it worth it?

0:04:44 - (Matt): Yeah, that was my next question.

0:04:47 - (Travis): A big part for me going to Y combinator is we applied, we thought they would be able to give us a lot of guidance on what we should be doing. And when we got there, what we learned was how to learn how to trust our gut to test those theories, to build stuff customer wants. And it seems like they always say, build stuff that customers want.

0:05:08 - (Dave): Make something people want.

0:05:09 - (Travis): Make something that people want. And that seems so common sense, but so much of it, that's not how it rolls out in business. And so they constantly focus you down into make something people want. And you do that by building things, listening to your customers feedback, talk to customers.

0:05:24 - (Dave): The second thing they say first is, build something people want. And then you got to know, well, how. And the answer is, talk to customers.

0:05:31 - (Matt): Yeah.

0:05:31 - (Travis): And it also gives you one. It gives you going to Y combinator gave us tremendous focus. We both have families, and so it was a sacrifice for us to go off and live someplace separate from the families and not have those responsibilities at home. And our wives are superheroes for picking that up and really helping us out, but that we were able to focus just strictly on the business for a very concentrated portion of time.

0:05:53 - (Travis): And you're around a community of people struggling with the same stuff and doing the exact same things. And so you can throw ideas, you can talk about struggles. Come demo day, we're all super nervous, and we're like, we have a good story to tell, all this kind of stuff. And people would go around and go, oh, you guys are fun.

0:06:10 - (Dave): Awesome. You're fine.

0:06:11 - (Travis): And it was good for us to hear that because we weren't necessarily feeling fine. We were just as nervous like everybody else. We did happen to have a very big brand name.

0:06:20 - (Dave): Well, at least with that crowd of.

0:06:22 - (Travis): People, we had a very big brand name. But we're just as new to this as they are, right?

0:06:27 - (Matt): Yeah. Well, I think it says a lot, too, that I'm thinking about you saying you were taking a risk by going out there, and I've heard you say before, Travis, that it's sort of like a young man's game to do, like, the startup again and try and build something up. But I think it's sort of a testament that you guys could be successful feeling like you had those constraints, like you knew that you had a limited amount of time to really give it a good go because you've got responsibilities.

0:06:54 - (Matt): There's things going on.

0:06:55 - (Dave): Well, I'll tell you what. For as much as youth and vigor is an advantage, age, experience and intuition is a bigger one. So a lot of people think that the average age at y combinator would be something like 21 or 22 or something like that. And it turns out the average age is 32. So that means for every 20 year old there, there's a 45 year old. And that was our experience. It was far more age diverse. And at the time, we were right smack in the middle. That was a great age to be there because we had seen enough in the real world and done enough.

0:07:27 - (Dave): But we also were old enough that we had a solid idea of who we were and who we wanted the company to be. Right. Because what we did as a company, the product we made, was secondary to who we were and who we wanted the company to be. But the question of why would a company our size, why would we want to do this? And I think the best description I have for Y combinator is that it's business trade school. So you've got Harvard MBA, right? That's not trade school. Right. That's a very specific. It's very theoretical. And you get a step back and look, lots of case studies, and it's a really, really good thing to do. But the cool thing about y combinator is that you're learning by doing.

0:08:05 - (Dave): Everybody there has a business that they're running. Everybody there is learning while they're doing it right. You're building the airplane on the way down, and that's what Runway is. Right. Runway is the amount of time until you hit the ground. And so you're building that Runway on the way down with a whole bunch of people also doing it, recognizing, and you've got just enough kind of support there with the people that you meet that you recognize.

0:08:23 - (Dave): While this, what we're doing now might be abnormal to a lot of people on the outside world, here with our people, this is totally normal, what we're doing. And it turns out it's not as risky as we might have thought. It's not as hard as we might have thought. If you do a few basic things, you might be able to pull it off. And so I think that's one of the things humans are. Humans, how we calculate risk, we tend to be more risk averse than is actually reasonable for most risk. And then there are people that tune their risk way too high in life, and lots of problems ensue. But in general, for the average person, we don't take enough chances in life, right? And there's this weird thing in life where you tend only to regret the things that you don't, the shots that you don't take right in the end, you rarely ever regret that. I tried it, and I failed. You almost never end up regretting it, because it turns out in the end, a, you learn, oh, I can do that again, the failure. Actually, failure isn't failure. Failure is just, I learned something on the way to figuring it out and getting it done right to begin with. So this notion that success and failure even exist in the way we think of them is also wrong. That's what y combinator was really good for, was a lot of ways just the people around you to recognize, oh, in the right crowd, we are normal.

0:09:37 - (Matt): Right. One of the things you'd mentioned once, Dave, that was interesting, is that I don't know if it's like the folks that decide on the companies that they're going to accept to the program or how that works. Maybe you can explain it, but they really are betting on the team of people rather than the what of the product or the idea. Can you talk a little bit about that?

0:10:09 - (Dave): The most recent round of YC just wrapped as we're recording this, it just wrapped the winter 2023 batch just finished this past weekend. For that batch, they had 20,000 applications and they accepted 1.4%. If I remember Harvard's acceptance rate, it's got to be around. I need to look it up. It's either 5% or two and a half percent. Whatever it is. YC is harder to get into now than Harvard is. And of those accepted folks, only 52% were accepted with just an idea and no product.

0:10:41 - (Dave): So they were a team. It was just the people. And that's all they had the ability to make the bet on. Combinator believes that they've gotten good enough at being able to identify who the right people are, and they know that's the bet. The bet is not the idea. The bet is on the people. If you look at stripe, one of the more successful, they're still private, one of the most successful YC companies. The idea didn't matter. I mean, Paul Graham gave them the idea for we need an easy payments company that works for devs the way that they want them to work. And that's the whole idea. And so in a way, what you're looking for is the right people.

0:11:12 - (Dave): The idea, if you keep spinning around long enough, you'll find a good place, because ideas are actually the easiest part. Even great ideas are the easiest part of a startup. So the hard part is the right people. So what you want to do, even early on, if you take the long game as an investor, the long game is, even if this idea doesn't work out, for this person, this is the right person and I can tell. And so I'm going to keep betting on them because I know that it's going to hit at some point. And that's the thing that I think Y combinators really, really cares about as they're making those additional bets. And so YC makes those new bets. They're betting more and more just on the people, even not an idea.

0:11:46 - (Dave): The advice that vcs always give each other know, bet on people most, but in practice, it doesn't actually tend to work.

0:11:53 - (Matt): That's more the idea. Can we get a return on our.

0:11:57 - (Dave): What's my tam? What's the total addressable market? How big could this be? We got to make sure we get FOMo in there all of the way that you do the VC dance, all the pieces involved in that, and it's neat to see them really going off of the team and off of the people.

0:12:14 - (Travis): And your question about how it kind of worked, at least I don't know if they've updated since COVID and that kind of thing. And their procedures may be a little bit different, but for us, you send in an application and they kind of determine from there whether you get.

0:12:28 - (Dave): We had to do a video. We did a video, yeah. Of who we were, what we're doing.

0:12:32 - (Travis): It's kind of like a follow on. And then you get an invite out to Mountain View and you actually go to the offices and you interview in person. Interview in person. And they'll have three partners there. And it's like a 15 minutes interview. And it doesn't feel like 15 minutes.

0:12:49 - (Dave): Oh, my goodness.

0:12:50 - (Travis): Feels like 30 seconds.

0:12:52 - (Dave): Oh, man. Yeah. So this was, this was not our first interview when we went out to interview with YC. So we applied and we got in. We were like, that's amazing. Or that we didn't get in. We got the interview, but this was not the first YC interview I had ever done. I want to say it was back in 2007 or 2008, the first startup I was ever a part of. My co founder, and I got the invite out. We did the interview, and I will be as polite as I possibly can and say that we.

0:13:17 - (Dave): Well, he's the royal way. He was the CEO. We did not do well in the interview. We were not prepped at all for the hard questions at all. It was like he thought he was going to fly by the seat of his pants and do this. And it was a really, really good object lesson for me specifically. So when we found out we got into YC, there are those moments in life where you are given a shot, right. And when that happens, you leave nothing on the table.

0:13:46 - (Dave): You put every single thing you have into it because this might be your shot. We don't get that many shots in life. We don't get that many shots. An interview at y combinator, that's your shot. And so if you go there and you get everything you have with what you have and who you are right now, and you don't get in, that's okay. You left everything you had there.

0:14:05 - (Matt): You're not going to have regrets.

0:14:06 - (Dave): You can't have regrets. I mean, you can, you can't have reasonable regrets, right? You can learn from it. You can try to do more things. Right. Those are valuable ways to respond to it. But you shouldn't, anyway have real regrets about that, because if you live your life doing what you think is right and working, when you see those chances arise, then there isn't really anything to regret. And so we went out with a very different mentality this time, and we stayed with our childhood friend that we have literally known since we lived in a block away from each other back in fifth and 6th. Know Travis and I are, we've been friends since I moved on his block in Carl Junction, Missouri, when I was in fifth grade.

0:14:43 - (Dave): And Travis and our other friend, Ryan is in 6th grade. And so Ryan, it's funny, Ryan then ended up going to MIT the year before I did, we both majored in mechanical engineering. We both lived on the same floor in college and are great, great friends. When we went out, we stayed with him, flew out there and stayed with him, and we went out a couple days early. And Ryan is the right person to be staying with for this because Ryan's experience, we were both mechanical engineering at MIT.

0:15:06 - (Dave): When he was done, he went out to Stanford, got a degree, and got his master's in biomechanical engineering. Then he worked in the medical device startup. Medical device startups has his name on 20 or 30 or maybe more patents by now than that. Then he went to Harvard Business school, and then he worked in venture capital for medical devices, and now he's working on his own medical device. So you want to talk about how fate you get lucky, right?

0:15:34 - (Dave): We're all nobodies from nowhere, but because we had a group around us of like minded people, it's really, really awesome. What you see happens when you get that group of people who kind of are able to coalesce. So we went out and he grilled and, you know, Travis and I, I'm a designer. He's a developer. The question of how. Yeah, but how is this a billion dollar idea, right. We just thought was the most asinine, in some ways insulting question, because you're clearly only all about the money, and I'm also the kind of person, I'm not ever going to be able to answer a question like that without telling the truth.

0:16:07 - (Dave): Right. Not just what I think is true. Right. So it's not just something a random idea I made up in my head. It's something I really think that this can be done. Right. I can't answer a question like that, that I don't truly and honestly believe how we could do it. And so it was really fun being out there with Ryan because he just kept asking that question, kept asking that question, and we had to get a better and better and better idea of how we answer that correctly.

0:16:31 - (Matt): So how did you answer it correctly?

0:16:33 - (Travis): Well, funny enough, so we go into the interview, and after it's over, you kind of sit down while they call in the next group, and then when they're done, you kind of leave. And so we thought, okay, we gave it our shot. We did best.

0:16:48 - (Dave): It was a good interview.

0:16:50 - (Travis): Dave, I and Ryan, we were going to go up into wine country and see Napa and all that kind of.

0:16:54 - (Dave): Stuff, said, hey, because we left everything on the table, we could enjoy the hell out of it before we know the results. Right now we can just enjoy the fact that we knew that we had left nothing on the table. The interview was okay, but we'd left nothing on the table.

0:17:07 - (Travis): And so then they asked, hey, could you come back in a few hours and talk to a second group of people?

0:17:14 - (Dave): Which we'd never heard of that. Yeah. We had never even heard of that ever happening before. Sign.

0:17:17 - (Travis): So we got a second interview.

0:17:20 - (Dave): Well, it's not the best sign. The best sign would be, you're in. Right? Already done. You're in.

0:17:24 - (Matt): Right.

0:17:25 - (Dave): So it was a little bit like, how should we read this situation that we've recognized?

0:17:31 - (Travis): There probably was something there, but they had some extra questions, different mentors that had more experience in our space to then come talk to us. And so we spent that time, and ryan's like, all right, let's go. And we went to, I think, the mountain view public library. And we just started thinking through the questions we had already gotten asked.

0:17:49 - (Dave): Better answers. Better answers.

0:17:51 - (Travis): Better answers or different answers or. Okay, well, let's think about.

0:17:54 - (Dave): Okay.

0:17:54 - (Travis): The idea we were going in with at the time was, I'll never forget this, because it was like, okay, where could this go? And so one of the things we always compared ourselves to was adobe typekit. Well, type kit at the time, and then adobe's bought it and adobe type kit, now adobe fonts. But it was like, okay, so what is that worth? Well, adobe's a public company, so ryan's like, hey, let's look up their financials. Let's see. Okay, if you were to be that size, what would that know? And so it was just really know, really good, especially for me to go through and think, okay, look at the comparables. Yeah, what are your comps? What could you grow into?

0:18:32 - (Travis): How could you get there? How would you layer on top of that?

0:18:35 - (Dave): How big is that? How many people do we have using font? Awesome. Right now, those are all prospective users. This is the group and the following that we have already.

0:18:43 - (Travis): And so we were able to go in that interview, you, funny enough, that's one of those questions when the first question was like, how do you get to a hundred million dollar company? And we had a pretty good answer for that. And the shake of the head was like, and granted, dave and I are sort of thinking, man, we'd love to be a hundred million dollar company. And it's like, yeah, I can see that. How do you become a billion dollar company?

0:19:01 - (Travis): And we had an answer. We had an answer through comparables to Adobe type kit ideas we had going forward, how we could build that and if we could convert x amount of fun, awesome for users and all that kind of stuff. And it's kind of like the shake of the head, whether our answer was legit or not was. The point was that we thought about it. We thought about how is the path we can go from where we are now with a real product and real customers, albeit a few of them?

0:19:27 - (Travis): Do you see a path where you can get that to where it's a company that employs a lot of people and has value, bigger value in the world. And that was a great exercise and owe a lot to Ryan for really helping to prepare us so much, prepare our minds on how to think about these things differently.

0:19:44 - (Dave): Yeah. And that's really what YC is at its core is the real education that you get from YC, is them helping you see from the investors perspective how they invest and what they look for. So you learn what they're looking for, their priorities, and then you learn and you get, oh, okay, you really do need that answer because that's actually important, right? Like people, vcs are there to invest other people's money and see a return on it. And you got to understand the venture capital business model. And the venture capital business model is not that every company makes two x and becomes twice as big.

0:20:19 - (Dave): It's not that. And so, understanding what that model is, how they make those decisions, that means that it helps you tailor your answers, but it also helps you see, oh, if I want to be a venture capital company, this is what I'm signing up for, too. Really, really up close, really in depth. And it's nice to have somebody to be able to help walk you through that. And so then, same way he was able to do that for us, then that's what they do for you before you're investing.

0:20:55 - (Matt): Those couple hours must have been a little bit stressful. You got together with your friend, and we're thinking about, okay, what are they going to ask? How can we come in more prepared? What was that second interview like for you guys?

0:21:08 - (Dave): Yeah, we really didn't know what to expect. It turns out that Kevin Hale, who's one of the design, he's got a design background. He's one of the founders of the design background, wanted to interview us, and schedule didn't work out to do it anytime before then, so they managed to fit us in. So when we came in, we had better answers to the questions than we had before that they asked. But ultimately, too, because he is a domain expert on this, he and I really got to talk, like, eye to eye and just question, question, answer, question, back and forth. And that was that connection. Right. So in any interview you're doing of any kind, you're not just looking to give correct answers, you're looking to connect with the human being that's sitting across from you, right. That you're actually connecting on more than just a factual information exchange level, but there's like a wavelength you're trying to connect on, and we just snapped right to it. And for any question that I did not have just the absolute perfect answer to, right, then, boom, Travis steps right in.

0:22:02 - (Dave): Travis stepped right in and had the answer. I don't remember which questions it was, but it was just like, boom, back and forth. Boom, both of us throwing in. And then I think Kevin Hale had a question at one point, I was, no, no, I don't think of that. I think it's this. I think this is the real truth underneath this. And it was this great kind of getting to just go back and forth on it. And when we walked out of that second interview, what did you think, travis?

0:22:24 - (Travis): I remember watching the other partners smiling at a lot of the exchanges, which, you know, that's a good sign, at least they're enjoying the know, especially when Kevin and David were really getting into know. And both, they're very passionate, so they're know the volumes rising in a good way. They're kind of smiling. I thought, you know what? Okay, this time we definitely put all on the. And so I remember telling my, like, when we decided to apply for YC, like, hey, we're going to apply for YC.

0:22:54 - (Travis): We want to do this as a business, but the chances of getting in are just so low. And then we know application, then we got to send in a video. I'm like, hey, we send in a video. But the next step is interview. I doubt we get an interview. And then we got an interview, and I said, you know what, it's really cool. This is going to be really awesome. This will be really good for us. But if we were to get in, I'm going to have to spend like three months in Mountain View, and we'll figure out what that means for us.

0:23:22 - (Travis): But the chances of getting in are.

0:23:26 - (Dave): That'S such a critical step for something like this, for both of us in our lives a little bit later. Can't just walk away, can't start a startup without making any money. We've got families, responsibilities, mortgages. Right? Like, we couldn't do that. So for both of us to take that step, I took the step with my wife, and I was like, look, here's the chance that we have before us. Do you think we should do it? Because in order to really do this, well, you need family all the way on board for something like this, right? Well, if you care about your family, if you care about your family, you need to have them on board. And we both were.

0:23:55 - (Dave): Well, Travis is always wise enough, I was wise enough to pose it that way because really having, because it's a lot. When we were at y combinator, my wife was seven months pregnant. The only weekend we could not be back was during demo day. We actually were not in San Francisco the entire time. We came back. Every couple of weeks we came back to see the family, but my wife was seven months pregnant, and we had to move during the weekend.

0:24:19 - (Dave): And I say we, she moved us seven months pregnant while I'm at demo day. The one weekend I couldn't be back, and she did that, and she took care of that. And so this is all the stuff that had to happen. So having family on board at the right moment, ahead of time, is the only thing that makes something like that doable. Because that interview, at the end of that interview, I remember thinking in 1000 different multiverses or if we had 1000 shots of this in a thousand different days, this was the best of all of them.

0:24:48 - (Travis): And walking away, both of us, the way it turned out, we both walked out. I thought, I don't know if we'll get in because it's really tough. I mean, there's a lot of good companies, a lot of good people, and it's tough and they see the best. But I thought we couldn't have done any better. That was the best of what we could.

0:25:05 - (Dave): Yep. So we knew walking away from that, I still remember we were able to finish our drive the rest of the way up to Napa. And I remember Ryan's really funny. He's got this little convertible we all barely fit into. Was awesome. And I'm sitting there in the seat and sun is shining, convertible is down, and I'm just sitting back there with my head in the wind, and I'm just like, you know what? We gave it everything that we had. And so even if we don't get in, we left nothing on the table. There's no regrets, whatever happens.

0:25:35 - (Travis): And we went and ate at a place near Ryan's place. And I remember we got the call where Dave got the call, and they said, we're in.

0:25:44 - (Matt): Yes.

0:25:45 - (Travis): And I was like, wait, what? Yeah, it's like, yeah, no, we got in. I said, you're.

0:25:49 - (Matt): It's amazing.

0:25:50 - (Travis): And so I walked out. So I get better cell service. I called my wife and I said, well, I'm going to have to live in Mountain Dew for three months.

0:25:59 - (Dave): Wow.

0:25:59 - (Travis): Because the next day we had to go to Y combinator. So those that all got in stayed an extra day. And they gave you like a little.

0:26:12 - (Dave): Is it is right. It's twice as hard, at least, to get into y combinator as it is to get into Harvard. Based on that acceptance. I've got. I've got mit on the resume and I've got YC on the resume. The YC one is the one that, in the end, has actually mattered quite a bit.

0:26:28 - (Travis): Quite a bit.

0:26:29 - (Matt): So if you were to back, say, let's say you guys didn't get into y combinator, what do you feel like you would walk away with? Because that sounds like sort of a pressure cooker thing.

0:26:39 - (Dave): Well, it's tough, because what is the right thing to learn at that point? The lesson that we might have learned is, well, we don't have what it takes. We went, we gave our shot, and we aren't able to see that reality happen. That's a real thing, right. That's a real response. And I suspect that might have been. We would have been out of money in probably another four or five months, and we would have had to figure out what to do with it. We were already talking about how to pivot to just taking on contract work because we can build all day long because we still wanted to work together, and we would have probably given that a shot and seen if that worked.

0:27:15 - (Dave): But in the end, the dream of a product company that we got to run and then we got to make the company design the company. Right. The most important part, we wouldn't have been able to do it the way that we wanted to. And so, I don't know, might have just gone back to just being regular designer and developer, working for somebody else, which would have been okay. Right. Because happiness in life is not a matter of outcomes. It's a matter of what you put in. It's a matter of what you put in the best that you do and that you're looking for opportunities, you're looking to grow, you're looking to be engaged, be passionate. But ultimately, more than any of that stuff, it's the relationships you build. Nobody can take that away.

0:27:55 - (Dave): In the world we live in, there wasn't really such a thing as failure anyway.

0:27:58 - (Travis): And with y combinator, one of the biggest values is they have access to investors. And so you go through the program, you're building on your company, you're learning a lot, and at the end you have demo day. You get to get up on stage and pitch your company, tell your company story to hundreds of people, some of the very best investors in all the world. You get their undivided attention for 5 minutes or whatever it is. I forget now. I think it maybe would have been 5 minutes. I don't know. It was very quick.

0:28:28 - (Travis): It was very quick. They prison on stage, so one person prisons on stage, and the rest of the team sits the side of the stage and just faces the crowd, which is a very awkward position, too, because I'm not sure what to do with my hands. I'm just kind of sitting there. We just had a team of two. Some of these people had teams of five. So there's like four people sitting there looking awkwardly at the crowd. But that allowed us to then have the opportunity to then talk to investors more about our company and our vision of the future and where we want to take it and even define further, even solidify it further in our own minds, what we were going to do and how this company was going to survive and provide value.

0:29:09 - (Matt): So you guys went the Kickstarter route. And did you go into this experience thinking that you do a Kickstarter or that you were looking for VC, or how were you thinking about that?

0:29:20 - (Dave): So first thing we were looking for, we needed to raise money because we didn't have other options. If we didn't have money, we didn't have a company that could continue, so we raised money at that point. The market is different now. There's a very robust seed stage market where smaller investors really looking for. The reason that I see, part of the reason they moved even earlier in the chain with just an idea and a founder is because there's already a very robust seed ecosystem for raising funds. So they moved earlier and earlier, but at the time there wasn't for us.

0:29:48 - (Dave): And so y combinator kind of worked. Is that so? We had a product, we had revenue, we needed to know how to raise money. Right. We're not from that background. If you don't understand the ins and outs of the VC model, there's a lot that you're going to be missing and trying to pitch them. And so YC basically kind of holds your hand through that process and helps you craft that pitch, because they know the notes of what people are looking for, how to package this up. And it's not that they change you, it's that they help you tell your story in a way that the crowd you're talking to wants to hear it, and they're very, very good at, so, and that's why I say it's business trade school. You're learning by doing, because you're getting all this on the job training for the very practical stuff that you needed. And so when we came back, we raised a seed round. There was one VC firm I really, really wanted to raise from founder collective in Boston. There's a lot of vcs out there who have partners who haven't done it themselves before, who haven't built a company from scratch before, who maybe they come from an MBA background or something like that. And so they're lacking some of the actual experience of how the sausage gets made. And so there's a lot that they're missing. Founder collective, the name, right? It's all people who have done it before, and they've got a great reputation in Boston and I've been wanting to raise from them for ages. And we felt really lucky when we closed that round. They led with us, was such a privilege, because they're the folks that have been on both sides. Right. I tell my kids, they're asking questions about something, and it's hard to trust sometimes when you're younger, your parents. I was like, okay, so which of us have been your age? Okay, it's me and you. Which of us have been my age? It's just me.

0:31:19 - (Dave): Right. And so it's kind of like that with founders who have, or with vcs who have been there before. They've been in both places, right. And so they know a lot of the stuff that you don't know. And there's a whole lot more likelihood of being able to help along the way. And not just be cash. Right. Which you certainly need, but to be able to be more than that.

0:31:37 - (Matt): Right.

0:31:38 - (Dave): And looking for the right kind of investors is such a key part of that stage, too. So we did that. That was fall of 2015. After we got back, we closed that round, I want to say October. And then we ended up about a year later, we ended up running the Kickstarter in December of 2016. We didn't use Kickstarter as a way to raise money for the company. Kickstarter, people think of it as a crowdfunding platform. I think that's incorrect.

0:32:03 - (Dave): I think it's really just a presales platform more than anything. It's a way to, before you have the product done and ready, be able to convince people to buy this thing. And I guess you can call it crowdfunding, but it's not. Right, because crowdfunding is where somebody gets equity in their money that they're giving. Right. You're just doing a presale, and so if the whole thing goes bust, you get nothing. We didn't do that trying not to raise venture capital. But what we knew was we always had the intuition that we want to be, if we can be financially independent as a company, obviously, we want to do that. Right. Within reason, you want to keep growing. Right. And so after we did, the Kickstarter launched version five of Font awesome.

0:32:37 - (Dave): Started getting and changed it to a subscription model, started getting subscription revenue. There was a point at which we started getting approached to raise a series a as a company, and we looked at the numbers and what they were offering us. We'd have to give up a sizable part of the company for money that we just had to wait six months for. We saw the rate it was coming in. All we had to do was sit for six months and we'd have it because we had a very good, robust customer acquisition at that point, the company really building and growing really fast at that point. So we elected not to because we saw that we could be profitable, we saw that we could keep. The fewer third party dependencies you have as a business, the less likelihood that the rug is going to get pulled somehow or that something's going to happen, right? Every third party dependency is a business, whether you're talking software or design or you're talking business, right? Every single one of those is a risk. And so we just decided, let's stay as self sufficient as we can and still grow at the rate at which we're growing, right? Hire people, the rate at which we're bringing on extra new recurring revenue and grow that way. And that's basically what we've done since then. And since a lot of companies have had a lot of layoffs, we haven't had to lay anybody off, we haven't fired anybody.

0:33:43 - (Dave): There's been no transition within the company because of that, because we grew slowly, we grew steadily, and we're in a good place now. We're still very profitable.

0:33:51 - (Matt): That's great. Coming all the way back around full circle. The question, I guess would be, was YC worth it?

0:34:10 - (Dave): It's an interesting question. It's an important question for everybody to have asked about big things like this, right? It's because YC takes, for us, they took, I mean, I think the deal is where they still take 7% of the company, and for us it was for 120 grand. The deal is different now and there is more cash involved, but I think it's still the 7%, if I recall. But I'd say honestly, YC paid for itself in the first 30 minutes meeting we had with Kevin Hale. The level of experience, depth, understanding, to be able to be like, yes, this, no, not that, and to be able to really help us. Because the problem of this startup is always that you have more ideas than you can do anything with.

0:34:45 - (Dave): And being able to have somebody there just to be able to bounce them off of, who's got intuition based on experience, just makes that so fast.

0:34:53 - (Travis): And they continue. When you've been a YC company, you're always a YC company. And we have access to other YC founders to talk to. There's email lists that you can get ideas from or bounce questions off of. When you have a question of, hey, has anybody run into this before? And it just continues to. We.

0:35:12 - (Dave): I'm having a problem with this third party, with this third party vendor. Does anybody have a connect there? And almost every time out of the blue, somebody's dropping an email. There's a reply on the forum, right? Because YC has this great robust forum of all founders, we can still reach.

0:35:27 - (Travis): Out to partners and ask questions and they answer you to help us.

0:35:32 - (Dave): I know that if I dropped Gary Tan an email today on something, and I was concise about the question with a definite answer on something, he would get back to me same day. He would reply same day.

0:35:43 - (Matt): Wow.

0:35:44 - (Dave): Even today, how busy he is, right? He's running YC now. He's one of the great folks there.

0:35:48 - (Matt): So I'm thinking about the first experience that you had, Dave, was y combinator, and that it was a sort of a fail, sort of fell flat for somebody who's considering applying or they have an opportunity to go to YC and think back to that experience, what would you say to somebody? How can they be best prepared and how can they get the most out of it? And like you say, sort of leave it all on the table and be ready for it.

0:36:13 - (Dave): I'll say this, any job interview process, application process, there's the front door, you go in and then there's 1000 side doors no one tells you about. You are always looking for the side doors. So the other side doors you're looking for are, there are great resources now where people have kind of collected generally the kinds of questions YC asks. You need to know every one of those backwards and forwards, and every answer rock solid to every single one of those.

0:36:36 - (Dave): You need to go and find out which partners are going to be in that batch. You need to know about every single one of them. You need to know what their background is, you need to know what they do, because that's more chance that when you're in that conversation with them, that you can guide the conversation towards something that they have more experience with. The same thing that you're applying anywhere, right? Like you go and you find out who people are, you try to make real connections in any other way that you possibly can. Whether it's on Twitter, whether it's you inject yourself in their mentions or in some way, you engage prep. I mean, the biggest thing is prep. I mean, you've got to know your own business too, inside and out.

0:37:06 - (Dave): What's your growth rate? How many users did you add? What are you charging? What's your strategy? Like all of the basic stuff, because the first question they're going to be is, okay, what do you do? How do you make money? And if you've got a long answer to that, you don't know the answer right. Well, we're a platform that synergizes the backward overflow from.

0:37:25 - (Matt): We're making the world a better place by consensus.

0:37:29 - (Dave): Paxos algorithm.

0:37:30 - (Travis): Yeah, I would say. You don't want to just make stuff up. They've been there before. They've done that. They've seen a ton. You're not going to trick them. You're not going to bs your way through. You need to know. And it's okay not to have the answers to every questions, but even while you're there, you can think honestly about what you're trying to say and say, listen, I haven't thought about that before, but thinking about it right now, I would think honest and be a great listener.

0:38:02 - (Travis): Be humble, listen, learn, apply the stuff that they're telling you. And yes, listen to your customers. Find way to get feedback, find a way to talk to them and be flexible and mold your company in the direction that your customers within reason.

0:38:19 - (Dave): Right.

0:38:20 - (Travis): You know the business you're trying to provide, you know what you do best. But taking that feedback and being able to mold that into what your company is going to be, because that's building something. You're making something people want.

0:38:29 - (Matt): Yeah. One of the things you said earlier, too, Dave, is that the folks that decide on who gets through the front door of y accommodator and gets to enter the program, they're really betting on the people rather than just the idea. It makes me think automatically with other conversations that we've had, maybe you could speak to this. They must have a barometer of. I don't know, maybe they have a barometer of character, of how people work together.

0:38:55 - (Matt): Or do you think that it's that, or do you think it's that they have what it takes to go the distance?

0:39:01 - (Dave): I'll say this, you hear them talk about. So four people who did this originally. One, everybody knows Paul Graham, and there's also Jessica Livingston. So Jessica Livingston, from the stories I've heard, one of the things that she was best at was identifying character in founders. And that's one of the reasons why, if you look at their early bets, they found some phenomenal people to run these companies.

0:39:22 - (Dave): Right? They're like people with, even in the face of massive amounts of wealth and power, still try to do the right thing with it. You'd think that there's a group of people that will tell you today that's impossible, that as soon as you're a billionaire, you're automatically evil and there's no way around it. And that's a neat, naive thing to think because it doesn't actually work that way. And so I think YC at its bones has always had that as a part of the culture.

0:39:46 - (Dave): I don't know specifically day to day now how it plays out, but I'd be surprised if there still wasn't a hefty amount where they tried to rely on that in some ways. But the idea that they're not just about the product or the idea and that they're about the people first, that's going to change how you think about if we were going back today and we were in the execs, let's say we want to do it again, we're like, we know. You know what? We got no idea. As a matter of fact, we're going to purposely show up to our wife interview because I'd rather them tell us a good idea and we'll go do it and execute the hell out of it because it turns out many of those guys are going to have ideas they've been sitting on like Paul Graham did for ages. Where stripe came from, where all these places kind of came out of, that'd be just fine, right. And so then what we got to show is that we are people.

0:40:27 - (Dave): I think being a person of character, right. This notion of, and I don't think there's any way to get this across, but character really comes from all the places that you spend money to correct problems, right. In some ways, one of your easiest ways to tell your value system is what are you willing to sacrifice money for to see something made better? When do you choose something over money? When have you done something at great expense? Something we're always trying to suss out when we're interviewing people is it's not true for everybody because not everybody's had the same life experience, right? But some people have been through some pretty traumatic stuff where life has presented them with some really hard choices and they choose to step up in ways that show real character. Right. When you choose to do something at great pains to yourself and you choose it because you think it's the right thing to do, I think that's what you're kind of around the edges trying to sniff out as best you can.

0:41:16 - (Dave): Which is part of the reason why I think a 15 minutes interview, I still don't know how they pull that off. That's insane to me. We have a nine month typical process for finding new people. Right. At least because we really, really care about that a lot. So I don't know. I know it's a part of the bones. I would be shocked if it wasn't in some way a part of their debrief. Afterwards, I'd be kind of shocked. But I also know that it's highly dependent on who those partners are. And we get interviewed by the three partners that were our mentors during the batch, and I don't know if that. I suspect it's still structured that way because it's just too smart of a way to structure it, to give that up. But the people that you interview with tend to be the people that end up your mentors during the batch. And so that's worth knowing, too, right? You're not interviewing somebody who's going to have nothing to do with you. It's like going to college and only being interviewed by the professors.

0:42:02 - (Dave): Actually, that'd be a neat trick, wouldn't it? That'd be a neat trick.

0:42:06 - (Matt): So not everybody's going to get an opportunity like this, but you've learned a lot from the experience. So wrapping up, like if, I don't know, if you were speaking to a young entrepreneur, they're maybe not at a place where they are ready to apply for something like this, but from what you guys have learned, what should they be doing now to build their company?

0:42:24 - (Travis): Find a way to talk to your customers and build them something they want. It comes down that's hard to do. It's a simple concept that's very hard to do. But any way you can find a way to market your end, whatever solution you're trying to provide, you got to build something somebody wants. We started with open source, and tons of people use, and still use our open source product. Free is one thing, but when you want to even charge a dollar, that's a different contract with somebody.

0:42:53 - (Travis): And so listening to them and finding ways to provide what they want with what you know, as a business, what they think they want versus what you deliver, that ultimately works is great. What ultimately you deliver that really resonates may be not something they exactly asked for, but it's part of the conversation with them to try to figure out what that is they want. And listening to your customers, I think.

0:43:18 - (Dave): Another component, it's like asking a company what their core values are that will probably be so core they may not even be able to identify know. Travis skipped right past it, but it's the real one for the two of us that it's always been is have relationships with good people develop, not because you're going to get something out of it, but because that's what life is for. That's what life is about.

0:43:36 - (Dave): Those connections with other people that you can rely on and actually trust in the long run. Do that, do that. And if they happen to be people that are in a field that might overlap and someday you start a company with them, cool. But I think that's the core, right? Make real relationships with real people. Find a community of excellence wherever you mean. Honestly, that's what I mean. The biggest thing MIT provided is probably genuinely bad. It certainly wasn't the teaching, it was the people you were around it. The people that you happen to be sitting next to in class or there's a very reasonable shot, they go start a billion dollar company. I think that the people side of it, man, I think that's the long game. That's the long game for us as a company too.

0:44:14 - (Matt): Well, and you guys have said before too, that icons are just sort of, that's a tertiary thing. It's sort of like it could have been anything. I mean, you could have made widgets and you had the right people connected with the right character and a base set of skills where you could go and build something together and that, it's really about the people. Yeah, that's good stuff. Well, folks, the big takeaway for me in this conversation is that it's always about relationships. The quality of relationships between teammates.

0:44:44 - (Matt): Man, if you've got that, you can sure get a whole heck of a lot done. And it doesn't necessarily even matter what you're doing. I mean, we create icons and icon tech, just a tiny little thing in the corner of the universe. But we're having a great time doing it because you know what? We really like each other. Honest. So if you like what you've heard, why not pass this on to a friend? And if you don't mind, it would just take a second. Maybe you could tap on that five star if you're feeling really ambitious, maybe you give us a review.

0:45:14 - (Matt): As always. Podcast awesome is produced and edited by yours truly, Matt Johnson. The fun awesome theme song was composed by Ronnie Martin and audio mastering was done by Chris ends at Lemon Productions.

0:45:39 - (Dave): We're making the world a better place through Paxos algorithms for consensus protocols. And we're making the world a better place through software defined data centers for cloud computing. A better place through canonical data models to communicate between endpoints. A better place through scalable, fault tolerant distributed databases with active transactions. And we are truly local, mobile, social. And we're completely so mo low. And we're Moloso. We're lo so, bro. We were so low mo, but now we're mo low, so no mo so low.