If this is your first time reading, I recommend you start with my 6-month challenge and table of contents of weekly posts for the past 13 weeks.
tl;dr YC Startup School last weekend was great. Not amazing in blow-your-mind amazing, but met some great people. Been working out kinks in MVP v3 but it’s pretty set to go next week — no more doubts and roadmap guesswork anymore. But… I am beginning to have some doubts on the viability. I also did an interesting social experiment in rejection in the exercise of asking for a 10% discount on coffee.
On a non-startup related note, this week overall has kind of majorly sucked and been absolutely crazy in terms of my work hours vs. sleep hours, externalities like my tire completely blowing up on me on the highway and more. It’s been pretty terrible.
I think I’m running on 3-4 hours of sleep right now, actually.
I. YC Startup School 2013
II. Crazy week and crazy events
III. Thoughts on Cusoy’s viability
IV. Timeline to failure
V. Asking for a 10% discount on coffee
VI. Next week and key lessons learned
17. The Value of Community
A surprising number of founders said what surprised them most about starting a startup was the value of community. Some meant the micro-community of YC founders:
The immense value of the peer group of YC companies, and facing similar obstacles at similar times.
which shouldn’t be that surprising, because that’s why it’s structured that way. Others were surprised at the value of the startup community in the larger sense:
How advantageous it is to live in Silicon Valley, where you can’t help but hear all the cutting-edge tech and startup news, and run into useful people constantly.
– Paul Graham, What Startups Are Really Like
I. YC STARTUP SCHOOL 2013
So YC Startup School 2013 was this past weekend! It was pretty exciting and I had a good experience overall.
To be honest, I actually had some initial trepidation about attending the event because I was like, Oh man, that’s like an entire day of work that I’m missing because of this event.
But then I sucked it up and went 🙂 I’m glad I did, anyways.
Recaps and summaries
If you’ve been following the live webcasts on Saturday or the numerous tech press coverage that followed afterwards, then you probably already know all the great parts and tidbits about it. I’m not going to spend time to rehash them.
Here is my favorite resource on the event speakers and takeaways from Charles Feng.
My main takeaways
What are my main takeaways? These might come off as platitudes, but oh well…
- Storytelling is incredibly important. I’ve always believed this, but hearing Chase Adam of Watsi speak, just absolutely blew my mind. He had the best talk, hands down — which is surprising, considering he was the youngest speaker there. If you watch just one speaker, I highly recommend you watch his talk. He is a phenomenal speaker.
- Hearing how people started is always really interesting — and not only hearing that they suffered setbacks but also how they overcame them. There’s no concrete formula or “right” way to achieve success.
- Startups are a ton of work. A lot of lows, all of which aren’t talked about except after-the-fact, in retrospect — the speakers you see always have some sort of seemingly fairytale success. Who wants to hear about failures? Failures happen everyday, but it’s only people who have persevered through failures to overcome them to achieve success that are asked to speak and are written about in the press. Much like how history is written by victors/winners. Just how it is. Although, I’ve noticed there have been a lot of startup postmortems that have been written publicly this year — I actually think there might be more interesting lessons drawn from them, but it definitely depends what stage you are in.
- Other Paul Graham principles like do things that don’t scale. How it’s better to have 100 users that love you than 1000 users that simply just like you. Focus on product. Nothing really new here… fairly straightforward. You know what to do, so just do it. No excuses.
- Oh and there were probably 100 guys for every girl there. Oof. I felt a little self-conscious.
- It was just great to be in a community of people who were all there because they wanted to do startups (or are already doing them) and are entrepreneurially minded. Also, I assume the vast majority of them were there because they were planning to apply to YC. I talked to a bunch of cool people during the event and also at the after party — I actually think those conversations and relationships gave me greater value than these talks themselves.
… looking back, I didn’t really find anything particularly new and groundbreaking or anything really actionable from these talks that I wasn’t already doing. It was more of hearing others’ stories about the trajectory of their success and startups, which is good and cool too.
Paul Graham and Sam Altman office hours live on stage
What was really cool though was that Paul Graham and Sam Altman did an office hours segment, where they pre-screened 3 YC applicants and actually did their YC interviews live on stage, in front of 2000+ people! The first group, after they were done, PG shouted after them, “You’re in!” which set the whole room abuzz and made my jaw drop in surprise. I think that’s the first that’s happened… unfortunately, for the next two startups doing office hours, PG did not say that. But who knows — he may or may not have called them back afterwards.
It was just interesting to hear PG’s thought process as he asked these startup founders questions.
And before you ask / or maybe you’re thinking this, I ultimately chose not to apply to YC because I simply am not ready and haven’t launched yet so I don’t have any traction yet. Some friends thought I should’ve applied anyways, but I guess I have a lot of invisible scripts psychologically in my head preventing me from doing it, but perhaps I’ll apply in the spring. I just think I’m way too early-stage for that yet.
Ultimately, I’m functioning under the assumption that I’m going to have to rely entirely on my own savings and not outside funding. Which is totally fine — but that means I’m not spending any time whatsoever reaching out to VC’s, angels and investors. All my time is spent building the product and talking to users.
II. CRAZY WEEK AND CRAZY EVENTS
My tire just burned out on me
My tire completely blew out Monday morning when I was driving down US101 S to meet a user — so all the events that happened afterwards of calling roadside assistance, waiting for them to arrive, calling different auto shops to get price quotes, waiting in line at the auto shop (one of the most aggravating experiences in life, seriously), getting two new tires, etc. took up 7+ hours and basically my entire day. I was pretty wiped out.
Like it was nuts, I was driving like normal on the highway and suddenly my entire car was shaking and vibrating — I started to panic that my tire was going flat (I had this happen to me once in Houston and remembered the same vibrations with a sinking feeling in the pit of my stomach) and I prayed the car wouldn’t stop in the middle lane of the highway. I then slowly dragged it off to an exit and left it on the ramp shoulder — at this point I was literally going 1 mile per hour since the car was rapidly deteriorating and I was scared stiff that every inch it moved forward would be closer to its complete collapse.
There was a car behind me that must’ve been thinking I was some 80-year-old grandma who doesn’t know how to drive or that something was seriously wrong. I’ve never felt so self-conscious in my life.
By the time I brought the car to a complete stop, I got out and took a look. I just expected a flat tire, not one that had the rubber completely unravel with smoke emanating from it.
Here’s a picture:
Thank goodness I wasn’t hurt and nothing bad happened, other than my entire day just was dedicated to car stuff afterwards.
Then… once the tow guy got the spare tire from my trunk, I then quickly realized my trunk cable was loose and broken — therefore, my trunk wouldn’t close properly. It would flap up and down depending how fast I drove. Ugh, this was super annoying and again I had to drive like a slowpoke of 40-50 mph on the highway… didn’t get it fixed till the next day. My car is getting old, I guess, or I’m not taking very good care of it.
Great start to my week, right?
…But, on the upside, I rescheduled that meeting with a user to the next day and the usability testing went very well 🙂
Not sleeping very much
Then, these past 2-3 days I’ve been up till 6-7am in the morning, sleeping till noon or so and getting up to grab a quick bite to eat before getting back to work again. I have no sense of work/life balance and I ashamedly haven’t had time this week to go work out yet. (I did last week, though!) It’s pretty awful.
This week has been absolutely crazy. It’s like I’m working investment banking hours again. It might just be the caffeine (just started drinking coffee again — a couple sips will be enough to keep me awake to go all night). Either way — I love it and have never been so productive (or just “awake”) in my life. In the most recent memory, I guess.
…It’s 5:17am right now as I write this first draft of the blog post.
III. THOUGHTS ON CUSOY’S VIABILITY
This is a somewhat stream-of-consciousness rant I was thinking at 5:25 in the morning:
Successful people aren’t afraid to cut what’s not working. Be honest with yourself, and if you see a process or product that is sucking in more energy from your business than it puts out, don’t hesitate to quit it.
I’m going to extend the challenge by 2 months — to March 2014 for a total of 8 months duration, but I’m going to consider the challenge a complete failure if I don’t make a single dollar. Ideally, I would want to reach ramen profitability (to me that’s $1,000/month).
I have strong internal conflicts because on the one hand, this is a product that’s near and dear to my heart. But if I were to be completely honest with you, as a user I would never pay for this product. Not that my lack of payment means lack of value in the app, but it’s because a staggering 90% mobile apps in the App Store are free, as part of a larger trend.
Let that take a moment to sink in for a bit. 90%. Ninety percent of apps in the App Store are free. Geez.
It’s absolutely insane what the app landscape has come into — particularly for consumer B2C apps like mine.
I was thinking — well, what about premium services that I could offer? What about a freemium model? If I offered dish curation, a gluten-free concierge, would people pay? It’s something I definitely want to test when I launch. Again, I personally wouldn’t pay for such a service. (But I’m also a cheapskate and could eat the same meals everyday and not get bored.)
There are some gluten-free apps out there that are paid apps – that’s one way to go about it, but I hate paid apps because I myself have that free-app mentality. I personally very rarely buy paid apps. The free apps in the App Store have the most traction because it’s so frictionless to onboard users — there’s no internal debates on users whether or not they want to pay $4.99 or even $0.99 for an app. And these are iPhone users we’re talking about, who statistically spend much more $ on apps than Android users — it’s even worse trying to make money off Android users!
It’s horrible for developers and great for consumers. How do you find the middle ground? In-app purchases is one answer, and mobile advertising is just getting started — but quite frankly, is a terrible user experience with the limited screen real estate on a smartphone.
There’s also advertising. That’s how Yelp and GrubHub/Seamless do it. I am not a fan of advertising as a user though, but it’s a lot of companies’ bread and butter — but more importantly, requires that I have traction and growth before I even start to think about that. Makes a lot of sense.
Strong inner critic voices are telling me I’m starting to sell out and give up prematurely. But I am being firm on this. My goal is not to create a product that people want — it’s to create a product that people want and are willing to pay for. That to me is success.
In Cusoy’s sense, the paying “customer” is most likely the restaurant, business side. Like how Yelp and GrubHub/Seamless do it. But would I be able to get the app users to pay for it too, not just restaurants?
I am constantly burning money every day, I don’t have infinite runway and don’t have as rose-colored glasses to confidently tell myself this is a success even if I launch and get 1,000 or 10,000 users but with no money in the bank to show for it. Just the other day I was reading about Forkly, an app that got up to 300,000 users and $900,000 in seed funding but struggled to make money and after 3 years, is being shut down.
3 years! That’s insane. There’s no way I can be patient for that long, even with outside funding. And just shocking that they made a great app but no one was willing to pay for it.
But Melissa, you ask, don’t you think you’re prematurely having doubts? Why are you worrying about monetization and distribution when you yourself kept saying focus on value and users first?
I’m torn, I’m really torn about this.
I used to say — well, make something people want before you worry about monetization. Yeah, except now I know for an absolute fact this is a useful product that people want, even if it might be 100 rather than 100,000 people (for now, anyways). I’d use it myself. I do use it. Users I’ve talked to have found it immensely useful.
It’d be a great app for a social good purpose and to crowdsource everyone’s knowledge. But it wouldn’t be a business, per se. Would it? Probably possible, but probable? I’m not sure I want to mindlessly slave away for another six months or even years to find out.
Why can’t I find out sooner? My goal is to get even just $1 in revenue within 8 months. How hard can this be?
It’s going to be a bit tougher since now we’re approaching Thanksgiving and Christmas and New Year… everyone will be pretty much out of the office, on vacation and spending time with loved ones. I don’t think it’s a very opportune time to “grow,” per se. Do you?
On the other hand… being a product manager or starting a company doesn’t mean just making a product people want. You want to start a successful business, with revenue and profits. You want paying customers — that’s the real validation. The best investors are your customers, not some top tier venture capital firms.
Customers implies payment. Users are free.
/end my 5am stream of consciousness rant on my thoughts on Cusoy’s viability
11:34 am update
Don’t get me wrong, I’m still going absolutely full steam ahead with Cusoy, but I just wanted to be honest and transparent about my doubts as I progress along this challenge.
Being a founder is an absolute emotional roller coaster — so some days I feel really down and critical like above, while other days my spirits are lifted after getting positive feedback from users. Some of it is irrational, and some is rational.
We’ll see how I feel after I launch and see the reception then.
IV. TIMELINE TO FAILURE
It’s really, really important to have a timeline to failure. What that means is, you need to set your own personal metrics or measures for success — and stick to them. If you don’t achieve ______ by _____, then that’s a failure and maybe a good time to stop.
For example, your goal may be to get 1,000 users in 3 months before your money runs out or before you consider your idea/product validated. Or your goal may be to get a certain $ in x months before you keep pursuing it. Or your goal may be to get outside funding by x date before you pull the plug.
It doesn’t matter what it is, just that you have one yourself. And you stick to it. Because if you don’t, you lose focus and urgency. Urgency is incredibly important. It just boggles my mind when I see startups that take 6+ months to get to market (of course, there are exceptions — hardware for instance, but that’s different) or dilly dally and laze about, making excuses and not failing fast and shipping.
In an ideal world, Cusoy will make me at least $1,000/month so I can achieve ramen profitability, with lots of room to grow and scale.
My timeline to failure:
If I don’t get $1 (or even $50 or $100) in revenue at the end of these 8 past and present months, by March 2014 — I’d consider Cusoy a massive failure and would seriously consider either shutting it down or downgrading it to a side project and pursuing another business idea.
Note that I said business idea, not startup idea. I’ve lately become extremely disillusioned with consumer apps and their ability to generate revenue. I know I mentioned before my focus is on B2C, but B2B SaaS products look extremely interesting.
I read a startup post-mortem blog post recently and wanted to highlight a key excerpt and takeaway (emphasis mine):
In reality, this is a lesson that many other web apps need to learn. I see a lot of others making the same mistake we did and this shows a flaw in the current startup culture. Many small startups who don’t have funding emulate those who do. This is a sign of trouble. Funded startups are designed (and funded) to scale. At Todaymade, we just wanted a small product with a good profit margin. There was no reason to follow the big boys. Most founders would be better served to launch niche products with a 100% pay-to-play model. This will force you to flesh out your idea quickly, and validate your approach.
– Garrett Moon, Killing Your First Product
I am not venture funded, nor am I strongly compelled to become venture funded. I want to have a successful business with paying customers, a business that makes a difference by solving problems and pain points while generating revenue. Doesn’t everyone want this too?
Perhaps. But not everyone wants to be a billion dollar company (which makes sense to get VC money to grow distribution and scale) — and it’s sometimes hard to get out of that mindset when you’re in Silicon Valley and reading everyday press releases of startups raising money — but that’s not my goal.
V. ASKING FOR A 10% DISCOUNT ON COFFEE
Going along the lines of talking about paying customers, overcoming fears of rejection… I did a fun social experiment in behavioral psychology and rejection in asking a Starbucks barista for a 10% discount off an iced coffee.
Think about that for a moment and imagine yourself asking a barista for a 10% discount off coffee.
The principle behind this was not trying to save 10 measly cents here or there, but overcoming psychological barriers. Personally, I find it hard to charge people or ask customers to pay me — I have hangups about whether or not I would be charging the right price or fears they would reject me and not buy, etc. So this was a really interesting exercise.
In a business, you are asking people to buy from you and this is the same as asking for a discount.
I decided to try this under the guise of taking a business class and this being one of the assignments, if/when I get asked about it.
A couple days ago, I drove to a local Starbucks and mustered up the courage and shamelessness to ask for a 10% discount when I ordered a tall iced coffee.
I had a huge adrenaline rush as I slowly approached the counter.
Luckily there was no one else around me in line at the time. This was around 4pm.
“Hi, can I get an iced coffee?”
“Um, can I get a 10% off discount on that?”
“[barista laughs] What for?”
“I’m taking this business class and it’s one of the assignments.”
“[barista smiles] OK sure. I’ll see what I can do.”
Then she proceeds to make the iced coffee for me and puts it on the house.
As I hand her my credit card, she waves me away — “Don’t worry about it.”
I was stunned.
I then walked out of the Starbucks with the biggest smile on my face and gratefulness of having done that, even though I had a super high chance of getting rejected. I felt really silly, weird and ashamed at the act of asking for a discount off an everyday item — more so than even having to pay $5 for a coffee. Again, the $ part is irrelevant — but it’s the psychological barriers that are tough.
Important lesson I learned – don’t be afraid to ask, you never know what will happen until you do.
VI. NEXT WEEK AND KEY LESSONS LEARNED
I just had my last office hours with Rock Health and discussed my revised pitch deck. Got great feedback and it’s basically ready to go! 🙂 I’m really excited. I’m planning to apply next week to Rock Health.
I have my reasons for applying to Rock Health but not YC — not that I think it’s “easier” getting into one over the other (Rock Health has what, a 3% acceptance rate? And YC a 1% acceptance rate?), but because I think I’d get the most beneficial experience out of Rock Health in terms of vertical expertise. I’ve also attended six office hours now with Rock Health as well as gotten coffee with one of their cofounders, leading up to their application deadline next week.
So I’ve finally worked out some of the issues I’ve been having with MVP v3 and it’s pretty much set to go next week. This weekend will be completely spent getting things ready to go, but otherwise, that’s pretty much it.
Key lessons learned:
- Don’t spend too much time going to networking events. YC Startup School is an exception though — there’s a lot of great people you can meet and learn from.
- Work hard in the spirit of getting things shipped, but try to keep some semblance of a normal sleep schedule. I may be feeling OK now, but my body might hate me in the next few days.
- Stuff happens. Like my tire — and you just gotta roll with the punches.
- It’s a constant emotional rollercoaster. Some days I have irrational/rational thoughts like above on the viability of Cusoy while other days I’m pretty happy with how I’m doing. You can have your moments, express them, then just keep working and move on.
- Have a timeline to failure. Be firm about this and stick to it. What are your metrics and measures of success? Use specific milestones and a sense of urgency to achieve your goals, or decide when to stop.
- Don’t be afraid to ask. When you start a business, you’ll need to overcome your fears in asking customers to pay you. A simple, fun social experiment in asking for a 10% discount off coffee is a great exercise in overcoming those psychological barriers. Try it sometime 🙂
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