Essential Startup Advice from Dalton Caldwell: Keep Going and Pivot Wisely
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Introduction
In the fast-paced world of startups, navigating the challenges can feel daunting. However, Dalton Caldwell, a seasoned figure at Y Combinator, emphasizes the value of persistence, understanding the fundamentals, and making thoughtful pivots. In this article, we delve into the key themes Dalton explores, offering actionable insights for aspiring entrepreneurs and established startup founders alike.
The Importance of Persistence
Just Don’t Die
Caldwell advocates for a fundamental mantra for startup founders: "Just don’t die." This advice resonates deeply because many startups encounter near-death experiences, where the founders may feel all hope is lost.
Why is this important?
- Resilience: Successful startups often emerge from a place where giving up seemed like the only option. The ability to persevere through tough times can lead to unexpected breakthroughs.
- Mindset: Being able to maintain a positive mindset can help founders ground themselves and focus on the essentials.
- Learning: Every challenge presents an opportunity for learning, paving the way for innovation.
The Role of Fundamentals
Even top-tier athletes rely on their coaches to reiterate the basics. Similarly, Caldwell believes that startup founders must stay close to their initial motivations and basic business principles. He explains that connecting with fundamentals keeps entrepreneurs aligned with their goals.
Practical tips:
- Regularly revisit your business principles.
- Encourage open communication among co-founders to ensure everyone is aligned.
- Focus on your unique selling proposition and customer needs.
Recognizing Good Pivots
When to Pivot
Pivots can be crucial to a startup's survival. Dalton Caldwell suggests that a necessary pivot often feels "warmer"—closer to the founders' areas of expertise and prior knowledge. He states that a good pivot builds upon what founders have learned from prior experiences.
Indicators for a pivot include:
- Lack of Progress: If after numerous efforts, growth is stagnant.
- Customer Feedback: If customers express desires that diverge significantly from the current product.
- Team Fatigue: When the team feels demoralized and loses excitement about the original idea.
The Process of Finding New Directions
- Begin developing hypotheses based on customer feedback.
- Run small-scale experiments based on these hypotheses before full-scale pivots.
- Engage with customers early to identify what they truly need.
Common Patterns in Successful Startups
The Power of Customer Connection
Dalton emphasized that many successful entrepreneurs share a common trait: they genuinely enjoy talking to customers. This direct interaction not only builds rapport but also leads to invaluable insights that drive product improvements.
Key practices that lead to success:
- Regular customer meetings to understand their pain points better.
- Using customer interactions to inspire product features and enhancements.
- Building a feedback loop to continuously refine the offering based on market response.
Avoiding Tarpit Ideas
Dalton also warned against engaging with what he calls "tarpit ideas"—concepts that seem promising initially but are ultimately traps.
Examples of tarpit ideas:
- Apps for organizing social events, which have failed for decades despite plenty of initial enthusiasm.
- Music discovery platforms, which often struggle to find a sustainable model.
The key takeaway here is to be wary of ideas that seem universally appealing without addressing a significant, solvable problem.
Patterns for Startup Success
Understanding Investor Perception
When seeking funding, founders should consider the perspective of potential investors. Caldwell points out that investors often prioritize potential over current performance, focusing on big market opportunities and innovative ideas. To secure investment, founders should:
- Clearly articulate product-market fit and the unique value proposition.
- Show adaptability and willingness to pivot based on external feedback.
- Maintain a consistent communication strategy with potential investors.
Conclusion
Dalton Caldwell’s insights serve as a guide for entrepreneurs navigating the tumultuous startup landscape. The emphasis on persistence, simple yet effective fundamentals, and the openness to pivot are crucial for survival and success in the startup world. Founders are encouraged to pursue their passions, engage actively with customers, and heed the warning about tarpit ideas. Ultimately, the road to success is fraught with challenges, but with determination and the right strategies, it’s navigable.
Final Thoughts
In the end, Dalton leaves aspiring founders with this essential advice: find true enjoyment in what you do. If the initial spark is gone and the experience becomes overwhelming, it might be time to reassess your direction.
Connecting with the right support network, whether through mentors, fellow founders, or resources at Y Combinator, can also create pathways to success that feel less isolating. Remember, as you embark on this journey, it's not just about reaching the end destination but fully enjoying every step along the way.
seeing everything people apply to YC with people all kind of have the same idea one of these themes is simple
pragmatic advice sell make money one of my mantras is just don't die being coached and being reminded of the
fundamentals and Basics puts you in the right mindset you have this concept of tarpit ideas seems like an unsolved
problem you'll get all this positive feedback from the world and people have been starting that startup since the
'90s recently you put out a request for startups 20 categories of ideas that YC wants to fund we're trying to mix up
some of information diet about what kind of ideas people might be contemplating they are currently a lot of people say
you the king of the pivot a good pivot is like going home it's warmer it's closer to something that you're an
expert at are there other patterns you find across startups that do well there's a lot of Founders that come this
close to it all being over and through sheer will kind of just keep it going today my guest is Dalton Caldwell
Dalton is managing director and group partner at y combinator where he's worked for over 10 years across 21
different YC batches including working closely in the earliest days of instacart retool brex deal door Dash
webflow repet amplitude whatnot razor pay and 20 other unicorns prior to I combinator Dalton was the co-founder and
CEO of imim which was acquired by Myspace and co-founder and CEO of app.net which was an early adsfree
competitor to Twitter Dalton has seen and worked with more startups than nearly any human alive and in our
conversation we get incredibly tactical and deep on the startup Journey why it all comes down to simply not losing hope
and not letting your startup die what to do when your startup is struggling and how to know when it is time to give up
what makes a great pivot and signs its time to Pivot had actually talk to customers why every single startup goes
through a point where they feel like all hope is lost why investors say no to startups what most often leads to
startups failing why you need to avoid overd delegating early on plus startup ideas that you should avoid and also 20
ideas Dalton is looking to fund also so many great stories and lessons this episode is action-packed with that I
bring you Dalton Caldwell after a short word from our sponsors and if you enjoy this podcast don't forget to subscribe
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Lenny Dotan thank you so much for being here and welcome to the podcast yeah I than so much Lenny I'm really excited to
talk to you today is going be great so to prep for this podcast interview I asked a bunch of Founders that worked
with you during YC what advice you shared with them along the journey that was most transformative to the way they
think about product the way they think about building their startup the way they operate and there's a bunch of
themes that emerge and I'm going to touch on a number of these themes one of these themes is just how often you get
to like very simple pragmatic advice and how much of your message is just like sell make money don't run out of
money why do you think Founders need to hear this advice which is seemingly simple and obvious have you ever seen um
in in like NBA basketball or college basketball where they have the coach miked up and it shows what they're
actually saying in the Huddle you ever listen what they actually are saying they're like okay we
we need to really focus and get the ball and win this game like if you actually listen to what the greatest smartest
most successful athletes are talking about like if you listen to what Tiger Woods is saying to his caddy it all
sounds like pretty mundane stuff they're not it's not like what Tiger Tiger Woods is talking about with his caddy as some
you know imp possible to decipher jargon it's like yeah you really need to keep your head down on this
that even if you're the the best in the world being coached and being reminded of the fundamentals and Basics is what
puts you in the right mindset and that you already know everything right you're at the top of your game if you make it
to the elite levels of being a startup founder basically doing anything that's really hard um psychologically and so
going just keep going and I say that over and over again and and honestly that is often what people tell me is the
most impactful thing I said it's not that I said some Ninja 5D chess move that they never would have thought it
before it's just the constant affirmation that continuing to keep going and doing high quality reps is the
game I know that You' give a talk that's exactly called that how how not to die just to pull on this thread a little bit
more what is what is the general advice you share there for people that also don't want to die the way to summarize
that is if you look at all the startup stories that we have at YC and all the companies we funded over all the years
and so again let's talk about Airbnb obviously something you know a lot about you know when they probably should have
shut down like three or four times before they got into YC it objectively wasn't working they were basically
ruining their lives they were disappointing their parents everything was wrong and it was it was a purely
irrational act for the founders of Airbnb to keep working on their goofy startup and so and again that's just one
story if you look across the across the portfolio of YC and non-c companies there has to be this
irrational you know intention to keep going even when the world tells you it's not working and you feel completely
experiences and then you get lucky and then you look like an overnight success right and so that's that's that
is the theme that as a summary and I provide you know lots of data and lots of stories there but this is one of
those things that the the longer I had this job the more I really really believe this is true what's your advice
kind of on the flip side of that where there's a lot of startups especially these days that are just super
struggling have been added for a while their mental health challenges they're really they'd be very sad if they had to
shut this thing down but often it's probably the right move what's your advice to folks of deciding okay
actually does make sense to give up in this case I think this is a nuanced question and it's hard for me to say
something on a podcast that will actually be useful to people but here here's here's a couple of thoughts one
are you still having fun do you still enjoy doing what you're doing do you enjoy spending time with your
co-founders you know like is this actually a fun thing you're doing and if the answer is is yes I would tend to
lean on the keep going and then if it's more of wow this is actually profoundly affecting me a negative way and my
relationships with people in my life and my team you know I don't really want to work with my co-founder anymore and
things like that then I would lean on the probably don't do it anymore something that a lot of the folks that
turn it around have't common is they actually do love their customers and they love their product and again if in
the Airbnb story again you know it really well but they really liked Airbnb like and they liked working with
know what I'm saying like they were actually they loved their startup even though it was going
bad and so that's kind of to me a signal to keep going is that you really really love what you're doing and the people
you're you're doing it with and you love your customers and you love the problem versus when you're just like yeah I
could care less about any of those things I'm just having a bad time hard harder to be encouraging in that
situation you know and this is a fixable situ you know you can make it more like the thing you love can't
you yeah this is actually very practical and great advice like this is something people can sense okay am I actually
enjoying this do I want to keep doing this versus like man such a drag that I have to keep running this startup is
there anything you could say to folks that are just like I can't stop because it'll feel like I failed if it's really
going poorly if you're having a really bad time it's no big deal no one will remember that you that you shut down
your company probably in 10 years or 20 years like time as long as you have integrity as long as you're an honest
fondly and it's you know better we have such a short life there's only so many years we get to to to have our careers
doing something that makes you miserable and the only reason you're doing it is to avoid losing face and you know when
your heart is not going to work I don't know that seems like a pretty big opportunity cost on on literally your
there's no need to force yourself to work on this yeah and I really like your point of just like is it still enjoyable
do you like working with your Founders kind of following this thread of the struggle train a little bit more one of
the founders that was that worked with you during YC uh his name is Danny alberon yeah shared a story how during
one of the batches of YC somebody one of the founders raised his hand and asked you what is wrong with our batch
everyone is struggling nobody is doing well what had we done what have we done wrong and you shared a story about brex
that made everyone feel a little better can does that a bell and if so can you show that that definitely happened and I
think the story is the story of the winter 17 batch and in the winter 17 batch I funded something like I don't
know 35 40 companies in my group so we subset them into groups so it wasn't like a lot of companies and I knew I
knew all of them really well and Founders can't help but compare themselves with other Founders All the
time about who's doing well and who's not doing well and there was this one company in in my group this batch was
called theond that was their name at the time and it was like a VR headset thing from these uh Stanford dropouts and they
basically showed up to group office hours and we're just ashamed and they're like our idea is horrible you know we
might want to shut our company down this is like really embarrassing like they just I had to like beg them to not give
up basically and if you would have asked people in the batch what the worst company was I think
they would have said this one again not because like they were like bad people but it was just like the founders
themselves seemed like despondent about how it was going and then funnily enough this is in the story too there was
another startup also in my group called cashew which was this PTP for uh the UK PTP venmo excuse me um in the UK and it
was going really poorly also and not growing and so if you just took this snapshot in time in the middle of the
batch of like who is definitely not doing well it would clearly have been this vyond company in this cashew
company and so to catch the chase vond changed their idea and got really excited about it and renamed to brex and
this was brex which is like a decacorn and cashew changed her idea and renamed to something called
retool and so out of my 35 companies the ones that objectively seemed the worst in terms of like it's just everything is
going bad we're by far in retrospect the most successful companies in that group wow oh wait so you're saying brex was a
VR head said company they thought it was really high-tech they want to do a really high-tech startup and so they're
like we're going to build a new VR headset and you know they were good programmers but they just didn't know
anything about Optics or the things you might want to be an expert in to build a headset wow that's an amazing story it's
a great seg way to another theme that emerged from talking to Founders about advice that You' shared a lot of people
usually a successful pivot gets warmer instead of Colder from what you're an expert at and somehow Builds on what you
learned on the prior idea right and so in the case of brex it was let's they had worked on a a fintech
company in Brazil when they were younger and so I'm like you need to work more on the thing you know all about and not the
thing you know nothing about and that was what worked for them in the case of retool it was the same
thing they had built similar internal tools both at their internships as well as for cashew they had all these
dashboards they built to like operate their their venmo competitor and so they knew a lot about what to build in the
case of post hog pivoting into their idea they knew a lot about analytics and had strong opinions about it and so it
was much closer than what the original idea is in the case of zip rul knows a lot about a lot of things and
um he knew a lot about like the crazy pictur process at airpnp because he worked there and so it was kind of like
a good pivot is like going home you you know it's it's warmer it's closer to something that you and it never occurred
to you that this thing you know all about would be a good idea or maybe you co consciously you're like I don't want
to work on this because I'm burnt out on it like sometimes you have to someone someone has to get over this barrier
they have on why they don't want to work on a certain idea these are amazing I like how modest you arm like oh here's
like big idea and then you just give very tactical uh items to look for so essentially a good pivot in your
experiences you're getting closer warmer towards something you have experi actual experience in and two it builds on
something you've done essentially the core idea of a pivot right where you're like in the in the example of segment
which is obviously a really big successful company um they started with something to tell your professor you
were confused in class it was like software that they sold to universities and then they ended up PIV
into something kind of like a mixed panel competitor after like two years and it's because they didn't they
learned about how analytics Works running their first idea okay and then no one wanted to adopt their mix panel
competitor and so they were like we should make this JavaScript thing that you embed on your website that can send
events to multiple endpoints at the same time so that way people would be willing to try our mix panel competitor side by
side with mix panel to show that it's better and then they were like oh yeah no one actually wants that they just
want this JavaScript to send events to different locations and so there's no way those Founders could have started
with the final idea you get what I mean there was no Universe where they would have made up the idea for Segment
because they didn't know anything about how analytics worked but because they were grinding for multiple years and
became experts on these things is a side effect of their earlier ideas they ended up with really good unique insights I
think that's a really important point there is you don't need to necessarily have that experience before you start
the company could come from trying to build a company exactly a big question people are always wondering is like
should I pivot like is this the time to Pivot is this should I keep trying this idea what's your your advice there of
just like okay now you should really be thinking about some else again this is one of those where I like to give very
bespoke nuanced advice on a caseby Case bases to the folks in YC but again just to give you a preview of how I would
think about it um I would look at how many more ideas the founder has on how to make it grow like if it's not going
well and you're out of ideas that is usually a good time to Pivot but when there's a you know you have like half a
dozen or a dozen really good grow ideas that you haven't tried yet he try them right like hey give it a shot again
in the Airbnb story right they they tried uh all sorts of stuff including cereal and conventions like they had a
bunch of zany ideas on growth and they didn't run out of them and so I think when you I think when there's still uh
gas in the tank um on an idea that might be a reason to State the course and when when when literally the founder is like
yeah I don't know I guess maybe we should pay influencers or something when when that's the kind of ideas they're
coming up with that's that might be a better sign to Pivot that is incredibly helpful coming back to zip real quick
they went through I think six different pivots before they landed on this idea that is now a billion dollar business is
there anything from that specific Journey that you found really interesting because they went in so many
different directions like accounting marketplaces and yeah I think of the example of the zip Founders they were
both such great experts and you know I knew rul really well he actually worked with me at at y see as a visiting
partner and so I was I was really close to rle and he had done this Marketplace called flight car when he was younger
which was you know rais a series B it didn't work out but it was a really cool company and
um I had a lot of confidence in his competence on running a business and executing fast and just having great
instincts like he really knows the fundamentals and the problem was they weren't as clear on what Market to go
into is still with me and so I actually suggested to do something in their case again this is very bespoke um but my
suggestion was to start by looking at what companies are um publicly traded uh and or owned by private Equity that are
find where there's a knowable big Market with an incumbent um combined with the software
is horrible and they kind of did that like they basically found out about all this procurement software and what the
state-of-the-art was and that was that was the prompt again maybe he told you this that was that was basically the
process he did tell me that I love that example and piece of advice so much I don't know why more people don't do this
basically find a large incumbent with very low NPS uh and try to disrupt them so straightforward yeah I mean it I
can't promise that works for everyone but again in the in the very best situation with rul it worked really well
because he actually knew exactly once he locked in on that prompt oh man was he ran a master class you know like they
did they did they did an A+ job it was really good also Lou his co-founder credit to him too of course like sorry
yeah we got to give Lou the shout out Lou did an amazing job I just didn't know Lou as well before he did YC but
you're right we got to give Lou the credit as watching your chat with Michael cyel talking about pivots and
desert to find the gold of a new startup idea versus the middle of the city you're unlikely to find gold in the
middle of San Francisco is there anything along those lines that you you can share yeah I think maybe this
pertains into what we see from applications and interviews which is from where I sit seeing everything
people apply to YC with and what they interview with and and whatnot um people don't people all kind of have the same
idea like like basically imagine this imagine your information consumption where you're listening to the same
podcast wink wink um you're reading the same people on Twitter you're reading the same blog post basically you have
the same information diet of all these other Founders and you're friends with all the same people does it seem
surprising then that you would all end up with similar startup ideas or similar philosophies on what makes a good
startup idea of course you are so this is the metaphor on cities is that if you just are following the same principles
and have the same information flow into your brain you're going to come up with the same ideas as everybody else and so
the prompt here is to try to go more off the beaten path either from your personal experience like in the case of
brex and retool or whatnot you know there was no one else trying to build marketplaces for Funko Pops you know go
go deeper in your own personal interest or experience to find something that just the your exact per wouldn't come up
with in exactly the same way and again the zip example I don't think other people were trying to build wonky
procurement software that was just that was not an idea that we saw much of and so again the prompt to people
is try to mix up what your information diet is or what areas of expertise you have and and M that well versus just
having all the same thoughts as everybody else and so again let me give you one more example a few years
ago startups around Trucking were super new and fresh because no one was doing them and they worked really well and
then it became completely conventional wisdom to do like Trucking related startups yeah I'm not trying to diss
anyone but you'll see things that become fashionable really quickly because someone found success in this
unfashionable space and then it becomes fashionable this is a good segue to something I definitely want to spend
time on which is you have this concept of tarpit ideas which are essentially ideas people all kind of gravitate
towards and get stuck in and either pivot into and then can't pivot out of or try to Pivot out of
and essentially it's just like consistently bad startup ideas that people continue to try to start can you
just talk about this and then what are some what's examples of just like bad startup ideas that people should stop
trying to start for people that are familiar with this terminology for us sometimes they get defensive and don't
give what we were saying so let me by definition it is only a tarpit if it seems like it's
not like like if it's just a regular idea that is hard that is not a tarpet the the weird aspect of what we call a
tarpit idea is an idea that a lot of people come up with and that it seems like an unsolved problem and you get
lots of positive feedback for right and you have a really good set of arguments that it's a really good
startup idea and that's different than a bad startup idea do you get what I'm trying to say a bad startup idea is like
I don't know something that is obviously bad or something where you just can't get any positive uh feedback on but some
of the the most common tarpet be something like building um like an app to coordinate with your friends to
decide where to go out at night or where to meet up with people which is it which is a really it's coming from a good
place like it's a good idea if you ask your friend hey would you like an app for us to coordinate to hang out more so
we can be friends they're like yeah I would love that like you'll you'll get you'll get all this positive feedback
from the world and man people have been starting that start up since like the 90s and so you can validate it like part
of being a true tarpit is that you can get good initial validation you get what I mean and so
anyway and and honestly I worked on tarpet ideas myself as a Founder which is music Discovery this is something I
trying to be like oh we're going to fix music Discovery is those classic things where you can get lots of positive
feedback and even get users to work on those things but there are aspects of it that make it a very hard idea so does
that make does that make sense absolutely I'm also guilty of this I had this startup called local mind that uh
allowed you to talk to people checked in in various locations around the city on for square and koala back in the day and
ask them how's it going and everyone when they used it they're like holy this is the most incredible thing I've
ever seen I could see what's happening at this bar that I'm about to go to and then they never use it again do you
remember when four score clones was all anyone worked on for two years they told they told us for square is going to own
this there's no way this idea your building is going to be its own thing and now yeah for square is a B2B
business yeah and all the four square clones if they didn't pivot out of doing what they're doing wouldn't work so
anyway that's that's a tarpet is just something that's super appealing and a lot of people do it and that you can you
can kind of get validation and that's why that's why is a tarpet is it draws you in and you get stuck because it
seems like it's like a good idea and you get all this positive feedback kind of along these lines I was talking to a
Founder recently and she's asking me what causes an investor to say no to you when you're trying to raise money from
them and I know there's every investor has a very different perspective on what turns them off to a startup but is there
anything that you find is just like here if you do these things investors will say no maybe my best advice here is for
Founders to put themselves in the shoes of investors and just imagine what their life is like and how if you were in
their shoes you would make decisions and so given this framework a lot of investors just don't make that many
Investments and as for what we talked about earlier life is short and so there's lots of things that an investor
that in their hearts thinks is like pretty good and they're oh like I like this person and I like their
pitch but I only am going to do a few Investments and so even though I really like a lot about this I'm going to say
no and then I I often think that Founders think that there's some secret truth that's being held from them on why
someone says no or like they're you know like they want more feedback I need feed back it's like wow the feedback is we
didn't want to invest and and it and it really is just that and and so I think if you put
yourself and the in the shoes of an investor of like hey I only can do a few of these a year I have very limited
budget they're really just trying to pick the things that they're either personally most excited about or things
that they think can be truly phenomenally big in some way or you know again you I know you do Investments too
so it's it's it's that you only get so many shots as an investor and so anything
that doesn't seem like this is the one this is the one I want to do is a no and that that's actually why they're
saying no versus this you did you know oh you you had a bad Zoom setup or something you know oh we didn't we
didn't like what color your shirt was we said no I don't think that's I don't think that's how this actually works you
know I think that's such a good piece of advice that it's not necessarily they don't believe in what you're doing it's
they have better options and they're waiting for something that hits higher bar just because because they have a lot
of options yeah because again and if you if you ask someone well put yourself in investor shoes wouldn't you be making
decisions the same way usually Founders are like yeah like like they if you if you do that exercise a lot of this
starts to make way more sense specifically when you're evaluating startups I wasn't going to go
into this but I think it might be interesting is Mark Market size how do you think about the importance of a
large Tam as as an investor YC I think it really depends on what stage you're investing at and it's
absolutely critical the later stage you get right if you're going to invest at a very high valuation it is really
startups if you were really uh penic about it the Tam would be like tiny like the The Tam of uber would be like
nothing right like how um The Tam of Airbnb would have been nothing The Tam of I was uh I funded Razer pay which is
I think the largest payment processor in India and the Tam of that was Tiny because no one was using credit cards in
2015 in India so you had to believe that the size of the credit card industry in India would like 100x well guess what
happened you know what I'm saying and so so I'm not saying that the having a large Market someday doesn't matter of
course it does eventually but trying to be super pedantic about Market size when you when it's like a preed company or
someone applying to YC is not you know it's just not something I put a lot of thought on you get whatnot oh what's the
Tam of the collectible Funko Pop industry I don't know I don't think it's that big man I don't know if you did
that now when you invested but I you know think it's pretty small but I I wasn't worried about it that was like
the last thing I was worried about it makes so much sense that at YC you don't think about it that much because of as
you said many startups pivot anyway so if you like the team but and I'm not saying it's not I just it's not and the
things I'm worried about it's like hey how do you get users hey how do you grow things like that like are you making
something people want those are the things I'm really worried about as opposed to oh I ran an Excel model and
I'm worried this might not be a big enough T that's that's not at the top of my list I think it's important to
acknowledge though a lot of investors are very like YC I think is unique in a lot of ways where you invest very early
and you help people through this journey a lot of investors are very focused on Tam so you may find you're getting
turned down because they don't think there's a big enough market for you to build a big business right yeah or that
you're asking them to believe a crazy leap of faith that again they can say well it's theoretically possible you'll
be able to sell more than Funko pops and I understand that that is your pitch but I am I have other
opportunities that are less risky you know what I'm saying like like it's not because the a lot of Founders make the
argument that the Tam is big and you can say wow that's a really interesting argument and I have no I have no you
know I'm not going to argue with you about it but no I'm not going to and so again it's it's hard to get
someone to engage in a debate about Tam even if you have you know even if you have some proof points ultimately uh a
lot of investors just don't like that risk fair enough fair enough going in a slightly different direction so uh
someone else that worked with you uh another Lenny uh Lenny boganov who started a company called milk and then
he was head of growth at open a for a bit he asked me to ask you about things product leaders and startups should
watch out for do that ring a bell I don't remember the specific office hours but I I understand the question and of
course remember Lenny um I think that the advice that he's referencing here is just how important it is to not overd
delegate and for the founders to stay close to things um as well as watch out for the Trap of hiring super senior
people with fancy resumés really early at a start up I think that that's what he's referencing there and again this is
definitely one of those very basic things that we find ourselves repeating a lot um where they're like yeah yeah I
get it like don't overd delegate we get an adult on and then like two years later they're like wow we over
delegated um we need to we need to go clean that up so that is probably the best product advice and the folks that
are really great at product the founders that are are always deeply in the Weeds on product and still care a lot and are
still talking to customers no matter how late stage it gets again I'm sure you experienced this in Airbnb culture but
you know you can't delegate caring about your users and you can't delegate caring that the product is great that is so
critical to make this even more real what are what is it that you see them do it's they hire a PM too early they hire
a senior salesperson to early what are the yeah I think it's I think that you get pushed Often by investors to hire
Executives or to scale the team or we need you know we need we you raise all this money you got to spend it you know
we got to you got to show you're serious about growth and building a world-class organization whatever stuff like that
and so you end up with super nice people with super shiny resumés from from Big tech companies oh wow they they did this
amazing thing at Google and then you hire them and then you wake up one day and you're like oh wow everything went
wrong it's not really anyone's fault it's just that you you you o you took your eye off the ball and this is what
these things is there any guy you give just like don't overd delegate don't overhire but also you need to you you
you have 24 hours in a day is it just find the time prioritize well or is there more more to it I think if you
just care a lot about your customers and you care a lot about the product your instincts are pretty good on what to
spend time on and so for example spending tons and tons of time like hanging out with investors and
networking it's probably not it's probably the thing that I would be cutting um you know what I'm saying like
it's it's what we talked about earlier if you really love what you're doing no one needs to tell you how to rep
prioritize your time your intuition will be correct on what you should be spending all your time on which is being
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Lenny okay so one of your former one of your colleagues current colleagues not former colleagues Gustaf was on the
podcast previously his episode is I think the fourth most popular episode of all time currently so no pressure cool I
don't know I can with that all right I think you can so I asked him what is often the most
common reason a startup fails and his answer was they don't talk to customers they don't find product Market fit
nothing else matters if they can't do that and so his advice is talk to customers more often so two questions
here and first of all just is there anything else you would add to why do startups fail I know we talked about
some of these already but just what comes to mind there I completely agree with what gustoff said but to to look at
this from a different frame I think is that the founders lose hope and when you and your heart is like
yeah we're failing like once I can see it when I'm meeting with the founder when they've resigned themselves that
they're failing versus when like we got one more move in us we got one more try like you can see in their eyes when they
feel like there's more ideas or there's some last ditch Hillary thing um it doesn't always work but it's it's almost
like like you have to not accept that you're going to fail and as long as you don't accept
that that's going to happen there's usually a lot more moves you can try to save the company what maybe it's to get
profitable maybe it's to like do some other zany thing maybe it's you know to launch a new product um and so it's
pretty rare I would argue that the cause of death is that they had lots of Firepower and they were feeling really
positive and they just ran out of money that's actually like more rare than Founders think um it's much more common
that they still have some money left I'm not saying a lot but some money and they're just like yeah I'm done I'm out
of ideas I don't want to do this anymore and again fair enough you know but do you get what I'm saying like I think
Founders are afraid that they're going to run out of money and that's why they're GNA shut down and it's way more
common that they like their idea doesn't work and they have a big fight with their co-founder and then they can't
agree on what to work on and then they just like are like I don't want to do this anymore and they shut down that is
the most common cause of death is something that sounds like like that story that is so interesting and again
this comes back to your cord viice don't die just don't die we talked about this already of just
like sometimes it's actually okay to die and I guess just to refresh that lesson is if you're not having fun anymore
maybe yeah you're out of ideas you're like I'm just I'm done like if you know in your heart that you're done you don't
have to keep going through the motions no one benefits from that right and you've also seen enough cases now you've
shared a few of these where they their all hope was potentially lost but they kept going and then they turned into a
huge success story and I think most people don't see those examples I guess is there anything you can share just
like how often that happens how often you see that turn around I would argue that if we Define it is the company had
a near-death experience where it was going poorly and the founders seriously wondered if it was all going to be over
100% of the time people go through that you know where the found like yeah I guess we're done guess we should pack it
in and at least you feel that way at some point in your startup journey I me everyone goes through that um and again
there's gradiation people that actually truly got down to very very hard situations it's still a high percentage
like maybe 50% I mean you can ask Founders there's a lot of Founders that come this close to it all being over and
imagine for many Founders hearing this of just knowing every single founder goes through okay I think it's actually
over yep following on this real quick the advice that gusta shared which is about talking to customers I'm just
going to keep trying to pull wisdom out of your head do you have any advice for just how to effectively talk to
customers we're always hearing talk to customers build things they want easier said than done you get a lot of asks you
get one customer asking for a lot of stuff there's a big company that's like build this thing we'll buy you pay a
million dollars just you have General guidance of just like what to pay attention to and what to build versus
they're like yeah yeah talk to customers we get it cool and I'm like cool well how many customers do you talk to and
they're like well and they get really quiet and so I think this is one of those things like hey you should have a
healthy diet and exercise every day or or whatever where people know it and that doesn't mean they do it and so I
think to start with you have to get out in the world and talk to people in person and you can't just hide behind
your keyboard and call that talking to customers right and I think a lot of folks their inclinations are to like you
know build a landing page and buy some Instagram ads and try to get people to sign up for something and again maybe I
maybe that's something but I think a lot of the reason people do that is they they're just shy and they don't want to
put themselves out there because it's a little awkward to go talk to people and and you kind of have to Su yourself up
to go out in the physical world get people to meet with you get them to take you seriously show them a product you're
building and so again to be very tactical here you can do a self assessment in the past month how many
in-person physical meetings have I had with potential customers maybe you've done a lot I don't know listener maybe
maybe you have but you know it's it's shocking how many companies I talk to they're like
well we're focused on raising our prede round before we talk to customers like things like that and and again I think
stupid and I think you just got to get past that you know you just got to start doing it until it doesn't feel bad
anymore but you know think about how how stupid the Airbnb FS must have felt they were like hey you should run out your
house and I'm GNA come and sleep in your house and here's an hair B like like it's the whole thing is a little awkward
right so you got power through the awkwardness of talking to people and um once you start doing it it's
actually kind of fun and so once you once you get used to to overcoming this awkwardness um I think people do much
better at talking to customers when someone does this self-evaluation is there a heris that tells you this is
enough what do you look for is there a number like how many per week how many per month yeah I don't know if I know a
good number I think it's look at your calendar and there should be you know 20 or 30% of your time that the calendar
says something like customer meeting customer call like meeting with food meeting with this
person and when the calendar is not that or it's all you know again what you're actually doing is just buying ads to try
to validate your idea that I don't I don't think that's talking to customers you know I think that's something else
that's an awesome her istic so roughly fifth of your time at least should be talking to customers yeah again it
depends on the idea space you're working on some are more some are less um so yeah I just it should be a fair amount
time and nothing substitutes for an actual conversation versus just staring at analytics dashboards makes so much
sense so airb B is a classic example of they went to New York and talked to their host and things like that is there
another startup that comes to mind that did this really well I found just a really cool way and hustle to talk to
customers well again if you if you some of the companies we talked about I mean for brecks they were just talking to
other people in their batch and that worked extremely well um same with retool is they just sold it inside of
the YC Network I think with zip they were just beasts at getting companies on calls with them to ask them about
procurement and I think they had way more than 20% of their time like when you looked at their calendars oh man I
think they were doing they were talking to customers a lot to to build their first product and kind of pre-selling it
before they built it same with postt talk I guess that's a different go to market they launched this open source
thing to start with and it was they their calendars are filled with people that were trying to implement the
first open Source version of post hog or so excited about it and people on Hacker News were excited about it and like they
had this like huge influx of people that were excited that post hog existed and had lots of feedback and uh web reports
like it wasn't always positive but they never lacked for people that wanted to talk to them once once they launched
that which was very helpful on zip I actually have a lot of their story in one of my series on how to build a B2B
startup and what they did actually as you know uh is they just called DMD people on LinkedIn and asked them for
advice on hey we're we're trying to understand how you enjoy your current procurement products and then they ended
up being early beta testers I think they did and I think they did hundred like hundreds of these
they just had oh yeah no it was a numbers game they they were just grinding at this and so yeah that was
that was very good the other classic uh YC story is the the cison Collision I think it's called or the cison install
oh cison install Okay where can you tell that story briefly the Collinson install is um what often happens with customers
is that they say yes I want to buy your product and then they do not implement it they just go quiet they're like
there's no implementation and this is very bad if you're selling software to someone if they never implement it
they're going to churn and you're not you know you basically failed on the on the one yard line okay and so they kind
of developed this tactic to be like oh well you know I'm in the neighborhood you know I'll drop by to your office to
help you implement stripe and kind of just like create again it was a little awkward like we talked about earlier but
you would You' be like yeah I'm I'm in I'm in the neighborhood like how about I drop by and then they would show up and
they' be like cool cool can you like pull up your text editor oh yeah cool all right um hey can you can I can I
drive can I have the keyboard and they would just sort of like install stripe into the customer's website you know
smiling being like Charming Charming guys and they be like oh that's cool okay well like can we like roll out the
website now and and they basically would kind of not go away until you uh finish the implementation of stripe and like
again it was actually helpful because they were doing all this white glove service to get it implemented that was
very effective and I think the takeaway from that story is even when you get a yes you're not actually done with sales
you have to finish the last mile to get the thing implemented and uh they were very good at that that's an incredible
story and uh now they're like I don't know hundred billion dollar in business and that's how it all begins yeah I was
an early uh stripe customer my start up and yeah Patrick would like um we used Google talk at the time Patrick would be
sending me messages like on a weekly basis just like checking in and so again it's funny how successful these folks
get but yeah Patrick was very Hands-On with all of his customers and was extremely available um like I I can say
that because I was one of them yeah and I'm sure he had social anxiety going through all that that wasn't a
comfortable thing to do just like keep pushing people to install your software and deploy oh surely not it's just you
got to do like if you want your startup to work this is just what you got to do you know comes with the territory this
is going to be just a way broad question and I don't know if you'll have an answer but just are there other just
patterns you find across startups that do well this is like maybe the 64th million dollar question of just Founders
and what they do that ends up leading to success I don't think personality types matter as much I've seen very quiet
people very extroverted people very you know you name it I've seen all sorts of personality types so for me personally I
don't think that there's a right or I don't think there's a personality type that people should copy and be like I
need to be like this person you know I need to be like Steve Jobs I need be like Elon you know I don't really
different than a lot of folks and reel is so different and Grant from whatnot these are all very very different people
Patrick is a different kind of person Ryan from flexport like these these are just very different personality types
common is they just really want it and they really believe in themselves and they really believe they can make it
work and that there somehow deep in their internal psyche there's something that's like I'm the
one and I won't take I won't accept this not working and even though OB objectively
there's all there's all this data coming in this isn't working this is bad you know my employees want to quit my
like oh yeah I'm gonna make this work this is this company is gonna be big and they and they they just believe and it's
almost like that internal gravitational force inside of them is so large it kind of warps the world to bend to that will
and people start to believe it because they believe it so much and they convince their employees to believe it
and they convince everyone around them that this is going to happen for them and so again this is not a personality
trait this is I'm arguing this is like um a core belief so interesting and it connects so much to what we've been
talking about just don't die don't lose hope in what you're working on a Founder hearing this might feel like man I don't
know if I'm like so convinced this is going to work in your experience how much of this is internally they're so
certain and convinced versus externally they need to show this confidence well I think it's internally they're convinced
I I again I'm not sure it's external but and this is the big butt no one has this at the early stages when they don't have
a good idea and they don't have customers and like it's objectively not working and so I again I know a lot of
Founders like well I don't feel that way oh no maybe I'm you know maybe I'm an imposter and I shouldn't do a startup
well of course you don't feel that way if you haven't talked to any customers and haven't built a product like you
good idea that you care about and customers you care about and you launch it and the better the product does the
more obsessed you get with your own company like I I think in the case of stripe I don't want to you know tell