The Trough of Sorrow
For the past few days I’ve been at the YC summer retreat with a bunch of other founders and partners, networking, talking about early stage startups, and trying just to learn through osmosis. Finding some time to write today during some downtimes to distill my most impactful learnings
Last night all of the group partners gave their founder stories. One thing I *really* like about YC is that all of the partners are founders first, not investors. All of them have been through the program, started and grown companies, and exited. One of the talks was Jared, founder of Scribd, and he showed this graph:
Before showing this graph he put up a slide about how long it took to make things work:
Took us 10 years to find PMF
Almost died every single year
Had to pivot the company 3 times
They did YC in 2007, failed to raise money at demo day, and were living off money given to them by their parents in a SF high rise with a bunch of other YC founders. What kept them going was “the fun of working with everyone in the YC Scraper (what the YC founders called the building)“. Their first big break was pivoting the company to building “youtube for documents“ and getting featured in techcrunch. The techcrunch feature (that initial spike on the graph), brought in a huge wave of customers, investors etc. They raised a Series A off of the momentum. The problem was the customers were “fleeing“ after signing up and really it was just a hype wave. They closed their series A in just enough time to secure the money.
At the bottom, essentially all of the customers left and the only people using the site were the “100 copy cat competitors trying to copy their idea“.
The lesson there is that after the initial hype dies down, essentially every company goes through this period where things “aren’t working“. Either the offer isn’t good enough, retention sucks, market is bad or something else. I think good founders feel like it’s their fault for things not working, but it’s just the reality of the game. You need to struggle and suffer for a bit to really get to something that works and figure it out.