Successful Founders Are OK With Rejection episode artwork

EPISODE · Sep 5, 2022 · 20 MIN

Successful Founders Are OK With Rejection

from Y Combinator Startup Podcast · host Y Combinator

Dalton Caldwell and Michael Seibel on the importance of talking to your users, why successful founders are ok with rejection from potential customers, and how protecting your ego by not talking to your users can kill your startup. To create Rookies Mistakes we asked YC founders: Is there a simple fact you wish you knew when you started your company or a rookie mistake you wish you could take back? Apply to Y Combinator: https://www.ycombinator.com/apply/

Dalton Caldwell and Michael Seibel on the importance of talking to your users, why successful founders are ok with rejection from potential customers, and how protecting your ego by not talking to your users can kill your startup. To create Rookies Mistakes we asked YC founders: Is there a simple fact you wish you knew when you started your company or a rookie mistake you wish you could take back? Apply to Y Combinator: https://www.ycombinator.com/apply/

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Successful Founders Are OK With Rejection

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And so I just noticed a lot of these teams, the really core thing going on is ego protection. And nothing else. And like you come up with all these intellectual arguments on why actually, you know, but we really talked to someone, you get down to the core. It's being okay with getting in rejection.

Hey, this is Michael Sago with Alton Paul. Welcome to Ricky mistakes. We asked why he found us for the Ricky mistakes. So we can share them with you and help you with them.

Here's the person's take-out. Right in. And to getting when you're still from your idea or product, then as many user potential user calls as possible, at least one per day, and ideally multiple. It seems obvious, but something that we personally fail that in the beginning.

Don't brainstorm ideas in a silo. You don't know what people want. We have all these ideas I had as founders about what people want. That the moment they were subjected to reality are embarrassingly wrong.

But there's nothing more humbling. There's nothing that you feel sure you're then seeing real people using this thing that you both spend a bunch of time on it. Just like Ricky just read and understand it. Or like using other features or clicking on the wrong thing.

It's horrible. So you're talking to users is like inoculation against this Spain. And or not. It's a time doing something that is completely irrelevant to your users.

Okay. So you're suggesting then that it takes their face. Right. What's the most interesting way to learn when I got some of this money?

It should certainly them. Right. So this may be offensive to some folks out of this video. But I don't think that user surveys are that valuable.

When choosing to start a video. Surveys are useful way to get certain kinds of feedback. I would think of it as micro optimizations or trying to choose directions or say about four ideas, four names or how many you want to choose which name was the best before choice. Yeah.

Right. One survey. But when you're looking for fundamental truths or you're trying to find your first customer in the market. All right.

You want to be harsher or harder. What is that? That means get somebody to give you money for it. Do you see how it's much higher bar to get someone to pay you money than to fill out a survey?

Or to get someone to actually use your thing every day or to get them to install it on site. Think about how many products that we would all any survey say, oh, that sounds useful. Like, oh, it's very useful idea that you have. But you would never really know your actual data.

I just think about a survey that I've seen really be horrible is there's a tiny subset of your potential users who actually have expertise. They've actually tried 27 different products. This is actually a really important problem for them. But if you treat everyone you talk to the same and they call the same question so you never get exposed next to these.

And the best example I saw was this was early days early in B. Air maybe did this fun thing to get users in the very early days where they offer people who are putting their homes online for mental and other platforms. Free digital photos. High-res the different photos.

Back when digital cameras weren't a thing yet. In order to listen to B and they start talking for a day went out. They got the camera. And then they asked them a number that there was one guy who they met.

They took photos of this house. He loved the photos. He asked them how he was down for coffee or tea or whatever. They started talking.

And then he said, you know, I've been renting out my house on all of the platforms in a minute for a decade. And I have a notebook of all of my notes on all the things they do bad and all things they do well for the last decade. Do you want to see it? I was like, so in the Dalton scenario, hey, he never received an email survey.

Like, he would sign up for me to be an idolist and not use an email survey. Like, how do you like every in B? So just things to do for a break. In the real world example, they got a book of all the things they need to do.

And then like, think about this. Imagine, you know these guys, the founder's got to be back in the day. The way they got to be able to ask people on a survey, whether it's some user research, they didn't interview. When you like to write your home, do you see how what they could have learned from that is like this versus actually trying to get strangers to write their home out to others?

And all the things that popped up trying to actually make the damn business work. Do you see how like they learned this much from that versus this much of right in a survey? Well, Dalton, it's not even this much. We're not.

We're not. It could be negative. Right. Like it could be negative.

Right. Well, I would never want to use that because it's a dangerous. Right. You have a good hand to my pocket users about the feature set for Twitch streamers back in the day.

Can you show that? What high-creatle priority list based on 12? So when we were pivoting from downtown to downtown, and she went to a tournament, we were leading the Twitch team and they took this to heart. And they started interviewing the industry and asking what they wanted.

And the funniest thing is at this point, we had built every feature, a live video social media site could have the chat, the messaging, the feed, social media stuff. We had embedding, we had every kind of sharing or multiple platforms. And so they were really surprised when the first thing people said was, can I stream in higher quality? And they were like, really?

That's like, you know what? Like some big. We'll go to anything. Like you know, they said, like, when computer costs like four grand, and I paid for like the best internet connection in my neighborhood, and streaming this HD game.

And it looks like crap. And they were like, huh. Well, because we built our own media server and we were controlling our own streaming. That was like an integer.

Like that was a bit easier. It's been changed. You could ever make. And like, it was constantly going to be more.

But it was like, from a building product perspective, it was very anticlimactic. And so I think like three days later, like, you know, we introduced like higher, higher, you know, you hear something. And these people went crazy. They were like, I've never, I first of like, I never imagined you could do this.

Like I thought it was a massive technical issue that was like, where you were screwing us or like, a year or two, because it was too hard. And like suddenly you fixed it. And then two, I've never used the website where I talked to someone about it. And then it got better.

And so this kind of started a series of in hindsight, but looked like extremely obvious things to build. One was I felt this thing to look better. Very quickly, two was I'd like to make money. Please, can you help me?

You guys want to know the social managers? You don't want to customize your page more with different colors and themes. It's like, no, I'll run ads on my own stuff. Like what do you mean?

Oh, if you give me a button, we're out of video out of my own users and I can make money. I'll cook it. Once again, you're happy to add. Once again, it's like, oh, that's not even hard to build.

Like, the hardest thing was like, what's the button look like? You were experts. You were just five years in. You're not an expert.

You're not everything about everything. But then you were like, I guess we should talk to some of our users and they said a bunch of stuff that blew your mind. They know that you were with them. And not only did floor minds, the engineers listened to appreciate it.

It wasn't hard to build. Like, we could make them happy so easily compared to all the other shared on our brainstorm list. I was like, you know, months long projects. And I was like, oh, yeah.

So anyway, clearly going a little deep helps. Putting yourself into the situation, we can add a deep conversation is way better than anything else. We touched on this and I want to bring up a quote because we can dig a little deeper. What's your favorite?

A potential customer's opinion is not valuable. Unless they're willing to pay you. Or use the product regularly. Or share the product with their friends.

They call this financial capital. Pay you. Time capital. Use it.

I think people really struggle with this because I think it's getting at the core of human condition thing, which is we want to be loved if we don't want to be rejected. And so, you know, getting through all these layers of defense that you've created for yourself to protect yourself from rejection is really hard. And it's like, yeah, man, if personal work, like it's worth doing your head, it's not worth doing external roles. And so I just noticed a lot of these teams, the really core thing going on is ego protection.

And nothing else. And like, you come up with all these intellectual arguments on why actually, you know, but when you really talk to someone, you get down to the core. It's being okay with getting rejection. I was like to think about this a little bit like science.

Like imagine that you're a founder. Oh, sorry. If you're a founder, imagine your scientist, right? And you can decide one of two experiments.

One experiment that actually tests your hypothesis. And will give you actual information about this is right around. And another experiment that doesn't test the important role. How many founders do we know who are never testing the important key hypothesis of their company for the exact reason you talk about it because if I know that I'm wrong, my either shatters or my investors wait me or my co-founders will leave or some other reason I told myself for not just figuring out is the thing I think true or not.

And what I find so surprising is that some founders just, it doesn't occur to them to think this way. You know, we have to strike founders come in and talk about that. And we always get founders asking us about pricing. I've got this time I found it freely and done it up.

And the strike founders said we thought that startups had a problem except in credit price. We thought that all of the existing products out there back in the day, which you are to use in some true panias. So now we test our offices. We built something for developers.

There's a lot easier for startups to use. And then we charged more than the competition for it. Now any scientist we say, okay, well if we're trying to like test this variable, charging more to see figure out what the product would use this thing, it seems a great logical test. But for a startup founder that seems like a crippling decision.

And what I loved about the strike founders here is that they just went with a logical test. And they put their go to the side and they say, hey, what's the fastest most logical test that we can run to see if this thing is something that people want. Anyways, so we talked about this problem, this mistake of like our users really just went to capital. Any kind of capital on these.

Here's the last one. The last one is kind of sometimes what I call the terrorists. These are like, you love more than they love you. So here's the quote from the YC founder.

What the customer you're pitching says, we really love your tech. But we can't pick it up today because X. We want to use our next question. We'll be in touch soon.

This is a rejection. They don't want your tech. They just want your business. They just want your out of their office.

This is a don't call me. I'll call you. So how does a founder interpret whether they're talking to a real customer or someone who's just trying to be polite or just trying to move on or doesn't have the need? How do you figure out?

We told the talk to their users. How do I figure out what I don't talk about? I think if we talk about being scientists again like we didn't want to go, the scientists would be dispassionate. And they would say, okay, no, and they wouldn't think about it anymore and they would go on to the next thing.

I think a lot of the reason why founders talk in this trap is because they were never taught what sales really is. Like they were taught sales in the context of I don't almost argue, argument. Like I think what a lot of founders think sales is is more like what lawyers have to do to convince a jury. Like a jury's been has to be there.

And like they're going to make a decision. And as a lawyer, your job is to convince them one or the other. I would argue that the best sales people convincing is really low on the list of what they're doing. I would say convincing isn't on the list of what they're doing.

I would argue that the best sales people are spending a lot of time doing two things, learning and filtering. Learning and filtering. It's a successful conversation with a customer. If they say no quickly and they teach you about other kinds of customers who also are going to say no quickly.

That's a success. And like filtering out the customers will never get to a yes as soon as possible is a success. And I think that a lot of founders have never been sales. Like I know if they say no that just means that they don't understand how many things I have to explain about it.

I suppose to like know that no is a gift. Figure out what you could have asked them so they would have said no in the first three minutes of a conversation. So I see when you talk about this customer validation. Like every sales call should start with three questions that allow the customer to disqualify themselves from your product.

A lot of your calls should be ending in the first five, ten minutes. Like I don't think we're right for you now. We're happy to call you back when we can do this thing or that thing. I don't know right for you now.

And if enough founders and it's funny because the themes are all the same, being willing to say no, being willing to test the core processes, not feeling bad when someone doesn't want your thing. Have you got one of those fire roles of self-rec representation and self-tout. If we're going to wrap this up, this is a common place if I have talked to users. And I think the reason why people don't do it and clearly what you have played out is they don't do it because it makes them feel bad.

And here's why I see startups. And I'm like, that's what you signed up for. So don't run. It's kind of like a marathon owner being like, man, I hate that feeling when my legs are super cramped.

I don't want to run anymore. It's like, well, you're going to feel that way all the time. You're good because you can deal with that feeling and stay productive. And stay logical and stay scientific.

I think about a lot of what you said in terms of the trade-off of being an employee versus being a founder. When you're an employee, if you're working at Apple or Google, you don't have to work on this stuff. You're like, you got 15 layers protecting you from external world feedback that you don't want. You have several layers of managers telling you it's all going to be OK and getting you constructed positive feedback.

You have to get fired when it doesn't work out. It doesn't work out. You have probably all hands where you can expect all these layers where this is all the stuff that's filtered out from you. This is not your problem.

When you're a founder, there is no filter. And I think people freak out because they treat being a founder. It's on the same thing. The same sort of thing is being employed.

You're on a work-a-goon. It's like, oh, no. This is different. One of those things, you're like a worker being, and you just work on your thing.

And it's really low stress. And you have to worry about your manager liking you and stuff like that. There's no managers, there's no filter. You're just out there, day on the wind.

And every breeze that comes away, you're going to feel the inputs that you experience as a founder are completely unfiltered. You have to be a person that tells the people working when you're on the roll of the filter. You're not a filter. Not a person who filters.

A lot of those aren't many prepared for this. Reality is tricky when it's not filtered. But I don't think it's more fun. It's more fun to look at the sky with your own eyes and to look at a drawing of a picture of a movie of a webinar of the sky.

It's more fun. You've got to live your life. We only get a short time at the start. Might as well use your own two eyes.

That's at least my thought. This is great. This is a great wrap up on talking to users. Why and then why it feels like crap?

And why it feels like crap?

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This episode is 20 minutes long.

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This episode was published on September 5, 2022.

What is this episode about?

Dalton Caldwell and Michael Seibel on the importance of talking to your users, why successful founders are ok with rejection from potential customers, and how protecting your ego by not talking to your users can kill your startup. To create Rookies...

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