tag:initialized.com,2013:/posts Initialized Capital 2017-02-22T09:16:53Z Initialized Capital tag:initialized.com,2013:Post/1132434 2017-02-18T22:37:14Z 2017-02-22T09:16:53Z Co-founder Conflict

This post was originally posted on TechCrunch here.

Here’s how it felt in the weeks before I resigned from my last startup: I couldn’t sleep. I couldn’t eat. Resting pulse at 120. I had reached a point where I couldn’t agree with my co-founder over the future of the company. I had to step away from the startup that I shed blood sweat and tears over for years. I didn’t want to do it, but I reached a point, physically and bodily, where I couldn’t handle the stress anymore.

This is the first public post I’ve ever talked about it, and through advising hundreds of startups I’ve learned that my story is not uncommon.

Every co-founder situation is different, but one common problem that keeps popping up really revolves around how the founders engage in conflict: either not enough, or far too much.

Being successful will mask co-founder problems

Founder drama happens even in situations where you wouldn’t expect it to crop up. Success will cover up many sins. When things are going up and to the right, things might be going wrong underneath and you won’t be aware of it. It’s the black ice of startups. It’s dangerous because every startup will hit the skids sooner or later. You can’t count on good times forever. Winter is coming.

Posterous, the startup I cofounded in 2008, grew 10X yearly and became a top 200 Quantcast website in that time. But by the end of 2010, growth had flatlined.When things were going well, we were too busy keeping the site online to have anything to disagree about.

I learned the hard way that if you haven’t prepared for conflict in your co-founder relationship, you’ll be at each other’s throats right at the moment when you most need to be working well together.

The mistake that my cofounder and I made was in avoiding the dynamics of our co-founder marriage altogether. We rarely spoke directly and honestly with one another. We didn’t stop to reflect on what he needed or I needed. We never sought professional support to ensure the health of our partnership. When the honeymoon ended, there was no healthy foundation to support the company.

During my time as a partner at Y Combinator, we always looked closely at how well co-founders knew each other before they started. Most people think of good co-founding pairs in purely functional terms: a business person paired with a technical person. This is deeper than that, because when conflict does arise (and it always does), if you have nothing in common other than the startup, you’ll struggle to find common ground at the worst of times. It’s necessary for founders to have something in common, but not sufficient in and of itself.

In my case, I had known my co-founder for over 8 years and we had been friends since college. We had history, but we learned history is not enough — you’ve got to maintain it like any relationship. It isn’t enough that you have been friends for years. It matters what your relationship is like now.

Avoiding conflict

With hindsight, I now realize my rift with my cofounder was entirely preventable. We stopped spending time together because we were avoiding conflict. I wanted so much for us to succeed, and I wanted so much for us to be great co-founders (and to maintain the narrative that we were close and and had a good partnership) that I skipped the hard work that it takes to get that relationship and do our best work: embracing conflict and resolving it. It’s a problem that I’ve recognized over and over again in founders whom I’ve worked with both as an advisor and investor.

If you haven’t spent time together outside of work, ask yourself why? If you see your co-founder coming down the hall, do you alter your course to avoid them? Do you try to keep your interactions at a minimum? If so, that’s a clear sign you’re avoiding conflict by just avoiding them period. That’s just not going to work.

Founders sometimes take the avoidance route to an extreme. One recently told me that he decided to talk to his co-founder only once monthly, claiming it to be the only valid way forward. This was a pretty extreme case of avoidant behavior! I told them they had to either radically spend 10X more time working through issues and resolving them, or prepare to split.

It’s the same script all over again: co-founder conflict is bad, so if we minimize how often it happens, that’s the best possible case. It’s a trap!

My executive coach Cameron Yarbrough points out that this is usually the moment the Four Horseman of the Apocalypse show up: Defensiveness, criticism, contempt and stonewalling. When psychologist John Gottman (author of the Four Horseman concept) identifies those behaviors in marital relationships, he’s able to predict relationship failure with uncanny accuracy. The same thing holds true for cofounders.

Successful co-founders actually embrace conflict, and are constantly in the process of resolving it. If you can’t argue and arrive at the best solution, you’re not doing the work to actually have a real, healthy working relationship.

You have to actually lean into the conflict and come out with a solution that makes sense, over and over again. If you find yourself avoiding it, then you have to consciously expend effort to fight that default behavior.

Don’t agree on something? Don’t leave the room until you have a resolution.

An hour not enough? Cancel your weekend, go on a hike, and figure it out.

In these situations, there’s nothing more important than for you and your cofounders to do the work and come out of it stronger.

Too much conflict? Boundaries

Of course fighting all the time is no good either. It’s a recipe for a frayed relationship sooner or later. When founders are in a situation where they are fighting about everything all of the time, it usually means that their individual roles are not well defined enough. Two hacker founders refuse to give up ground over an architectural decision — product oriented founders with similar skill sets fight over direction, and so on.

Here’s the best way to handle it: Make a list of all of the areas needed for your business. Then figure out who is best at each part, and assign one person to it. If someone’s better at sales, then they should own that. Likewise for DevOps or any other specific kind of task that is core to your business. That person is officially the owner of that thing. Everyone agrees to hear each other out when a decision comes up, but once the owner decides, all debate is over. Everyone moves on. You can’t debate things forever, and co-founders need to be able to trust each other.

Embracing conflict, fighting fair

If this is your first company, this might be the first time you’ve had to make decisions at this stage. What does it actually mean to embrace conflict? What is fighting fair?

Embrace conflict instead of abandoning yourself. Some founders know what they want, and know what’s right, but end up giving up before the fight even starts. If this sounds like you, don’t feel bad about it— that was me too. I’ve always valued harmony in my interactions with everyone I work with. But with time, and again sometimes the hard way, I’ve learned you can’t sacrifice what you know to be right in order to get to that harmony early. You’ve got to fight. Don’t swallow your words. If you have a point, make sure you are heard.

It’s not aggression either. You shouldn’t bulldog your way to a decision. The loudest in the room shouldn’t necessarily and automatically be the one who wins. This is actually conflict avoidance of a different stripe— One that doesn’t give any space to any competing idea at all. You may be sure you’re right, but in a fair and balanced conflict, there’s no downside to listening first and letting the other side know you hear them.

Fighting fair is collaborative and data-based. One concrete thing before you start to work through conflict is to always remind yourselves: you’re on the same team. Everyone in the room wants to win, and all of you want to make this company successful. With that, you’re ready to go talk about the problem as a process, where different viewpoints are aired out and evaluated directly. You fail at this only when you try to skip to the end, either by giving up before you begin (self-abandonment) or asserting you’re right before anyone even gets to get a word in edgewise.

One concrete way to get more direct experience with this is what’s called a T-Group, which is a technique developed for the Stanford GSB’s Interpersonal Dynamics program to train people in precisely this kind of fighting fair. Nonprofit Innerspace regularly hosts them and many founders describe the experience to be extremely valuable.

Get help

Some of you reading this will have been through all of the exercises above, and more. For those of you who are at the end of your rope with your cofounders, I have one final piece of advice: Get help! Talk to your most trusted friends, investors, and mentors. Startups are crazy things, after all. You’re trying to do something nobody else has done, and it can feel very lonely, like you’re the only one who has ever had this problem. Trust me, it helps to get outside of your head here and talk through what you’re seeing with other founders and friends.

Don’t be afraid to bring in the pros. Be open to getting professional help, either individually (to help you respond to the ongoing conflict) or as a group (similar to how a marriage counselor can save a marriage). I can’t recommend executive coaching enough for founders, especially when a company-killing conflict is on the line. You have employees and customers who depend on you to make the right call, and you owe it to them to make sure you do. Athletes have coaches and trainers who help them get to peak performance. Knowledge work can be just as demanding, and I’ve seen many founders find their partnerships saved this way.

Cofounder disputes are the #1 early startup killer, but it doesn’t have to be that way

Cofounder disputes have historically been one of the top reasons why startups fail at the earliest possible stage. Most that do fail happen because conflict (either too much or too little) is left unresolved for too long, but with these tools, you’ll be at least a little more prepared against that possibility.

Embrace the conflict, just the right amount, and you’ll get through this too.

Thanks to my executive coach Cameron Yarbrough for reading drafts of this.

IMAGE: PIERRE-ARNAUD KOPP/FLICKR UNDER A CC BY 2.0 LICENSE

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Garry Tan
tag:initialized.com,2013:Post/1129141 2017-02-06T20:51:40Z 2017-02-20T01:09:09Z Feeding people more efficiently is a billion dollar business — Why Initialized invested in Shelf Engine

Stefan Kalb ran a multi-million dollar business in selling sandwiches and salads to Seattle area cafes and supermarkets. As an actuary by training, he couldn’t help but notice the profits in the business were driven by how closely his team was able to match supply to demand. Every unit unsold was cost that would not be recouped. He paired up with a friend, Microsoft Hololens engineer Bede Jordan, to figure out a better way.

We’re proud to announce our newest seed investment in their startup, Shelf Engine. We led this $800K seed round with participation from our friends at Liquid 2 Ventures and Founder’s Co-op.

This is a great example of a strong business founder with domain expertise working together with a strong engineering co-founder to tackle a big business lying in plain sight. Both sides of the equation here are exposed regularly to supply/demand mismatch: both food producers (manufacturers and distributors) and food retailers (cafes and grocers). The ordering process today remains a manual one, with nearly all orders still done using traditional methods: phone, fax, or often just pen and clipboard.

When using traditional methods, it’s up to regular operations folks to decide when to up an order or reduce it— but that results in whiplash. If you over-order, then you’ve got waste. If you under-order, then you don’t sell as much as you could have. Individual managers end up increasing or decreasing order size based on what just happened (one data point), which means there’s whiplash as order sizes change dramatically over time.

Food wastage costs grocers as much as 12% of overall revenue, and when large grocers like Kroger average 1.4% long term profit margin, that represents a multi-billion dollar problem that needs to be solved. Shelf Engine has created a food ordering and prediction engine that has already increased annual profit by 7% for an early pilot, and is going live now with beta customers in the Seattle area.

This early stage startup is tackling precisely the kind of file cabinet business we know desperately needs smart software, and we’re proud to be backing this team.

http://www.shelfengine.com

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Garry Tan
tag:initialized.com,2013:Post/1123704 2017-01-17T15:00:02Z 2017-02-20T13:11:37Z Welcome Eric, Vince and Jen to the Initialized Capital Team

The Initialized team has grown, and we’re very lucky to call these talented people our partners. It’s always been a priority for us to bring on people who are experts at what they do who also happen to be genuinely good, kind, and empathetic.

We’ve gone out of our way to find people who can help with the nitty-gritty of building a company — in going from zero to one. Successful startups are able to navigate not one or two, but thousands, of landmines that stand between them and building a successful company.

With these new additions, we have just upped the ability of our founders to diffuse problems on this path. When a startup reaches the other side of product-market fit, it’s magic, and we are happy that with these great folks, more will be able to cross over.

Eric Woersching, General Partner

Eric is able to help startups understand their metrics and put together operating models that make sense as they hit scale. He is a seasoned financial analyst and investor, and worked for legendary investor Peter Thiel for 9 years, first managing the trading desk at Clarium Capital Management and then as a portfolio manager and macro analyst at Thiel Macro. Eric has also been an angel investor in Y Combinator startups. He is a CFA charterholder and has a BS and MS in Electrical Engineering from Stanford.

Vincent Chu, Operating Partner, Engineering

Vince has consistently built distributed systems that have handled world-class scale, while also having the empathy and product vision to build software that deeply satisfies what users need. A physicist turned software engineer, Chu worked with me as Director of Engineering at Posterous. At Twitter, he worked on the backend systems that power the public API and consumer-facing features for the home timeline. More recently, he was an early employee at Clara Lending, building its mortgage lending platform. He has a AB in Physics and Mathematics from Harvard, and a PhD in Applied Physics from Stanford.

Jen Wolf, Operating Partner, Product/Design

Jen is a talented interaction designer who can also build, manage, and inspire teams of product managers and designers to build products used by millions. She was recently Chief Product Officer at Reserve, a hospitality platform that connects restaurants and diners. A startup veteran, she was previously the CEO and Founder of a boutique product and design consultancy where she worked on successful projects with companies like Apple, Twitter, Chase, Nordstrom and Starwood Hotels. She has a BA in International Studies from the University of Washington.]]>
Garry Tan
tag:initialized.com,2013:Post/1112106 2016-12-01T12:30:02Z 2017-01-09T09:56:39Z Why Initialized Invested In WorkRamp & The Future of Employee Training

Work is changing a lot, and great software remains at the heart of that. Around the Initialized offices, we often talk about how easy it is for someone to share a photo with a friend with great consumer software, but nearly impossible for very simple things to happen at work. 

Today, we’re announcing that we’ve invested in WorkRamp, a graduate of the most recent Y Combinator batch, that is re-imagining how companies train their workers.

Imagine for a moment: A room full of 100 people looking at PowerPoint slides together. The dull videoconference where half the people have the browser minimized. The long-winded email that managers spend days agonizing over, but most folks skimmed briefly and archived immediately. Incredibly, the best option for folks who wanted to train their organizations was to use MailChimp to send the email and check the open rates! 

Enter WorkRamp. The company has built a knowledge management tool that lets employers easily create training guides. These are living documents that are actively pushed to large teams, with sections that train people through tasks, tests and videos. These guides can be revised over time into a master plan that folks use for new employee onboarding, rolling out a new sales plan, or even for engineering teams to share the best security practices. 

Managers can get real feedback about whether the guides are useful, and if their teams actually retain the knowledge presented. For instance, a salesperson can shadow calls with senior sales people and get certified in their skill pitching people, using video, all inside of WorkRamp. Once a whole team has been through the training, the VP of Sales can easily see who’s up to speed and who might need some extra coaching. 

We love that WorkRamp guides are the obvious replacement for the dumb out-of-date wiki, a painful all-hands, and the boring videoconference. Their smart learning management software is already helping companies like Square empower more small business owners, and Off Grid Electric bring electricity to more homes in Africa. 

WorkRamp’s CEO Ted Blosser previously led teams at Box and Cisco, and his cofounder Arshdeep Mand was Director of Engineering at YC-funded SpoonRocket. It’s a winning combination: product/engineering founders who can sell. Here’s what Ted had to say about starting WorkRamp now with more experience:

My first company failed and I promised myself that I would go learn from the best before taking another shot at starting my next one. I spent almost 5 years at Box, learning and doing everything I could — from sales, to product management and go-to-market. I was able to work with top leaders like Aaron Levie and see first-hand what you needed to do to make your company successful. Right before my fifth anniversary, I felt the market opportunity was right and my skill set was developed enough to make the leap again. Building a company is a long journey (especially in enterprise SaaS), but there hasn’t been a day so far where I’ve regretted the timing of my decision!

We’re very excited to be investors in this startup with great co-investors and friends like Leo Polovets at Susa Ventures, Semil Shah at Haystack, Wei Guo at Wei Fund, Mike Ma and Mike Miller at Liquid 2, and super-angel Elad Gil. 

WorkRamp is available now at workramp.com.

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Garry Tan
tag:initialized.com,2013:Post/1105313 2016-11-21T18:21:43Z 2017-01-06T17:06:21Z Flexport CEO: The corporation is a relic of a bygone military era


Ryan Petersen founded Flexport, a shipping logistics company that manages and tracks inventory as it crosses the globe by ship, plane, truck and warehouse. They recently closed a $65 million round after taking seed investment with Initialized back in early 2014.

The genesis of the company is rooted in Petersen’s teenage years, when he was buying and selling products from mainland China by arbitraging costs between marketplaces like Alibaba and other U.S. sites. His second company, ImportGenius, played off the first one, when he and his brother realized that all manifests for ocean freight shipments entering the U.S. were a matter of public record. He started digitizing these documents — around 300 million so far, made them searchable and began selling subscriptions to that data.

But when Petersen started Flexport, he didn’t want to just re-think shipping. He wanted to take a wholly different approach to structuring a company.

Companies as Biological Organisms

While in business school, Petersen wrote an essay, called “Out of Control By Design.” 

His idea was that corporations, as we know them today, are a relic of a bygone military era. They have teams that are siloed and split by function, which centralizes decision-making power and makes companies less nimble and responsive to customer needs. 

But as the nature of warfare and security threats changed, the military adapted. They’ve created special forces and squads that flexibly operate where traditional top-down control structures once dominated. Companies haven’t.

Petersen argues that the militaristic approach of the past has to be replaced by a more accurate metaphor. Businesses, made of people, behave much more like biological systems. 

“We want our company to behave like an immune system, where people see a problem and kill it rather than waiting for permission,” he told me.

Making Customer Service Central, Rather Than Peripheral

And so, rather than having siloed teams in sales, customer service and operations, Petersen and his onetime business school classmate, COO Sanne Manders, structured an organization where small teams or “squads” of account executives, account managers, operations associates and customs compliance specialists work together to address client needs on the fly. It’s totally different from how customer service is usually a more peripheral function inside tech companies.

“Companies often treat customer service as something that can be like a coin-op. They don’t empower reps to solve problems,” Petersen said. “But employees would rather be much more than a cog in the machine. You want bottom up decision-making, not top-down control.”

Every Flexport customer has a lifetime relationship with just one team or squad. And every customer service rep has autonomy within the squad to make on-the-spot decisions to make customers happy without needing to go up a hierarchical chain of approval or following a rigid protocol.

“When I reflect on bad customer experiences I’ve had with companies, it’s always because the person I was talking was not empowered to do the right thing to help solve my problem,” Petersen said.

In Flexport’s case, a customer can have an extraordinarily valuable lifecycle. Earlier on in his career, Petersen learned that the yoga brand Lululemon has used the same freight forwarder from when they were doing only $1.5 million in revenue. Today, Lululemon does more than $2 billion in revenue. 

While Lululemon isn’t a Flexport customer, this realization ended up informing Petersen’s strategy. The goal is to lock in valuable companies as customers when they’re young and to grow up with them. Petersen estimates that Flexport’s clients could spend up to 5 percent of their revenue on freight.

Tracking Your Net Promoter Score

To make sure his customers are happy, Petersen measures Flexport’s net promoter score or NPS daily on Delighted. The net promoter score measures how many customers would refer a friend, colleague or client to the business. Flexport’s current score is 79, which would put the company among brands such as Starbucks and Apple. 

“In the old world, the executive committee or a CEO was in charge. In our world, the customer tells people what to do,” Petersen said.

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Kim-Mai Cutler
tag:initialized.com,2013:Post/1105379 2016-11-07T19:18:24Z 2016-12-24T13:50:37Z HR Incentives and Unintended Effects on Hiring Engineers

When Harj Taggar founded Triplebyte a year and a half ago, he wanted to take lessons from evaluating thousands of startups as a former Y Combinator and Initialized Capital partner into helping companies put together the very best technical teams -- regardless of background or pedigree. 

He started Triplebyte, a company that does the first pass of evaluating engineers through programming tests and interviews. Since starting last year, Triplebyte has evaluated 12,000 candidates. Of those, Triplebyte has interviewed 2,000 engineers and sent 15 percent through to the final step of being introduced to companies in their network. At partner companies like Dropbox, Cruise and Stripe, Triplebyte is seeing offer rates on candidates that are above 60 percent. (You can read the company's post about it here.)

As part of the Initialized portfolio, he shared a few observations he's made over the years at how growth-stage technology companies build engineering teams, and where they can miss the mark in creating incentives for recruiters.  

“The metrics of success you give your recruiters or your recruiting team can have unintended consequences that can harm diversity efforts,” Taggar said. 

Here are metrics that CEOs emphasize to recruiters that Taggar thinks can sometimes have unintended effects:

  • The on-site offer rate: This is percentage of candidates who come to on-site interviews who you ultimately end up approving and offering positions to. Taggar says some CEOs tell their recruiters to optimize for this. But the problem is if you’re trying to maximize on-site offers, recruiters will end up becoming more conservative. They’ll go for safe, recognized engineering schools rather than lesser-known ones that may produce a more diverse engineering team, but a lower on-site offer rate. “Recruiters will dig in, and start making sure they’ve only gone to certain schools, which reinforces their pattern-matching and could hurt diversity efforts,” he said.

  • The offer acceptance rate: This is the percentage of offers that are being accepted. Because you’re putting recruiters on the hook for closing candidates, they’ll get penalized or feel bad if few people or no one accepts the company's offers. When CEOs emphasize this metric, Taggar says recruiters will start advocating for avoiding making offers to candidates that they think won’t accept deals, which means a company could miss out on good potential hires. 

  • The “culture fit” rationale is probably overrated: When Taggar started Triplebyte, the company made the deliberate decision to only screen for technical skill rather than soft skills or “culture fit” on top of that. Even with this decision, the company still has a 60 to 70 percent placement rate for the candidates it forwards to startups. “For engineering hires, this suggests that the bottleneck isn’t “culture fit,” it’s just getting people who have the skills.”

Here are metrics or practices Taggar thinks CEOs should optimize for:

  • Minimizing response time to candidates: “From a procedural perspective, the best engineering organizations never seem to leave a candidate waiting for more than 24 hours,” he said. “Usually, founders have no visibility into this.” Taggar said if he were starting another company, he’d try and monitor response times to candidates through Lever (another Initialized-backed startup) or e-mail. “I’d monitor how long it takes my recruiting team to get back to candidates and relentlessly optimize that,” he said.

  • Keeping the hiring process centralized as long as possible: Early on, it’s very easy for startups to have a centralized decision-making process where founders and early team members can have input on every new hire. But this obviously becomes more difficult as a company grows. “When you don’t centralize your process, it’s hard to maintain consistency. If you don’t have consistency, you will be more likely to miss out on good people,” he said. Taggar said Coinbase and Mixpanel still have centralized processes where a single-person has input in end-decisions on hiring. 

  • Emphasizing the match between candidates and technical projects they’re interested in over selling the grand vision of the company: Taggar says the best engineering organizations pay a lot of attention to matching the personal interests that every candidate has with what they end up working on inside a company. “It’s less about selling the big vision of the company and more about being really specific and getting people to work on something they’re really excited about.”

  • The false negative rate: Taggar says growth-stage CEOs could start measuring the percentage of candidates that they reject that go on to get offers at companies whose hiring processes they respect. “This is somewhat tricky to do,” he said. “You can check LinkedIn profiles of candidates, and look for companies they end up getting jobs at and try to get the rate of misses down over time. I think companies just completely overlook this.”

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Kim-Mai Cutler
tag:initialized.com,2013:Post/1104632 2016-11-01T17:49:20Z 2016-12-04T04:22:15Z Last minute tips for YC Interviewees

This is the first week of interviews for the Y Combinator Winter 2017 batch! So I thought it'd be helpful to folks to get down in writing my lessons from being a partner doing interviews at YC for almost 5 years. 

Congrats on getting the interview. You've made it past the most significant cutoff in the YC applicant process. Based on your team, idea, and traction, you've made it into the top 5% of all people starting startups at this time. You're one 10 minute interview away from being in the top 1.5%. 

Here's the list. You'll notice that each of these is usually addressable through practice, and preparation. When you pitch an investor for half an hour or an hour, you have a margin of error. With 10 minutes, you don't. 

Use plain-spoken language and start concrete

You don't have a lot of time to explain what you do. Ten minutes is not a lot of time. Don't let your desire to fit some idea of what a startup should sound like obscure what you actually do. If you're making  software that connects retailers with consumers, that's fine, but that's not specific enough. Better to say that you help brands like Gap or Aeropostale directly sell to customers online through YouTube stars. 

...Then zoom out, and be sure to show why that could be something much bigger

The best founders are able to start off with very concrete and real progress, but then once they've established themselves as real, they can zoom out to show what the product could become. So you might be helping Gap sell through YouTube now, but because Gap is such a great lighthouse customer, it means that the Fortune 1000 is now willing to sell direct through you as well, and that could be very big. 

Traction gets you in the door, the big future gets you the check

Smart investors never fund things because of what you've done so far. What you've done just gets you in the door. What makes people get out the checkbook is how big you can become. 

This fact is important because the top broken pitch problems end up being related to exactly this. Some pitches start with the grandiose future, but the team has nothing rooted in reality or what they've done so far to show that they're the folks to make it happen. Others focus almost entirely on talking about the traction now, but never talk about what it could become. 

It takes both. 

Know your numbers

What is the cost of what you're doing? How much does it cost to acquire a user? How much does it cost to service one customer? How much money do you make per unit sold? It's fine if you're not profitable initially, as long as you have some story where you can certainly be profitable down the road. 

The most obvious way to tell if someone is serious is that they've thought through the costs and pricing of their business. Great founders never neglect that part, because at the end of the day, the bottom line is how you tell if a business is good, or a business at all. 

What do you understand that nobody else does? 

Having big dumb competitors is good because it shows that there's a real market or problem that's being solved, and YC partners have a long history of seeing firsthand small teams of smart people outperforming big dumb companies for years. It's a well known playbook. But it's not enough to call them big and dumb. What can you do that those incumbents can't or won't? 

If you don't have competitors, that's OK too. What do you replace? What were people doing before using your product or service? One thing this question tends to capture is whether people actually want it. 

The tricky part is when there are actually smart competitors who already exist. Then you've got to be even more direct about why you are better. These are cases where in particular you have to be 10X better, not just 10% better. The road to startups is littered with many failed teams that have a product that is only marginally better. 

---

These tips work great for all pitches (including pitches to us!). Being prepared in the above ways is helpful for founders in the same way the 12 question YC application helps founders of all stages— because these are the things that naturally help people make things people want.

YC remains the best place in the world for eminent founders to create new things and join one of the most valuable founder communities, and we've been lucky to have a front row seat to the great things that have come through. Let us know how we can help.

Best of luck to all the interviewees. 

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Garry Tan
tag:initialized.com,2013:Post/1098555 2016-10-24T14:00:00Z 2017-02-02T09:17:11Z Initializing Initialized Capital...

Welcome to Initialized Capital. We’re proud to announce we're investing out of a new $115M early stage seed VC fund. 

We’re founders who are engineers, designers, and product people. We’ve built startups from scratch ourselves, and we want to help you do the same. When startups work, they look like miracles, but they are in fact the result of impeccable execution in every aspect, from the team, to the idea, and ultimately to the product itself. There are a thousand landmines that every founder, no matter the experience level, has to navigate. If we can help point out those landmines, and help folks along their journey, then more miracles can happen.

We invest in early stage companies with a typical check size of $500K to $1M. This should either be plenty of funding for a small team to show traction from nothing, or the start of a strong seed round syndicate with other smart investors we know who can help in complementary ways. We’re happy to be the first check into your seed round and we won’t ask you that thing everyone else always asks: "Who else is investing?" We make up our own minds. 

We believe great companies emerge from many industries and disciplines, and from anywhere in the world. We are best at funding small teams just starting out, when they have zero to 10 employees. You should have a great team pointed at a great idea, but we’re not afraid to invest even if you only have an early demo.

Come talk to us. We’ve done more office hours with more startup founders than most anyone you’ll find. If we can help you avoid some landmines and find the right path, then that’s what we’re here for.

—Garry Tan
Cofounder and Managing Partner

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Garry Tan