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This is a fantastic story! A couple of takeaways here. The team took rejection VERY well. This is not as easy as you may think. This to me shows the founders be

by adim86 7y ago

This is a fantastic story! A couple of takeaways here. The team took rejection VERY well. This is not as easy as you may think. This to me shows the founders believe in what they are doing and have a deeper goal than just making money. The ability to take the feedback and double down in just a few days is motivational. Second, The power of positive response to negative situations. Lord knows how long it would have taken them to work on MRR if not for the rejection and they could easily have wasted time fiddling with copy and graphics, but the pressure for YC to re-evaluate them made them release ASAP and now they are already making revenue. At the end of the day, YC rejection allowed them to start generating proper revenue before they would have initially, to me that's a win, and they still get to keep the shares YC would have taken and now they have a higher valuation for whomever they apply to next for funding. This is a great framing of a story that could easily be a sob story blog post. Keep it up, guys. You are bound for success.

almostarockstar 7y ago
Just wanted to echo this post. The start of the OP felt a little like the prospective founders were focused more on image than results, but by the end I was convinced. My 2 cents would be to forget about YC as a source of seed capital and either get a loan or private angel investment to build a solid, revenue generating success.
- jjeaff 7y ago
  Ya, if you already have good revenue and revenue growth, why do you need YC? I think YC may be overvaluing their contribution a bit. If I take on all the risk, blood, sweat, and tears to get a product built and out the door and making money, I don't need your $150k. At least right now in this climate, you can raise much more than that from VCs that carry cachet similar to YC and will be good advisors as well.
mikeokner 7y ago
> The ability to take the feedback and double down in just a few days is motivational. Maybe. I took it slightly differently. They received negative feedback after a 10 minute pitch, and immediately dropped everything to change their product & strategy to appease a potential investor. Was monetizing in this manner at this moment the right strategy for them? That's a pivotal decision to make and not one I'd throw together at 2 am to try impress a party with no skin in the game.
- dyeje 7y ago
  I think considering they've grown the MRR to $5000 from nothing since then, it looks like it was a pretty good strategy even if you don't like how it was concocted.
  - hluska 7y ago
    It is very rare that I upvote two comments that seem to be in opposition to each other. In this case, I think it's warranted because you're both likely correct. In your favour, the strategy was successful and they grew to $5k MRR in four months with estimates suggesting they'll hit $100k in recurring annual revenue by the end of the year. It worked so it's hard to criticize it. But, what if it hadn't, or what if the founders were in a different situation where they had a bigger team? Last minute "we have to do this now" decisions are often wrong. When they're not, they often result in some really ugly code that will be tough to maintain. Further, they can be hard on morale. Chances are that the founders had this type of conversation and talked about the risks while they were brainstorming. It almost sounds like they had debated this in the past. Those kinds of debates are very valuable and I think that founders need to talk about how a new feature can go bad.
    - nmfisher 7y ago
      I think you're generally right, but "we have to make money NOW" is a last-minute decision that's probably right in every scenario.
- hinkley 7y ago
  It can be pretty stressful working for people who pivot too easily. Some investors may be attracted to this kind of behavior, and I fear they are also the least pleasant to work with. Things can get a little exploitative sometimes.
- glangdale 7y ago
  Their willingness to make the change may reflect the fact that deep down, they had been thinking that they should monetize, and having YC tell them to do it may just have been the kick in the ass they needed. It's not like YC told them "put on a chicken suit and dance in front of our headquarters and we might consider you". Monetizing and finding out whether there's anyone willing to actually pay for the product is a straightforward move. They weren't building a social network or something with a massive network effect. Putting off the terrifying discovery ("hey, will anyone pay for this?") in their case may just have been procrastination - and YC's rejection may have been a useful trigger to end it.

by adim86 7y ago

almostarockstar 7y ago

Just wanted to echo this post. The start of the OP felt a little like the prospective founders were focused more on image than results, but by the end I was convinced. My 2 cents would be to forget about YC as a source of seed capital and either get a loan or private angel investment to build a solid, revenue generating success.

jjeaff 7y ago
Ya, if you already have good revenue and revenue growth, why do you need YC? I think YC may be overvaluing their contribution a bit. If I take on all the risk, blood, sweat, and tears to get a product built and out the door and making money, I don't need your $150k. At least right now in this climate, you can raise much more than that from VCs that carry cachet similar to YC and will be good advisors as well.

mikeokner 7y ago

> The ability to take the feedback and double down in just a few days is motivational. Maybe. I took it slightly differently. They received negative feedback after a 10 minute pitch, and immediately dropped everything to change their product & strategy to appease a potential investor. Was monetizing in this manner at this moment the right strategy for them? That's a pivotal decision to make and not one I'd throw together at 2 am to try impress a party with no skin in the game.

dyeje 7y ago
I think considering they've grown the MRR to $5000 from nothing since then, it looks like it was a pretty good strategy even if you don't like how it was concocted.
- hluska 7y ago
  It is very rare that I upvote two comments that seem to be in opposition to each other. In this case, I think it's warranted because you're both likely correct. In your favour, the strategy was successful and they grew to $5k MRR in four months with estimates suggesting they'll hit $100k in recurring annual revenue by the end of the year. It worked so it's hard to criticize it. But, what if it hadn't, or what if the founders were in a different situation where they had a bigger team? Last minute "we have to do this now" decisions are often wrong. When they're not, they often result in some really ugly code that will be tough to maintain. Further, they can be hard on morale. Chances are that the founders had this type of conversation and talked about the risks while they were brainstorming. It almost sounds like they had debated this in the past. Those kinds of debates are very valuable and I think that founders need to talk about how a new feature can go bad.
  - nmfisher 7y ago
    I think you're generally right, but "we have to make money NOW" is a last-minute decision that's probably right in every scenario.
hinkley 7y ago
It can be pretty stressful working for people who pivot too easily. Some investors may be attracted to this kind of behavior, and I fear they are also the least pleasant to work with. Things can get a little exploitative sometimes.
glangdale 7y ago
Their willingness to make the change may reflect the fact that deep down, they had been thinking that they should monetize, and having YC tell them to do it may just have been the kick in the ass they needed. It's not like YC told them "put on a chicken suit and dance in front of our headquarters and we might consider you". Monetizing and finding out whether there's anyone willing to actually pay for the product is a straightforward move. They weren't building a social network or something with a massive network effect. Putting off the terrifying discovery ("hey, will anyone pay for this?") in their case may just have been procrastination - and YC's rejection may have been a useful trigger to end it.