Tim O'Reilly literally "Watching the Alpha Geeks" (photo by Adam Kazwell)

Y Combinator and Stanford’s BASES recently announced this year’s Startup School.

When: April 19, 2008, 9:00 am
Where: Kresge Auditorium, Stanford University
Application Deadline: March 23

I’m biased of course, but I think this is the best event out there for anyone who wants to start a startup (or already has). You can’t learn everything in a day, but Startup School exposes you to advice from an amazing array of people who have either done it themselves or work daily in that world.

Startup School began as an experiment to “open source” Y Combinator. YC itself takes three months and we can only fund a limited number of startups. But we wanted to see how much we could give everyone for free in one concentrated day of talks. A lot of the experts who speak at Startup School are the same ones who speak at YC dinners.

But beyond the high quality speakers, there’s something magical about Startup School that is hard to understand if you haven’t been there: the audience is mostly programmers and there’s an atmosphere of intelligence combined with commitment that I’ve never felt anywhere else.

The event is free, because we know that the one thing most startup founders lack is money. It always seemed odd to me that so many conferences having to do with the web charged so much to attend. Many founders we knew (even ones with some funding) who were at ground zero of all the new things happening on the web, tended to be priced out of these events.

We run Startup School like a startup. We offer bagels and coffee in the morning and not much else. There’s none of the extra stuff usually associated with conferences-- no sponsors, no introductory remarks, no exhibitors, no bags full of schwag. Startup School is just about the content. And like a startup it has grown by word of mouth.

Ask someone who’s been.  They’ll tell you what I mean.

Me interviewing Flickr's Caterina Fake at SUS 2006. Fun! (photo by Patrick Tufts)

Bill Gates demoed Xobni (YC summer '06) at the Office Developers Conference today. Cool.

Today Imeem announced that it has acquired Anywhere.fm.

Anson Tsai, Luxiou Chen and Sachin Rekhi founded Anywhere.fm last year, during Y Combinator’s summer 2007 funding cycle. They’re the first startup from last summer’s batch to be acquired, and they were also one of the first in that batch to launch.

The Anywheres seemed to do everything fast. Above all, they built things fast.  They’d talk with us about a new feature idea, and then the next time we saw them, a few days later, it would be done. This ensured that they had one of the most impressive presentations at Demo Day, which meant they got a lot of interest from investors.

Congratulations guys!

Michael Ossarehof Heysan! advises two new startups.

A few weeks ago, we kicked off Y Combinator’s sixth funding cycle with 21 new startups.  They’re all living in the Bay Area now and are totally immersed in building their products. Some have already launched.

One of the things that surprised us recently is how big the YC alumni network has grown. Now that we’ve invested in 80 startups, there are almost 200 alumni.  It didn’t really hit us till we started organizing a reunion and realized they’d barely fit even in our huge west coast building.

A cheery reunion with founders from last summer's funding cycle.

It’s great how much the founders help one another. As usual, several alumni came to our first dinner to talk about what they wish they’d known when they were just starting. The most consistent pieces of advice: launch quickly, be really careful about hiring, and that raising money can take longer than you’d expect.

Joe Kraus (seated far right, in "Cookie Monster" t-shirt) talks to the founders.

Joe Kraus, a perennial favorite with the founders, came to the second dinner to talk about his experiences founding Excite and JotSpot. Joe is such a smart and articulate person—I always enjoy hearing him talk. My favorite takeaways:

-    #1 Persistence. The “$4 billion dollar story” of how Excite landed the Netscape button deal is a must-read for every entrepreneur.
-    Hiring is key. The cost of hiring someone bad is so much greater than missing out on someone good. I think this was a rule they took very seriously the second-time around. They wanted “no false positives.”
-    You make what you measure. Merely measuring something regularly will help you to improve it. And not measuring it will almost guarantee failure.

Carolynn Levy of Wilson Sonsini Goodrich & Rosati joined us at the third dinner to talk about corporate law. WSGR is probably the most prominent startup law firm in the valley. Most founders don’t get too excited about legal stuff  (which is as it should be) but everyone liked Carolynn because she knows startup law so well and is what Paul calls “hacker compatible.”

David Greenspan and Aaron Iba showing off an early version of AppJet on their iPhones (summer '07)

A new YC-funded startup launched this week: AppJet, which lets you create a live web app literally in a matter of minutes. Aaron Iba and David Greenspan founded AppJet during Y Combinator's summer funding cycle. These guys are hotshot hackers and have been friends since grade school. In fact, they started a shareware videogame software company together in middle school.

Knowing each other for a long time tends to be a good recipe for
cofounders. It worked for Paul Graham and Robert Morris when they started Viaweb. Aaron and David brought on their friend J.D. Zamfirescu very early as another founder, and that was Viaweb's initial structure too: two old friends and the smartest person they knew.

AppJet is also similar to Viaweb in that the founders had to do
some technically difficult things to make their application look simple on the surface. But don't let AppJet's simple user interface fool you: running other people's programs on your server is a hard problem.

I'm not a programmer, but I am able to appreciate the difficulty
of the problem that AppJet is addressing. Being a platform in this
sense is more complicated than being one in the sense that Facebook is. Appjet's founders have the technical chops to take on this kind of problem: Aaron and J.D. were highly regarded programmers at Google before AppJet, and David is on leave from graduate school at MIT. While undergrads at MIT, David and Aaron won 1st place in the annual 6.370 programming competition.

Congratulations on the launch, guys. Who knows, maybe AppJet will make it easy enough to inspire me to learn how to code!

L to r: Paul Graham, Kulveer Taggar, me, Harjeet Taggar, and Sumon Sadhu.

Earlier this week, Paul Graham and I participated in the seventh annual Silicon Valley Comes to Oxford event at Oxford’s Saïd Business School.  I’d heard great things about this event from Kulveer and Harjeet Taggar of Auctomatic, as well as Google’s Chris Sacca.

Kul founded Oxford Entrepreneurs when he was an undergraduate, and has been an active supporter of SVCO. In fact, he met Evan Williams at the event a few years ago, and Kul says his interactions with Ev and other SVCO speakers had a big impact on his decision to move to Silicon Valley. He’s been writing about his experience in a series of Viewpoint pieces for the BBC.

Paul and I taught a master class on the evolution of startups. We presented a list of what seemed to us the major drivers of change for startups and discussed their impact.

- Moore’s Law

- The Internet

- Open source

- Advances in programming languages

- Changing attitudes

- Increased funding options

- Changes in income tax policy (especially in the UK)

I was able to talk with a lot of students during the conference. It seems like the default plan for the MBA students is to work for investment banks or consulting firms upon graduation.  But a significant number seem to be rebelling against this. Many planned to start startups instead.

Luckily, they didn’t need to look too far for inspiration. In addition to the experts SVCO usually invites from America, this year they were able to invite recent Oxford grads who had founded startups in Silicon Valley, including the Auctomatics and Bob Goodson and Kirill Makharinsky.

The Saïd School struck me as extremely energetic, and dedicated to developing a real sense of entrepreneurship. In fact the school seemed a lot like a startup itself. It’s quite young as B-schools go, but obviously determined to rise quickly through the ranks.

The most enjoyable part about speaking at SVCO was meeting the students. We met a lot of promising founders. I wasn’t surprised, though. Including our winter ’08 batch, Y Combinator will have invested in 7 startups with founders from Oxford. In total we’ve invested in 8 UK startups, so they’re 10% of our investments.

Other highlights for me:

-    As I was sitting next to Reid Hoffman on a panel, I was delighted to hear he liked Founders at Work so much that he’d bought several copies to give as gifts.

-    It’s always a treat to see Chris Sacca. He’s a big supporter of YC and a perennial  favorite guest speaker. (Regrettably, I missed the late-night kebab tour.)

-    While talking with Biz Stone of Twitter, we discovered that we’d grown up on the very same street in the suburbs of Boston.
 
-    Speakers had a private tour of the Bodleian Library, Oxford’s main research library. We saw a Magna Carta, a book of  gospels thought to have belonged to St. Margaret, and 1 of about 20 remaining pre-Columbian manuscripts.

-    2 current Saïd Business School students gave me a personal tour of Pembroke and Christ Church colleges. (Oxford is comprised of 39 different colleges, many of which are not open to the public.)

Adam Rubin and Jitin Dhanani gave me a tour of their colleges. Photo was taken at Christ Church, where scenes from Harry Potter were filmed.

Finally, I’d like to thank everyone in charge of SVCO: Jonathan Black, Clare Fisher, Deborah Lisburne, Colin Mayer, Josie Powell, and Fiona Reid among others. It was a privilege to take part in such a special event.

Twice a year, Y Combinator has to say no to lots of people. Though we’ve done it 5 times already, it doesn’t seem to get any easier. Selecting a small number of investments from a much larger pool is just the nature of the business. It's particularly hard the day after we have to reject people and Hacker News is filled with woeful posts.

The top story on Hacker News yesterday was advice from someone who’d applied in the past: #1 on his/her list was not to take the rejection personally.

It’s not personal

Please don’t take a “no” from us to mean anything more than there happened to be other applications that interested us more. We get a lot of applications and it’s always difficult to choose who we’d like to interview in person. We admit that our review process is “fraught with error.”  I’m sure there are many people that we’ve passed over for funding that went on to start promising companies—and there will be many more.

Work on your idea anyway

So much of startup founders’ success rests in their attitudes. The founders we’ve funded that have been successful (so far, at least) always seem to be the ones that radiate a conviction that they will succeed no matter what. They are an elevator going up; do you want to come along for the ride?

I hope the Y Combinator application process is at least the ground floor for everyone. You’ve already accomplished some useful things: gathered commitments among cofounders, brainstormed ideas, fleshed these ideas out with some thoughtful answers, etc. But what you may not realize is that you’ve already made it through one of the toughest hurdles for startups: by applying to Y Combinator, you’ve agreed with yourself that you can start one.

So why not keep going? Even if it means just working on your startup on weekends. It’s OK if you want to keep your commitment low risk. The point is just to keep it somehow, some way.

Rejection is part of being a startup

OK, you may not have the same structure, advice, networks and extra cash that Y Combinator provides, but maybe that shouldn’t stop you. The painful reality is that if you do move forward with your startup, the YC “no” will be the first of many—even harsher—rejections you will face.

In the introduction of Founders at Work, I wrote that one of the most surprising things I learned from the interviews was how often the founders were rejected early on:

    I’d say determination was the single most important
    quality in a startup founder. If the founders I spoke with
    were superhuman in any way, it was in their perseverance.

However tomorrow turns out for you, remember why you applied in the first place: you want to start a startup. Don’t let us stop you.

Robert and Paul reviewing applications for the summer '06 funding cycle. (In the old days we used to review applications printed on paper.)

Matt Brezina (l) and Adam Smith (r) in summer '06

It seems like ages ago when Xobni’s founders, Adam Smith and Matt Brezina, were in Cambridge during YC’s summer ’06 funding cycle. We funded them on the premise that they were going to “make email better.” They’ve been working in stealth mode since then, but it seems like the Xobni guys will deliver on their claim.

This week, Xobni launched an invitation-only beta of its first product, Xobni Insight, at the TechCrunch40 conference.

Whew-- it’s so exciting to finally be able to talk about Xobni. Their product has been in the pipeline for a while but had to be kept under wraps. It’s not a web app; it’s integrated with Outlook, so it took them a long time to write.

Xobni Insight mines your email for the relationship information hidden in it. Among the cool features: when you search for someone, their profile appears in the sidebar with contact information. It also gives you a history of your correspondence with them.

Maybe making life better for Outlook users doesn’t seem like the sexiest problem to work on, but there are a lot of them and their lives aren't so great. (I was once one of these people. Ugh.)

Fred Wilson wrote, “I realize that many of you don't use Outlook anymore and have moved on to Gmail or some other better way to do mail. But for those of us stuck in email hell in Outlook, Xobni is showing a way out...”

It also got kudos from Matt Marshall of VentureBeat: “We’ve downloaded it, and are playing with it, and find it truly impressive.”

Simultaneously with building the first version of the product, Adam and Matt had to deal with growing the company. They raised funding from an impressive group of investors: Khosla Ventures, First Round Capital, Atomico Investments, Baseline Ventures and several angel investors.

Last April, they brought on Gabor Cselle, a software engineer they lured away from Google. He’s a formidable hacker: the kind of employee #1 that startups hope to get. They’ve since brought on several other employees and moved into hip (but not too expensive!) new office space in San Francisco.

But most importantly, with the launch of Xobni Insight, they seem to have made something people want. And I couldn’t be happier for the Xobnis.

Congratulations!

I’m always a bit depressed after the last dinner of the funding cycle. In years past, I’d plan a vacation starting the next day—just to distract myself from being sad. I wind up liking the founders so much that I feel like an empty nester once the weekly dinners end.

We have a bench signing tradition, where each founder signs the bottom of one of our benches at the last dinner.

But this summer was slightly different. The day before the last din, I was already preparing to be sad and was talking to Paul about it. I realized that this time the cause was not just because I’d miss everyone but something more: based on past experience, I knew some of the startups would die over the next several months.

I don’t mean I was bummed from an investment perspective. We’re in the seed funding business; we don’t expect all of our investments to pan out. It was the founders that I couldn’t help thinking about.

Most take funding from us and show up with grand ambitions. They beaver away for the next 3 months and get swept up in this amazing wave of excitement, achievement, and sense of invincibility.

But startups are hard. If they weren’t more people would do it. And it’s usually the next year that separates the wheat from the chaff.

That’s why I was so pleased that Paul decided to give a talk at the last dinner about how not to die. This topic may seem too grim to be introduced during such a celebratory night, but I think it was exactly the kind of thing the founders needed to hear. Because it could prevent them from making mistakes that inevitably lead to failure. For example, founders may not have control over market conditions, but they can decide whether or not they go to grad school. After 5 funding cycles, I’ve seen some predictors of early startup death and Paul hit them in his talk, which he posted online.

I suppose ultimately running out of money is the biggest reason for failure. But that’s a symptom of some other cause and doesn’t usually happen if you are doing things right. I think one of the biggest things that kills startups in the earliest phases is not focusing 100% on the company. Paul wrote, “If you find yourself saying a sentence that ends with ‘but we're going to keep working on the startup,’ you are in big trouble.”

You probably won’t make something people want right away. It will take so much perseverance on your part that if you put yourself in a situation where the startup is allowed to fail silently while you are (fill in the blank) [back at school] [consulting] or [working on another startup idea with a friend], then it probably will.

My favorite sentence was, “So if you want to get millions of dollars, put yourself in a position where failure will be public and humiliating.”

All this said, I don’t blame the founders if they try hard and fail. They of course have to pay their bills. Never having done it before, some people can find a startup too overwhelming.

Paul already warned everyone that “bad shit is coming;” and it probably is. But so is some really great stuff too. Like closing a funding round, launching, getting users, moving into your first office, creating something really useful, starting to be well known…

Though I’ll miss them, I can’t wait to see what the future holds for the summer ’07 founders. Good luck!

The gang gave us this digital picture frame, with photos of everyone to remind me of them. I'll treasure it!

Mitch Kapor was our guest speaker last week. It was a magical moment when he spoke to the room full of founders. Not just because he’s rich and famous, but because he is the kind of person they are. There seemed a special sort of fellowship of founders.  

One of the guys wrote to me the next day, “Wow, Mitch was truly great.  Definitely a nominee for Best Speaker Ever.”

I first met Mitch when I interviewed him for Founders at Work. I remember being on the edge of my seat when he told me about the early days of Lotus.

Chapter 6, Founders at Work: "I was so convinced that VisiCalc had a lock on the market that I had to convince myself that we were going to do something that wasn’t fundamentally a spreadsheet.  Of course, what we did was fundamentally a spreadsheet, but the self-deception I engaged in wasn’t sufficiently damaging to be fatal. But there was a big push to call it integrated software, to add other capabilities, to wrap other things in it.

The galvanizing event was when IBM announced the IBM PC in August 1981, and it was very important in the history of PCs because it legitimized the whole field--  because of IBM’s imprimatur. Until then, the personal computer hardware companies were Apple, Tandy and Commodore. IBM was the first “real” computer company to come out with a PC, legitimizing it for the business marketplace.  And that was not lost on me. And they made some very smart decisions." Read (a little) more.

Mitch’s interview is filled with stories that we cite to founders. But it’s not just his experience with Lotus that makes him so knowledgeable. He’s a cofounder of the EFF and was an early investor in companies like RealNetworks, UUNET, and Second Life’s Linden Labs. He talked about his experiences with these and other startups at the most recent Startup School. You can tell immediately that he is genuinely interested in new technology.  

What I like best about listening to him talk is that he’s so candid. I found myself writing down much of his advice. Dinner talks are off-the-record, but he’s given me permission to share one of my favorite quotes. Someone asked what it was like running Lotus and taking the company public. He replied:

“I actually woke up scared every single day that I would do something so stupid that the company would crash as fast as it went up.”

I like this because it shows that even a successful startup founders didn’t always think he had all the answers.

Since then, he’s seen a lot in the world of startups-- and continues to (he gave us a peek at some stuff he was working on with Foxmarks). But what struck me last week was that he does not seem to have lost any enthusiasm for new ideas.