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.

What a week we all had out in California!

Tuesday Dinner

We hosted our weekly dinner at our office in Mountain View. We share space with Trevor’s company, Anybots, so the founders were introduced to his robots, Dexter and Monty.

Steve Anderson of Baseline Ventures and Sam Altman of Loopt were the guest speakers. Steve gave an investor’s advice on the fundraising process, and Sam offered the founder’s perspective.

The Bay area alumni descended, making dinner an impromptu YC reunion. I had forgotten what a force of nature all the past founders can be when they are in one room.

YC founders listen to the guest speakers

Ashwin (Buxfer) and Dan (Weebly)

Pelle and Sam

Paul and Steve (Reddit)

Demo Day

The big day was last Thursday and it came off without a hitch. Between the east and west coast Demo Days, the founders demoed to pretty much all the big Internet VCs, along with a lot of angels and even some acquirers.

In fact, the biggest problem we had was the crowd. Our California space is pretty big, but it was still uncomfortably tight. We’re going to have to try something different this winter. I think our plan will be to be to host a special session a few days in advance of Demo Day: a sneak preview for any investor who has previously invested in any YC company.

The investors seemed pleased: it was a very efficient way for them to see a lot of new startups. Many mentioned how impressed they were with the founders’ presentation skills (Paul warns the audience that we choose people because they are good hackers, not good presenters). One VC told me he was on a high from “having quaffed 19 shots at the entrepreneurial bar.”

We had some nice write-ups by the press.

Afterward, Trevor’s toys (the Segwell and Eunicycle) came out, and luckily no one was seriously injured.

Peter Nixey (and his iron-on shirt) on the "Eunicycle"

Pete Couldridge (blurred) almost takes down Paul Graham (with camera)

The proof of the pudding is in the eating

Though it feels like Demo Day was a success, the real test is how many of the startups can get more funding. I hate to scare the founders, but all the hard work they’ve done so far may seem like a walk in the park compared to actually getting investors to close.

Paul’s written some great essays about this. I think the hardest part of being a YC-funded company may be the second three months. We’ve seen a lot of our startups do well during this period, but I’m afraid we’ve also seen some wither and die. So we’re working with the founders now as they try to get more funding.

Xobni party

We capped off the week with the Xobni office-warming party on Friday night. The Xobnis’ new office is just right: funky, good light, not too fancy. A good place to take over the world from.

It was especially fun to see everyone at an event that I was not hosting. Though it was a party, it still kind of amazed me how cheery everyone seemed.

There are so many YC alumni now that they’ve become a real society. Paul told me later that there was nothing like this around when he, Robert and Trevor were starting Viaweb. No one really understood what they were doing. Their friends would ask, “So, are you still doing that company thing?” At the Xobni party, practically everyone there had either started or worked for a startup. They understood.

Ten weeks into each Y Combinator funding cycle, the founders present to investors at Demo Day. It’s probably the most exciting part of the 3 months we spend together.

10 weeks is not really a whole lot of time. But it’s enough to build something good enough to convince investors of your potential.

We tried something new this summer: in addition to presenting to investors in Boston, we’re flying all the founders out to Silicon Valley this week to present again at our office in Mountain View. We found that of all the previous startups that received follow-on funding, about 90% got it from west coast investors. Even ones that presented to Boston investors in summer ’05 and ’06 wound up moving to the Bay area for funding.

It’s gratifying how the east coast Demo Day has grown in popularity. The first summer we were praying people would show up. This year we had to put up a tent in our parking lot to accommodate everyone.

I think the founders were filled with a mix of excitement and anxiety as Demo Day approached. They had heard over and over what a big deal DDay was from alumni, but it wasn’t till a week before-- when they first rehearsed their presentations with the group and saw the list of attendees-- that it finally hit them. Y Combinator founders typically fall towards the Woz end of the continuum rather than the Jobs’ end; most aren’t that comfortable presenting to large audiences.

Well, the week they spent overhauling and practicing their presentations totally paid off. The founders really pulled it together under pressure!

But this often happens. What was surprising this summer was how many investors showed up, and that they all stayed to the end.

I think investors realize that it’s an efficient deal for them: they get to see 19 new startups in one afternoon. Based on past batches, it’s statistically almost certain there will be very successful companies among them.

And of course it’s also a good deal for the founders, who in two days get exposure to the top investors in the country.

10 weeks doesn’t seem like much time to make something to show to the nation’s top investors, but Y Combinator’s funding cycles are so concentrated that you get more done than you’d think possible. My three partners are all hackers, and one of their big principles is that hackers can be much more productive when they’re freed from distractions. Dinner each Tuesday is a big event, but the rest of the week we leave the founders alone to work, and during these stretches they get amazing amounts done.

So now 50 founders are all making their way across the country to the Bay Area, getting ready to fine-tune their presentations and try to convince another room full of investors that they are going to take over the world.

Paul Buchheit (r) with founder Josh Wilson

Paul Buchheit was YC’s guest speaker last week. He also spent the day meeting with the new batch of founders and giving them product advice. With 19 startups, this was a Herculean effort!

I first met Paul when I interviewed him for Founders at Work. He’s the author of Gmail, developed the first prototype of AdSense and suggested Google’s now-famous motto “Don’t be evil.” As much as anyone, he set off the “Web 2.0” phenomenon.

Needless to say, we were delighted to have him join us in Cambridge. Paul never fails to be thought-provoking when he gives talks. I’ve heard him speak a few times and  I usually come away with this overall message: listen to users, not convention.

This talk to the founders was no exception. I was really sick and had to leave before Paul’s talk, but I asked Paul Graham for a few highlights. My favorites were:

“Anything that’s different or innovative, people are going to predict isn’t going to work.”

It’s true. Anything that hasn’t been done before people tend to reject. In fact, practically everything really good was rejected at first-- from the Apple computer to Google. 

“You just have to find some group of people you can make really happy.”

It’s much easier to broaden the reach of something some people love than to get people to love something they only like.

Thanks again Paul for coming to YC and for all your support!