ABOUT THIS EPISODE

Episode 17 of Startup School Radio: Host Aaron Harris interviews YC partner Michael Seibel. Also on the show: Wade Foster, cofounder and CEO of Zapier.
English
United States

TRANSCRIPT

00:00:00from the campus of the Wharton school in San Francisco this is start up school radio here is why commentator partner welcome to start up school radio from Morton's San Francisco campus on Sirius XM business radio powered by the Wharton school I'm your host Erin Harris I'm a partner
00:00:29at white company or where we fund early stage companies and work with them to help build a billion dollar businesses coming up on today's really great show I'll be joined by Michael Seidel one of my partners out why commentator and a co founder of Justin TV and social
00:00:46Pam we'll talk with Michael about what he's doing now out why see all the travel he's doing to meet start ups around the world and what he's learned from companies and what he teaches them later on in the show co founder and CEO is a peer wait foster
00:01:02will stop by to talk about what inspired him to build C. pier and help connect apps and automate work flow tasks we'll talk with weight about how he got into why see after being rejected the first time and also talk with him about some of the user acquisition
00:01:18strategies that they use every year why commentator we host a conference we call started school where we bring some of our favorite founders and have them tell the stories of how they found their companies we talk with them about their screw ups their successes and everything in between
00:01:34this show is meant to bring a little bit of that knowledge out to you every single week we broadcast every Wednesday at one PM eastern ten AM Pacific with a pretty simple goal we want to help people who want to start companies learn how to do it faster
00:01:49and better and help those of you already running companies and start ups avoid some of the pitfalls that are bound to come in your way you can follow us on channel on Twitter at bizrate EO one eleven or follow me at Harris I'm very happy to welcome my
00:02:05first gas to the show today Michael Seidel Michael is one of my partners out why commentator and before he was a partner at YC his co founder of social camp which went through YC in twenty twelve and sold Autodesk he was also one of Justin cons co founders
00:02:23at Justin TV Justin was a guest on the show in the past and hopefully we'll get Michael to tell some embarrassing stories about Justin Michael thanks so much for joining me today thank you glad to be here so you've had a I think a pretty cool and interesting
00:02:37and varied career in and start ups but it all goes back I think probably pretty interesting decision you had to make which was you were originally in politics yeah you are what you are finance director for a Senate campaign out of college I was twenty three why why
00:02:54did you do that why did I do politics %HESITATION see why I was a poly sci major in college and %HESITATION always thought I was going to go into law or politics and so I read bill Clinton's biography increased school and he wrote about working on a campaign
00:03:16and I said to myself I want to do that when I'm young so that I can afford to be on the road and not make very much money and so I graduated that's what I did and why did you then go to start up some in %HESITATION it's
00:03:30they're pretty different things I also I worked in politics for awhile like these are about as far apart from one another as you can possibly get except the fact that when you're early in both you make no money adds yet have to travel a lot well to put
00:03:43it simply I was tricked into starting start ups basically and %HESITATION I %HESITATION I was kinda told a series of lies that %HESITATION let me to be here so just a lie to you I would see you know some people say that law is too strong of a
00:03:58word right I would not say that so what did he tell you what convinced you to you to drop the the dream of being a senator and president and go help co found Justin TV so %HESITATION in reality what happened was our campaign lost science yeah we lost
00:04:16but you don't have enough money yes we did not have enough money great job finance director I failed that was my first of many failures and so %HESITATION I want to go on vacation at the same time %HESITATION Justin and I met who ended up being make to
00:04:30my co founder suggests in TV we're traveling across the country to start a new company in San Francisco and so I asked if I could join with them I'm gonna take a road trip and %HESITATION basically get my mind off of the campaign so we traveled across the
00:04:46country and we ended up in San Francisco the day before %HESITATION the blue angels to their big performance and so they were practicing sewer literally a fighter jets flying over the city its first time ever been the California first ever in the San Francisco beautiful weather in October
00:05:03fighter jets I think Justin planned that whole thing and you're like from the Sims is right the weather is awesome all the time there fighter jets flying around but we do know that was like one day of good perfect weather didn't know I didn't know anything and then
00:05:17they said %HESITATION we're not living in San Francisco we're living in my cousin's basement in Mountain View so I mean we talk about bait and switch like that is one of the ultimate examples yeah so I'm basically I was there for a week on vacation as they were
00:05:36starting Justin TV and I just want to be helpful I'm because I'm you know college friends might want to be helpful so I help them find apartment that later became otherwise caper where a lot of companies %HESITATION were based back then and then I help them must have
00:05:51a bank account to deposit the check and at the end of the week it was my birthday so we went wide tasting with some friends and %HESITATION upon leaving Justin asked me to join adjusted TV and I said no because Justin TV was a very very bad idea
00:06:09was an online reality TV show and he said just think about it and you know long story short two weeks later I was sleeping in the living room of the apartment that I found for the wet well and now you can I don't know that it is a
00:06:24long story short you made this decision to go do something you thought was with us I mean what happened how they can hide what convinced you I think there are a couple things I think one I knew Justin Emmett or extremely smart %HESITATION too they'd recruited %HESITATION another
00:06:38team member who is going to build this live streaming camera that we need %HESITATION then that was kept from MIT who sent these amazing kind of CAD drawings of exactly what he would build and how fast he would build it and then they'd raised fifty thousand dollars which
00:06:52I thought back then was like an infinite amount of money yeah so the last thing that I thought about was that this is a once in a lifetime opportunity right %HESITATION your friend is not going to say let's go start a company many times there are many presidential
00:07:08elections so want to get shot %HESITATION news weird because I was dating some of the time I had like a lease and you know whole life %HESITATION where in Baltimore and %HESITATION but yeah yeah to decide just pick up scattered you gotta do yeah it's crazy how %HESITATION
00:07:27how many of the decisions I think that people make around what looks like serendipity or starting a company or a lot of purpose and you know of course we're gonna start and build this huge company is kind of falling into it right you happen to be on a
00:07:40cross country trip with friends of yours they happen to be able to connived to convince you to join and you happen to have done it exactly and one of the other reap big reasons why is they said that within six months we're going to move to New York
00:07:53City were just in San Francisco to raise some money and get started they promised to move to New York that was a nine year lie I've never heard that part as promised that's wild suit you are the first non technical founder on the team only not technology right
00:08:11so this is something that a lot of our guests on the show you know our our our one member you know maybe that the technique on me than on technical and one of the things we don't talk about that much is what actually has to happen at the
00:08:22founding of a company that isn't the tax I would you know we romanticize the coding and the you know building the product what else is there to do what were you doing in those early days arm to be honest I didn't have a lot of work to do
00:08:36so %HESITATION Justin had already taken care of incorporation %HESITATION IT finest place to live in bank account before I even joined the company that's eighty percent of the so I'm you know really I felt like my responsibility was like to cook was so like contribute interesting ideas %HESITATION
00:08:57and kind of stay out of the way right %HESITATION really I only could start doing you know my thing when launch was imminent right which took how long I want to say I guess by mid October October twentieth I was there and I bet we launched and Ali
00:09:19who were April I'm gonna say while yeah yes is is a bit of time %HESITATION their little things like I had to get Kyle you know flights to to be it and %HESITATION to be with a San Francisco there are there a lot of like little tiny tasks
00:09:33right in a filing and paperwork and you know employment docks and stuff but yet the vast majority of my time was just trying to make sure that everyone was comfortable and could do what they need to do yeah I think Alexis Ohanian has said something about this also
00:09:46that when he and Steve were founding read it you know his job was basically just make sure Steve could work right and get stuff done one ugly awkwardly during that time Steve was also living in that part of building right he thought his job was to prevent us
00:10:00from working he would %HESITATION come to the apartment every day at five o'clock on the dot with beer we probably had just started working at around two right so %HESITATION said you have to manhandle him out and you know we we actually no I think we drink the
00:10:15beer that actually knowing you guys that actually makes loss but this this is you know this is one of these points where I think a lot of people wonder well what can I do right and I think people spend way too much agonizing over the things that they
00:10:28might have to do eventually where there are no responsibilities and I think you're good example of this idea that you just go do write whatever needs to be done you do and if you're not the one doing the glamorous part whatever the hell that means who doesn't matter
00:10:41it's whatever moves the company forward and by the way like sitting and working on product including isn't glamorous right this is the thing that has to be done tennis is the idea behind a team and what teams are so valuable down I guess our building Justin TV and
00:10:56it's a long it's a long road right figuring out all the different pieces of it and and the aberrations of yeah I mean just as he was very interesting because %HESITATION you know we are a bunch a you know young kinda right out of college folks we thought
00:11:12we were kind of funny and interesting and so we thought that people would would love to watch the show about us and about starting a company and it takes about three months realized that nobody cares any no I don't see nobody care to meet fans we were on
00:11:27like you know the today show on the front page of the chronicle like people cared but like you know our viewership was smaller than probably like you know a very very very small TV show right and when you're trying to build a large company that doesn't really do
00:11:43very much for you doesn't work I think the other challenge that we realized was that %HESITATION you know scamming a TV show content business is extremely hard round and we didn't really have any idea how to do it %HESITATION we did have a second kind of we call
00:12:00them life caster back then so Justin was the first time he had just dean I just steam was that was the second one but yeah that you did you specifically go out and try to find someone interesting no I don't even remember how we found I feel like
00:12:16who I feel like she was maybe blowing up on you tube at the time it's something and we met up and %HESITATION because I think she's probably in town for some tech things I think she like reviewed a bunch of tech things was generally like tacky and we
00:12:31were like Katie when the camera and she said yes yeah she became far bigger than Justin because I mean you know is far more attractive than Justin is %HESITATION and so basically what ended up happening was we were like okay we need to you know and there wasn't
00:12:47this where did exist need to pivot around never used the word back that and so I immediately we started thinking can we become a platform for streaming live video if you're just joining us I'm Erin Harris and you're listening to start school radio I'm speaking with one of
00:13:03my partners Michael Seidel who's talking to us a little bit about how Justin TV made its first have it when they realize that their business wasn't gonna work at all yeah so what was awesome but our team was that we were so technically deep there are four of
00:13:19us three technical co founders piled it all the video work and the hardware I'm just into a bunch of front and stuff emitted a bunch of back and stuff and so %HESITATION when we decide to prohibit it was actually fairly quickly that we are able to launch the
00:13:35new products so I think we we probably will guess we launched in in April the normal show %HESITATION by the summer we knew that we need to have it and not in October of that year we launched of the platform right for anyone to broadcast and %HESITATION that
00:13:51really kind of began the narrative that you know saw Justin TV mature saw you know social came into which come out of it yeah all of them want to jump out jump out ahead a little bit %HESITATION too when you decide to launch social cannon how that happened
00:14:06because it's not the normal story I think that people think about of how start ups are started right so we are very interesting position Justin TV I I remember this distinctly so it was %HESITATION August two thousand and ten up to this point I think we probably raised
00:14:26about seven million dollars in financing %HESITATION and you know we were at maybe thirty thirty five people are maybe three thirty million monthly uniques and %HESITATION we realized that there were two big problems one was that %HESITATION it's really really hard to build a content platform when you
00:14:48don't own a lot of content right and so are the second thing was that %HESITATION investors did not want to fund us so oh yeah there's one more thing which is that I want to find you because they don't think it was gonna be a big business exactly
00:15:02and the last thing was we only had two months of money left that's a large problem with people people don't appreciate how terrifying that is and how big a deal is like if you can't make payroll one month then your company's insolvent which means that there's nothing you
00:15:17can do it over yet so I sat about seven people down in a room founders and some of the more senior folks I basically said we need to make a list of all the things that we can do to make more money and all the things that we
00:15:32can do to save money %HESITATION in order to hit one of these three goals either we're going to try to burn less by try to break even we're gonna try to be profitable right answers you driving a conversation well I mean I wasn't coming with most of the
00:15:49ideas right was the one saying Hey we got talk is yeah you were you still the one who is mainly focus on things like the bank account and and what was going on I mean I was a CEO so I was I felt like I was kind of
00:15:59responsible for making sure the whole thing was I right running I wasn't a product CEO right %HESITATION and so that was an area that really Justin kind of red so it was much more like I gotta make sure the right people in the room come to a solution
00:16:16that's gonna keep this company going right and so %HESITATION we had the meeting everyone decided that we want to be profitable with a meeting with a whole bunch of things on the left on the board we told the entire company that if we got profitable we would take
00:16:29them all home why and %HESITATION two months later we are profitable wow %HESITATION we ended that year with eight million in revenue and about I think one to one and a half million a profit and it took everyone to Hawaii in the the March of the following year
00:16:47so %HESITATION you know during that time once we kind of got over the hump I think it was maybe November %HESITATION in the visor of ours kind of informal adviser guy named Gideon you came to the office and he said you know you guys think that %HESITATION you've
00:17:03just become profitable like you are you know excited you making money like you are kind of a going to be amazing and he said you've accomplished nothing that's pretty harsh it was very harsh he's like if you keep down this path with Justin TV in three years known
00:17:26offered of you the company be dead and we are just really hard to hear when you look back we just made a million and a half dollars last year that's a lot of money to bring it to the back we just did the impossible a company right now
00:17:36to be dead we did the impossible but like most good advisors they don't tell you %HESITATION stuff to make you feel good right tell you the truth and it was the truth right which a lot of people aren't really capable of here but you know we heard it
00:17:53so the next step was a different meeting the first meeting was how to rescue the company the second meeting was how do we make this a big company yeah so we decided that we were going to kind of collect some ideas on kind of what to go after
00:18:08how we could further pave it Justin TV into something that can make it really big and two of the most prominent ideas were one focusing just on TV around video gaming right we have a small committee people who were streaming video games that we never really supported and
00:18:27to was pivoting Justin TV to create an app for the iPhone android allow people to take videos and share them with friends and family and Justin Justin when he was on the show got into a little bit of this conversation about you know and it on the video
00:18:41game side and and you on the social campsite but one thing I'm curious about from your perspective is you know why did the social camp thing speak out to you in some ways for me you know I'm thinking back to something you just said which was creating a
00:18:55content business is super hard and this seems to answer the content question is that why you were thinking about it I think what I was thinking about was %HESITATION one I need to come up with an idea that was within the strict constraints of the company we were
00:19:09video company I needed to kind of have an idea within those constraints the second thing that was happening one because that was the thing you could likely build well and quickly quickly on the second thing was %HESITATION Instagram was just coming on line and so for the first
00:19:25time you were seeing a really really rapidly growing %HESITATION iPhone app that was building a community I think it's going was probably one of the forest that was mobile only building right community right and simultaneous to that the iPhone basically the newest version of the iPhone have for
00:19:43the first time %HESITATION was video enabled and so you know I was kind of looking at all these factors and as basically saying to myself you know a Instagram for video will exist we're in the best position to build it and so and it's still early like nothing
00:19:59is out right now right and so let's go for it %HESITATION but what's interesting is that like thinking back I would say that %HESITATION I would describe that as an NBA %HESITATION %HESITATION company for why was I mean arm I was seeing a market opportunity but it's not
00:20:23it wasn't my passion in life okay I wasn't setting myself up for a project that I'd be willing to work on for the next ten years right %HESITATION and to Emmett's credit I think he was he was a huge video game fan yeah the love watching the games
00:20:38on on on Justin TV and he found a use case within Justin TV that scratch the personal itch and also was a good business opportunity or a bizarre show you know right away as it was unclear at the time I think when people heard about like really no
00:20:53end and games and this is one of the things that like I always say is that investors don't really know anything either like right when we were talking **** up with ideas they would say that your game idea was horrible and they would say this was committee was
00:21:03amazing and you know one sold for billion it was sold for sixty seconds they got it they got that wrong so I'm we decided to do as a company was basically to split the company into three teams armed and was graves because just as he was creating revenue
00:21:18it right you have on file as a logical yeah actually go back one second to that so the the thing about the NBA idea I think when I think about looking at applications and looking at new companies this is actually one of the hardest things to figure out
00:21:33whether or not founders are are building something because they realize it's a good business you know they say that they basically do an analysis of markets and say this inefficiency exists here let me export of that verse is the people who have organically built an idea because people
00:21:51tell you where the idea came from they can make stuff up again and I think it's it's you know I don't want to slam the MBA idea across all areas right but I think particularly in the startup area %HESITATION it's really really really hard to stick with something
00:22:11right at six seven to ten years to build a company that's worth a billion plus dollars and so on average and so on as as people who are kind of trying to find the next billion our company we have to kind of rely on like what's gonna stick
00:22:26you through it and personal passion personal interest is often times something that's very very important right pose to kind of opportunity seeking right arm and you know it's always best to get both right %HESITATION it's funny because you know you you look out of the world and soap
00:22:43so much of what we think about when we think about start ups and we look at the returns generated by stars whatever you want to look at it's it's all out liar dependent and so one out liar that is a different example I mean Amazon right now just
00:22:57business is a business plan complete that that he said he saw on inefficiency and you can argue that that's not a successful company you're trying to figure out I think how to you again figure out which of those you back is so hard in a lot of it
00:23:11I think its founder depend totally agree I think that %HESITATION the personal passion peace is often seen as an end but it really is the means from it's a means of understanding is this person going to stick it out right and there are other ways of understanding that
00:23:29%HESITATION it's just kind of one of the many ways yes so I don't like to hold up many of these rules as ultimate ends right yeah because the exceptions to every rule but it's really just trying to get the insight when the going gets tough is gonna stick
00:23:42with it right you've traveled all over the world meeting founder think you probably traveled more widely than almost anyone I can think of in terms of meeting founders in different places her %HESITATION does that hold true wherever you go are there are there different signs that you see
00:23:59in other places that aren't the valley that are good indicators of of people being committed and passionate you know it's really interesting when I meet %HESITATION when I meet founders across the board in the states and outside of the states I'm I basically feel as though the ones
00:24:23that I really %HESITATION the ones that I'm really impressed by the ones that don't let anything get in their way and weather fortunately or unfortunately French national founders oftentimes especially for start ups oftentimes that means finding a path to America interesting and %HESITATION because there's more funding here
00:24:45it's more accepted here what is that there are two things I did not realize this but American till I left America first of all %HESITATION the harms any amount of money available in America is massive right %HESITATION there are terms you mean meaning founder friendly terms for funding
00:25:04right for terms that don't deep six your company from day one right a number of top the number of funds that can actually write a ten million dollar check on sand hill road just on one road in Silicon Valley is more than the number of funds that can
00:25:18write a ten million dollar check in all of Italy and so and I bet the numbers actually most countries in Europe right so that's the first thing the second thing is America is a huge population all speak the same language right in culture right yeah there are a
00:25:36lot of homogeneous populations like that that you can target I mean China is an example great example but clues to anyone not in China yes yes he one of the things I think about when meeting international founders on they're often a lot they're often just tough to a
00:25:52level that you don't normally see at first time founders here because I think they actually have to overcome so much more if you're coming from India from Delhi like rising above the other start ups there and then getting here getting to watch you are just what it's about
00:26:08life yeah I mean like we have one founder from Columbia who when he was going up use violence we had one founder %HESITATION grew up in Croatia during Baltimore's right like it will have to country was leveled yes I mean like literally I remember I was in creationism
00:26:25thing a founder and like he told me this story about how up there in the hills somebody had a gun was shooting down on this little valley that we were standing in that was like his life memory right so %HESITATION yeah they are tough really tough and and
00:26:41I think when we when we look at companies the thing that we're trying to do one of the things are trying to identify most his toughness yeah and it's hard but that's and like like you said that's the thing that gets you going through you know having to
00:26:52shut one type of company down even Justin TV right shattering the idea of moving to another idea decided to chase these other things and here that you know here that feedback yeah that's toughness was fun I'm Aaron Harris and my guest this hour is Michael Seidel coming up
00:27:08Michael and I are going to be joined by Wade foster the co founder and CEO of a beer you're listening to start up school radio on business radio powered by the Wharton school Sirius XM one eleven listening radio powered by the Wharton school again welcome back to start
00:27:37of school radio on business radio powered by the Wharton school Sirius XM channel one eleven I'm your host Erin Harris a partner at why commentator and I've been speaking this hour with one of my partners out why see Michael Seidel Mike thanks for so much for sticking around
00:27:53things bunch we're now joined by Wade foster weight is the CEO and co founder of Zak beer Wade thanks for joining us today yet thanks for America so just want to get started and dig in a little bit first off tells what zap your does so but these
00:28:10days in in different companies they're using all sorts of different sass offer people use you now sells for smell champ move through Google apps you name it right people are using dozens and dozens of these fortunately they don't play very nicely together yeah and there's these things called
00:28:25API's that your for developer you can use to hook these tools up and get him to play nicely however most of the world is not developers so it's after does is makes like little plug and play out of the box tool so that if your not a developer
00:28:38you can get these tools play nicely together right if I'm building an email list and MailChimp and I want to email my customers but they're all sitting inside of cells for so there is no good way right now again sappy or of dumping that a sales force and
00:28:51right into Belgium I got to dump it out into an excel file make sure it's formatted properly then upload it and that stinks yeah exactly and you have to do it on it like it's a manual thing wears was after you can set it up one time it
00:29:03just works for you on an ongoing basis see just kind of can kind of set and forget it which is the bright kind of thing so this is one of those things that when you hear about it sounds will die of course people want this and yet it
00:29:16didn't exist right and not everyone is using it so how did you guys decide to actually work on this word of the original idea for sappy or come from shirt so my co founder Brian and I did a lot of freelancing for small businesses back in Missouri you
00:29:32know he can set up like wordpress sites and kind of like the classic way you make a Buck early on right but we often get asked to do what I call a tag grunt work this stuff like Hey get my you know PayPal sales and to cook books
00:29:45were me right like get this list of contacts in the sales force for me it's not particularly challenging for an engineer but it's not fun either like nobody really likes to you know wrangle with API's unless you're maybe a **** or something out of interesting problems that it
00:30:00does really changed very much exactly you know and so we're like you know we can really and plus we're like turning small businesses like engineering rates for this stuff isn't cheap work so lot of them can't really afford it Sir like we were pretty confident we could build
00:30:15like a general purpose tool so that these small businesses could set up you know use a tool like that and solve these problems like get my PayPal sales and a quick books with like a one time set up thing and try hard you know twenty Bucks a month
00:30:29or whatever and you know solve a problem that Michael when you were at Justin TV you're dealing with a lot of the this kind of stuff I would imagine do you remember anything that was just I had to do it every month dumb things from one place to
00:30:43another to another so that's a really good question %HESITATION you know back then it was such the way that we worked that didn't seem to like register yeah it sucks but like I didn't even think that there would be a solution so it never occurred to me was
00:31:00just like filed under all of the things that suck about doing it started right the frog in boiling water thing like you just you're used to it so whatever it is that it yeah you saw through this right which is kind of maybe because your coming out from
00:31:13the other side you actually building it for other people again and again yeah it was one of those things where you kind of have to have a bit of creativity and you kinda have to like step back and be like it have enough pain that it's like you
00:31:26know there's a better way to do this is the Huff which you know that doesn't come naturally for a run I don't think so what were the first hooks that you built so I think the very first ones we built were PayPal a highrise Twilley ill I think
00:31:44we're the first three do you remember what the first thing a customer used it for but so the very first thing a customer use it for was wufoo to a Weber %HESITATION so we use it ourselves for pay pal to three truly are to send SMS because we
00:31:58got paid by that very first customer so I sat up and I was waiting for a sale to come in and we actually the funny thing was we didn't have like a bank account or anything at this point in time and so I thought he was like how
00:32:10do I pay you guys money in other art crap I don't know and so I was like well how you just PayPal me you know a hundred Bucks here's my personal PayPal address and write that'll work right and he is PayPal ing us to set up this weird
00:32:23food to highrise are routed to a Weber integration that we hadn't quite bill yet but we're pretty sure we could do in a couple days and so the funny thing was as we were walking into the bank to get our bank account set up I got a text
00:32:36message that said you just got paid a hundred dollars I got to figure out how to put that in banking was that yeah what's that was that was easier right like you mean just one time thing and then everything goes to the bank after I mean so you're
00:32:51going to set up a bank accounts does that mean you realize that there was a business sitting underneath what you were doing yeah we're pretty confident that we could turn a business out of this you know people like integrations have been a thing for a very long time
00:33:03right it's not a new concept to like you know do this sort of stuff like middle where was the stuff back in like the seventies and the eighties like we're not doing anything like revolutionary in that sense of the word other thing that was interesting was the way
00:33:17that we took it from point to point integrations right like in them made a hub and spoke model out of it so it's a lot more scalable and we just have to plug in a new app it automatically works with everything else right arm so we figured we
00:33:30could scale this out to create integrations and places that nobody ever like would take the time to build it because it's very much like the long tail fact right like there's only so many people are going to use this integration of that integration right because it's so cheap
00:33:44for us the plug one end right you can just keep plugging them in exactly from the start and then send them out to where ever you want to send their ego so did you think that small businesses were the ideal customer for what you were doing at first
00:33:58yeah it was definitely that's definitely been the case because small businesses they're a lot more nimble they're a lot easier to reach out to their a lot easier to get a cell from right away and you know we didn't I don't none of us had any like heavy
00:34:11enterprise sales background or anything like that so it's like this is a way that we can start and make money right away no problem which was very important for us because we started in Missouri Columbia Missouri there's no such thing is like venture funding or angel investing I
00:34:27mean I think there was like a local group that did like some bio science stuff right nothing intact at all so it's like from day one we're like if this is gonna like exists we need to find a way to least make a little bit of money right
00:34:39like how can we get to a couple thousand Bucks a month to you know there are still exist yeah this is actually one of the awesome things Michael and I were talking about you know founders from outside the valley and we're talking a little about other countries like
00:34:52toughness in the way people think but it's it's it's really outside the valley you know you go to Missouri there aren't a lot of other founders are on a lot of tech start ups you have to figure out how to survive and how to actually build a build
00:35:04this business that's going to propel itself which is great training L. absolutely I mean you know the nice thing about outside the valley in like the Midwest in particular the taut cheaper of course right you also don't have any of the resources of the any of the funding
00:35:17so you have to be a little bit more creative about how you did it and so for us like for the first three months I was happier for me I had a day job like I you know it was a it was a thing that I did at
00:35:28night and on the weekends and then eventually went full time and then Mike and Brian followed suit shortly after that as we are able to you know grow the business and see more success and things like that but you know you have to be a little bit more
00:35:40creative with how you manage your funds and state it's similar to when Kevin hell was on the show he was talking about when they found it looses and down to them quit their jobs and were working on with a full time the third of them actually work full
00:35:52time and split his check three ways to support the company but they also had this a similar idea of Hey we need to make money up front because this is something which we're gonna have to support the idea of going in raising venture funding or something like that
00:36:05didn't even figure yeah into what they were thinking absolutely I mean it's the exact same thing we're just like we had no in like we didn't even think it would be like even if we thought it would have been possible it was like how would we you even
00:36:16go about doing this stuff right you just like you mellow person in my could you email like what you know who who has these ten million dollar checks it's this thing that was just totally like and it was just go knock on doors and Santa Rosa Hey what's
00:36:32the Intel road you know some stuff that's like just totally it's just so outside of like the line of thinking that you don't even it's like yeah I know that companies like there are companies that do that but we're we're certainly not one of the rifles like the
00:36:45line of thinking so what made you decide as your buildings after that you wanted to kind of go down that path of of being in Silicon Valley and you know looking at venture funding and things of that nature yeah so I think you know as we started to
00:36:58have like a little bit of success %HESITATION it made sense that like you know of an app that's gonna hook and other apps like we need access to life partnerships and things like that and the valley is if if people are based in the valley there at least
00:37:13coming through the valley a lot and so that was kind of where we felt we needed to go and of course you know we'd read Paul Grahams essays with friend hacker news and so it's like well YC seems like the way to get there I guess if we're
00:37:25going to do this and so if I do I see if you're just joining us I'm Aaron Harris and you're listening to start up school radio I'm speaking with Wade foster from zap here who is just telling us a little bit about why they decided to try to
00:37:40move to Silicon Valley and how they actually heard about what goes on here while they were starting the company back in Missouri you're reading Paul Graham essays you checking out hacker news you apply to why see is like Hey maybe this'll get us over there and help us
00:37:53get more funding to build the company bigger and get us these partnerships that we want to connections and companies actually building apps we connected to so that sounds cool what happens well the first time we apply we actually apply just right as we were starting and we just
00:38:06got the road rejection email that goes out to you know basically most people right now which was a bummer but and you know we just figured like well we know what we're gonna do anyway so we're just kept working on it was like we have a plan for
00:38:20it like my seat was definitely it was like a nice thing but it was like we didn't have it was like if we get it great but if not we'll just keep doing what we're writing like we can still make which is by the way that we we
00:38:30make this point again and again by Clifford you say this to two companies a lot if you have money and your money coming in you don't need anyone else they're nice to have they can accelerate you but completely not necessary so okay take the rejection in stride you
00:38:47keep buildings Appier and then what happens well six months later we play again this time around you know we're we're more than just like three nobody's from the Midwest we actually have a thousand people have paid for the cut the the product we have probably a dozen YC
00:39:02companies that are using it the traffic to the site is growing like there's kind of a business model in place there's actually like a launch products in my lunch frantic it's not great but it works good enough so it's like a number of the nice things that YC
00:39:17kind of looks for that it was like they didn't have to trust like are not like basically invisible reputation like we had nothing going for us outside of zap here so it was like Hey this is actually could be a thing right and so you know we reach
00:39:32out to like a few of the people who are using us that were YC founders and said Hey we're going to try this again what can we do this time to make sure that things go a little bit better and you know we got their help which was
00:39:44nice so we polished up the the the the application but the business itself was just way way better and that I think was really the the difference right it's like oh this is actually now it's not just like a spy in the sky idea it's actually a thing
00:39:58that has been done and you know we get got in the next time around right now Michael I know that you spent a lot of time with companies who are either get rejected or come in for an interview maybe they just don't make the cut and you nurture
00:40:10them right you'll spend a lot of time with folks you know in three months six months twelve months with the things that you look for when you see a company that applies that we don't accept that makes you want to keep working with them you know how I
00:40:23think one of it is it's funny because people say this about college you see a company that %HESITATION probably is a little bit better than you are when you got into what I say right and you're like man %HESITATION you know if you've been applying three four years
00:40:36ago you might have gotten in right and that's one thing I think the other thing is you see a really really passionate founder in a really good market but they've just started to the perfect explanation right and so it's like you don't know whether they're going to be
00:40:53able to execute %HESITATION they're they're out there to kind of sketches at the Chester debated just started and so for those folks I love to keep in touch with them I love to help them and one of things that I tell them is that you know in many
00:41:05ways it might be better that they do I see six months later after they've launched %HESITATION that's not to say that you have to watch you I see but I think the the more you know about your business like the right or that you can execute out here
00:41:19in the valley so %HESITATION know has been a lot of time at those types of companies and you know what most people don't understand is that this is a typical story like applying more than once identical story it's a lot easier to get into why see the second
00:41:31time you apply yeah we have more information about you death assuming you doing the same business and you're executing right yeah I think that you know one of the things we I think we love to see is companies that applied got rejected and apply again and say here's
00:41:44what I learned it doesn't necessarily have to be a huge amount of progress alone in your case with you has it made a huge amount of progress yeah it was more than just what we learned it's Hey here's what we learned and here's how we made the business
00:41:54so much better do you think that %HESITATION between those two times you applied there were fundamental learnings that you guys had that xcelerated you or was just more executing on the same I think it was mostly executing on the same stuff it was you know when we first
00:42:09applied it was very much like an idea it was like we're pretty sure this will work if we can do it right like it right you know it's like people pay for integrations all the time we just have to like get it out there and it has to
00:42:22be usable enough that you know someone who's an accountant a Brzesko like can use the product right so is very much like we just got to get this out the door and we actually knew some ways that we were like we had like a distribution plan that would
00:42:36work like we did we come from marketing background so it's like we know like if we can make this we can probably get customers for its a lot of it was just raw execution right of those thousand customers you had when you applied to I see how many
00:42:50there were small businesses that I mean you know most of it was either a mix of like start ups are small businesses right all young companies or you know five to ten people or so shops or whatever I'm there was some people from like bigger companies but it
00:43:04was very much like a single person had signed up for it to use it themselves inside of an org we hadn't nobody and even today we still don't have like institutional people paying for us right right still very much a small business product so how do you go
00:43:19about reaching lots of small businesses with the tech product I mean this is something that there's there's I think a huge flawed thinking that a lot of people have and we see this all the time applications I see when I talk to founders when they're talking about the
00:43:31size of their opportunity and I'll talk about something like small businesses in the disco top down they'll say %HESITATION small businesses spend fifty billion dollars on software every year and so that's our market and frankly it's just not true right because that the risk of the thing that
00:43:46you actually do is reach those companies and convince them to use a piece of software how do you actually do that how do you get the small businesses to start using a brand new service so for us it was nice because we could latch on to existing platforms
00:44:02right you see a company like Mel shampoo as eight million users apart from like sales force whose which has however many millions of users platforms like quickbooks online which has I think like five hundred thousand users so there is that these are like big businesses already to have
00:44:15lots of users that have no need and what we were systematically going to do is tap into them all of them very very quickly and so the thing there was we could get into their market places we could do co marketing opportunities to them and basically get them
00:44:31because we were providing value to their users to write a sickly put zap your out in front of them for a reason and then the other thing we did was just really tapped into the nascent demand yes yes we spun up a ton of landing pages for very
00:44:44specific integrations right like melts himself force how quick Bucks we threw a whatever and we had all of these for every permutation and combination that could exist so if someone was looking we were there pop yeah you I wanna I wanna Diggin on both of those a little
00:44:59bit but the first thing you said you made it sound as if it was so easy right to just get mail chip get into their market place and do co branding and all of a sudden have customers it's one of the hardest things started to try to do
00:45:12and everyone thinks they can do it and pretty much everyone fails so how did you make that work so a lot of them a lot of people have market places to begin with right so Melton pastor after rectory and they are very welcoming they'll pretty much let anyone
00:45:28in the door yeah and so that's great so those are the ones that we tried to like go after big platforms who had ways to like expose us so things like MailChimp were great you know I'm trying to think other sales force has the applet stain Shopify has
00:45:42there after rectory so there like it was up important thing for their business to expose apps on to other to their users shortly and so those are the ones we went after because we knew that they were going to promote a son but there's there's a difference between
00:45:58just getting in the store right getting an app store of some kind and actually getting people to notice that you're there and download you yeah that's actually the track yes so that that is the other thing we learned was that the app stores themselves are usually not hugely
00:46:12effective there okay account when you're really young its profits look enough right like we didn't need a hundred customers you know it's like we needed ten customers like early on present that we knew it we were going for like massive scale it was like we just really need
00:46:26to get the next ten people in the door that was enough right you know we did other which stupid stuff to like we would I mean I say it's stupid but it was like really easy like we post links and forums where people would ask like Hey does
00:46:39ever not work with Dropbox me by K. were working on a project that can do this thing and drop the link in the forums right %HESITATION that pointed people to us and we would get like you know ten visitors a day from that link or whatever but five
00:46:51of them would convert and that's exactly what you which is by the way an insane like if if that's your conversion rate off people come in all forms of the same like you're not going to get you know thousands of people to come from the right early on
00:47:03you don't need thousands of people you need like just a couple people who really care yeah and then this goes to the thing is you said stupid but I think what you know the the the reason you said it is because it's not scalable right it doesn't seem
00:47:17like it's something that's gonna pay dividends over long term but the fact is when a small you shouldn't be thinking about scale right you should be thinking about five users yeah because that's material ten users that's material and over time you start figuring out things that work better
00:47:31and see working on this SCO strategy on the other side which actually is scalable exact right so it's like let's get some people in the door then let's let the channels that are going to take longer to develop let's start developing them now right in overtime they'll grow
00:47:45into the really significant stuff but I am right now we still need customers we can you know sit around and wait for it to develop but you know as as like you know the company grows like they kind of just shifts over to that other channel becoming more
00:48:00more more successful at this other stuff like I would never get in a form and drop a link it like I just it's not worth my time how do you actually make the decision of where to prioritize your time is your time to see the limited your team
00:48:13time it's super limited so you have to do these non scalable things early just to get a couple customers but you also want to build the foundations like you said for the you know long term asio how do you split time between those things and measure what's working
00:48:26yet so for us there was three of us when we started and we had a really nice division of responsibility so Brian was working all the back into the product Michael's working all the front of the product I was working on like any of our marketing sites and
00:48:39distribution stuff so it's like anything I could do to make that happen I would make that happen while those guys are focusing on getting the product out the door so basically I would just see like okay I can get like all spent a few hours here on you
00:48:53know something a little bit more scalable than the rest of the time we'll just spend on trying to get like the next five customers right and that was basically it right it's not that one really rocket search science or anything right that is just here's you know I'll
00:49:07spend a couple hours a day on this get like short term stuff a couple hours a day on long term stuff yeah and then over time it kind of just adds up yeah it's gonna keep that's exactly right and accumulation thing right to spend an hour to Dan
00:49:19SCO you know it's gonna take months and that's fine because then you're going to look at and say oh I spent like three hundred hours and look at all the stuff it's generated exactly I an old boss that said something you know trying to like do one thing
00:49:31better each day or whatever and it's kind it's totally cliche but like when you're building a company that's kind of the mindset you have to do it's like do one thing better each day and then over the course of a year five years that adds up to be
00:49:41like quite a lot right it's it's this idea that you know it's okay doing little things as long as they're leading to a tax improvement over time yep and and that's that's the framework to think about it because I think if we look at our days and say
00:49:54father so many things I could do you just have to think about it a little bit more long term than that because little things don't necessarily look big when they start out are not at all %HESITATION so you know you get out here you're sort of started building
00:50:10up the company figure out these channels that start working you know your couple years and how many customers do you have now us that today we have six hundred thousand registered users were freemium product and we have about fifteen thousand paying customers justice stop it for a second
00:50:26and a match and then we're going from a thousand to six hundred thousand and how long three years that's on but like that is a rate of growth that is absolutely astonishing and I think it's easy to lose sight of how powerful that is when it's a product
00:50:41that people are testing in using for the business and the pain for one small businesses you know people I think it tricked by things like %HESITATION face because one point two billion users yeah that's one thing but when you're selling small businesses and giving them something that they
00:50:53really want I know that's something that you don't hear very often and that's the foundation of you know world building businesses which is super cool yeah I mean it's it's fun yeah so waiting just our our last minute or so here what's next on say beer and so
00:51:12I mean the biggest thing for us is you know what we want to get all of the apps possibly on chapters today there's almost five hundred but I like it's so easy these days to build a new product that there's always constantly new apps coming out and just
00:51:25like taking off right you see a company like slack which was a year and a half ago basically nonexistent right now today their enormous you know compared to most other sass software and so for us it's like just making sure that we keep up with all these apps
00:51:39that are growing really fast and adding those to the platform then the other thing is just a really improving the product right there's like today there's you know it's pretty good at doing this very narrow set of integration like you know if something happens here automatically do something
00:51:53over there but there's this whole like thing where apps need to play nicely together and so that's really what we're focusing all good luck you getting all that down there's obviously a huge amount that you guys have yet to do but based on your track record seems pretty
00:52:08clear you're going to get there Wade Michael thank you thank you both for joining me today for more information about Michael you can follow him on Twitter at and W. Seidel and if you want to learn more about zap your check him out as sappy or dot com
00:52:22followed weighed on Twitter at Wade foster thank you so much for joining us today and a special thank you to my senior producer Lisa Montenegro and associate producer and engineer T. on some guns be sure to tune in for another edition of our show next week at one
00:52:36on Wednesday at one PM eastern ten AM Pacific I'm Aaron Harris and you've been listening to start up school radio on business radio power by the Wharton school Sirius XM one eleven thanks so much for listening today and looking forward to talking with you again next week yeah

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