Ask HN: YC misses that went on to do well (like veed.io)

https://news.ycombinator.com/item?id=32724564

by arunsivadasan • 4 years ago

81 81 4 years ago

news.ycombinator.com

Its quite possible that even YC would miss a few good founders. One that I came across recently was veed.io. They have raised 35 million in funding from Sequoia. What other startups that YC rejected went on to do well?

nathanyz• 4 years ago

My guess is that a bunch of startups that have gone on to do well and were rejected aren't broadcasting that around. Too many other priorities to deal with when things are succeeding and no reason to create any negative feelings about being rejected by YC.

Just think about this. Every successful startup was rejected by some VC. It is par for the course and not really a big deal if you are winning.

mhluongo5• 4 years ago

I think it's useful to hear the stories. When you're a 1-3 person startup early stage rejection is harder to get over, and it helps to know others have succeeded regardless.

fillskills• 4 years ago

YC reject here. Created a B2C company doing 5M/month revenue in 4 years. Exited. Applied with second company to YC (B2B), rejected again. Hoping to grow it bigger than last time.

joshmanders• 4 years ago

You really don't need YC rejects to validate that being rejected by YC isn't a death sentence. 90% of all startups that are successful have done it without YC. Many have done it without any VC.

x0x0• 4 years ago

YC reject. > $40m raised.

Separately: I'm not saying this to denigrate YC or anything; they get thousands of (at least moderately) serious applications and probably 10x that that are nonsense, but the interview we got had interviewers that seemed pretty unfamiliar with the sales processes of b2b companies that sell to midmarket or enterprise. I assume the people who did the 10 minutes with us were luck of the draw. And major props for promptly responding and saying no thanks; lots of vcs we talked to fucked around with responses and/or two even ghosted us.

So, YC for dev tools or b2c stuff? Probably great. YC for sales enablement or tooling for midmarket or enterprise sales teams? It may be very hit or miss. (Just like any vc.)

neojebfkekeej2• 4 years ago

There’s also a lot of YC companies that failed to gain traction. This is also seldom talked about

ignoramous4• 4 years ago

Some don't even feature on https://ycombinator.com/companies

mhluongo5• 4 years ago

I co-founded Fold [0], which went on to raise a $13M Series A from Craft and has some pretty incredible numbers. We were rejected a few times, one after a pretty spicy in-person interview where one of the partners told me to "have fun in jail" because we dared to mess with Bitcoin while the US regulatory system worked itself out.

The parent company became Thesis, a venture studio where we raised a $21M Series A, and have incubated a few more projects (Keep, tBTC, Saddle, Tally).

A friend's company, Wyre, was rejected. They ended up being acquired for 1.5B [1].

It would've been nice to do YC in 2013/14. From what I've heard from other founders, I'm not sure the value today is nearly so high.

[0] https://foldapp.com [1] - https://www.wsj.com/articles/crypto-startup-wyre-being-acqui...

NetOpWibby9• 4 years ago

Haha, “have fun in jail”?! Sheesh. Interesting anecdote about today’s value add. I wonder why?

jonathan-adly• 4 years ago

That’s rich, considering that last year they funded a literal ponzi running on Luna lol where the founders are probably going to jail.

Good job on fold by the way - I am a user and it’s great!

555552• 4 years ago

They FOMO'd in.

arunsivadasan2• 4 years ago

You should blog about this "have fun in jail" incident

mhluongo5• 4 years ago

Ah, live and learn. Fun to share here, but as another commenter pointed out I don't want to spend too much time on it or burn bridges.

They did great with Coinbase, but by and large missed crypto due to that attitude. Maybe they'll reflect on that now that Garry is back.

faangiq• 4 years ago

Sad how this kind of behavior (“have fun in jail”) is lauded in the VC world.

nextos• 4 years ago

What other VCs do you think provide better value today?

ignoramous4• 4 years ago

Reminds me of: https://nitter.net/VCBrags/status/1566080075723730944 / https://archive.is/cTfKB (:

Jasper_• 4 years ago

Wyre got acquired for 1.5B by Bolt? Wasn't Bolt doing heavy layoffs and downsizing after it was revealed literally nobody used their payments system, and they locked their employees in predatory loans?

How much of that 1.5B was real money, and how much was soon-to-be worthless stock?

xenospn• 4 years ago

Another Silicon Valley scam.

mahmoudimus• 4 years ago

I believe it was an all cash txn

endisneigh• 4 years ago

Funding is not success.

purim2• 4 years ago

Came here to point this out. I've seen many cash flow positive strong businesses end up in the hands of VCs by raising money. Remember that when you raise money and you don't hit "KPI" or any goalpost that can be manipulated and moved, you are gambling.

In the age of cheap capital, this might have been an attainable goal: Raise money, pump valuation and dump on retail. If not, get acquired by another startup unicorn. That is no longer the case. Many startups are going to run out of capital and not only is IPO out of the picture in 2023 and beyond, the "failacquired" is just going to be straight up "shut down" when they can't find buyers.

I saw this happening heading towards 2018 briefly and I am seeing even more number of desperate startup founders who turned their cash positive business into a cash negative by raising money.

It always puzzled me why startups were being told to lose money to grow quickly and its made me uneasy knowing that when the tide goes out, it does so rapidly.

spaceman_2020• 4 years ago

In the last 2-3 years, it certainly seems to now equal “success”.

Founders at least are offloading so much equity in every round that every raise essentially becomes an “exit”.

I’m very surprised by this change. When I first started in this world, it wad drilled into my head that founder equity must be controlled at all costs. But now, the prevailing wisdom seems to be to sell off as much as you can with every round.

purim2• 4 years ago

Basically we are at the Ponzi finance stage and approaching a Minsky moment. By participating in this destructive greed driven financial system, nothing new is created, the world isn't any better.

It will take some time but there's a side of this coin that nobody with money likes to talk about, its the slow realization that your material attainment creates a cycle of apathy and that you have an impact on the world that you've squandered ultimately in the vain chase of exuberance. You try to get over this feeling of emptiness by doing a variety of things but because you are so comfortable you can't find a way to undo it. Many fall into addictions, sex, drugs, purchases but its fleeting and you hit a wall. With all the money and comforts in the world an outsider would be puzzled but this is the burden of haves. While it isn't quite the same as have nots, its of the same pedigree.

Everybody chases what everybody else is chasing without realizing what it is they are chasing. This is the type of conversations we avoid. We don't stop, pause, and collective question what we do is correct. No there's no trickle down effect either. It's the other way around and I've seen many successful people destroy their lives once they let wealth get to their heads.

ak_111• 4 years ago

You can tell that being rejected by YC isn't that strong indicator for success given the number of YC startups who have been public about having only got into YC in their third or even fourth attempt. In my book that is equivalent to being rejected, and YC only accepted them after they basically made it.

YC is also very public that a significant number of every batch have been rejected a couple of times. So basically being rejected by YC is not even a strong indicator that you won't be a YC success.

NetOpWibby9• 4 years ago

Yeah I don’t see the point in applying anymore (I’ve applied twice). Why bother?

I found a bunch of “first check” VCs but out of the ~30 I contacted, only 4 responded with some level of, “Ahh, that market hasn’t been proven but keep in touch!”

With YC it’s, “You didn’t get selected but keep trying!”

The only need I have for VC money is freedom to work on my ideas full-time and continue to feed my family. I guess I’ll keep bootstrapping.

A close friend once told me, “Rejection is protection and redirection.” (:

tthun• 4 years ago

Do you have a handy list of first check VC’s that you can share ?

testmasterflex• 4 years ago

Mind sharing your startup?

blitzar2• 4 years ago

YC only accepted them after they basically made it

Everytime I watch dragons den I get the same feeling. You have $1m in orders this year, which should be a profit of 200k, sure I will give you 100k for 20% of your company.

arturkane7• 4 years ago

it is very tempting to go to dragons den even if you made it. Basically getting a 10 minute free advert on prime time BBC.

edouard-harris2• 4 years ago

SendGrid (acquired by Twilio for $2B [1]) famously had their application rejected, and their later success caused YC to update its selection process.

From this Quora answer [2]:

Apparently, only one partner, Robert Morris, reviewed the SendGrid application, and he gave it a highly negative score, calling it a "spam company." That pushed it so far down the application queue that no other partner reviewed it. Paul talks about how they changed the application process after that so that any applications negatively scored by Robert would also get reviewed by Paul.

(Interestingly, venture returns skew so highly to big winners that SendGrid's objectively huge outcome would not even have had a material impact on YC's current portfolio value of nearly $1T [3]. I'm not aware of any current $10B+ companies that were rejected by YC, though there may be some.)

[1] https://www.zdnet.com/article/twilio-to-acquire-email-api-pl...

[2] https://www.quora.com/Why-was-SendGrid-rejected-from-YCombin...

[3] https://www.ycombinator.com/

Xx25• 4 years ago

YC's current portfolio value of nearly $1T

I don't think you mean portfolio value. That would mean YC actually owns $1T in the companies they funded, at their current valuation. The following on YC front page is more meaningful: "Our companies have a combined valuation nearing $1T."

edouard-harris2• 4 years ago

Yes, the combined valuation number you cited is the one I was referring to. You're right that it's not correct to call this "portfolio value"; thanks for pointing out the mistake. (But it is still the correct number to compare SendGrid's $2B exit value to.)

colordrops• 4 years ago

calling it a "spam company"

Was he wrong? Honest question. Looking at their homepage I'm guessing a good portion of unsolicited emails in my inbox went through SendGrid.

badrabbit2• 4 years ago

They are used by legit businesses and they do a lot in containing spam, so yeah he was wrong.

defanor• 4 years ago

As a bit of anecdata, I received a spam message from SendGrid about 3 weeks ago (while just a few spam messages per year make it through), and that's how I've learned about them. But I guess they won't stay out of DNSBLs for long if the portion of spam messages will be particularly high.

weard_beard• 4 years ago

It is the default service used to manage and send transactional emails out of most Magento instances. It’s basically used like new relic for eCommerce comms. And extra layer of logs/detail/visibility on top of mail logs and a, “baby’s first” EMS/CDP

lancesells• 4 years ago

Sendgrid seems to be used as the infrastructure to send emails from a lot of the email service providers I use. They are not spam companies and react to customers who get marked as spam by suspending accounts and doing reviews.

I'm going to guess Sendgrid themselves also look for high ratios of spam reports and do the same.

numair• 4 years ago

The most amazing thing about this story is that Robert Morris, of all people, was the one who dismissed it as a spam company. Ironic, hilarious, something like that…

https://en.m.wikipedia.org/wiki/Morris_worm

rmetzler• 4 years ago

Yeah, viral is just an adjective describing growth. Unfortunately it’s associated with both positive and negative impact.

petrbela• 4 years ago

Notably, SendGrid went through the Techstars accelerator instead. One of their mentors from the Techstars program [1], Jim Franklin, later became SendGrid's CEO and helped the technical founders grow the company towards the success they eventually achieved.

[1] https://davidgcohen.com/2020/09/19/a-review-of-the-first-ele...

threeseed• 4 years ago

SendGrid. LaunchDarkly. Dropbox was rejected first time around.

And I would take a guess Bolt probably got rejected.

pyb2• 4 years ago

Dune Analytics, Udemy, Metamask

NetOpWibby9• 4 years ago

Wow, all three are huge!

arunsivadasan2• 4 years ago

I had no idea Udemy was rejected! I know so many people in my circle who use Udemy

andsoitis• 4 years ago

How much revenue and earnings does veed.io make?

nkotov• 4 years ago

Raising money doesn't indicate success.

remote_phone• 4 years ago

What percentage of YC companies fail to take off?

mtmail• 4 years ago

12 month ago "Growing Veed.io from $0 to $5 million ARR in 2 years" https://www.youtube.com/watch?v=pYS3QKJHUDM

YC is mentioned at timestamp https://youtu.be/pYS3QKJHUDM?t=715

I attended the talk. The founder said they'll grow organically and won't need any VC money. I can't find the sections are not in the youtube video (missing minutes?). So I'm interested why the founder changed his opinion.

dceddia• 4 years ago

They wrote a post about their thoughts on this and why they raised money even though they were profitable: https://www.veed.io/blog/raising-series-a/

NetOpWibby9• 4 years ago

Ah, so they raised money for more stability for their growing team and so they won't have to focus so much on revenue. Seems like Sequoia's a great fit for them.

The way they broke down the traditional venture path with YC was eye-opening. Lots of divvying up the pie.

aranibatta2• 4 years ago

Fairly sure Roam and Notion are both rejected. While Roam isn't there yet, Notion is a very healthy business at venture scale.

aranibatta2• 4 years ago

Fairly sure that Notion and Roam are both YC rejections. While Roam isn't quite at the same level, Notion is a healthy business at venture scale, a meaningful miss to the YC portfolio.

pyb2• 4 years ago

Do you have a source for Notion?

evanfarrell• 4 years ago

i don’t personally have anything in writing, but i had lunch with the notion founders in 2019 and they mentioned they got rejected by YC when notion was “more of a research tool”

maccaw• 4 years ago

I was rejected with clearbit.com

Was told the business required a degree of enterprise sales that my skills weren't suited for. It's now worth $350m (on paper at least).

That said, no hard feelings. They see so many applications - they're bound to make the wrong decision time to time.

555552• 4 years ago

Congrats! You've killed it.

ignoramous4• 4 years ago

...the business required a degree of enterprise sales that my skills weren't suited for.

10mins isn't enough time and their judgement is likely to be off (it is also mostly also down to the interviewee / founders to sell themselves in whatever time they have). I've heard this similar "no skill" story before from another start-up (which isn't doing as good... yet).

It's now worth $350m (on paper at least).

YC's bar is $10b exits. I hope you get there!

bot41• 4 years ago

Looks like clearbit is "just" a broad services company. I thought YC invests in more specific products/services like dropbox or airbnb.

(I don't think there's anything wrong with clearbit just to be clear)

Ask HN: YC misses that went on to do well (like veed.io)

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