TigerEye builds AI-powered planning and revenue management software for businesses, combining AI and machine learning with a company’s own historical data to help them predict their future. It’s “Moneyball but for business,” as Tracy puts it. </p><p><strong>I recently sat down with Tracy to find out more about her, what drives her, and some of what she has learned along the way. We talked about:</strong></p><ul><li>Why she wanted to jump back in as a founder/CEO, and what sparked the idea for TigerEye</li><li>The YC interview that inspired her to focus on enterprise software</li><li>Why she and her co-founder spent months “dissecting the past” before starting another company, and what they’re doing differently this time.</li><li>The hard parts of joining a big company following an acquisition, her advice for new founders going through YC, and more!</li></ul><p><em>Find our conversation below, lightly edited for clarity and length.</em></p><hr><p><strong>You had a massive exit with PlanGrid. You took a couple of years and then jumped right back in to do it again with TigerEye. What drives you?</strong></p><p>That’s a really good question.</p><p>I think my kids drive me. I always need a project to work on; I’m a busybody that way. I like working, and I like working with really smart, talented people.</p><p>But I also have a lot of energy and intensity, and my kids don’t need me all over them all the time. They have their own life, they don’t need founder-mom on top of them — because then I’m nitpicking every little thing. “Why are your toys out? Go pick that up!” <em>[laugh]</em></p><p>They don’t need that energy on them 24/7. So I output it into a startup.</p><p>But more than anything, I watched my parents work incredibly hard to give my siblings and me the life we have. They were refugees of the Vietnam War. They worked seven days a week for many years; they worked two jobs a piece just to make things work for our family. <a href=https://www.ycombinator.com/"https://www.ycombinator.com/library/JF-the-immigrant-journey-behind-a-silicon-valley-success-story/">It absolutely made me who I am today</a>, and I want my kids to see that you can dream, you can work hard, and you can do whatever you want as long as you’re passionate about it.</p><p><strong>What came first: the idea for TigerEye or the desire to keep building [after PlanGrid]?</strong></p><p>The desire to keep building.</p><p>[My co-founder] Ralph and I were actually working at YC in between PlanGrid and TigerEye — we were both Visiting Group Partners. We saw a lot of really cool technology come through during interviews, and while reading thousands of applications from all of these ambitious, talented founders.</p><p>It was really clear to us there was so much low-hanging fruit in enterprise, but the only people who would build solutions there… let me tell you a quick story: I remember interviewing a really, <em>really</em> talented engineer. He must’ve been only 18 years old, and he was building.. I don’t even remember, some kind of vague thing around video. We were looking at him and asked: you can build anything! Why don’t you solve real problems for real people’s jobs?</p><p>He looked at us and said: enterprise software is for old people. </p><p><strong>Oh jeez. What was your response?</strong></p><p>I laughed, but it got me thinking that the only people who would build great solutions in the enterprise world are the people who saw it firsthand. </p><p>We had this unfair advantage of having built a startup for almost 10 years, seeing it grow the whole time, and deploying every solution under the sun to make our company scale and work.</p><p>Then we got the privilege to be acquired into a public company, and to form a new construction business unit [within that company], where we then replaced all of our startup tools with the [big brand] winners — we were paying millions of dollars to buy the software each year, and then another several hundred thousand to deploy it and administer it.</p><p>It was so clear to us: we could take any category [of Enterprise software] between CRMs and ERPs and there were ten good startup ideas in there, right? But the only people who would build that type of software are people who saw it fail them for years.</p><p><strong>For those who don’t know, can you explain what TigerEye does? What was the pitch?</strong></p><p>When Ralph pitched me the idea of TigerEye, he said, “Remember all of those spreadsheets we’d have people make [when building PlanGrid], and they’d never actually answer our questions? I think I can build a business simulator — and automatically generate that data through simulation theory.”</p><p>In a past life he worked at Johns Hopkins University Applied Physics Laboratory using simulation theory and he felt strongly that it could be applied to business. That was really interesting to me.</p><p><strong>Can you give me examples of what TigerEye is simulating, and what it bases its simulations on?</strong></p><p>Something that’s interesting about, say, Salesforce, is that it’s a flat database. When a sales rep hits save on an opportunity, it overrides the history. There’s no version control.</p><p>But that history is interesting! Especially if you have a lot of it, because now we can understand rep behavior over time. So we go into the CRM and snapshot everything every 15 minutes. We pick up every minor change that’s happening over time and use a bunch of AI, machine learning, and advanced statistics to use their historical [data] to predict their future. We’re like Moneyball but for business.</p><p>It gets even more important at public companies, where you’re trying to figure out: where are we going to clock out this quarter, or this month? Where’s our business going to be? </p><p>You constantly have really smart people munging numbers on a spreadsheet to try to predict the future, and these spreadsheets don’t work.</p><figure class=\"kg-card kg-embed-card\"><iframe width=\"200\" height=\"113\" src=https://www.ycombinator.com/"https://www.youtube.com/embed/5eYN7-l6d_A?feature=oembed\%22 frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen title=\"Introducing TigerEye\"></iframe></figure><p><strong>What was it like for you to go from running your own startup for 10 years, moving at your own pace, to being within a larger corporate environment?</strong></p><p>It really sucked for me. I think everyone knew this.</p><p>Startups move at such a velocity. To get inserted into a 40+ year old public company… there’s a cultural difference. There’s definitely decision-making differences, and I think that was the hardest part. I felt like I couldn’t sneeze without asking permission from five head-of-somethings.</p><p><strong>Between your experiences with PlanGrid and then at a bigger company — how retrospective did you get about all of this before diving back in?</strong></p><p>We left Autodesk in March 2020 — and then, as you recall, went right into a worldwide lockdown. </p><p>I’m married to my co-founder [Ralph], so we ended up spending most of shelter-in-place and that COVID period dissecting the past. We suddenly didn’t have a job, we’d left Autodesk, we’re used to moving at such a velocity, and then we came to a complete standstill. </p><p>What we ended up doing is dissecting everything we felt we did wrong, and everything we did right. Everyone we thought we wanted to work with again, and everyone we for sure were not going to work with again. We mapped out the differences between those that we’d want to work with again, and those we didn’t. The first 24 or 25 people [at TigerEye] were people we’d worked with before.</p><figure class=\"kg-card kg-image-card kg-card-hascaption\"><img src=https://www.ycombinator.com/"https://ghost.prod.ycinside.com/content/images/2024/06/tracy-and-ralph.png/" class=\"kg-image\" alt loading=\"lazy\" width=\"1388\" height=\"913\" srcset=\"https://ghost.prod.ycinside.com/content/images/size/w600/2024/06/tracy-and-ralph.png 600w, https://ghost.prod.ycinside.com/content/images/size/w1000/2024/06/tracy-and-ralph.png 1000w, https://ghost.prod.ycinside.com/content/images/2024/06/tracy-and-ralph.png 1388w\" sizes=\"(min-width: 720px) 720px\"><figcaption><em>TigerEye co-founders Tracy Young and Ralph Gootee</em></figcaption></figure><p><strong>What determined whether or not you wanted to work with someone again?</strong></p><p>It was the people we thought were incredibly talented, and that we had a fun time building with. It’s as simple as that: looking back, yes, I would love to work with that person again. We had that core value in place before we even narrowed in on a product idea.</p><p><strong>Can you tell me a bit about what you’re doing differently as a founder this time, day-to-day?</strong></p><p>It’s a little bit different this time around; when I first started PlanGrid, I was in my mid-to-late 20s. I’m approaching 40 this year, and I have 3 young kids.</p><p>Getting the luxury of doing it a second time around, I know the things that are a higher value — the things that only I can do as a CEO and founder. There are certain decisions only I can make, and there are decisions that are better off made by someone else at the company.</p><h3 id=\"it-makes-people-feel-like-they-suck-at-their-job-when-the-ceo-jumps-in-and-does-it-for-them\"><em>\"It makes people feel like they suck at their job when the CEO jumps in and does it for them.\"</em><br></h3><p>I think in my 20s, as a founder and a first-time CEO, I honestly didn’t know what my job was. I always jumped onto support tickets; if customers had an issue, I’d be the first one to jump in. Companies get to a point where that’s not the best use of your time. We had really great support people on the team — and it feels really bad when the CEO is jumping in to do your job! It makes people feel like they suck at their job when the CEO jumps in and does it for them.</p><p>So this time I’m really deliberate in how I spend my time.</p><p><strong>What does that look like?</strong></p><p>These days it’s mostly product and sales. But it’s also about having really heavily protected family time, and really heavily protected work time.</p><p><strong>That dedicated family time… I generally don’t ask questions about founders being married to each other because it feels too personal, but since you mentioned it earlier: does that make it easier or harder to separate life and work? Easier because your partner already understands the things that are going on in your life, or harder because, in some way, work is always in the air?</strong></p><p>We’ve been doing this together for so long that it’s hard for me to even know what it’s like on the other side. We worked together [on PlanGrid] starting in 2011; we got married in 2013. With three kids, and now two startups — yeah, it’s hard.</p><p>It’s funny, but we often get founders who are thinking about starting a company with their partners, and the advice we give is: don’t do it. And the reason for that is that startups are hard. And marriage is hard. And having children is hard! So it’s this combinatorial explosion of problems that could come up.</p><p>But we’re also a good example that it can work, but we’ve done a lot of work on personal growth, and practicing patience, and practicing forgiveness to be able to do what we do. </p><p><strong>Last question here, but: you have an incredibly rare perspective on YC. You went through it as a founder multiple times, you were a Visiting Group Partner... for anyone going through the incoming YC batch, or applying in the future, what would you tell them to really maximize their time?</strong></p><p>It’s easy to get a bit obsessive — the goal is to make as much progress as you can in three months, so that you have a great Demo Day with as much revenue and progress as you can.</p><p>But I would encourage everyone to look at the people around them [in the batch], and the startups around them, and put in the effort to get to know them. Learn what they’re building.</p><p>I think back to YC Winter 2012 and Summer 2022, and it’s the people that really are the best part of YC. It’s the friendships I made; the partners that I got to work with. It’s really easy to be 100% heads down and obsessive over your thing — of course, talk to customers, make something people want! — but don’t forget that you are getting an incredible opportunity to meet people who are going through the exact same journey you are.</p><hr><p><em>Find out more <a href=https://www.ycombinator.com/"https://www.tigereye.com//">about TigerEye here</a>, and <a href=https://www.ycombinator.com/"https://www.linkedin.com/newsletters/predictable-growth-7018963257554046976//">find Tracy's newsletter \"Predictable Growth\" here</a>.</em></p>","comment_id":"6669d02f5df3e40001fdc874","feature_image":"/blog/content/images/2024/06/tracy.png","featured":true,"visibility":"public","email_recipient_filter":"none","created_at":"2024-06-12T09:43:27.000-07:00","updated_at":"2024-06-12T11:07:13.000-07:00","published_at":"2024-06-12T11:00:00.000-07:00","custom_excerpt":"In 2018, Tracy Young and her co-founders sold PlanGrid for $875 million. By 2021, she was ready to jump back in and do it all over again with a brand new startup. I chatted with Tracy about what drives her and some of what she's learned along the way.","codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"645000ebb09be6000165fbad","name":"Greg Kumparak","slug":"greg","profile_image":"/blog/content/images/2023/05/greg.jpeg","cover_image":null,"bio":"Greg oversees editorial content at Y Combinator. 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He was previously an editor at TechCrunch for nearly 15 years.","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/greg/"},"primary_tag":null,"url":"https://ghost.prod.ycinside.com/tracy-young-tigereye-interview/","excerpt":"Tracy Young is unstoppable.","reading_time":8,"access":true,"og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"email_subject":null,"frontmatter":null,"feature_image_alt":null,"feature_image_caption":null},{"id":"61fe29f1c7139e0001a71c0a","uuid":"1de61bb8-4ca3-433a-bdd0-27aa55f4786b","title":"2021 — YC Year in Review","slug":"2021-yc-year-in-review","html":"<p>In June, I wrote a <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/yc-is-crispr-for-startups//">blog post</a> comparing YC to CRISPR. When a founder is accepted into YC, we modify the startup’s DNA, edit it, to include key <a href=https://www.ycombinator.com/"https://en.wikipedia.org/wiki/Allele/">alleles that make success more likely. In the end, however, the secret to success of any startup lies squarely with the founders — their vision and their execution. We simply help those founders discover the very best versions of themselves.</p><p>In 2021, many YC founders led their companies to achieve outstanding results, and we are honored to be part of these companies’ history. This year presented an exceptional challenge to startups and established companies alike as the world struggled through a full year in the grip of the COVID-19 pandemic. As we all stayed remote and worked to operate effectively without offices, the startup environment thrived. Seed funding grew 56 percent year over year and totaled $29.4 billion in 2021, <a href=https://www.ycombinator.com/"https://news.crunchbase.com/news/global-vc-funding-unicorns-2021-monthly-recap//">per Crunchbase data</a>, with more than 17,000 startups around the world raising funding at seed.</p><p>Of course, YC itself remained remote during 2021, as did all of our programs. Like most of the world, there were ups and downs. Some of us fell ill, but thankfully none seriously. We believed towards the end of 2021 that the pandemic was entering an easier phase, only to be confronted, like everyone else, with Omicron. Despite this unique macro environment, there were many notable liquidity events for YC companies.</p><p>Prior to 2021 a total of four companies we funded had entered the public markets. In 2021 an extraordinary ten YC companies went public.</p><ul><li>In February, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/lucira-health/">Lucira Health</a> (W15), a company focused on the development and commercialization of infectious disease test kits, went public. Their COVID-19 test kit has received OTC authorization in the U.S. and Canada and has started aiding in testing programs that enable safe reopening.</li><li>In April, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/coinbase/">Coinbase (S12) went public. We <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/coinbase-from-yc-to-ipo//">reminisced about our early impression of co-founder and CEO Brian Armstrong, and reflected on the company’s excellent execution.</li><li>In July, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/matterport/">Matterport (W12), the spatial data company, went public. In one year, they more than doubled their subscriber count to 439,000 subscribers and have brought 6.2 million buildings and spaces online.</li><li>In August, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/momentus/">Momentus (S18), a space company that plans to offer transportation and other in-space infrastructure services, went public. Since then, they have completed the initial assembly and initial system-level functional testing of their Vigoride 3, which is designed to be capable of launching on most large, mid-sized, and small rockets.</li><li>In September, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/amplitude/">Amplitude (W12) went public. We <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/amplitude-w12-is-going-public//">reflected on the founders’ going through multiple pivots before landing on the perfect idea for them: mobile analytics.</li><li>In September, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/ginkgo-bioworks/">Ginkgo Bioworks</a> (S14), the first biotech company YC funded, went public. We <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/ginkgo-bioworks-s14-is-going-public-today//">told the story</a> of how Ginkgo Bioworks ended up in YC, and their journey as YC’s first biotech startup.</li><li>In October, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/gitlab/">GitLab (W15) was our first open-source company to IPO, as well as the first alum of the <a href=https://www.ycombinator.com/"https://www.ycombinator.com/growth-program/">Growth Program</a> to start trading publicly. We <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/gitlab-from-yc-to-ipo//">shared details that show the team at GitLab embodies the open-source mindset, not just in technology, but in culture and spirit.</li><li>In November, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/weave/">Weave (W14) went public. We <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/weave-w14-is-going-public//">spoke to the epic ups and downs that the founders pushed through — and ultimately, Weave became fundamental to how offices run.</li><li>In November, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/embark-trucks/">Embark Trucks</a> (W16) went public. We <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/embark-trucks/">reflected on the young team's passion, energy, and commitment, and how the initial idea shifted to focus on a different market.</li><li>In December, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/pardes-bio/">Pardes Biosciences</a> (S20), a clinical-stage biopharmaceutical company developing PBI-0451 as a novel direct-acting, oral antiviral drug candidate designed to treat SARS-CoV-2 infections, went public. PBI-0451 is currently in Phase I clinical study with early results showing potential for an unboosted oral regimen against COVID-19.</li></ul><p>Also, in 2021 there were a number of companies that had significant exits via an acquisition. Here are highlights:</p><ul><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/sendwave/">Sendwave (W12) was acquired by WorldRemit.<br></li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/clever/">Clever (S12) was acquired by Kahoot!.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/caper/">Caper (W16) was acquired by <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/instacart/">Instacart (S12).</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/sqreen/">Sqreen (W18) was acquired by Datadog.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/bear-flag-robotics/">Bear Flag Robotics</a> (W18) was acquired by John Deere.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/openinvest/">OpenInvest (S15) was acquired by JPMorgan Chase.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/modern-fertility/">Modern Fertility</a> (S17) was acquired by Roman Health Ventures.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/paystack/">Paystack (W16) was acquired by <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/stripe/">Stripe (S09).</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/drchrono/">DrChrono (W11) was acquired by EverCommerce.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/chargehound/">Chargehound (W14) was acquired by PayPal.</li><li><a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/truebill/">Truebill (W16) was acquired by Rocket Companies.</li></ul><p>Our batch program funded 750 companies in 2021 — the most ever in a year. The YC admissions team sifted through tens of thousands of applications and the selection team, including all of our Group Partners, reviewed thousands of apps until our eyes blurred. And then we sat for thousands of virtual interviews for each batch. In the end, we funded 350 companies in the <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/w21-batch-stats//">Winter 2021 batch</a> and 402 companies in the <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/yc-summer-2021-batch-stats//">Summer 2021 batch</a>. Demo Day for both batches remained completely virtual of course, but it was remarkably successful as more than 3,000 investors attended and YC companies raised record amounts of seed funding.</p><p><a href=https://www.ycombinator.com/"https://www.ycombinator.com/continuity//">YC’s Continuity</a> funds are now maturing. We launched the first YCC fund over six years ago and in 2021, YC participated in the funding of several of our most successful companies.</p><ul><li>Coinbase and Gitlab, key investments in YCC’s portfolio, went public in 2021.</li><li>11 YC companies were added to the YCC portfolio, including <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/deel/">Deel, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/fivetran/">Fivetran, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/opensea/">OpenSea, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/pave-2/">Pave, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/posthog/">Posthog, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/razorpay/">Razorpay, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/revenuecat/">RevenueCat, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/vanta/">Vanta, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/whatnot/">Whatnot, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/kiranakart/">Zepto, and one not yet announced.</li><li>We increased our investments in top companies like <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/brex/">Brex, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/faire/">Faire, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/groww/">Groww, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/lob/">Lob, <a href=https://www.ycombinator.com/"https://www.ycombinator.com/companies/podium/">Podium, and others.</li></ul><p>Valuations of YC companies have <a href=https://www.ycombinator.com/"https://www.ycombinator.com/topcompanies//">continued to soar</a> and today 150 companies are valued at $150 million or more and 60 companies are valued at $1 billion or more.</p><p>I would be remiss not to mention that YC wouldn’t function without the people that make up this organization. At YC, we are founders, operators, and experts; we’re building the programs that we wished we had as founders and working as experts and operators alongside our companies. We are growing our team to support these programs, and in 2021, we welcomed 30 people to YC. Key additions in our software, legal, and finance teams helped those teams scale to meet the needs of an ever expanding number of founders, companies, and deals to manage. And in 2021 our Outreach team helped launch hundreds of companies and organized dozens of YC events at schools around the world.</p><p>A few program highlights:</p><ul><li><a href=https://www.ycombinator.com/"https://www.startupschool.org//">Startup School</a>, our free online program and community to help aspiring founders learn about startups, build a product, and track growth, signed up over 100,000 founders and aspiring founders and <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/co-founder-matching//">launched co-founder matching</a>, which led to <a href=https://www.ycombinator.com/"https://blog.ycombinator.com/does-co-founder-matching-work//">new YC companies</a>.</li><li><a href=https://www.ycombinator.com/"https://www.workatastartup.com//">Work at a Startup</a>, our platform for candidates to apply to top YC startups with a single profile, helped 600 people find jobs and ran six hiring events, including our first <a href=https://www.ycombinator.com/"https://www.workatastartup.com/events/2021-office-hours-women-founders/">Women in Engineering</a> series and <a href=https://www.ycombinator.com/"https://www.workatastartup.com/events/crypto-tech-talks-2021/">Crypto Tech Talks</a>.</li><li>The Series A Program, our program that prepares YC founders for raising their Series A, helped nearly 200 YC companies raise $3.5B+ from more than 150 investors, like Accel, A16Z, Benchmark, Coatue, Founders Fund, General Catalyst, Khosla Ventures, Ribbit, Sequoia, Tiger Global, and more.</li><li>The Post-A Program, our program that teaches best practices for managing this stage company, and the <a href=https://www.ycombinator.com/"https://www.ycombinator.com/growth-program/">Growth Program</a>, our program and community for CEOs of YC’s fastest-growing companies, nearly doubled the number of companies served compared to 2020.</li></ul><p>If you made it this far, well I am impressed. Thank you! I’ll just end here by pointing out that, like our companies, Y Combinator is always evolving and never stagnant. We have big plans for 2022 and will continue to iterate to provide the best founders in the world with the best programs and tools to improve their chances of outsize success.</p>","comment_id":"61f5fb42eb74f90001a957a4","feature_image":"/blog/content/images/2022/01/BlogTwitter-Image-Template-17.png","featured":false,"visibility":"public","email_recipient_filter":"none","created_at":"2022-01-29T18:43:14.000-08:00","updated_at":"2022-03-01T10:11:49.000-08:00","published_at":"2022-01-19T09:00:00.000-08:00","custom_excerpt":"In 2021, many YC founders led their companies to achieve outstanding results, and we are honored to be part of these companies’ history.","codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"61fe29e3c7139e0001a71092","name":"Geoff Ralston","slug":"geoff-ralston","profile_image":"/blog/content/images/2022/02/geoff.jpg","cover_image":null,"bio":"Geoff Ralston is the former President of Y Combinator and has been with YC since 2011. 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Why Does Your Company Deserve More Money?
by Michael Seibel7/9/2018
The hardest conversation I have to have with a founder is when they’ve spent their 1-2 million dollar angel round but haven’t found product market fit. Unfortunately, I have to ask them a very unforgiving question: why does your company deserve more money?
Raising millions of dollars from great investors does not equal product market fit. Most YC companies raise money after demo day based on investors seeing potential in the founders and product. Their hope is that by the next time the founders need to raise money, they’ll have found product market fit.
If you don’t have product market fit and ramp up spending on people/office/equipment/etc, you’ll be on track to lose all leverage in later funding rounds or, even more likely, you’ll kill your company. I know because we nearly killed Justin.tv this way (the full Justin.tv story: part 1 & part 2).
In early 2010 we had 50 employees and 8 months of runway. We had users (30m monthly actives) and revenue ($4-6m revenue run rate) but weren’t growing so I tried to fundraise and buy ourselves more time. I failed. Honestly I thought that investors were going to save us even with our bloated headcount and slow growth. This is a common sentiment among founders burning through a seed round. They think they’ve proven enough by building a product and getting some users and firmly believe that with another funding round they can take their company “to the next level”.
After 4 months of failed pitches (in a process we organized poorly) the only option we had left was to cut expenses and break even (here is how to organize a good process). We let a lot of good people go and doubled down on generating the advertising dollars we needed to stay alive. Within 2 months we went from burning $250k a month to making $100k a month and we ended the year at $8m in revenue and $1m in profit (Suhail, co-founder of Mixpanel, describes that tactic in a great tweet). We even took all of our employees to Hawaii to celebrate 🙂
With the pressure of fundraising off of our backs we had time to take stock of what we had built and figure out the next step forward. Justin Kan and I were particularly interested in creating an “Instagram for video”. This later became Socialcam and exited for $60m in 2012. Emmett Shear and Kevin Lin were particularly interested in the small community of gamers who were streaming on Justin.tv and ran an experiment in which we focused on making a product that was really great for them. You know that experiment today as Twitch.tv which exited for $1B in 2014.
After you raise a seed round and before you get a fancy office and hire a dozen people, you must see your company as it really is. Do you have product market fit or not? If not, save as much money as you can, spend more time with your customers, and build a product they need.
If you have 12-15 months of runway and aren’t seeing retention plus growth, here’s what I’d recommend. Get lean – do you really need to staff up before you actually have usage? Stop thinking that spending a lot of money and hiring a lot of employees will create growth. That is true post product market fit but not true pre.
Don’t limp into a Series A fundraise. You need to be able show that you have taken the early investment money and used it sensibly to create a product that people love. You need to have sustained growth to raise a Series A – understand that and you’ll be better off than most startups.
Thanks to Kirsty Nathoo and Craig Cannon for reading drafts of this.
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Michael Seibel
Michael Seibel is a Group Partner and Managing Director, Early Stage at YC. He was the cofounder and CEO Justin.tv and Socialcam. Socialcam sold to Autodesk in 2012 and Justin.tv became Twitch.