The Post-YC Slump

&gt; The main problem is that companies stop doing what they were doing during YC—instead of relentlessly focusing on building a great product and growing, they focus on everything else. They also work less hard and less effectively—the peer pressure during YC is a powerful force.<p>I&#x27;m curious about why there&#x27;s no consideration of the possibility that perhaps such a high-intensity pace is simply not sustainable on a personal level for most people.

This seems like a failure of YC - if companies that have gone through the program are consistently forgetting the lessons it has taught as soon as they leave, maybe they&#x27;re not being taught correctly?<p>That said, I&#x27;m not surprised. YC is a rare opportunity, and people will absolutely punish themselves for the duration of their stay in YC to get the most out of it. Few people can maintain that kind of pressure longer term. I don&#x27;t think that&#x27;s a weakness, I think it&#x27;s just being human.

I have to disagree with a lot of people who seem to be saying that &quot;working hard&quot; necessarily means torturous 100 hour weeks.<p>I don&#x27;t think the measure of working hard is counting how many hours you&#x27;re at the office. I think the signal of working hard is how often you let yourself get into your comfort zone and coast.<p>I think working hard means pushing yourself out of your comfort zone - continuously. It means forcing yourself to ask the hard questions about your business you&#x27;re scared to ask. It means figuring out how to do things you&#x27;re not good at, like hiring or selling. It means identifying the most important problem for your company today, and tackling it, even if it&#x27;s not what you want to be doing.<p>I&#x27;d guess that during YC, the partners and the community act as a force to keep people asking the hard, honest questions about their business. And I&#x27;d guess that after YC, without those outside forces, people revert to their default comfort zones, with things that feel nice. Getting press feels nice. Going to conferences feels nice. But what&#x27;s true early is true later too: it&#x27;s the work that doesn&#x27;t feel nice that usually matters most.<p>You could spend 40 hours a week in the office doing the right things, or 100 hours doing the wrong ones. One of those will lead to growth, the other one won&#x27;t. And it doesn&#x27;t have to do with the hours.

&quot;So how can startups avoid this slump? Work on real work.&quot;<p>Simply working hard does not guarantee any path to success, at least in the world of startups. You can work extremely hard, do no &quot;fake work&quot;, and have really great product and the vast majority of startups will still fail. You need a great deal of luck as well, ie. #rightplacerighttime, and that&#x27;s something that isn&#x27;t admitted by VCs whatsoever.

One common theme from the YC CEOs I&#x27;ve talked with (maybe 8-10 - small sample size, etc.) is that post-YC they don&#x27;t know the basics of sales (what a purchase order is, etc.). It would not surprise me if this was part of the reason.

What a contentless article, &quot;Work harder! Grumble grumble grumble.&quot; We all know that none of these VC &quot;gurus&quot; are actually cleverer than the rest of us, but yet we give them an audience for empty posts like this because their job is (hilariously) to maintain the VC guru image.<p>I just don&#x27;t get why these &quot;insightful advice&quot; posts ever gain traction.

&gt; At the end of a YC batch, the general consensus among the partners is that about 25% of the companies are on a trajectory that could lead to a multi-billion dollar company. Of course, only a handful of them do. Most go on to be decent or bad.<p>Pure hubris.<p>&gt; The main problem is that companies stop doing what they were doing during YC—instead of relentlessly focusing on building a great product and growing, they focus on everything else. They also work less hard and less effectively—the peer pressure during YC is a powerful force.<p>No, the problem is that it&#x27;s difficult to build a large company. High growth is easy in the beginning when you&#x27;re going from 0 to $100,000, but try going from $100,000 to $100,000,000. &quot;Fake work&quot; isn&#x27;t what prevents the vast majority of companies from doing this.

I think there&#x27;s also a theme around young founders, the ability to work as a team when the going gets tough, hubris, and the fame that comes with being in YC.<p>During YC, you&#x27;re in a very controlled environment - everyone around you is working hard, you have a deadline, you don&#x27;t have money, and you just focus on building, etc. Once you leave YC, suddenly, a few things happen (I&#x27;ve seen this with exactly 2 start-ups so apologies for extrapolating):<p>1. You suddenly have a lot more money, and simultaneously lose the very guided structure you had at YC<p>2. A lot of YC founders are young, haven&#x27;t worked in teams with different personality types, etc before and they have to learn how to manage people and each other<p>3. Because growth is the only thing they&#x27;ve been taught to look for at YC, at the first sign of any slowdown in growth (which could be natural and acceptable, or due to some other reason), they start freaking out and churning. This further exacerbates point 2 and they start stressing out their team and each other<p>4. There&#x27;s a bit of a personality cult around YC founders right now - I recently attended a YC party in an apartment in a fancy high-rise in SF and it&#x27;s amazing how many hanger-ons that were there fawning over the founders. It was a very SF start-up version of a celebrity night-club in LA&#x2F;NYC. This unfortunately builds on the narrative of infallible YC founders who are building great billion dollar companies, etc<p>I guess where I&#x27;m going with this is that in addition to just growth, folks need to be taught how to work in teams, how to gear up to build a longer term, sustainable company, and to appreciate that they can and will make mistakes, but they need to handle that with grace and maturity.

I think it&#x27;s super interesting to hear that they&#x27;re developing software to automate traction updates. It would be so cool to be able to &quot;gem install yc&quot; into your Rails app (or whatever) and then have hooks that will automatically keep them abreast of user growth and engagement.<p>It provides really interesting opportunities for them to be proactive about giving help at the right time. For instance, they&#x27;ll be able to setup rules for notifications e.g. when you&#x27;re having a slowing rate of growth, or to send congratulations when you&#x27;ve had a strong month etc.<p>I imagine one of the problems in investing in so many companies is that you aren&#x27;t always aware of problems before it&#x27;s too late. By using software to collect metrics about their portfolio companies, they can systematize how to become aware of and help out companies where they can make a difference.

YC is a coaching environment. Imagine if you took a professional soccer team and removed the coaches for a month. They would start loosing and if they didn&#x27;t you would find that one of the players had taken on the role of a coach. This is almost certainly what is happening here.

&quot;Raising money and getting press is fake work&quot;<p>Raising money is not fake work if you don&#x27;t know how you are going to pay your team in 6 months, or 3 months, or next month. Twice I have taken out a second mortgage on my house to pay my team, its not a good idea. Press seems to be a necessary evil, again I have made the best product on the market, only to go unnoticed because of lack of press coverage. Its not like 99.9% of the press are out looking for a great product, they are being lead by the PR agents.<p>I agree raising money and getting press are &quot;non productive work&quot; as far as product advance goes. But so are things like washing the dishes in your house, they don&#x27;t help you get more work done that day, but it is a needed part of the system.<p>So maybe y-combinator should take those two VERY important survival aspects over for the 25% of companies that they feel are the unicorns. For another 10% they will make sure they have enough money for the next year, and that they will get the press they need. Seems like a natural extension....

I&#x27;m surprised how many people here seemed to have missed the point of the article.<p>What the author is talking about is how there are a lot of fun things one can work on that could be useful at some point in the future. But probably not within the next week or month. Instead, the author is saying to focus on the things that will without a doubt be useful within the near future (&lt;month).

Couldn&#x27;t this just be a form of the &quot;Sports Illustrated cover jinx&quot;, that is, regression to the mean?

Seems like it would be a simple inexpensive investment (probably completely outsourced) for YC to set up fortnightly (down from Tuesday dinners&#x2F;weekly) dinners for founders of a single batch to come and report updates to each other.<p>I recall reading somewhere that YC batches are now split into clusters because there are so many companies in each batch. Maybe these dinners can be cluster specific as well.<p>As the companies grow in size, they can democratically decide to reduce frequency to monthly - I can see how changes would be slower as the companies become larger.<p>Edit: To clarify, this is purely a peer group - no YC presence needed. Have to do it this way to scale.

I believe this could be a problem in general, but I keep thinking about a recent high profile failure from YC - Homejoy. They had a number of problems with their platform, but from what I&#x27;ve gathered through the press&#x2F;blogs is that they focused too much on (geographical) growth after their $38mm round at the expense of fixing issues with quality and their business model (costing them retained users and continued local market growth). I think this is an outlier to Sam&#x27;s theory, but it also provides some food for thought.

This pre-investment spike for startups reminds me somewhat of the pump and dump marketing tactics of a more mature company looking for a sale or an IPO. I&#x27;ve been in companies that have done this: go overboard trying to game some unsustainable metric, such as top line traffic, until you don&#x27;t have to anymore. If you have done digital marketing for awhile, you can come up with dozens of ways to &quot;grow&quot; your metrics that appear sustainable on the surface but have some kind of catch that makes it impractical long term.

&quot;At the end of a YC batch, the general consensus among the partners is that about 25% of the companies are on a trajectory that could lead to a multi-billion dollar company. Of course, only a handful of them do. Most go on to be decent or bad.&quot;<p>&quot;You have to keep up a high level of intensity for many, many years.&quot;<p>Don&#x27;t take this the wrong way &#x2F;u&#x2F;sama, but could it be that perhaps business models are the problem and not founders not grinding away for years on &quot;real work&quot;? 90% of startups fail [1] [2]. I am highly suspect of the idea that this is caused by teams not being committed or working on &quot;fake work&quot;. More likely, markets shift, business models aren&#x27;t viable, and so forth. This is not a case of people &quot;not giving it their all&quot;.<p>[1] <a href="http:&#x2F;&#x2F;www.quora.com&#x2F;What-percentage-of-startups-fail?share=1" rel="nofollow">http:&#x2F;&#x2F;www.quora.com&#x2F;What-percentage-of-startups-fail?share=...</a><p>[2] <a href="http:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;neilpatel&#x2F;2015&#x2F;01&#x2F;16&#x2F;90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;neilpatel&#x2F;2015&#x2F;01&#x2F;16&#x2F;90-of-start...</a><p>EDIT: Its been proven scientifically that people encounter diminising returns past 40-50 hour work weeks. [3] Don&#x27;t encourage grinding harder. Encourage finding where to exert the most leverage, and hiring best people you can hire <i>today</i>. Quality people + automation leverage (your software) + quality marketing is a solid formula (but not a guarantee) for success. Luck, while no one wants to admit it, is a non-insignificant component of success (&quot;right place at the right time&quot;).<p>[3] <a href="http:&#x2F;&#x2F;www.lostgarden.com&#x2F;2008&#x2F;09&#x2F;rules-of-productivity-presentation.html" rel="nofollow">http:&#x2F;&#x2F;www.lostgarden.com&#x2F;2008&#x2F;09&#x2F;rules-of-productivity-pres...</a>

After the startup curve, the focus has to be about Revenue. And in a simple way, there&#x27;s a formula, and activity outside of this formula is a lot of the &#x27;fake work&#x27; Sam mentions.<p>Revenue = Value x Sales Activity x Conversion Rate x Retention<p>The specific approach will differ depending on your size, your vision, funding or bootstrapped etc, but the fundamentals are the same.<p>Value: Covers getting your business model right. Volume x Margin, Product-Market fit kind of thing. It&#x27;s essentially a hypothesis you&#x27;re taking into Sales activity and refining.<p>Sales Activity: Includes lead generation, but I don&#x27;t like to put &#x27;Marketing&#x27; as a separate heading because blogging and chatting to bloggers is the easiest way to feel busy and achieve nothing. Are you getting in front of clients?<p>Conversion Rate: And how many of your clients are actually buying? Track this! Segment it when you can! [<i>channels the power of Danielle Morrill</i>] &quot;Know your numbers!&quot;<p>Retention: Obviously depends on the business model, but ongoing or repeat clients are lovely. In a recurring revenue business, churning a client for every new one you bring on board wastes all the previous steps.

How about backing these assertions with real data? Can YC show that companies are more likely to flatlines post-YC vs. while being coached? Or is that simply due to fast growth being hard to sustain? A careful statistical analysis of the growth of their companies, given the large sample they have, could have made this an interesting post rather than just a smug one...

We felt this coming out of 500 Startups B12. We were a team of four, we had limited analytics in place, we were ranking horribly for SEO, accounting was a mess, and we were doing a ton of things that didn&#x27;t scale which we needed to now scale. Post demo day we had to worry about fundraising, then recruiting, hiring, and now training--and in some cases firing, and starting all over again. If we get this iteration wrong we&#x27;re doomed to fail. Basically we needed to add a whole new level to our pyramid and we need to find people we can delegate tasks to do that the process scales and so everything has come to a grinding halt for a few months. If you raise more money quickly it may be possible to attract more &amp; better talent at the top of the funnel and run this process more quickly but it&#x27;s been a massive growing pain for us.

&gt; Burnout seems to almost always affect founders whose startups are not doing well...<p>There doesn&#x27;t seem to be an obvious causation here. I could totally see either causing the other, or there being a common cause of both. Seems weird to just assume burnout is a result of doing poorly.

One can easily gain momentum by simply adding mass, which is completely the wrong metaphor. Let&#x27;s end the practice of misusing the word &quot;momentum&quot; in business. Use &quot;velocity&quot; or simply &quot;speed&quot;.

My favorite fake work is &quot;I am doing research.&quot; It is also the most important work one can do prior to making decisions, however it just gets to one point where you have to admit to having enough data to move forward.

Not sure how I feel about cleaning up a code base as doing &quot;fake work&quot;.

Bullshit fake work is way worse than strictly time-boxing work. A focused 20-40h&#x2F;wk is a lot more effective than 100h&#x2F;wk of working on 90% bullshit, particularly because the bullshit reduces your per-hour marginal productivity as much if not more than real work, so you&#x27;re not even getting just 10h of real work. And because 90h of bullshit this week means, due to sunk cost fallacy, prior commitments, etc., you&#x27;re basically going to have to spend at least 50h the next week on similar bullshit.

The article should have been titled &quot;never lose momentum&quot;. Burnout is always a big thing. And distractions are even bigger. And complacency is fall of many.

This post is probably the best reason I&#x27;ve seen yet to be a YC startup. The investor who can call you out on stuff like this is the investor you want.

&quot;But the list of fake work is long.&quot;<p>I would honestly really love to see a full list of tasks and activities that could be classified as &#x27;fake work&#x27;.

Momentum is definitely a big thing. When you get a little bit, everything seems to feel a little bit easier. Your morale and confidence peak, it&#x27;s easier to stay motivated and focused, and the sky even seems bluer. OK, maybe not that last bit, but you know what I mean.<p>We were in a place like that towards the end of last year. We got invited (finally, after several applications) to the CED Tech Venture Conference, which was an important chance to raise our visibility, meet investors, etc., and I had speaking engagements lined up at All Things Open, Tri-JUG and an NCTA event. In the span of 2 months we had 4 big chances to be &quot;out there&quot; getting our name out, and we had some really cool new stuff ready to demo... life was good.<p>And then two weeks after All Things Open, I find myself on the back of an ambulance, being rushed to the hospital with a heart attack. Talk about your momentum killers. :-(<p>After that, things went into something of a tailspin. Obviously there was a period of time when I couldn&#x27;t have cared less about startups, business, or even technology. I was just happy to be alive, and was focused on bike riding, diet, and cardiac rehab. But all through that, I figured it would be easy enough - eventually - to step back into working on Fogbeam and get things moving again. As it happens, it hasn&#x27;t been quite so easy.<p>I mean, don&#x27;t get me wrong... I&#x27;m back. Definitely, absolutely, 100%, back. But I can only say that as of maybe sometime in the past month. But there was a 9 month gap in there where I really just wasn&#x27;t in the right place mentally to focus on this. It&#x27;s hard to explain, as I was back to normal physically within a couple of months, but the mental recovery was actually the harder part, and getting back to where I am excited about technology and excited about building a company took a LOT longer than I expected.<p>I had a little false start back in Feb., when I wrote some code, did some stuff, and thought I was back on the horse, but it didn&#x27;t last. It&#x27;s been discouraging to deal with all this, and even more so very exactly <i>because</i> all of this happened when we did have some momentum going. Now I find myself wondering what it&#x27;s going to take to get that back.<p>I guess there are a lot of things that can kill your momentum: the &quot;fake work&quot; that sama talks about, dealing with fundraising, dealing with acquisition talks, whatever. But from my personal experience I&#x27;ll just throw in &quot;health issues&quot;.<p>I&#x27;m sure you guys get (or will get) tired of hearing about this from me, and I am <i>generally</i> not the preachy type but I&#x27;ll reiterate this again: pay attention to your health. No, really, do it. It&#x27;s super easy to assume you&#x27;re indestructible and immortal, and to push aside concerns about health. I know, I lived that. And the younger you are, the easier it is.<p>But trust me, it&#x27;s not a good idea to blow that stuff off, no matter how young you are. Don&#x27;t say &quot;I&#x27;ll wait to get back in shape once we have our exit&quot;. I mean, there probably won&#x27;t be an exit if you&#x27;re dead; and if there is, you won&#x27;t exactly benefit from it. And remember, on things like heart disease, the artery damage that leads to heart attacks and the like, can begin really young. Even as young as your teenage years. So no matter how busy you are, or how old you are, NOW is the time to start eating right, lose weight, quit smoking, whatever it is you need to do.<p>Sorry, I&#x27;ll step off the soapbox now.

Is it really the case that out of this startup batch that &quot;25% of the companies are on a trajectory that could lead to a multi-billion dollar company&quot;? I haven&#x27;t really looked at this batch, but I highly doubt that 25 out of the current batch have that ability, just on common sense and past performance.

This is an excellent blog: &quot;Focus on growth and never lose momentum. Momentum cures everything. &quot;<p>I have one question: What to do if your growth flatlines even if you work super hard? How to approach that problem? (I know that there is no simple solution for this - but what would general approach to solve lose of momentum).

&quot;I tell founders to consider how directly a task relates to growing.&quot; - but is it really all about growing?

&quot;Stay focused on building a product your users love and hitting your growth targets.&quot;<p>How can you grow without a product users love? Say your retention rate is nowhere where it needs to be yet, isn&#x27;t it counterproductive to work on getting more users when you those users won&#x27;t stick around?

A lot of comments seem to be making a horrible comparison between &quot;relentlessly focusing on building a great product and growing&quot; and working long hours. There is no rule that says you must spend 120 waking hours in the office to be relentlessly focused on building a great product and growing the business. In fact, if anything sama is pointing out that people are wasting time with work that does not focus on building a great product or growing.<p>A member of a YC batch seems to have only a few obligations. There was occasional office hours which help to keep the batch on track with objectives to reach product or growth excellence. They have social events, which are good for learning and more general. They have a few demo type activities which are, again, around product and grown excellence. The rest of the time they work on... product and growth excellence. Do they have to work on things more than 40 hours a week? No. Is there a time clock where they share their hours? No.<p>Granted they are often out of their normal environment and very excited so they do work more than 40 hours. But that is a choice not a requirement. There are many examples of founders who bring spouses and children and find time during their batch for having great family experiences and good work&#x2F;life balance.<p>The issue seems to be when they get home. They no longer spend 40 hours working on growth and product excellence. They work on marketing themselves. They work on raising more money. They work on PR. They lose the product and grown momentum.<p>We need to stop turning this into a conversation about how &quot;start up founders must give up work&#x2F;life balance to succeed&quot;. No one is suggesting that. What is being suggested is that you take what you learn in a 3 month period and use it after that three month period. Don&#x27;t work longer, work smarter.<p>Edit: If the down voters would care to discuss why they object to this opinion, do feel free.

Are there statistical differences in slumping rate between pure-software startups vs domain-specific startups that use software as a tool? Numbers, please. Thanks.

don&#x27;t you think part of it is, startups that are not clearly hotshots that are going to raise a ton of cash quickly end up needing to focus on fundraising, and, as an investor, I would expect significant adverse selection on those startups that didn&#x27;t land big time backers right away

Make them stay for longer. That way the good habits are more likely to build. Have you considered that?

typo: &quot;Many YC startups learns these lessons&quot; (s&#x2F;learns&#x2F;learn&#x2F;)

So tl; dr: keep working hard.

Something about &quot;startups fail because they simply don&#x27;t listen to us, get confused, and stop working&quot; feels wrong coming from the President of YC. It bothers me that there&#x27;s no institutional or personal responsibility being taken. It also bothers me that the risk the founders took isn&#x27;t being acknowledged - that all the failures are being placed back on the founders&#x27; shoulders. YC selected these founders from thousands in an incredibly selective process. Why is Sama crapping on alumni? Wouldn&#x27;t you want your president going to bat for you and defending your efforts?

I know that Sam knows 100 times what I do about failing startups, and that some probably do fail for this reason. But I think this meme that &quot;your startup probably failed just because you stopped trying hard enough&quot; is awful.<p>Even Sam says IN THIS ARTICLE that &quot;Also, very small startups can grow by sheer force of will, even with a bad product.&quot; Looking at the TechCrunch reviews, I think probably half of these companies will turn out to be pretty bad products in hindsight that could never have gone anywhere.