Woman: From the campus of the Wharton School in San Francisco, this is Startup School Radio. Here is Y Combinator partner Aaron Harris.
Aaron: Good morning and welcome to Startup School Radio. We're broadcasting live on SiriusXM's Business Radio powered by the Wharton School. I'm your host Aaron Harris. I'm a partner at Y Combinator where we fund early stage companies. You've probably heard of a few of our companies, Airbnb and Dropbox. Others you'll hear about pretty soon, some right here on the show.
Every year we do a conference called Startup School where we bring on founders that we really love and have them tell their stories; all the screw ups, all the successes, everything they've learned. Startup School Radio is how we do that on a weekly basis. We'll bring in great founders to talk about everything they've learned every Wednesday at 1:00 p.m. Eastern, 10:00 a.m. Pacific.
Today I have a pair of really, really awesome founders who I've known for quite some time. First up, we have Justin Kan. Justin has founded a number of companies. The ones that most people have heard of, Justin TV and Twitch and Exec. Twitch sold recently for close to a billion dollars to Amazon. Justin is also one of my partners at Y Combinator and give some of the best advice I've ever heard. He's also let me sleep on his couch quite a few times.
In the second half hour we'll be joined by Mathilde Collin who is the CEO and co-founder of Front which is a Y Combinator graduate from just a few months ago which helps companies deal with all of their incoming email, Twitter and all of their messaging with customers. Without any further introduction, let's turn it over to Justin. Justin, thanks for joining us.
Justin: Thanks for having me. I'm super excited to be here, Aaron.
Aaron: I'm glad to hear it. You founded a lot of companies and even now while as a partner at YC, you're starting more companies. Before we dig back in time, let's talk about what you're doing right now. What is The Drop?
Justin: The Drop is not actually a company, but I just launched a new website a couple weeks ago called The Drop which is a music discovery community. Anyone can kind of come on the site. It's like Reddit or Product Hunt. People can submit awesome electronic music tracks and other people can vote on them. It's basically, it is pretty simple, but I just felt like programming something, hadn't really built anything in a while and so just built this website and put it out there for the world and people seem to like it.
Aaron: One of the funny things here or something that I find super interesting about startups in general is when you talk about The Drop initially, people are going to say, "Oh okay whatever, music discovery website." It sounds small, right? It sounds like a quack and I think that you face that in the past, right? Justin TV when it started, so let's talk about what Justin TV was. Where did that idea come from and how did it start out?
Justin: I had been in the first batch of Y Combinator with Alexis and Steve and the Reddit guys and we had this company called Kiko which was basically a Google calendar one month before Google calendar came out.
Aaron: That's not great timing.
Justin: No it was actually terrible timing. We didn't really know what we were doing. We had just seen Gmail and we were like, someone should make a calendar version of that. We along with hundreds of other entrepreneurs started working on an online Ajax calendar with like a dragon.
Aaron: Sorry, what's Ajax?
Justin: Ajax is this new technology at the time about 10 years ago that lets you make these pretty awesome websites that would communicate very quickly with the backend. They felt like an application running on your computer, but it was actually a website.
Aaron: Right, and the way most people see this is if your site doesn't have Ajax when you hit the enter button on something, the whole page has to reload to refresh the information. When you got Ajax running, it all runs without a full reload, without a full refresh of the site. It was pretty new when it happened.
Justin: That's much more technically correct than what I said. We were working on this calendar and we worked on it for about a year, raised this small amount of money. We didn't know anything about startups and basically Google calendar came out and took all the few users that were actually using Kiko because when you want a calendar with email and we just had a calendar, but no email. Also our product quite frankly was inferior. We were deciding what we were going to do and Emmet and I, my partner, Emmet and I were just sitting around talking about what we could do now that we have this company with no users. We thought, we were brainstorming all these ideas like we could turn it into like a travel itinerary calendar or we could work on some new ideas. Basically we came up empty. However, after that conversation I was like, "Maybe we could have like a podcast of us talking about our company. Maybe that would be interesting and then ..."
Aaron: Do podcasts existed back then?
Justin: Podcast existed. Well they did. In fact I think that was probably the peak of their popularity, but after that we turned into maybe we should just stream an audio feed of everything that's going on around us like all the time. I'm not sure that most people would make that logical jump and then that turned into like maybe it should be a video feed and then that turned into maybe it should be a 24/7 live reality TV show about what we're doing.
Aaron: You basically took EDtv.
Justin: Yeah, the concept of Justin TV was born. We actually hadn't seen EDtv which was this '90s movie about how this one guy in San Francisco gets followed around by a live TV crew 24/7 and after we had initially pitched the idea of Justin TV, raised a little bit of money surprisingly, moved to San Francisco, built all the technology to get it working so that we could stream live from anywhere. We watched EDtv and we said, "No one's going to believe that we thought of this ourselves."
Aaron: I'll admit it's tough to believe, but I trust you so I'll go with it.
Justin: Well yeah. We actually ended up launching a show. Thankfully we had the support of Paul Graham and Y Combinator again and they funded Justin TV as a new company. We brought on two other co-founders; one, Kyle, dropped out of MIT to help create this live broadcasting technology because there was no iPhone then. This was 2006. We needed basically to be able to broadcast over the cell phone networks from anywhere. The connections weren't very strong, so we ended up aggregating a bunch of cellphone cards into this like backpack computer and then streaming a video feed over that back to our servers and then out to the world at large.
Aaron: It sounds like you guys were actually building some really cool technology and some hacks on how to do this.
Justin: It would've been cool except it didn't work very well, but it was like theoretically cool. It was a hard problem and then with my other co-founder, Michael joined us as the producer of the show at first. He's a college friend of Emmet and mine and he had been working on a Senate campaign and then they didn't make it. He was looking for a new job and we were like, "Hey Michael, you should come join our startup. We got ourselves funded for this crazy idea."
Aaron: Can I ask why anyone gave you money for this idea? Paul knew you and liked you and thought you were going to do great things. That's why he did, but you said other people gave me some money too. What were they hoping or what were you telling them was going to give them the return at the end the day on their investment?
Justin: Before we actually launched the show, so basically in end of '06, we moved to San Francisco with some prototype technology and said, "Okay, let's do this show." It took us like six months to get something that was stable enough that we felt we could actually launch a show. During that time we raised a couple hundred thousand dollars from Angel investors like Aydin Senkut and Paul Buchheit and Paul PB, Paul Buchheit is one of the partners at YC now, but at the time he was just getting in the Angel investing and years later I asked him like, "Why did you invest in Justin TV? It seemed terrible."
Our pitch was basically like this is going to be how media is produced in the future. We didn't know anything about media. We were like people are going to be creating these live, it's a new type of reality TV and people are going to be creating these live streams to the Internet. I guess he was like, "Maybe, but I don't really believe that but these guys seem smart so I'll just invest in them." I think that if I look back personally at all the investments that I've made or missed and if I just followed that philosophy of investing in people who are smart around me, I probably would've done pretty well.
Aaron: Do you think that smart is the thing that determines success or failure in a startup or the people that make money?
Justin: I don't mean smart, but I mean they are going to produce stuff. They're going to build stuff and they're not going to give up.
Aaron: At YC we talk about this issue a lot. Is it the smart thing? Is it the determination thing? I think we use a term sometimes formidability which isn't really a word, but the tendency of someone to run through brick walls to get where they're going. That seems to be the single biggest factor.
Justin: Yeah and I think our early investors identified that we were going to do that. We were a team that had worked together for a while and they'd known each other for a long time and everyone we pitched, even the people who didn't invest were like, "Well I like your team, but that idea is really awful." Or, "I really think there's something here in my view I don't like" They all said your team, like you have a good tech. You're engineers. You understand how to build things, but this is the worst idea I've ever heard. We got that a lot or the nice people said, "This is a a hits based business." Which is absolutely right and what they meant by hits based business was a business where you have to produce a hit. You have to be like a Justin Bieber and just knock it out of the park from the content perspective and everyone wants to invest in something where you just throw a bunch of content up and it's a platform and the winner succeeds.
Aaron: It's kind of the difference between... in the Hollywood model. The Hollywood model is a hits based business. You basically have to produce and each thing doesn't really have much relationship to the last thing rather than a reproducible model.
Justin: Yeah, exactly.
Aaron: Were they right? Was Justin TV a good idea or a bad idea?
Justin: Well, I would say that it was an extremely good idea in the sense that we got started and it was a bad idea from the perspective of a business that anyone that would be sustainable or create a product that anyone would want to use because Justin TV itself, the show got all this media attention. News people were like, this guy's crazy, but when they came on they were like, "Actually he's crazy and also very boring because we'd be sitting on our computer programming the site most of the time." We tried to program some content, but quite frankly it was awful.
Aaron: What's the most exciting episode or...?
Justin: The most exciting time for everybody was I went on a date live on the show and there was a lot of activity on the site, a lot of chat. Even today people say when I meet them and they had heard about Justin TV, they're like, "Oh, I remember watching or hearing about that date that you went on." It's like, "Okay, that's great."
Aaron: Do you look out sometimes at the world of reality television and say, "Hey, I was one of the grandfathers of a lot of what's going on right now." Or do you just try to disassociate from it?
Justin: Well I don't think I was actually one of the grandfathers in the sense that like there's reality shows on TV, on actual TV have been much orders of magnitude much more popular than Justin TV ever once. We were more like this weird niche internet offshoot that just died. It's like one of those evolution trees, we were like Neanderthals and like dead-ended. Live streaming was like Justin TV style life casting which is what we called it. It was like the Neanderthals. They went extinct. They did not compete well against human beings.
Aaron: Yeah, it's funny. There is a series of short stories by Orson Scott Card where, I think it's Orson Scott Card, where he has this is future world that he builds where the most popular form of entertainment around like the galaxy or whatever is people lives like live streaming. I think he actually uses the term live streaming. I remember reading and I was like, "Really?"
Justin: Yeah I think that that's probably not a future that's going to happen.
Aaron: Okay, Justin TV is this crazy, fairly crazy idea. Possibly not a business, but then something, something, something Twitch. What happens?
Justin: Basically what happens is we launched this reality show and then people come on and they're like, "You're really boring. However, I want to broadcast this thing I'm doing like a bike race or a live talk show or something like that. How are you making this live technology work?" The light bulb went off and we were like, "We should make a platform for anyone to broadcast live." Now looking in retrospect in years later, people were like, "Wasn't that your intention all along to create this one show to get attention for your platform?" We actually were not that smart.
It took all these people coming on and saying, "Hey you should make a platform for us to broadcast, for us to say hey that's how we could be a sustainable scalable platform where we don't have to create this awesome content. Other people will do it for us." We should have known that beforehand because honestly there was YouTube. It was already super popular and it had already sold to Google. It wasn't a huge stretch to think, hey, YouTube for live video, but eventually we went back to the drawing board and we built this live video site that anyone could broadcast on and then we launched it in October of 2007. That was about a year after we started the company.
Aaron: You launch that and it becomes something else. We're going to get to what it becomes in just a second. I just want to say to anyone who is just joining us now; you were listening to Startup School Radio on Business Radio powered by the Wharton School on SiriusXM. We're broadcasting from Wharton's campus in San Francisco. If you're just tuning in, we are talking with Justin Kan; founder of Kiko, Justin TV, Twitch and Exec and now The Drop. Justin was just telling us a little bit about how Justin TV evolved over time. All right, so you become this sort of platform for live video people basically whatever they want broadcast live video, but we're still not at what became the huge, huge idea. Right?
Justin: That's right. We were this platform for live video and just like any other good idea, hundreds of people at the very least had thought of doing a platform for live video at the same time. Lots of other people were doing, built other live video sites like Ustream or Mogulus which turned into this company called LiveStream or there were many, many others and they all kind of when I was like calculus. Everyone had the same idea and invented it simultaneously. We were in this head to head battle against all these other live video sites. In the beginning the content was just whatever people wanted to broadcast. There was a lot of like amateur talk radio type people that were people just in front of their webcam talking to the camera.
There were a few celebrities or some events, some sports things and then basically we just worked on that and scaled the site for three years, or maybe three and a half years. People were coming on. It was growing. Some months it would grow really quickly. Our website would fall over and then we'd have to figure out how to scramble, to like scale it. We have this band called the Jonas Brothers that was very popular on and thousands of teenage girls would like to refresh our site over and over and over again.
Aaron: Who put the Jonas Brothers on the site?
Justin: Actually they had seen my original broadcast while I was walking around. I think I was in New York that week and I was walking around and the Jonas Brothers' manager was like, "Oh that's great tech. That's cool technology. We should do something like that." They reached out to us in the early days and then started doing a few broadcasts and every time they would broadcast our site would like fall over. The technology was at the time not very scalable.
Aaron: How many multiples of your average traffic did the Jonas Brothers bring in?
Justin: It would be like 30x. We had a baseline and then our peaks would be like 30 or 35x baseline. It was crazy and it's technically a pretty hard problem to scale that. Most startups don't have traffic that looks like that. That was being able to figure out the technical and the technology and hire the right people to build this backend was pretty hard, but we eventually did it. That was what we worked on for the next three and a half years. Then to make a long story short, we were at a point where we were about 25 people. We were thinking, "What do we do next?"
The site had kind of tapped out. It turns out not everything type of content is good live, right? Only certain types of content are really good live and so we tapped out all these, all the live content and we were having trouble continuing to grow. The site was probably about 30 million uniques a month at that point which is pretty big website, but it wasn't growing. We started working on some new ideas of things that we could potentially be bigger than Justin TV and one of those was one of my co-founders Emmet came and said, "Hey guys I think we should work on the gaming section of Justin TV." The gaming section was people playing video games and other people watching them. At the time, Emmet came and said, "This is the only content that I actually like on our site."
Aaron: How big was that segment?
Justin: That was 3% of our traffic.
Aaron: Just 3%.
Justin: It was just 3%. It was a couple hundred thousand people a month and Emmet was like, "This is the only content that I actually want to watch. Let's focus on this content. Maybe we can be bigger." The rest of us, so the four co-founders, I thought hey that could be something. The other two co-founders were very skeptical. At the same time we had this other idea, my other co-founder Michael's idea, which was let's work on the mobile part because mobile is growing and there's no good way to get videos off of your phone. He was really selling mobile. We were at this impasse, right? There were two ideas. We couldn't decide between which one was going to work and so we decided let's do both of these things simultaneously inside our company.
Aaron: That seems like a terrible idea. Like when we talk to startups and they say, "We want to do two things at once" and they're a small team we say, "Bad idea."
Justin: Yes, we definitely tell startups not to do this and I actually think that's right. However, in this case it worked out. Basically we had these two ideas and then we start working on both. We created three teams inside the company and this is a company of 25 people, so there weren't very many people to go in each team. One team was running our existing Justin TV site. One was running this new project that eventually turned into a site called Twitch which is working on gaming; that was Emmett.
The rest of us were working on this new project that was like mobile broadcasting and we call that Socialcam and so we basically just said like, "Okay, let's set some goals now for what we would want each of these new projects to ... How we want them to grow for the next six months." That was like the best thing we did because we said if they achieve this monthly growth every month for the next six months, then we're going to be confident that this is something worth working on.
Aaron: Which is basically like a sheet borrowed out of how Y Combinator advices our companies. We bring them in for three months. We give them some money. We say, come to California. We'll work with you for three months and here are the metrics you want to hit, and if you're not growing month by month, if you don't hit these goals by Demo Day which is how we finish Y Combinator when we help them get up and demo in front of people, you're probably not on the right path or you haven't listened to your users.
Justin: Exactly, if you don't grow then your company is dying basically. That's how we felt about it. If these projects aren't going to grow, we're not going to actually work on them.
Aaron: Looks like the key differentiator in a lot of ways between a startup and maybe a small business, right? A startup is almost defined by the fact that it has to continue to grow at all times; otherwise it could be a great business. There's nothing wrong with that, but it's not what we classically think of these as startups that is rapidly scaling on path to be huge businesses.
Justin: Yeah, that's absolutely right. For us we were not confident that any of these projects would actually grow.
Aaron: Was there a backup plan? Was there doomsday?
Justin: We said, "Hey, if in six months both of these projects didn't work, well we're no worse off than we are today. We'll think of two new projects and work on them." Luckily Emmet for the first time in our company's history I think since we actually created the original platform, he went out and he talked all these gamers who were broadcasting and said, "Hey, how can I get you to broadcast more or get you to broadcast on our site instead of whatever competitor sites or if you're creating video, but it's not live video, how do I get you to produce live video on our site."
Aaron: So you hadn't been talking to users?
Justin: No, we actually had not talked to users for like four years. Once again, I've learned a lot and now I can pass on things to YC founders as a partner. I'm able to advise them to do the things that I failed to do.
Aaron: Right.
Justin: We had actually spent like four years not talking to users and then finally Emmett starts talking to users again and then it's voilà, voilà. He came up with all these features that our users actually wanted. It turns out they want to make money from streaming video games, right? We create a partner program which is one of the drivers of Twitch's growth. He created ...
Aaron: Just to cut in for a second, for people unfamiliar with the world of professional video gaming, it is massive. For a lot of people they hear, "Oh, watching other people play video games, that seems crazy." I did it all through college. My roommates watched me play a lot of video games. I watched them and if you look around the world, their video gamers making over a million dollars a year at this point in sponsorships and prize money. It might not currently rank the size of the NFL or the MLB, but this is a rapidly growing thing that you just had happening on your site without even realizing it basically.
Justin: We were kind of lucky because we were positioned to ride this wave. I think that it's the right timing for gaming to happen as a spectator sport. We were there, Emmet was talking to users getting more and more people to come broadcast every month and then it's just grown and grown and grown since then. Like the rest of the story was six months later we created a spin off site called Twitch which basically used the same backend as Justin TV, but had its only gaming content and was clearly a gaming community. Then it's just grown since then and last year in August we ended up selling it to Amazon for $970 million.
Aaron: That's not small change.
Justin: No, I think that people were pretty surprised, but when we sold it, the Twitch was at I think around 60 million monthly uniques, monthly people watching gaming content and today it's I think 100 million.
Aaron: How many hours of video games are people watching every month? Do you know?
Justin: How many hours of video games are people watching every month? I don't know the current stats off the top of my head, but it's like, on average, it's many.
Aaron: Yeah, you're probably one of the biggest like uses of bandwidth.
Justin: Oh yeah. I think that there was a Wall Street Journal article last year and this is probably only grown since then. They ranked us, it was the first time that people knew about Twitch. We were right after... We were number three on the charts of like top bandwidth usage in North America. It was like Apple, Google and Netflix were like that the first three and then Twitch and people were like, "What's Twitch?"
Aaron: That's crazy. Netflix was this brand name that everyone's known for a long time. It's this public company. It's streaming at all these homes. Apple, Google and then Twitch, right? A startup that had been under the radar, but apparently had this massive, massive following.
Justin: People love video games.
Aaron: Yeah, they do. I do.
Justin: As a user, I watched Twitch every day. I like playing this game called Hearthstone by Blizzard and I watch it all the time.
Aaron: Right, the only thing that's cut into my video game playing time is a child.
Justin: It's tradeoffs. Life is about tradeoffs.
Aaron: Tradeoffs, even though you gave me a PS4 and I didn't even get to play that.
Justin: Just collecting dust.
Aaron: It kind of is right now.
Justin: Part of the crib.
Aaron: Yeah, there's like pictures and crib. That's basically, it's a shimmy. Wow. It's so cool when you hear this and I'm just circling back to this thing that you said earlier where these ideas that might seem small or seem like they aren't things. If you pay attention to the users and work with them, you find just these massive opportunities and things that ... The well-known ideas in the well-known markets they're probably tapped out or they're pretty mature.
Justin: There are so many ideas especially in Silicon Valley which at first people say, "Hey, that looks like a really small market." There's a couple factors. I think the thing about the Internet is that there's always more people coming online and spending more money online and that means that like if you create something that's even a small number of people want, your market is growing over time. The wind is in your favor, right? I think that also a lot of really top startups that have been very successful started off as things that people considered niche products. I remember Airbnb in the early days, like people said, "I would never want to stay at someone else's house."
Aaron: To be fair in the early days Airbnb was literally an air mattress on a floor in a living room, right?
Justin: Yeah and turns out there were other ... People mostly wanted whole apartments, but the whole vacation and rental and travel space was huge and the same can be true for Uber. When they started it was a black car, you get a black car service is very expensive. I just think that lots of things start off as a niche business for a specific segment or demographic, but then expand out from there and I think that's a good way to start a business is to make something that a small number of people really want and then you can expand that pool of people.
Aaron: Yeah, Paul Graham who founded Y Combinator wrote this essay at some point, I think it's, How to Get Startup Ideas and one of the things he says is you want to dig a really narrow, really deep well, right? You want basically people who really, really desperately want what you've made and it doesn't have to be a lot of them at the beginning, because you can make the well larger overtime, but those are the people who stay engaged as passionate users. Thanks Justin, that was a pretty awesome story and I hope you'll stick around for our second half of our show. If you're just tuning in, I'm Aaron Harris, partner at Y Combinator and this is Startup School Radio on SiriusXM's Business Radio powered by the Wharton School. We'll be back in just a few minutes with Mathilde Collin, co-founder and CEO of Front. Thank you.
Woman: You're listening to Start up School Radio powered by the Wharton School. Here again is Aaron Harris.
Aaron: Welcome back to Start up School Radio on Business Radio powered by the Wharton School SiriusXM Channel 111. I'm your host Aaron Harris. I'm a partner at Y Combinator, where we fund early stage companies and work with them to make them into billion dollar businesses. I've been speaking this hour with Justin Kan, one of my partners at Y Combinator and founder of numerous startups. Most recently a project called The Drop. Justin, thanks so much for sticking around.
Justin: Thanks for having me.
Aaron: My pleasure and next up, we're going to be joined by Mathilde Collin. Mathilde is the CEO and co-founder of Front. They're a graduate of Y Combinator from just this past summer and they've been building a really incredible team and a really incredible product here in California. Mathilde, welcome to the show.
Mathilde: Thank you for having me. I'm super happy to be here.
Aaron: Why don't you tell us a little bit about what Front is?
Mathilde: Sure. Front is a software that helps companies manage shared inboxes. Every time they have a shared email address like contact that press at, or a shared Twitter account, or a shared phone number, they can use Front and then they can reduce response time. They can bring more visibility to their team and they can make happy your customers.
Aaron: How do people deal with these emails now? If I email
[email protected], or something like that. What's happening in the background?
Mathilde: Most of the time these emails are redirected to a few people and then everybody has a hard time figuring out who has a reply to what, or who is going to reply to what. They were replying or they're CCing, BCCing and it leads to a lot of mistakes. Like people reply twice to the same email or they miss some emails.
Aaron: Which probably results in unhappy customers and all kinds of badness.
Mathilde: Exactly.
Aaron: Why are you working on this? Did you have to deal with these email cues, did you have this pain?
Mathilde: Yeah. In my previous company I had this exact pain and then also I really wanted to work on a product that helped companies work and communicate better. I think we've seen really interesting things lately. For example Slack, is doing a really great job at reinventing how people communicate internally in companies and I think we wanted to do the same but externally. With the outside world, whether it's customers or investors, or leads or candidates, whatever.
Aaron: You think a lot and have written a bit about email, right? As a protocol, as a way in which we communicate, as a catch off for things that probably shouldn't be and there's a lot of people who argue that, oh, we should just get rid of email entirely, which Slack is trying to do that internally, but you don't really believe ... You think email is here really to stay in a lot of ways, right?
Mathilde: Yeah, I'm convinced that email will stay. I think there are a lot of areas where email was used a lot and shouldn't have been and I think internal communication was one of them, or project collaboration or a few other examples. However, I think every time you communicate with someone outside your company, I think email makes sense, because then that's the only way they can reach out to you and you can't force them to use another software.
Aaron: Why not something like chat. There's a company, a Y Combinator actually called Olark, which allows you to enable a little widget on a website where customers can chat at you when you're on the website. Why isn't that sufficient?
Mathilde: I think we use Olark at Front and I think it's great, but just like an example, if you're not sure on the chats then Olark will send you an email and then you will reply to the team, or to reply to your customer.
Aaron: It all comes back to email basically?
Mathilde: Yeah.
Aaron: Okay, so I'm an organization, I'm a company and I say, look I have one of these shared inboxes and I'm missing shit, I'm not catching emails I need to catch. I install Front and then what happens? How does it work with my team?
Mathilde: It's super simple, you add a shared inbox, so just by doing a Google connect if you're using Google Apps and then you'll just invite your team and then every new message sent to one of these addresses will arrive in Front. Then they are in Fronts and then on top of all the features that you expect from an email client, you can assign emails to the right person in your team, you can comment emails internally, you can mention people. Everything is in real time, so when someone is replying you know it, so you are sure not to reply twice to the same email and then you've got lots of productivity features to make response time lower.
Aaron: Can you point to companies that are using you and say, "Look how much faster we've made them at responding to customers, or how much happier their customers are." How do you think about the success of Front within a company?
Mathilde: I think there are really two things we track. The first one is, how more efficient companies are and I think for that, the best thing is the response time and we provide this information to them too so they can see before using Front or the day they started using Front what their response time was and then one month or three months after, what it is. Then I think the second value is harder to track, but it's more about the visibility that you give to your team, because more people have access to emails, to tweets, to SMS and I think it's really important for a company to make sure people know what's going on and what your customers think and why they are happy and why they were not happy.
Aaron: It's interesting; you just mentioned it's not just email, right? You're extending into Twitter, to SMS and I guess that's because companies are interacting with their customers in a lot of different ways now. Are all communications the same in a company's eyes?
Mathilde: Yes, so I think all these communication channels that you use to communicate with the outside world have the same problem, which is, they were made for one to one communication and they don't work for a team. Whereas, like the worklflow that we had invented for email worked also for other communication channels. We started with email, because it's the main communication channel, but then we added Twitter and then we added SMS, we were adding voice and then we'll add LinkedIn, Facebook and Olark, all the communication channels that you have and so you will have two benefits. First, making companies more productive and also having all in one place.
Aaron: It sounds like you're adding things the companies are using already. Are you creating features because you just like sit in a darkroom and say, "We need this thing." Where are the new ideas coming from?
Mathilde: Not at all. I think the first thing that I've learned at YC was to talk to users all the time. I think it's super hard to guess what people want. Like my job, 90% of my time I talk to users. I talk to leads to understand how they work and what they want and I talk to existing customers to know why they like Front, why they don't like Front and what they want to see next.
Aaron: You're telling me that being the CEO of a startup isn't all jet setting around the world and being on radio and all these things, it's just like talking to your customers.
Mathilde: Exactly, so I think maybe 99.9% of my time is talking to customers and I try to convince new customers to come on board with us. It's get things done.
Aaron: Is that something that comes naturally to you?
Mathilde: Yeah, I think so, because I think that the only way your company can grow and at the beginning you're super small. If you don't do it, then nobody will do it and then add a bunch, if you want other people to do it, then you have to tell them that you've done this before and that you know how to do it.
Aaron: Justin was just telling us how there was this kind of four year period at Justin TV where they stopped talking to their users. Here you are, you're early on the life of your company, you're like, "Of course we're going to talk to users." How do you avoid falling into the trap that he fell into?
Mathilde: Hard to say because it's been six months for the moment. I feel like I have to do it all the time. I feel like I will always read Paul Graham essays, because you always say the same basic things about building a company and I think it's worth listening that again and again.
Justin: She was way smarter than I am. I think she'll figure it out and we weren't very disciplined.
Mathilde: Thank you, Justin.
Aaron: You two worked together pretty heavily when Mathilde you were at Y Combinator. Is that right? You guys spent some time together.
Mathilde: Yeah, true, so you have dedicated partners when you're at Y Combinator and Justin was my dedicated partner.
Aaron: What's the best piece of advice that Justin gave you and for those of you who don't know Y Combinator very well, the way we work is after we fund the company we bring them out to California and we spend three months working with them intensively. The way that typically works is, we have office hours which are basically one on one meetings between companies and partners to talk about specific issues. You run into a problem and you say, "Hey Justin, I need help with this thing, can we talk about it?" You sit down for however long you need to sit down and you talk through these issues. In these conversations that's really where the meat of Y Combinator happens and then at the end of Y Combinator, we have what we call Demo Day, where all the companies get up and they give a demo to a room full of really, really great investors.
It's actually that simple which is shocking to hear because somehow this formula has produced some really, really incredible multi-billion dollar companies, but it really is that simple. You're at Y Combinator and you say, "Hey Justin, we're struggling with X." I'm going to actually ask both of you this question. Mathilde, what you think the best advice Justin gave you was and Justin, what do you think the best advice you gave was?
Mathilde: I think an interesting thing of YC is since you have really amazing people like Justin, you expect them to give you answers to your questions, so you come up with this list of questions and you expect them to give answers. However, they will most of the time always say the same thing. They will say follow your growth. Make something people want and talk to your users. It can be frustrating sometimes, but then after three months, you realize that that was the best advice they could give.
Aaron: Justin?
Justin: I think that that's absolutely right, because we don't have any magic secret knowledge about your startup. In fact you generally are the expert in your startup and the only way that you can actually ... Every situation is slightly different. We have a lot of situational experience in what happens, how do you negotiate a term sheet if you're raising another round, or how do you negotiate an acquisition, or how do you hire someone that you've been gunning for, for a while, but generally when it comes to what's the right thing to do for my startup, you're the one who probably knows best and if you don't know, what you need to do is go talk to your users and figure out what they actually want and try to deliver them something that they want.
I don't think that we have this like magic answer for like any question. I do think that one of the best pieces of advice that I gave last batch particularly was, something I forgot about for a while, but I heard it from the founder. He was telling the story about his experience in YC and he said that when he came in, he had intended on launching a startup in I think a month and a half after the start of YC and then he talked to one of our other partners Sam and Sam was like, "You should try to launch in two weeks." Then he had office hours with me and I was like, "You should launch tomorrow. Why aren't you able to launch this tomorrow?" Then he said, that really lit a fire under the team and they launched it, not the next day, but in 48 hours. Then I had totally forgotten about that incident, but when he brought it up I was like, "Oh man, that was really good advice for you." That was my proudest YC moment of the last batch.
Aaron: I think that's a pretty good moment. If you're just tuning in, I'm Aaron Harris. I'm a partner at Y Combinator and you are listening to Start up School Radio. I'm speaking today with one of my partners Justin Kan and with Mathilde Collin, CEO and co-founder of Front which is a company that Y Combinator funded just six months ago and it's been I think a pretty crazy six months for her. Justin was just telling us and Mathilde was also sharing with us some of the best advice that they've given and received at YC. Justin said something which is totally true which is, we don't actually have any magic ingredients. There is no like one specific thing that we just sprinkle on top of companies and causes them to grow super rapidly.
It's really more I think a way of thinking and a framework of thinking about problems and focus on what we think are really the core most important things which, as Mathilde alluded to, is talking to users and building products for them. Writing the code, writing the things, building the things that they actually want and responding to them, which is surprisingly hard to do in a vacuum. It's hard to do when you're out in the world and there's all these things competing for your time and all the things that you could do as a CEO of a startup with money, you could actually go around and speak at conferences all the time or do things that might feel good, but aren't actually important and forcing yourself out there to talk to your users really, really is critical. One of the things I wanted to ask you, Mathilde, is you started the company in France and you moved here to California. First off, how did you hear about Y Combinator halfway across the world and what made you decide to apply and then uproot your life and come here?
Mathilde: I started the company in Paris and when we started the company, we worked on the product and then we launched a homepage with a screenshot of the app and a field where people could write their email address. We communicated a bit around the idea and then people subscribed and when I looked at where these people came from, most of them came from here, California. I had never been to the US before, but I decided to book plane tickets and to fly the next week. That's what I did and at that time I had never heard of YC before.
Aaron: How long ago was this?
Mathilde: It was in January, so one year and two months ago. I came here and I met with a few people that subscribed to our products. I talked with them, talked with people in the same space and talked with a few in the stores. Then they told me about this amazing thing Y Combinator and everybody at that time when I met with company was applying.
Aaron: Every company that you talked to that had signed up was applying to YC?
Mathilde: Yeah. Because it was like the applicant period. I flew back to Paris and I told my co-founder, we need to apply, so I needed this one minute video, so I had to be here. That's why I decided to go back to France. We applied and then got accepted.
Aaron: That goes right back to what Justin and I were talking about earlier, which is the thing that seems to be the most important is, just getting stuff done, right? Just not thinking about stuff for too long honestly and not overanalyzing it, but actually going and doing what you think is necessary for the success of the company. That's exactly what you did. To fly to California, having never been to the States before, just to talk to your users, that's awesome. That takes some real courage.
Justin: I think Mathilde, what impressed us most in the interview was that she was just not willing to take no for an answer. Their product was really beautiful, but afterwards I remember we had a conversation and she was just basically like, she moved mountains to be like where we need to be in Y Combinator. Really just made us accept her.
Aaron: Yeah, I remember actually emailing with you before interviews, when I had seen your application and I was like, "Oh, these guys seem really ... I'm going to email them ahead of time." We were working through stuff and you just ... On the ball. Every time there was a request, it was like, you would get back to me almost before I had finished sending the email. I remember that, that was awesome. It was awesome to see and if everyone did that, I think there would be even more great startups. Hopefully we can convince people to be more like you and to do those things. All right, so you apply to Y Combinator halfway across the world, you get in, you come out here for three months and you decide to stay here.
Mathilde: Yeah. Exactly.
Aaron: Why?
Mathilde: We spent with the whole team four months in Palo Alto, during Y Combinator and I think we felt that everything was happening here and that if we wanted to build this billion dollar company, we had to be here. There are probably three main reasons why we decided to be here. First, I think it's easier to get funded here. We tried to raise money in France and we could not. Then I think you have a lot of talented people here. The last thing, I think it's easier to be ambitious when you are here and I think when we started the company in France, we had not this idea of making Front such a big thing and we are convinced that we can do that. I think it's because we are here and because we have inspiring people around us.
Aaron: Is there anything that ... What was the most surprising thing you got out of doing Y Combinator and moving here? There is stuff you probably expected to get. Being close to your customers, okay. You knew a bit about Y Combinator at that point, but is there anything that happened that you're like, wow, I didn't expect that and that changes our trajectory. That's huge.
Mathilde: Yeah, I think the fundraising was something I was not expecting. Before going to YC, we wanted to raise money in France and it was super hard. Whereas here it was easier. It was not like super easy, but easier. I think one of the main reasons is because French investors and American investors are very different jobs. I think when you are in the US, the one thing you don't want to do is to miss an opportunity. Whereas when you're in France the one thing you don't want to do is invest and then this company is not working. I think for a company like Front that is super ambitious, so investors also take risks, that's the downside. I think it was like far, far easier to get funding here.
Aaron: You're talking about how ambitious Front is and it is. If you hit all of your marks and you nail your milestones, what is Front to become?
Mathilde: I think there are a few ways you can describe it. I think the multiplayer of Gmail is an email that I like, but I think it's basically the place where you communicate every time you need to reach out to someone outside your company and today email is really how work gets done, so I think if we manage to be that great tool, I think we can really improve how people get work done and they spend hours in their emails today, so they will spend hours in Front every day.
Aaron: Do you think that it's mainly for software companies and knowledge workers? Does it go beyond that?
Mathilde: I think it goes beyond that. I think all the adapters are definitely tech companies that are willing to change something so important like email. However, we already have like very, very various companies. We have schools, we have hospitals, we have law firms. I think almost every company has this program of email collaboration.
Aaron: Was there a group of customers that just shocks you that you have them?
Mathilde: I think I'm super amazed that after a few months we are already working with companies like MailChimp and General Assembly and HomeJoy and GoDaddy and Kissmetrics, etc. I think that's the most surprising thing. I think just because when I was in France and I wanted to convince people to use Front, they didn't want to take that much risk for something that's crucial like communication with their customers and I think people here are more willing to take risk and to start with new softwares, because they've been a new software just a few months before, or just a few years before. They were happy that they had other companies testing their products super early and that's what happens to us.
Aaron: There's this trust that these companies will eventually be big not eventually fail.
Mathilde: Yeah and will be more responsive and will innovate more quickly, etc.
Aaron: Justin, you've been in the valley for a long time, do you think that that's changed? Was it always like that where companies were willing to give startups a shot and let them try out new software?
Justin: Yeah, I think that's why most of us came here was that this environment, the special thing about Silicon Valley is that people really have a positive outlook towards like new ideas, new products and new technology. There's people willing to invest in them, there's people willing to work for them and there's people ... Customers willing to try them and I think that that's part of what makes it awesome to start a company here.
Aaron: You think it boils down to optimism?
Justin: I think so, yeah. People are positive.
Aaron: That's really fine. I was born and raised in northern New Jersey. My early working experience was in finance, which I think is very opposite perspective. There's a lot of pessimism there in terms of finance in New York, where there's a limited amount of money I think that people are going to make and so everyone's trying to grab a piece of the pie and I think out here it's different. It's not about a piece of an existing pie; it's about a share of an ever increasing pie.
Justin: I think here we think of things as it's a positive summer camp. Working with other people is good and as an investor if you invest in these new ideas you can potentially grow something massive. Like invest in the next Google or Facebook.
Aaron: Or Twitch.
Justin: Or Twitch.
Aaron: Who thought that pie was big?
Justin: It's a new pie. There's slices for everyone, it was amazing.
Aaron: It's so cool to hear. Justin, you've seen these companies grow and get huge and Mathilde, your company is still in its earliest stages really. Six months in, seven months in, really in terms of the life of the company and there's just this massive, massive amount in front of you. I'm curious as you're looking out over the next six months, what's the thing, what's the biggest challenge? What's the thing you're worried about and the thing you focused on?
Mathilde: I think by far it's hiring. That's the thing that I'm realizing right now, we have a product that our customers like a lot and we have a funding team that is great and we have money, but now Front will never be a big company if we don't hire talented people to scale it. I find it much harder to find talented people here to hire them and to convince them to work for you when you're that small than in Paris. In Paris if you're a startup, you've raised a bunch of money, you went to Y Combinator, it's really easy to get talented people. Here, it's much more of a challenge.
Aaron: Even with that difference, it's still better to be here rather than go back to Paris?
Mathilde: By far.
Aaron: It's an incredible thing because hiring is so important, but being close to your users, at the end of the day, that's what counts.
Mathilde: Of course, but then hiring American people also may be harder, but more different and I think we are super happy to have French people and American people and I think they bring a lot of things and a lot of ambition too that French people don't bring.
Aaron: Mathilde, thank you so much. If people listening to this want to download Front app and use you and purchase your software, where should they find you?
Mathilde: They should just type Frontapp.com and then sign up and that's it.
Aaron: If they send you guys an email, I'd imagine it would get returned very, very quickly.
Mathilde: Of course.
Aaron: If they want to find The Drop, Justin where do they get it?
Justin: It's Thedrop.club. It should be ://thedrop.club.
Aaron:.club, that is a new URL for me. Thank you both so much. Justin Kan, Mathilde Collin, you have been really incredible guests here on just our second show. I hope all of our guests are as good as you are going forward. Thank you all so much for joining us and listening to Startup School Radio on Business Radio powered by the Wharton School on SiriusXM. We broadcast live every week at 10:00 a.m. Pacific, 1:00 p.m. Eastern. If you have any questions about what you've heard on today's show, send us a note, our email is
[email protected].
You can also follow me on Twitter at @Harris and you can follow Business Radio at @BizRadio111. Thank you for joining us and a special thank you to my senior producer Lisa Mantineo and our associate producer and engineer Dion Simpkins. Be sure to tune in next week. We'll be joined by Optimizely Pete Koomen and Sanjay Dastoor from Boosted. I'm Aaron Harris and you've been listening to Startup School Radio.
