- The video discusses the advantages that first-time founders have over second-time founders.
- First-time founders have the freedom to take more risks and work on ideas they find interesting without feeling the pressure to impress others.
- Second-time founders have access to more expert opinions and past experiences, which can slow down decision-making.
- Second-time founders may rely more on feedback from startup friends and mentors rather than potential customers, which can hinder innovation.
- Second-time founders may feel the need to work on ideas that sound impressive at social gatherings, leading to a fear of pursuing "dumb" ideas.
- First-time founders experience the novelty and excitement of starting a business, while second-time founders may not feel the same highs and lows.
- First-time founders are often more constrained and have to innovate more, while second-time founders may have more resources and networks.
- It can be harder for second-time founders to receive honest feedback from investors and friends due to existing relationships and incentives.

- Second-time founders may receive funding for reasons unrelated to the quality of their product or user satisfaction.
- First-time founders face more challenges and have to operate at a higher level of execution from the start.
- Financial independence from a previous startup can provide advantages for second-time founders, allowing them to think bigger and make long-term decisions.
- Capital-intensive businesses benefit from second-time founders who have experience raising large amounts of money.
- Examples include Elon Musk, Eric Wu, and Blake Scholl.
- However, not all businesses require a lot of money, especially software companies.
- Deep domain expertise in a specific industry can be advantageous for second-time founders.
- It is common for second-time founders to dislike the market they previously worked in, but going back to that market can actually be beneficial.
- Founders should be cautious when receiving feedback from previous founders who failed in the same market, as their opinions may be biased.

- The significance and reasons behind events are often misunderstood and not useful for founders building a new business.
- First-time founders have the advantage of building a unique and valuable business.
- The glamour associated with being a repeat founder is a trap and comes with its own problems.
- Competitors who are second or third-time founders often wish they had the benefits of being a first-time founder.
- Many successful companies like Google, Facebook, and Microsoft were founded by first-time founders.
- First-time founders should not be discouraged and should remember they are in good company with successful founders like Jeff Bezos.

The video discusses the advantages of first-time founders over second-time founders. First-time founders have the freedom to take risks and work on ideas they find interesting, while second-time founders may face pressure to impress others. Second-time founders have access to more expert opinions and past experiences, but this can slow down decision-making. They may rely more on feedback from startup friends and mentors rather than customers, hindering innovation. Second-time founders may feel the need to work on impressive ideas, leading to a fear of pursuing "dumb" ideas. First-time founders experience the novelty and excitement of starting a business, while second-time founders may not feel the same highs and lows. First-time founders are often more constrained and have to innovate more, while second-time founders may have more resources. Second-time founders may struggle to receive honest feedback and may receive funding for reasons unrelated to their product's quality. First-time founders face more challenges and have to operate at a higher level of execution from the start. Financial independence from a previous startup can benefit second-time founders. Capital-intensive businesses benefit from second-time founders with experience raising money. Deep domain expertise can be advantageous for second-time founders. Founders should be cautious of biased feedback from previous founders who failed in the same market. The significance and reasons behind events may not be useful for founders building a new business. First-time founders have the advantage of building a unique and valuable business. The glamour of being a repeat founder comes with its own problems. Many successful companies were founded by first-time founders. First-time founders should not be discouraged and should remember they are in good company with successful founders like Jeff Bezos.

Step inside the Group Partner Lounge to hear Y Combinator Group Partners Harj Taggar, Michael Seibel and Brad Flora discuss the advantages of being a first-time founder and the instances when it pays to have experience founding a startup in the past.

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Introduction
00:47 - Setup
01:35 - Expert opinions are not what you want
04:07 - Picking your market
05:37 - Novel
06:58 - First time founder have to innovate more
08:08 - Honesty
09:57 - Auto pilot initially but it shuts off
12:07 - Devil's advocate
12:25 - Financial independence to think bigger
14:04 - Capital intensive businesses
17:33 - Building in a space you know really well
20:07 - Wrap up


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The first time founders can actually take more risk on the ideas that they pick because they don't have other startup friends or they don't care as much.

They're just working on stuff they find interesting.

Hello, this is Michael with Harge and Brad.

Welcome to Inside the Group Partner Lounge.

As YC Group Partners, we often find ourselves repeating the same advice over and over again to startup founders we work with.

Before COVID, we'd often gather together in the group partner lounge at the YC office to try to figure out why this was the case and how we can help startups figure it out faster.

Today, we're gonna talk about all of the advantages that first-time founders have over second-time founders.

So we talked to a lot of founders where it's the first time they've ever started their business and some of you listening at home, this might be working on your first startup ever, or you're thinking about working on your first startup.

And 1 thing we see is founders love to read all the tech news, they love to read VC Twitter, they're out there consuming all of this content information about the startup world.

Oftentimes they get pretty psyched out by the fact that a lot of the coverage is about repeat founders, people that have sold companies, they've IPO'd companies, they've built huge companies, had huge successes, and now they are building some new company, maybe in the space that the founder is thinking about starting a business in, and it can be really discouraging.

How the heck are you gonna compete with them considering all the success they've had?

So, Harj, 1 of the things that you mentioned before we started recording is the idea that as a second-time founder, you had access to a lot of expert opinions.

Now, on the surface, that would seem incredibly helpful when creating a company, but tell us why counterintuitively, maybe that's not exactly what you want.

Yeah, I think as a second time founder, you both have access to more people, like more smart people who know a lot about startups, and you've had a lot more of your own experiences.

And so every time you have a decision to make, you just have a lot more data to check the decision against.

And I think that obvious there are obvious reasons that's great.

Having had the experience of choosing a startup idea or running a startup idea by your smart startup friends or mentors is has obvious advantages, but it can also just slow you down.

I think this is something I felt myself is that it took me much longer to pick the idea or commit to working on an idea for my second startup than the first startup.

And I think it's because we had so many people we could run the idea by and get feedback and opinions from, and then digesting all of that feedback and thoughtful ideas can actually just mean you move slower.

Like when you're in that scenario, you're not talking to your potential customers and your users there, right?

You're talking to all these other startup people that you've made friends with as the over the course of doing your first startup.

I remember I was at a Camp YC once and I had this idea and I pitched it to 10 people and they all told me it was terrible.

So I didn't work on it, but had I gone and talked to actual customers for it, maybe they could have helped me like find a better version of that idea that actually would have solved the real problem for them.

I also think this concept of expert is a really interesting concept, right?

Because I'm so happy you said this idea of separating the expert from the user, because there are so many people who are really smart about startups, but who don't really have the problem you're trying to solve and really can't give you great advice, to be honest, but they will give you advice that sounds very expert.

And then there's other people who are users who might not be able to tell you whether this can be a billion dollar company, but they can easily tell you they have the problem.

And I think as a second time founder, it's just as hard to talk to your users, but it's 10 times easier to talk to experts.

So almost by extension, it's like even harder to talk to your users.

Another area that's interesting is this idea of picking your market, right?

Like, oh, you know, like I don't wanna get caught by the trap of having a building in a small market.

God forbid I build a small company that only makes $100 million in revenue.

But I see so many founders who don't understand that markets can grow or that you can move to an adjacent market.

It's like, oh no, I have to be in the trillion dollar energy market.

That's the only place that can contain my ambition.

Have you all seen some of this disadvantage for second time founders?

I call this like the dinner party or the drinks problem.

It's that when you're a second time founder, you start optimizing for how impressive what you're working on sounds at like dinner parties when you go for drinks with people.

And so it's like, yes, I'm working on like, like revolutionizing energy and blah, blah, blah.

But like, you don't want to sound like you're working on some dumb idea, like airbed and breakfast as an example.

And so like, it actually is all like, you know, like, come 2011, 2012, like, if you were pitching the idea for Coinbase, like, it's hard to do that as like a second time founder, because it would just seem so dumb.

So I think that like, first, right, like first time founders can actually take more risk on the ideas that they pick because they don't have other startup friends or they don't care as much.

Now, what about this concept of like the novel?

Like it's, as a first time founder, you experience so many things for the first time, which can be so energizing.

Second time founders, like, 1 of the things we've been saying is like, the lows are just as low, but the highs aren't as high.

Well, with my company, I know that, that first time we got anyone to pay us anything for anything was incredible.

And we were dancing around the apartment, right?

We were, you know, cracking beers left and right.

And yet, you know, the next day we didn't feel that way.

And so, yeah, if you take away all those fun little moments, where do you find the motivation to go further and to push harder?

That one's also fun because you know the lows are going to suck, right?

So it's actually – it hits you on both sides.

You know that there are going to be moments you hate your life as a second-time founder.

But you also know like the first amazing hire would just feel like, yeah, that's 1 of the first hundred people I have to hire great, and then thousand people.

You know, it's like none of these moments kind of stick as much anymore in your head, and that can be demoralizing.

I think 1 of the other tricky advantages of first-time founders is that, like, because they're going to have harder times typically raising money or hiring employees, they tend to have to innovate more.

Like they tend to have to, they're constrained into building something good.

Whereas like the lack of constraints so often lead people astray.

That's what's the phrase like constraints breed creativity.

Like I definitely see that, especially with early stage startups, because yeah, as a second time founder, all of these things play in again.

You have an easier time raising funding, so you don't need to have the product be necessarily as amazing to raise your first round.

You often have other people who are willing to try it out and be beta users or testers or whatever.

So your friends and family network is potentially larger.

Whereas a first-time founder, you can get press to write about what you're launching as well.

Whereas a first-time founder, the only way you're getting your first few users is having a really great product and being really great at selling it.

I think you can just get a little bit lazy on that front as a second time founder.

Yeah, and then the other 1 is this idea of honesty.

Like Brad, do you think as a second time founder, it's really possible to get honest feedback from your investors or friends or things like that?

Or do people have a hard time being honest with you?

When you're a first time founder, nobody cares about you because they don't have any sort of relationship with you yet.

You talk to some investor and you're just the product and they tell you if they want to invest or not.

But then after you've been through a process with people and you've built some sort of rapport and relationship, it's now costly to tell them what you really think about what they're working on.

It basically, it all just comes from, it's just a continuation of the same, the first startup being carried through into the second 1 and not having like a clean break and resetting all those relationships.

But yeah, I definitely, it's really hard to get real true feedback from people.

Yeah, it's just part of the broader thing that first-time founders often don't get is that when you're getting feedback on your idea from investors in particular, their pure motivation is not to just give you the highest quality feedback they possibly can.

They're often playing a different game, which is how do they set themselves up to get referrals to other good startups in the future?

And it's like when you're a second time founder, the investors know that you know more people, they don't want to give you bad feedback, right?

They're incentivized to tell you nice things, so that you'll continue being nice to them.

Whereas when you're a first time founder, you're less useful to an investor in that way.

So they kind of can be a little bit more like just direct with what they think about you.

They can treat you without the kid gloves or they don't wrap you up in cotton wool as much.

Yeah, what I've also seen for second time founders is that oftentimes for an investor, it's more of a catch.

It like helps you build your reputation in your firm, or it helps you get the deal approved.

And like, so oftentimes there's like internal political reasons why you might be getting funded that have like nothing to do with your product being great or your users loving you, you know, and you're never told that stuff, right?

Like it's just kind of happening in the background and you don't really know that you're being graded on a different front.

Whereas, like you said, when you're a first time founder, you're nobody.

I'll say you find that eventually though.

It's a little bit like taking out debt, honestly, where it's like maybe early on as a second time founder, like maybe the seed rounds easier, maybe even a series A is easier.

But the longer you work in your startup for, the more people just care about the results.

And sooner or later, if you don't have a product, if it doesn't actually have product market fit, if you don't have customers who love you and will do a reference call saying how great your product is.

And so I think that's another thing often we can see with a first-time founder.

So they just had to learn how to operate at a certain level of execution from day 1.

Whereas the second time founder, you sometimes it's a little bit like you're like driving on like autopilot or something.

And then it like the autopilot gets shut off.

And now you're like, oh, crap, like, like, I have to actually figure out like how to get like a great product shipped.

I have to like actually fix all these problems because now I'm not gonna be able to raise investment or get to like the next revenue milestone unless I have something that's really good.

It's funny, I love that analogy because in that analogy when the autopilot gets shut off, you're like going 120 miles an hour down like a curvy mountain road.

And it's like, well, I thought everything was good though.

The computer was driving, I think somebody going great.

Whereas at least it's the first time You start on like some suburban road going 2 miles an hour.

Like someone should play devil's advocate because certainly there are some advantages to being a second time founder.

What do y'all think is like the first kind of big boy here on on a massive advantage being a second time founder?

Well, I think if you did your first startup and got some semblance of financial independence from it, then you don't carry the same like massive weight of asking yourself constantly, how the heck am I going to survive, eat, sleep, whatever, that first time founders often carry with them, right?

We work with a lot of these first time founders.

I mean, we know lots of first time founders, that desperation in their eyes, which is a great thing.

Also comes with a cost of just being stressed out all the time.

And it can lead to some short term thinking in terms of what to work on, how to sell your product, what go to market strategy.

I see a lot of companies that just want to do product led growth, for example, because they think that'll get them their first revenue when really they should be selling enterprise, which might take a while, but actually be the fit for their business, for example.

Whereas if you have some financial independence, like a lot of second-time founders, you can think bigger and actually like play out the implications of the business that you're going after and try to build something that's optimized to get big from day 1.

Yeah, you know, and that's a big 1 when you want to have family or want to own a house, just like, you know, being able to not, if you're successful, as you mentioned, being of using that money to free your life of distractions can be a big advantage.

You can up the childcare, you can up the quality of the home, the quality of the space you live in, and so on and so forth.

Another devil's advocate position here on why second time founders have an advantage?

Another very specific type of startup that seems to be suited to second time founders are capital intensive businesses.

And by that I mean, you know, any startup where like more money raised or just more money is a strategic advantage, second-time founders who are good at raising money can benefit.

There's famous ones, like Elon Musk, probably the most famous 1.

He started, I think it was Zip2 or something, then PayPal, but now SpaceX and Tesla.

But from our own orbit, we have examples.

I speak personally, a friend, former roommate of mine, Eric Wu is the YC founder who started a company called Moviety.

It was acquired by Trulia pretty early on, but it was a good exit for him.

Opendoor is now a public company worth billions of dollars.

And I think Opendoor is a company, he's raised like well over a billion dollars for that company.

And I think that was much easier for him to do as a second time founder.

Oh, because they're actually buying and selling houses.

They're like, yeah, it can be more capital intensive.

They actually go out and just buy like tens of thousands of homes across America.

Another classic example is Blake from Boom who started a software company and sold it and then decided to make a supersonic jet company, right?

And another example of a company that will take a decade to make the first flight, and at least, and that's on an aggressive timeframe.

And so, you know, yeah, being able to say, I've already exited, I've already given my investors cash back.

Like that's really helpful when you have to build a Super Sonic Jet company.

I mean, I think you can look at Cruise, for example.

And, you know, you can look at like what Max has done, Max Levchin, with all the different companies that he's built and each 1 just gets more and more and more and more ambitious.

And it's just something you can do more as a second time founder.

I think what I will say though, is that so many founders are confused about whether they're building a business where money is the real advantage.

Like I would certainly say that's the minority of businesses here.

When we describe what's going on, we have large physical, our examples are large physical things, rockets, cars, self-driving cars, and hypersonic planes.

Large physical things clearly need a lot of money.

You know, Brex second time founders, they extend credit to the startups.

Max Levkin with the firm extending credit.

So it's like lending and big physical things definitely require a lot of money.

It's not obvious to me that there are many other business categories that require a lot of money where cash is the advantage.

So if you're doing 1 of those 2, it might make sense.

And if you're 1 of the many people listening at home who's thinking about building a software company, like it's not going to help the incumbents, right?

Having all this access to capital is not going to do it.

That's what's going to make the difference.

Because they'll spend it on, instead of spending it on, you know, rockets and stuff, they'll spend it on too many employees.

So maybe the last area is when you're building in a space you know really well.

You know, Har, do you know Parker Conrad well?

Like you've seen him build 2 companies in the same space.

Like he built Zenefits, which was worth like $4 billion at its peak.

And then he started Rippling, which is now worth over $10 billion.

And I think if you ask him to explain that a little bit, he'll say that the experience of working on Zenefits gave him really deep domain expertise around how to build like high quality HR software and sell it.

And he used all that expertise to build something even bigger with Ripley, right?

Like he's clearly a world class domain expert in how to build effective HR software.

And you know, I've looked it up, the Workday founders, very similar.

You know, 1 of the Workday founders was a CEO of PeopleSoft, and then he saw how the world was moving to the cloud and he decided to move along with it.

So there's definitely advantage if you've got like intense, deep knowledge about a space.

And by the way, and you're not sick of that space and you want to go back to it for another couple decades.

But Michael, that raises the other point I want to make about this, which is that it's so common to talk to a second time founder and they just hate the market they were just working in.

Whatever the market is, if they did a startup in it, it's terrible.

And yet we're highlighting that when they go back, that's 1 of the times when it can be really good.

Another really important point about that, though, Brad, is that it's why it's really important if you're a first time founder, and you get feedback on your idea from a founder who had tried the idea before and failed, is you have to be very careful.

Because on the 1 hand, there's probably interesting learning for you there.

But the other hand, you have to remember that sometimes when founders don't succeed in a market, they end up hating that market and they kind of don't want anyone to succeed because otherwise it's sort of like, it's sort of like hurts their own self image, right?

Like, and so this is something I noticed.

I always, I often tell YC founders to talk to other YC founders that have worked on similar things before and maybe they've moved on.

But the trick is to listen to just the facts of what they did and what happened, not what they think about it.

Because we're all so deluded about why things happened or what they mean or the significance of them that it's just not useful signal to founders that are building a new business.

for the person who is thinking about being a first-time founder, but is worried that they don't have the advantages, What's the kind of parting message we want to give them?

You're actually well situated to build a unique, novel business that delivers real value to your users.

And a lot of the glamor that comes with being a repeat founder is a trap.

And they have their own problems that they're working through, and it's not going to help them.

Understand that you can and should take your swing.

Yeah, I'd say to first-time founders, just don't get sucked into grass is greener syndrome.

Like, don't think that just because you've got a competitor that started by a founder who's on their second or third company that they're going to crush you.

Like, as we speak from our own personal perspectives here, often those same second, third-time founders are wishing that they had the benefits and advantages of the first time founder.

And you know, I think we would be remiss without adding that some of the biggest companies ever, Google, Facebook, Microsoft, first time founders.

So you're in good company as a first time founder.

You know, your company is maybe the best founders who ever existed, Jeff Bezos, you know.

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Advantages Of A First-Time Founder