- The speaker found YC through Reddit and Paul Graham's essays on startups.
- They dropped out of grad school to join YC and worked on Scribd for a year and a half before gaining traction.
- Scribd started as a pivot idea and became a platform for sharing and embedding documents online.
- The YC experience was crucial for the speaker's company's success, providing guidance and a supportive community.
- YC funding at the time was $6,000 per person, which the speaker stretched out for a couple of years.
- Fundraising was difficult in the Cambridge startup environment, but Scribd managed to survive on savings.
- The speaker left Scribd after 5 and a half years to pursue a B2B enterprise idea, which became Parse.
- Parse experimented with 12 different landing pages to gauge interest and focused on B2B products that made money.

- The speaker wanted to send gifts to people who uploaded a large number of documents, but couldn't find a way to do it programmatically.
- They looked at whether people clicked on the pricing page and signed up with their email, and would email those who did to ask why they signed up.
- They used ShowHN and Twitter for marketing, and launched a landing page called ZStack.
- They wanted to create a platform that would help make mobile applications faster and more efficient, and launched Parse as a landing page.
- Parse eventually became a platform that helped make mobile applications 10x faster by taking care of the backend stack.
- The speaker and their team decided to go through YC again and applied with a company called PintPay, but later changed the idea to focus on Parse.
- YC provided a supportive community and access to potential customers, which helped with feedback and product development.
- Initially, Parse was a free service and they focused on making a few people really happy before thinking about pricing.
- They found a core segment of developers who wanted to make native apps faster and used their feedback to improve the product.
- The team worked quickly and constantly launched new features, eventually obtaining the parse.com domain thanks to the CTO of Stripe.

- The founder of Parse.com acquired the domain name for $15,000 after the CTO of Stripe mentioned it as their second choice.
- The founder found value in the community and advice provided by Y Combinator during their second time going through the program.
- Parse.com was acquired by Facebook in 2013 after raising $7 million in funding.
- The Parse team helped users migrate to the open-source project after the company shut down.
- Firebase, another company in the same Y Combinator batch, pivoted to offer similar services and was later acquired by Google.
- After Parse, the founder took a break and traveled, speaking at conferences and learning about the international startup scene.
- The founder learned that raising money outside of Silicon Valley is more challenging and advised others to come to the Valley if possible.

- The speaker believes that living and doing a startup in the valley is beneficial, despite the high costs.
- Investors are often averse to non-Delaware C-Corps, which can be a legal headache to deal with.
- The speaker encourages international entrepreneurs to apply to programs like Y Combinator and 500 Startups.
- The speaker looks for a large market and a relentless team when investing in startups.
- The speaker believes that a strong team in a great market will eventually build the right product.
- The speaker has invested in various companies and focuses on B2B, enterprise, autonomous vehicle tech, and marketplaces.
- The speaker believes that existing huge markets that are growing are good opportunities for startups, rather than small markets.
- Following trends and copying successful companies is not recommended, as the best companies were formed by solving unique problems.

- The speaker discusses the importance of education and relentless individuals in successful startups, using YC and Airbnb as examples.
- They mention that getting into YC is more difficult now due to increased competition, and recommend showing traction and product market fit in a large market.
- The speaker suggests looking at the Inc. 500 magazine for startup ideas and focusing on markets where there is room for improvement.
- They emphasize the importance of market size and mention the potential for self-driving startups.
- The speaker expresses fear of choosing the right idea as a repeat founder and advises against feeling pressured to come up with a genius idea.
- They suggest experimenting with ideas and being willing to work on "dumb" ideas that may sound unimpressive.
- The speaker warns against raising money too early and getting stuck in the wrong market or product.
- They mention the success of Max Levchin's lab model and express skepticism towards other labs.
- The speaker advises first-time founders to focus on finding product-market fit and not to waste time on things like fundraising.
- They recommend finding a market that the founder knows well and building a 10x better product in that space.

- The speaker found YC through Reddit and Paul Graham's essays on startups.
- They dropped out of grad school to join YC and worked on Scribd for a year and a half before gaining traction.
- Scribd started as a pivot idea and became a platform for sharing and embedding documents online.
- YC funding at the time was $6,000 per person, which the speaker stretched out for a couple of years.
- The speaker left Scribd after 5 and a half years to pursue a B2B enterprise idea, which became Parse.
- Parse experimented with 12 different landing pages to gauge interest and focused on B2B products that made money.
- They used ShowHN and Twitter for marketing, and launched a landing page called ZStack.
- Parse eventually became a platform that helped make mobile applications 10x faster by taking care of the backend stack.
- The speaker and their team decided to go through YC again and applied with a company called PintPay, but later changed the idea to focus on Parse.
- Initially, Parse was a free service and they focused on making a few people really happy before thinking about pricing.
- The founder of Parse.com acquired the domain name for $15,000 after the CTO of Stripe mentioned it as their second choice.
- Parse.com was acquired by Facebook in 2013 after raising $7 million in funding.
- The Parse team helped users migrate to the open-source project after the company shut down.
- Firebase, another company in the same Y Combinator batch, pivoted to offer similar services and was later acquired by Google.
- The speaker believes that living and doing a startup in the valley is beneficial, despite the high costs.
- The speaker encourages international entrepreneurs to apply to programs like Y Combinator and 500 Startups.
- The speaker looks for a large market and a relentless team when investing in startups.
- The speaker believes that existing huge markets that are growing are good opportunities for startups, rather than small markets.
- The speaker discusses the importance of education and relentless individuals in successful startups, using YC and Airbnb as examples.
- They emphasize the importance of market size and mention the potential for self-driving startups.
- The speaker advises first-time founders to focus on finding product-market fit and not to waste time on things like fundraising.
- They recommend finding a market that the founder knows well and building a 10x better product in that space.

Tikhon Bernstam cofounded Scribd (YC S06) and Parse (YC S11) - https://twitter.com/tikhon

YC's podcast is hosted by Craig Cannon - http://twitter.com/craigcannon

Hey guys, today we have TKAN Burnstam, a multi-time YC founder.

So could you just start by explaining how you first found YC?

Yeah, I actually found YC because I was on Reddit.

I was in graduate school, which meant I had a lot of free time.

And so I was, Reddit was super early, this was back when the top post might have like 10 points and this was like before it even had comments.

And via that I found Paul Graham's essays on how to do a startup.

And to me the idea of doing a company was basically impossible.

This is after the bubble or after the dot com crash.

Everyone had basically declared the web was over.

And so it was very… Like Paul Graham's essays were really the only source that I had found that kind of said, actually here's a pathway to do it and it can be done.

I applied to YC really on a long shot, I didn't think I'd get in.

So I interviewed in Palo Alto, although the actual program was still back in Boston in Cambridge.

And I got in, so I just dropped out of graduate school.

Physics actually, theoretical physics but I studied computer science and econ in undergrad so that was kind of a small change.

And so I dropped out of grad school and moved to Cambridge.

And so then, yeah, me, Trip and Jared probably worked on like Scribd for at least, well, yeah, We worked on Scribd for at least a year and a half before we got real traction on it.

And what was the initial pitch for Scribd in the application?

Well yeah, Scribd was actually 1 of those pivot companies where we applied with different ideas and then much like Reddit was actually a pivot company where it was actually applied for something else, like food delivery stuff.

Yeah, Paul's like, I love you guys, Steve and Alexis, but I hate that idea.

And so similarly, Scribd actually was the merger of me, Trip, and Jared during YC.

They were working on some other project And like it was like a Craigslist for colleges Back then Craig this was super hot.

So like everyone was trying to do, much like nowadays everyone's doing like Uber for X.

But then YouTube sold for over a billion and people said that was insane.

You know, oh my God, Google overpaid, which, you know, totally wrong.

So then we said, like, let's do YouTube for documents.

And I mean, We'd also noticed this problem where Trip's dad, who's at the Stanford Med School, was having trouble basically viewing the documents online that he wanted to read.

Sometimes I'd send my mom a PostScript file, and she'd be like, how the hell do I open this?

People were just downloading it, and then they needed to download Acrobat or something?

Yeah, because back then, if you had Adobe Reader, I don't think that actually opened up PostScript files back then.

It just depended on your OS and what sort of default software you had bundled.

But anyway, we just decided, why don't we allow the documents to be embedded inside of the webpages?

And we started off with Flash, But we always hoped that we could switch to HTML5, which we did much later.

Honestly, we would never have made it without that program.

And I think that's true of actually most of those companies.

And I'd argue probably most of the companies.

Because without that community of like-minded people who are highly motivated and working on the same general pathway as you, and also people who've done it before, like Paul, Jessica, Paul, JL, Trevor, and Robert, who were basically there to kind of like, no, you guys are like, that's stupid, get back on course.

Because sometimes we would just go the wrong way for like a whole week before we'd see them and we'd show them and they'd say, what the hell are you guys doing?

So like it's I mean it saved us years and The company wouldn't have worked without them.

And all the batches were small back then.

I think Scribd Summer 06 was the second batch.

So still my best friends are the people from the Summer 05 and Summer 06 batch in Cambridge.

Just because those were the only people I knew doing startups.

And it was great because 1 day you think With startups, 1 day you think your company is going to fail, you think you're getting sued or something, someone's threatening you, and the next day you think you're going to sell to Google for a huge amount, just because some person at M&A accidentally emails you.

And So having other people going through the same thing, like the Twitch guys kind of working on their stuff, which took over a decade.

And back then it was Kiko, which switched into Justin TV.

But like having that sort of having those people around in that community and then kind of like the guidance of the partners is probably the only reason that we survived.

And so how much money were you getting from YC at that point?

We almost sold the company for that much.

And so, I mean, obviously the money lasted.

Yeah, I'm always amazed how much people get now because the seed rounds today are bigger than like the Series A that Dropbox and Airbnb did with Sequoia, which I think was roughly a mil each.

And so I'm like, how did you guys spend all that money usually?

So for a couple of years, I was living on savings.

I was basically living out of Trip's parents' house at Stanford.

And his mom was getting irritated because I keep eating all the candy.

And I was subsisting on top ramen and whatever food was available in their cabinets.

So Trip Jared and I worked for months, basically out of his living room.

And without the generosity of his parents to even let us do that.

Back then fundraising was very, very different than it is today.

Also just the environment in Cambridge is so much different than the valleys, but back then, like the mood was so gloomy and like startups are over sort of thing that like it took a really there actually just weren't that many angels around.

There weren't that many people who had either gotten who had exited or like who wanted to do that sort of thing.

I mean now demo days over subscribed and such.

I don't think it was even a full room actually.

And so you were just basically living off savings?

money to… We actually stretched that 18k pretty darn far.

If you can somehow, as long as you can get your rent low, you can live for a long time.

Do you know approximately how long that actually went?

Well, I mean, yeah, it was another year after YC, so we scratched by on that.

And I mean, being a wealthy grad student, so having 0 savings, like if really any of us, because Trip had just left Harvard, Jared dropped out of Harvard to do this so we just really like we really try to make every dime count

Yeah, so it started, like I said, summer 2006.

I said, listen, I think if we're not going to go more B2B, more like enterprising, I think that I should probably go because I'm really interested in doing something in that space.

They actually invested in my next company, which was Parse.

Which we basically, actually, so it was actually 2 of us who left.

James was actually, I think, our first hire at Scribd.

So he and I were close friends and still are.

We left and The very next day we were coding and working on the prototype of what was not Parse, it was something else.

So with Scribd, we would spend about 1 month on every idea and build out an app and then test it.

And that's kind of why it may have taken longer.

With Parse we said let's not waste a year.

Let's make 12 landing pages and kind of launch them and see if people even give us an email.

Because I think in B2C it's much harder to gauge whether you have a long term traction or not or if you're a chat roulette or something.

And so we basically had 12 different pages that we launched.

Like, 1 was an API for companies to send gifts to their best users, because that's scribbed.

I always wanted to send gifts to people who uploaded like 100 documents.

It'd be nice to do that programmatically.

So like then we just looked if people clicked on the pricing page and if they'd signed up and put an email in and then anyone who typed in their email we would email them being like why did you sign up for this?

Like This was a crappy landing page that we made in like 2 hours.

Wait, how are they getting to the landing page?

Were you doing like outbound marketing for any of this stuff?

ShowHN was like basically, but this is before product hunt, so it was mostly ShowHN.

And we didn't own the parse.com domain, which we only got later thanks to the Stripe founders and Stripe CTO.

Again, just we wanted to make sure people actually wanted this thing.

Because we knew from our own experience building mobile apps at Scribd, at other companies, that everyone was sort of reinventing the wheel, redoing the same sort of code, like push notification type stuff that really could be generalized.

And back then AWS was kind of just still very much in its infancy, but you could see the need for like Heroku had just sold for 250 million to Salesforce so like the pitch of like Heroku for mobile like kind of was like a very like I actually dislike X for Y pitches now like all these now

but you're riding those waves in the past yes

yeah I am 100% guilty of doing those in the past.

I think the pitch deck I used at YC at the demo day was Hiroku for Mobile, which was the title of what the company was.

And just stepping back a little bit, what made you decide to go with ZStack versus the other 11?

Yeah, it was actually talking to the users.

So we talked to the users on basically...

But to be clear, there was no product for any of them.

Parse is actually the merger of 3 independent entities.

So Ilya was a solo founder in Parse, working on like a find your friends app sort of thing, which was very popular at the time.

Kevin had been in YC previously and then was working at Google, emails Paul and says, listen, I want to get back into startups.

Paul emails the list like, hey, there's this great guy, great hacker, you guys should talk to him if you're looking for a co-founder.

And so James and I met with Kevin, Ilya met with Kevin, we ended up all trying to work together for a couple of weeks just to see if we'd harmonize.

I don't advise people work with people they don't know.

Okay, so what were those 2 ideas then that merged?

So we were actually more in the payments space.

James and I were interested in the recurring subscription billing space, where people still have trouble actually getting recurring billing working.

I mean, it's getting better now thanks to Stripe.

So stuff for normal people to basically take payments that were recurring.

I mean, we were still very much in the ideation phase where We were very happy to pivot to whatever we felt would be the best type of business.

And then basically we also started working on Parse and we basically launched that landing page pretty quickly into YC.

It was called zstack.com I think at the time.

It was like a $9 theme forest theme that has these hot air balloons on it.

You can still buy it today Just it was basically heroku for mobile like basically we're gonna take away the devops and like the the back-end Like part of it So you can just focus on like the like front-end like like native You know code and not have to worry about thinking about like your database and all that stuff abstracting it away the RSD case Mm-hmm.

Yeah, and I mean I've used a product before but just like to be clear for everyone else who's listening could you just give the quick explanation of what it actually became?

So, Parse is a platform that helps you make mobile applications much, much faster.

And so, Normally if you're making a mobile app, you'd have to like write all of the code that like the native client interface on the phone that the person would play with.

But then you'd have to think about how does that app talk to some server in like Virginia, and then what does it send?

So Parse took care of that whole second part of the stack so that you just did the client stuff, you make a pretty native UI.

We didn't believe much at the time in the HTML5 approach, which now is working better, but the phone gap type of thing.

We believed that native apps at the time were definitely superior in experience.

So we just tried to abstract away, basically the really hard 80% of stuff that people shouldn't have to know how to do in order to make apps.

And had you guys decided that you wanted to go through YC again?

Oh yeah, I talked to Paul almost immediately.

And I was like, yeah, me and James have these ideas, we're not sure exactly which 1 we're going to do.

And Paul's like, all right, well, let's do this again.

So, okay, so you applied like kind of blind?

Well, we agreed with Paul that we would focus on a company called PintPay, which was the subscription billing service.

Back then, billing and like payments companies were super hot.

But we definitely never wanted to compete with Stripe.

So we were looking for other angles inside of payments.

You could do things like anti-fraud type stuff on payments.

So basically like another idea was sort of funded through YC and then you just changed it and you brought people on in the meantime.

That actually happens a surprising amount of the time.

And so by the end of the summer though, you're you're Heroku.

Yeah, or we I later switched to AWS for mobile But basically like an AWS tailored for developers of mobile applications.

Okay, And so why did you want to do it a second time, YC?

Oh, I mean, well, okay, first off, the first time we would never have made it without YC, and that's likely true the second time as well.

Again, it's largely for the same reasons as the first time.

I still don't think I know anything about startups.

Like the more and more I do this, the more and more I'm convinced how little I know.

And so like having that sort of, having that like community of people like who are highly motivated, having my first customers there right there in the batch where I could say, hey, you're making a mobile app, use this.

And then every dinner every week, you go to them and say, hey, I launched this new stuff, check this out.

And then we'd bring our laptops and show what we're doing, and then half the time it was stupid and people told us that, and then we stopped.

And then the other half, they're like, well, why not expand on this that way?

And we're like, oh, because that's the problem you're having in mobile.

How did you start getting customers afterward?

Because it makes sense, like when you're surrounded by startups, you can just grab a ton of people.

And I found Parse by going to hackathons because people are using it all the time.

But how did you get people who would pay for it?

Yeah, so we didn't have pricing for actually quite a while.

We didn't know how to do pricing properly back then.

And so we were mostly focused on, are we making something that's making a few people really happy?

So we would talk to the developers who had signed up and who started using our beta.

We started off just basically sending data to the cloud, to S3, say.

By talking to the developers and seeing, do we have a product where people are really disappointed if we just like went away?

If you can't find some niche that is absolutely fanatic about your product, then you likely don't have strong product market fit.

And most of the times that I've failed in startups was basically trying to push growth before I had product market fit.

And so we found this core segment of developers who really wanted to make native apps much, much faster, ranging from agencies who were making apps for everyone from Green Bay Packers to the Travel Channel and Weather Channel and Cadillac, who actually all ended up using Parse.

But we found people who really cared about this, like this makes my life much, much better.

And then we actually talked to them and we used their feedback to kind of make the product better in the ways that it should be better.

And so we worked and we kept kind of launching features constantly.

And we got the parse.com name thanks to Greg, the CTO of Stripe.

Because I was over at their office and I asked them, what was your guy's second choice?

And they're like, well, if Stripe didn't work, we're going to be Parse.

So they had written a script to email all the owners of one-word English, one-syllable domains like Stripe, Parse, things like that, and asked them, like, hey, we're a couple people working on a startup, are you interested in selling?

Most never replied, but like Parse and Stripe owners did.

And so I won't say how much Stripe cost, but Parse was only 15k, parse.com.

So going through YC the second time, what became valuable to you?

First of all, it was way more people in summer 11.

Well, again, having customers or the actual users inside of the batch where I could talk to them, having that community, because it actually gets quite lonely when you're just sitting there coding 16 hours a day, even if you're with the same 3 people every day, it's nice to have that community of other people who are doing the same thing.

The partner smacked us around a bit like, no, no, you guys are going the wrong way.

And so we got a lot of good, like it kept us honest about shipping every week, like shipping new stuff, not being embarrassed to ship too early, which is like really, really common, especially amongst like developers who just want to keep coding instead of shipping.

And so the partner's advice was priceless.

And then at demo day, fundraising was a fat less next easier.

I can't imagine the fundraising minus the YC demo day.

We were wildly oversubscribed, but we only took 1.5 weeks.

We stopped there for our seed round and like we really were able to get some of like the most like some of the best investors and some of the most like like kind of like famous like Valley type people and it was like, it was really, it was really awesome.

And then it was like 2 years and then Facebook acquired you guys?

We'd actually had M&A discussions with several other companies along the way, like in 2012 and early 2013.

But we actually raised our Series A right after demo day.

We basically went and started to raise our A, because we actually thought we already had enough traction to start doing that.

And it actually was a fairly quick process, we raised $5.5 million from Ignition, so in total we raised $7 million.

And then we started hiring and we kind of like we were able to recruit some just amazing developers a lot of people off the Google search team, for instance People A lot of developers were passionate about the problem and liked working on the tools that solved their own problems, so that was helpful.

See all Y Combinator transcripts on Youtube

The Challenges a Repeat Founder Faces - Tikhon Bernstam