Y Combinator and Stanford’s BASES hosted the 4th annual Startup School last weekend. It felt to me like the best one so far.

Startup School began as an experiment to “open source” Y Combinator-- to see how much we could give everyone for free in one concentrated day of talks. More than 700 people traveled from around the world to attend it this year.

The atmos at SUS has always been unique, but this year it was even more intense. In fact, what surprised me most was the audience’s rapt attention from beginning to end. I usually expect a handful of people to arrive late, to work on their computers during some of the talks, to leave before the last speaker. But not this year. The room was packed starting at 9:00am and literally had people sprawled throughout the aisles the entire day.

Though maybe it shouldn’t be too surprising that people were interested in hearing from the speakers. We had an amazing lineup this year, and did they ever deliver.

David Lawee: I was fascinated to learn that when David and his Xfire cofounders launched their first product, they knew it was wrong within the first 24 hours. “We took 90% of our resources within that first week and shifted them to a new product [Xfire] and launched 120 days later.” Note to founders: your idea changes a lot in the early days.

Sam Altman: Sam contributes a lot of time advising new YC founders about raising money from investors. His presentation was chock full of practical advice about what to expect during the fundraising process. This is gold for anyone who hasn’t done it before.

Jack Sheridan: You don’t often get free legal advice from one of the top corporate lawyers in Silicon Valley. Trust me, listen to this talk if it’s early days with your startup. It will help you know what you should and shouldn’t worry about, and also understand some key legal concepts that seem like a foreign language to first-time entrepreneurs.

Paul Graham: Founders should guide their corporate strategy by being good. I have a feeling this talk (now online) will be one of those Paul Graham essays that seem so forward thinking when we look back several years from now. Though he's dead wrong about one thing: “At best I speak good as a second language.”  

Greg McAdoo: Greg is one of the best VC speakers I’ve heard. He’s articulate, knowledgeable, and gives you the real deal. The surfing analogy had perhaps more marketing influence than usual, but I think it worked. You can have a great team, great idea and execution, but the market is critical and unfortunately not under your control.

David Heinemeier Hansson: Whether or not you agreed with DHH’s advice, you couldn’t help but love his talk. I was so fired up afterward that, had I not been so exhausted from managing the event, I would have gone out for a 5 mile run! I think DHH wins for most popular talk of SUS ’08.

Paul Buchheit: PB has a rare ability to make very important points but to be hilariously funny while doing it. It’s his dry wit, I think. His blog is a great source of insights too.

Jeff Bezos: It was a thrill to meet Jeff for the first time. He seemed remarkably nice and down to earth for someone so successful. What vision he has-- as the world’s top Internet retailer, Amazon branches into the cloud computing business and nails it. Some attendees wished he’d talked more about starting Amazon rather than focusing on AWS (which they all use anyway). But it was interesting to hear Jeff’s take on things and I especially enjoyed the Q&A period.

Mike Arrington: This was one of my favorites of the day. Mike told the audience how to get covered by TechCrunch. A lot of journalists give wishy-washy advice on this topic, so I found it refreshing to hear him speak so candidly e.g. “We only want to write stories that you don’t want written.” Easier said than done, but good advice nonetheless.

Marc Andreessen: Getting to interview PMarca was the highlight of my day. OK, my month. He’s a wealth of information (his blog is a must-read). YC founders asked me to give him a hour-long slot if we can get him to come back and talk next year. What struck me most was some advice from Steve Martin that he shared: Be so good they can’t ignore you. Startup founders: write that down on a sticky and remind yourself of this every morning.

Peter Norvig: I admit he lost me on some of the technical stuff, but all my programmer friends told me Peter’s talk was one of the best. His main point was to let the data do your work for you. This seems to be a philosophy that has helped Google be so successful.

I’d like to thank the speakers for donating their time on a Saturday and coming to inspire and educate all of us. I really don’t know if we’ll be able to top this year’s group of speakers.

And thanks to all the attendees who traveled far and wide to come. Your enthusiasm was contagious. A reporter asked me about the sense of optimism that seemed palpable in the room despite the looming fear of a recession. I reminded her that entrepreneurs by nature have a remarkably high level of optimism. They wouldn’t be able to endure a startup otherwise.  

Special thanks to BASES and especially its President Ryan Akkina. There will be some mighty big shoes to fill after he graduates this spring. The Omnisios have saved my hide this year by organizing all the talks online. Justin.tv too. Ross Boucher of 280 North (whom many-- unfortunately for him-- mistook for the designated conference AV tech) helped out enormously with all the slide stuff as did Justin Santa Barbara. Thanks to Alicia Collins for all her support. Reddit’s Alexis Ohanian helped us look semi-professional this year with the snazzy logo. Thanks to Dana Wu for managing the registration desk (along with Ellen Liu, Pokai Chen, Michael Pao, Linn Muang, Bryan Estrada, Matt Jones, David Kinghorn and Ping Taing) and keeping things sane in the lobby. Thanks to Brett Gibson and John Baunach of Slinkset for putting together the “Ask PMarca” site. And last but not least Kate Courteau for all her help with “afterparty logistics.” Photos courtesy of Garry Tan (Buchheit, DHH) and Mathieu Thouvenin (me and PMarca).

When Chris Sacca talks, people listen.

It’s 7 weeks into Y Combinator's winter funding cycle and we’re in the thick of things now.

Demo Day Looms Large
The founders are demons of productivity right now, because they are preparing to present to investors at Demo Day next month. Many founders look back on these three months and say it was the most productive time of their lives, but this period in the month before demo day tends to be the most productive of all. 

Over the past few weeks they’ve been iterating on their ideas. Some show up with their idea in great shape, but usually it changes a lot. Probably the most important thing we do at YC is help founders with the idea. Paul, Robert and Trevor have gotten really good at it. They help founders figure out both what to work on first, and how to expand their long-term plan into something bigger.

But of course no one can tell you what users want as well as users can. Paul Buchheit wrote recently about the importance of releasing early and often as a way of learning what users want. Fortunately there are now so many YC alumni that it’s possible to do alpha testing within the YC community.

Startups Launch
It’s also the season for launching. For better or worse, investor interest is highly correlated with traffic. Of the 21 startups in this batch, 6 have already launched: 8aWeek, Addher, Heroku, RescueTime, Tipjoy and WebMynd. I think it’s a big relief for the founders to launch and start getting user feedback. One trend we’ve noticed over the years is a correlation between launching late and failure. Paul suggested in his essay, “How Not to Die,” that startup founders should “put [themselves] in a position where failure will be public and humiliating.” Once you’ve launched you have more to motivate you.

Garrett Camp of StumbleUpon after his talk.

Guest Speakers
We’re so lucky to have such successful and busy people help the YC founders each week. Below are the most interesting or surprising takeaways I had from the recent speakers' talks. 

Evan Williams (Twitter, Blogger, Odeo):  Ev said something striking that I hadn’t really thought about….Twitter’s success was in part due to its limitations. It was like a stripped down blogging app.  I wonder what else could be “more” with less?

Paul Buchheit (FriendFeed, creator of GMail): “Keep moving, stop thinking and start doing.” Paul’s a big proponent of actually building something to see if it works rather than pondering if something should work. He did this with the first prototypes of AdSense and GMail.

Chris Sacca (angel investor, formerly Google): As always, Chris had a lot of fascinating stories to tell. One thing that struck me had to do with Larry and Sergey’s way of thinking. When something about the world is broken, they notice it’s broken, instead of thinking “that’s just how things are.” I suspect much Google’s success is a reflection of the personalities of the founders.
 
Garrett Camp (StumbleUpon): The founders of StumbleUpon worked “purely in isolation” in Calgary for about 3 ½ years. There wasn’t much of a startup community for them. Garrett’s main goal in starting StumbleUpon was just to make something he could work on after grad school.  He ended up doing a lot more than that.

Kevin Hale (Wufoo): I am always wowed by the Wufoos’ dedication to customer service.  Also, the founders have an amazing working relationship. He said, “the hardest thing about decision making is not taking things personally.” Seems obvious, but it’s a nice reminder for early stage startups, when so many decisions need to be made very quickly.

Tim O'Reilly literally "Watching the Alpha Geeks" (photo by Adam Kazwell)

Y Combinator and Stanford’s BASES recently announced this year’s Startup School.

When: April 19, 2008, 9:00 am
Where: Kresge Auditorium, Stanford University
Application Deadline: March 23

I’m biased of course, but I think this is the best event out there for anyone who wants to start a startup (or already has). You can’t learn everything in a day, but Startup School exposes you to advice from an amazing array of people who have either done it themselves or work daily in that world.

Startup School began as an experiment to “open source” Y Combinator. YC itself takes three months and we can only fund a limited number of startups. But we wanted to see how much we could give everyone for free in one concentrated day of talks. A lot of the experts who speak at Startup School are the same ones who speak at YC dinners.

But beyond the high quality speakers, there’s something magical about Startup School that is hard to understand if you haven’t been there: the audience is mostly programmers and there’s an atmosphere of intelligence combined with commitment that I’ve never felt anywhere else.

The event is free, because we know that the one thing most startup founders lack is money. It always seemed odd to me that so many conferences having to do with the web charged so much to attend. Many founders we knew (even ones with some funding) who were at ground zero of all the new things happening on the web, tended to be priced out of these events.

We run Startup School like a startup. We offer bagels and coffee in the morning and not much else. There’s none of the extra stuff usually associated with conferences-- no sponsors, no introductory remarks, no exhibitors, no bags full of schwag. Startup School is just about the content. And like a startup it has grown by word of mouth.

Ask someone who’s been.  They’ll tell you what I mean.

Me interviewing Flickr's Caterina Fake at SUS 2006. Fun! (photo by Patrick Tufts)

Bill Gates demoed Xobni (YC summer '06) at the Office Developers Conference today. Cool.

Today Imeem announced that it has acquired Anywhere.fm.

Anson Tsai, Luxiou Chen and Sachin Rekhi founded Anywhere.fm last year, during Y Combinator’s summer 2007 funding cycle. They’re the first startup from last summer’s batch to be acquired, and they were also one of the first in that batch to launch.

The Anywheres seemed to do everything fast. Above all, they built things fast.  They’d talk with us about a new feature idea, and then the next time we saw them, a few days later, it would be done. This ensured that they had one of the most impressive presentations at Demo Day, which meant they got a lot of interest from investors.

Congratulations guys!

Michael Ossarehof Heysan! advises two new startups.

A few weeks ago, we kicked off Y Combinator’s sixth funding cycle with 21 new startups.  They’re all living in the Bay Area now and are totally immersed in building their products. Some have already launched.

One of the things that surprised us recently is how big the YC alumni network has grown. Now that we’ve invested in 80 startups, there are almost 200 alumni.  It didn’t really hit us till we started organizing a reunion and realized they’d barely fit even in our huge west coast building.

A cheery reunion with founders from last summer's funding cycle.

It’s great how much the founders help one another. As usual, several alumni came to our first dinner to talk about what they wish they’d known when they were just starting. The most consistent pieces of advice: launch quickly, be really careful about hiring, and that raising money can take longer than you’d expect.

Joe Kraus (seated far right, in "Cookie Monster" t-shirt) talks to the founders.

Joe Kraus, a perennial favorite with the founders, came to the second dinner to talk about his experiences founding Excite and JotSpot. Joe is such a smart and articulate person—I always enjoy hearing him talk. My favorite takeaways:

-    #1 Persistence. The “$4 billion dollar story” of how Excite landed the Netscape button deal is a must-read for every entrepreneur.
-    Hiring is key. The cost of hiring someone bad is so much greater than missing out on someone good. I think this was a rule they took very seriously the second-time around. They wanted “no false positives.”
-    You make what you measure. Merely measuring something regularly will help you to improve it. And not measuring it will almost guarantee failure.

Carolynn Levy of Wilson Sonsini Goodrich & Rosati joined us at the third dinner to talk about corporate law. WSGR is probably the most prominent startup law firm in the valley. Most founders don’t get too excited about legal stuff  (which is as it should be) but everyone liked Carolynn because she knows startup law so well and is what Paul calls “hacker compatible.”

David Greenspan and Aaron Iba showing off an early version of AppJet on their iPhones (summer '07)

A new YC-funded startup launched this week: AppJet, which lets you create a live web app literally in a matter of minutes. Aaron Iba and David Greenspan founded AppJet during Y Combinator's summer funding cycle. These guys are hotshot hackers and have been friends since grade school. In fact, they started a shareware videogame software company together in middle school.

Knowing each other for a long time tends to be a good recipe for
cofounders. It worked for Paul Graham and Robert Morris when they started Viaweb. Aaron and David brought on their friend J.D. Zamfirescu very early as another founder, and that was Viaweb's initial structure too: two old friends and the smartest person they knew.

AppJet is also similar to Viaweb in that the founders had to do
some technically difficult things to make their application look simple on the surface. But don't let AppJet's simple user interface fool you: running other people's programs on your server is a hard problem.

I'm not a programmer, but I am able to appreciate the difficulty
of the problem that AppJet is addressing. Being a platform in this
sense is more complicated than being one in the sense that Facebook is. Appjet's founders have the technical chops to take on this kind of problem: Aaron and J.D. were highly regarded programmers at Google before AppJet, and David is on leave from graduate school at MIT. While undergrads at MIT, David and Aaron won 1st place in the annual 6.370 programming competition.

Congratulations on the launch, guys. Who knows, maybe AppJet will make it easy enough to inspire me to learn how to code!

L to r: Paul Graham, Kulveer Taggar, me, Harjeet Taggar, and Sumon Sadhu.

Earlier this week, Paul Graham and I participated in the seventh annual Silicon Valley Comes to Oxford event at Oxford’s Saïd Business School.  I’d heard great things about this event from Kulveer and Harjeet Taggar of Auctomatic, as well as Google’s Chris Sacca.

Kul founded Oxford Entrepreneurs when he was an undergraduate, and has been an active supporter of SVCO. In fact, he met Evan Williams at the event a few years ago, and Kul says his interactions with Ev and other SVCO speakers had a big impact on his decision to move to Silicon Valley. He’s been writing about his experience in a series of Viewpoint pieces for the BBC.

Paul and I taught a master class on the evolution of startups. We presented a list of what seemed to us the major drivers of change for startups and discussed their impact.

- Moore’s Law

- The Internet

- Open source

- Advances in programming languages

- Changing attitudes

- Increased funding options

- Changes in income tax policy (especially in the UK)

I was able to talk with a lot of students during the conference. It seems like the default plan for the MBA students is to work for investment banks or consulting firms upon graduation.  But a significant number seem to be rebelling against this. Many planned to start startups instead.

Luckily, they didn’t need to look too far for inspiration. In addition to the experts SVCO usually invites from America, this year they were able to invite recent Oxford grads who had founded startups in Silicon Valley, including the Auctomatics and Bob Goodson and Kirill Makharinsky.

The Saïd School struck me as extremely energetic, and dedicated to developing a real sense of entrepreneurship. In fact the school seemed a lot like a startup itself. It’s quite young as B-schools go, but obviously determined to rise quickly through the ranks.

The most enjoyable part about speaking at SVCO was meeting the students. We met a lot of promising founders. I wasn’t surprised, though. Including our winter ’08 batch, Y Combinator will have invested in 7 startups with founders from Oxford. In total we’ve invested in 8 UK startups, so they’re 10% of our investments.

Other highlights for me:

-    As I was sitting next to Reid Hoffman on a panel, I was delighted to hear he liked Founders at Work so much that he’d bought several copies to give as gifts.

-    It’s always a treat to see Chris Sacca. He’s a big supporter of YC and a perennial  favorite guest speaker. (Regrettably, I missed the late-night kebab tour.)

-    While talking with Biz Stone of Twitter, we discovered that we’d grown up on the very same street in the suburbs of Boston.
 
-    Speakers had a private tour of the Bodleian Library, Oxford’s main research library. We saw a Magna Carta, a book of  gospels thought to have belonged to St. Margaret, and 1 of about 20 remaining pre-Columbian manuscripts.

-    2 current Saïd Business School students gave me a personal tour of Pembroke and Christ Church colleges. (Oxford is comprised of 39 different colleges, many of which are not open to the public.)

Adam Rubin and Jitin Dhanani gave me a tour of their colleges. Photo was taken at Christ Church, where scenes from Harry Potter were filmed.

Finally, I’d like to thank everyone in charge of SVCO: Jonathan Black, Clare Fisher, Deborah Lisburne, Colin Mayer, Josie Powell, and Fiona Reid among others. It was a privilege to take part in such a special event.

Twice a year, Y Combinator has to say no to lots of people. Though we’ve done it 5 times already, it doesn’t seem to get any easier. Selecting a small number of investments from a much larger pool is just the nature of the business. It's particularly hard the day after we have to reject people and Hacker News is filled with woeful posts.

The top story on Hacker News yesterday was advice from someone who’d applied in the past: #1 on his/her list was not to take the rejection personally.

It’s not personal

Please don’t take a “no” from us to mean anything more than there happened to be other applications that interested us more. We get a lot of applications and it’s always difficult to choose who we’d like to interview in person. We admit that our review process is “fraught with error.”  I’m sure there are many people that we’ve passed over for funding that went on to start promising companies—and there will be many more.

Work on your idea anyway

So much of startup founders’ success rests in their attitudes. The founders we’ve funded that have been successful (so far, at least) always seem to be the ones that radiate a conviction that they will succeed no matter what. They are an elevator going up; do you want to come along for the ride?

I hope the Y Combinator application process is at least the ground floor for everyone. You’ve already accomplished some useful things: gathered commitments among cofounders, brainstormed ideas, fleshed these ideas out with some thoughtful answers, etc. But what you may not realize is that you’ve already made it through one of the toughest hurdles for startups: by applying to Y Combinator, you’ve agreed with yourself that you can start one.

So why not keep going? Even if it means just working on your startup on weekends. It’s OK if you want to keep your commitment low risk. The point is just to keep it somehow, some way.

Rejection is part of being a startup

OK, you may not have the same structure, advice, networks and extra cash that Y Combinator provides, but maybe that shouldn’t stop you. The painful reality is that if you do move forward with your startup, the YC “no” will be the first of many—even harsher—rejections you will face.

In the introduction of Founders at Work, I wrote that one of the most surprising things I learned from the interviews was how often the founders were rejected early on:

    I’d say determination was the single most important
    quality in a startup founder. If the founders I spoke with
    were superhuman in any way, it was in their perseverance.

However tomorrow turns out for you, remember why you applied in the first place: you want to start a startup. Don’t let us stop you.

Robert and Paul reviewing applications for the summer '06 funding cycle. (In the old days we used to review applications printed on paper.)

Matt Brezina (l) and Adam Smith (r) in summer '06

It seems like ages ago when Xobni’s founders, Adam Smith and Matt Brezina, were in Cambridge during YC’s summer ’06 funding cycle. We funded them on the premise that they were going to “make email better.” They’ve been working in stealth mode since then, but it seems like the Xobni guys will deliver on their claim.

This week, Xobni launched an invitation-only beta of its first product, Xobni Insight, at the TechCrunch40 conference.

Whew-- it’s so exciting to finally be able to talk about Xobni. Their product has been in the pipeline for a while but had to be kept under wraps. It’s not a web app; it’s integrated with Outlook, so it took them a long time to write.

Xobni Insight mines your email for the relationship information hidden in it. Among the cool features: when you search for someone, their profile appears in the sidebar with contact information. It also gives you a history of your correspondence with them.

Maybe making life better for Outlook users doesn’t seem like the sexiest problem to work on, but there are a lot of them and their lives aren't so great. (I was once one of these people. Ugh.)

Fred Wilson wrote, “I realize that many of you don't use Outlook anymore and have moved on to Gmail or some other better way to do mail. But for those of us stuck in email hell in Outlook, Xobni is showing a way out...”

It also got kudos from Matt Marshall of VentureBeat: “We’ve downloaded it, and are playing with it, and find it truly impressive.”

Simultaneously with building the first version of the product, Adam and Matt had to deal with growing the company. They raised funding from an impressive group of investors: Khosla Ventures, First Round Capital, Atomico Investments, Baseline Ventures and several angel investors.

Last April, they brought on Gabor Cselle, a software engineer they lured away from Google. He’s a formidable hacker: the kind of employee #1 that startups hope to get. They’ve since brought on several other employees and moved into hip (but not too expensive!) new office space in San Francisco.

But most importantly, with the launch of Xobni Insight, they seem to have made something people want. And I couldn’t be happier for the Xobnis.

Congratulations!