You’re going to need more than a good idea to become the next Jeff Bezos. It takes resources, information, connections, talent, and so much more to win...and even just to survive year one.
So where do those resources come from? And who gets access to them? That’s what we’re talking about today on Business Casual with Michael Seibel, partner at Y Combinator and CEO of the YC startup accelerator program. Aka principal of Silicon Valley’s unicorn finishing school.
If you want 1) an honest look at how the cards are stacked in entrepreneurship and 2) the tl;dr on what it takes to catch the eye of the wealthiest backers in tech and beyond, listen to this episode.
Want to keep up with Kinsey over email? Sign up here: businesscasual.fm/signup.
Kinsey Grant, Morning Brew business editor and podcast host [00:00:08] Hey there, everybody, and welcome to Business Casual. I'm your host, Kinsey Grant, and I'm not really much for cooking, but I do love a good recipe for success. So, let's get into it. [sound of a ding]
Kinsey [00:00:20] We are always on the lookout for the next big thing. For some of us, it's because we want to use that next big thing first. For others, it's because we want to invest first. But for a lot of us, it's because we wish we had come up with the idea first. To be sure, part of that is due to this mythologizing of successful startup founders we've all participated in in the last decade.
Kinsey [00:00:39] Another part is probably due to wanting to make bank. But there's also part of this inherent craving to be the first to build something that I think we can boil down to solving problems. Feels good to make pain points disappear. Also, just let me reiterate—the money and the power [laughs] for good measure. But these days, reading the tea leaves for the business world is nearly an impossible feat. There are just too many variables. But there will be an economy of the future, and it'll have different needs that the one we're in today.
Kinsey [00:01:06] That means the race is kind of on to create and build the next big thing. We've talked a lot on this show before about how classic startups are often founded during economic downturns, but it's going to take more than a good idea to be the next Bezos, even in this economic crisis. So that's why today we are going to talk to the fairy godfather of startups to better understand the most important resources, what they are for building that next big thing. I have a feeling that you need more than just a sans-serif font and a good idea.
Kinsey [00:01:34] So without further ado, I'm psyched to welcome to the show Michael Seibel, partner at Y Combinator and CEO of the YC Startup Accelerator Program. Welcome, Michael.
Michael Seibel, partner at Y Combinator and CEO of YC Startup Accelerator Program [00:01:44] Thanks. Thanks for having me.
Kinsey [00:01:46] So really excited to have you on the show. Like I said, you have kind of had a hand in just about every successful startup story that people are used to hearing. Do you have any favorites that you've worked with, [Michael laughs] like picking a favorite child?
Michael [00:01:59] No, no, no. Yeah, you can't do that.
Kinsey [00:02:01] Maybe some of the most notable.
Michael [00:02:03] Yeah. You know, the most notable company I worked closely with is a company called Airbnb. And I actually started talking with those guys way before I started working at YC. And it was interesting because I think that's when I realized something that people don't talk about in the tech world a lot, which is that I had felt like a lot of people helped us when they had no economic incentive to. Because there is a bit of like a cycle of altruism within the tech startup world. And it was interesting [indistinct] because I realized that I had gotten far enough that it was my job to start paying back into the community.
Kinsey [00:02:50] Yeah, absolutely.
Michael [00:02:51] And so it was really great to see a team that was like younger, the product was younger. They were hungry. It was really early. And they just didn't know all the tricks yet.
Kinsey [00:03:03] Yeah.
Michael [00:03:03] And so that was probably one of the most rewarding experiences I had, certainly one of the earliest.
Kinsey [00:03:10] I'm glad that this early in our conversation about startups and building businesses, you bring up the concept of altruism. It certainly is underrated. I think often in our conversations surrounding these kinds of businesses, it's like paying for the person behind you in Starbucks, but on a massive scale. [laughs]
Michael [00:03:25] Yeah.
Kinsey [00:03:25] It's a huge deal, and it's a huge part of how this world goes round. And we're gonna talk about that. So I guess we might as well just get right into it.
Michael [00:03:34] Perfect.
Kinsey [00:03:35] No time like the present. [laughter] So is there, like we were just saying, it takes more than a bright idea. Michael, what do you think are the most important ingredients for founders today? What matters most?
Michael [00:03:47] Let's see. I think that the—if I would have to think about the things that we look for when trying to decide whether to accept a company into Y Combinator, there are probably five things that we are really targeting.
Michael [00:04:04] The first is, is the team technical? Does the team have the ability to build the first version of the product internally? The second is, is there some existing relationship amongst the co-founders? A co-founder relationship is fundamentally both sharing of skills, but it's also a mutual support system. And so will these founders actually support one another when things get tough? Is there some existing relationship that they can use so they can seek each other out when things are tough?
Michael [00:04:37] The third is how much progress are you actually making over time? So is this an idea that just lives in a deck, or in every week, are you making progress towards getting a product out, getting a product launched, getting your first couple of users?
Michael [00:04:54] The next thing is how well can you communicate your ideas? In order to build a company that solves a really important problem, you're going to need to recruit and motivate people to join you in that effort. And your ability to communicate very clearly what you're doing, why it's important, what you know about customers, and how you want to build the best product is extremely important. And so how well you communicate those ideas to us.
Michael [00:05:23] The last one is, do you know something about this space that other people don't? And this is what trips a lot of people up. [chuckles] A lot of founders choose spaces or choose problems or choose ideas either because they think they're clever or because they're, like, hot. They're in the news. Remote work right now, for example, and they're not choosing spaces where they have some unique advantage over everyone else who's doing the same thing.
Kinsey [00:05:57] Right.
Michael [00:05:57] And so we're kind of looking for like, what is your advantage? What do you know about this that other people don't? Why do you deserve to win in this space?
Kinsey [00:06:06] So it's about more than just going about your daily life and figuring out what is difficult and what you can make a little less difficult. You have to have some sort of prior experience or some sort of advantage, not just this is something that we all struggle with. Or this is something we can all benefit from.
Michael [00:06:22] It's this is something we can all benefit from. I'll phrase it this way. Your knowledge can come from you experiencing the problem. Your knowledge can come from trying to solve the problem in another job or encountering a problem in another job. It can come from your family experiencing the problem. It can come from the community experiencing the problem. But what we really try to avoid is a founder who doesn't understand the problem, doesn't know anyone who has the problem, and is fundamentally choosing the problem because they think it's clever.
Kinsey [00:06:52] Mm hmm.
Michael [00:06:53] Because usually what that results in is a founder thinking that all the other people who are trying to solve this problem are idiots. So we can kind of unpack that a little bit, but that's usually not the case. Usually [chuckles] everyone else trying to solve the problem is not an idiot, and you have to be particularly insightful to win.
Kinsey [00:07:08] Let's do the unpacking. Let's unpack this now.
Michael [00:07:10] OK.
Kinsey [00:07:11] This founder complex. You've been a founder, co-founder before. You obviously work with a lot of them in extensive ways. But there is this sort of idea about what a founder is like and the attitude that a founder has about their role, not only within a company, but within the world around them. This sort of savior complex that we see quite often. What do you say to that?
Michael [00:07:31] Well, I don't know—I'm not sure what you mean by a savior complex. One of the things that I see is what I call fake Steve Jobs. And so it's kind of like when you tell the story of the iPhone, you can tell two versions of the story. You can tell a story that Steve Jobs knew what was important because he's a product genius. And the first iPhone was a representation of what was in Steve Jobs' mind. And it was perfect. So I call that the fake Steve Jobs story.
Michael [00:08:06] The real Steve Jobs story was that Steve Jobs, as a user of other smartphones, understood how bad they were. [laughs] And so thought there was an opportunity. And the first iPhone was a V1. It was an MVP. And it sucked. Let's be clear. It didn't have an app store. It didn't have 3G. It had very bad battery life. This was not a perfect device. [chuckles] But over the course of developing V2, V3, V4, iPhone was iterated into the perfect device.
Kinsey [00:08:39] Right.
Michael [00:08:39] So is Steve Jobs, this product genius, where he has a mental model of exactly what you need to do? Or is he iterating?
Kinsey [00:08:47] Yeah, I think that might be the shortcoming that we're facing right now. And when I say the savior complex, I think it's this fake Steve Jobs story that so many people who aren't founders seem to just imagine that that's what the founding process is like. You have a great idea. You tell people how to make it and they do it. And that's not reality.
Michael [00:09:04] Not even close. And I think that what's unfortunate is that when these stories are repackaged for public consumption, you know, after the company wins and they kind of retell this story, most of the details get washed out. And so what most people know about how these companies came about is not really accurate, or it's just not detailed enough. And so they're kind of creating a false mental model, not because something's wrong with them—just because they're not getting all the information.
Michael [00:09:35] It turns out you have to dig deeper to understand how these companies figured out how to win. It wasn't just someone came with an idea. Someone just built it. It was the right idea. Boom. The company works. No, the stories are always messier.
Kinsey [00:09:49] And [indistinct] history is told by the victor. [laughs] We have these ideas of what the story was because it's what the media has told us or it's what the comms department at this startup has told us —
Michael [00:09:59] Yeah.
Kinsey [00:09:59] Because of the sexy, fun story that people can tell one another. [Michael laughs] But to your point earlier, there are all of these five points that you brought up in the beginning of this conversation that I think are so often overlooked. When we think about starting a company, you think, well, you need a good idea, you need some money, you need to know the right people. But that's, I think, maybe skipping a very important step, which is getting the attention of the people who you need attention from in the early stages.
Kinsey [00:10:21] Takes more than having money. You know, that's step number one before you can even get VC attention. Or before you can get Y Combinator's attention. Can you talk a little bit more about the importance of making these connections, meeting people, convincing them that your product is one worth making, building, financing? [laughs]
Michael [00:10:39] Yeah. Let's unpack that in a couple different ways. So we were talking about employee use. I think that in the current market, more and more employees understand that the big tech companies are going to pay them a reliable amount of money. And so more and more you have to make the case that you're doing important work—or else it's really hard to compete against the big tech companies. And I think that's having a positive impact. I like that.
Michael [00:11:13] When it comes to investors, what's interesting to me is that I see founders often just making more simple mistakes with investors and not understanding that they're making the simple mistakes. So the simple mistakes I see founders [indistinct] investors are so obvious, like no technical co-founder. Pitching investors who are not in a true technology hub, so they don't actively invest. They take a lot of meetings; they don't actually invest. Pitching a deck without making progress, without building the prototype, without getting the first initial users. So on and so forth.
Michael [00:11:48] Hedging your bet. If you have some economic reason why you can't go full time, then it's totally fine to bootstrap. But if you don't and you're not going full time, you're just indicating that you're not as passionate as the next person who is gonna solve this problem, who is willing to go full time. And so I feel they're just all of these very basic blocking and tackling things that 90% of founders mess up on. And when they have a bad fundraising experience, they've made a structural problem. There's nothing to do with their idea. It's like they've hit one of these kind of structural roadblocks where it's very easy for an investor to dismiss you.
Michael [00:12:27] And so if you don't make those mistakes, you're really pitching. If you're making those mistakes, you kind of aren't even really pitching.
Kinsey [00:12:35] So I guess the question is, does every company in its early stages run into these kinds of events, you know, when you say 90% of founders fail to recognize a lot of these issues when they go about fundraising. Do we have any sort of strings that tie all of that 10% who don't together? Is it just making sure that you're prepared for any sort of circumstances that come your way when you're trying to get money? Or is there something else, some other sort of resource or ingredient to keep up with this recipe metaphor I'm driving into the ground? [laughs]
Michael [00:13:08] I think there are two significant issues. I think the first one has been addressed more recently. One is lack of information, not understanding that these are mistakes. I think that 15 years ago, it was much more likely that you would have to talk to someone. This information was not as readily available online. Today it is. Today it's on every [indistinct]. It's in podcasts. YouTube. It's everywhere. But still, some people don't get it. Some people are not on the receiving end. So I think one issue is, do you have this information?
Michael [00:13:41] The second issue is that acting on these things is hard. And I don't think we talk about this enough. Most systems in our life are not designed to be OK with 99.9% of failure. And so a lot—people typically don't think systems with 99.9% of failure are fair. It's not fair that you can be an amazing high school basketball prospect, tweak your knee, screw up your ACL, and you're done. Forever. That's not fair. But it happens all the time.
Michael [00:14:18] And so I think that the thing that kind of catches the people who have the knowledge is that doing those simple blocking, tackling things that I said is hard. It's hard to have a great technical co-founder. It's hard to be brave enough to quit your job, even if you have the economic means to. It's hard to build a product without very much money, or to come up with a plan that doesn't need a lot of money. It's hard to look at all those other people fundraising while you're having trouble.
Michael [00:14:47] And I think the thing that I've come to realize personally is that successful people get good at doing hard things.
Kinsey [00:14:53] Yeah.
Michael [00:14:54] They get good at doing hard things. And so I think that with knowledge, plus the confidence that you are going to get good at doing hard things if you try to do them, I think you get there. But I think all too often a lot of founders are kind of avoiding these basic blocking and tackling things because they're hard. And the reality is, is that, like, I always tell them to think about their competitor, their shadow competitor, and they don't know who they are. But that competitor is doing all the hard things.
Kinsey [00:15:24] Yeah.
Michael [00:15:25] How do you match up?
Kinsey [00:15:27] I have to wonder, though, beyond just being willing to do the hard things in order to succeed, if there are more systemic barriers to entry in this conversation that we should be talking about. We can read all of the information that's out there, follow all of the blogs that you're putting out, and understand all of it. But still, there are groups of people in this country who are continually denied access to getting in the right room to talk to the right people, to even have the opportunity to block and tackle.
Michael [00:15:52] Completely agree. And it's interesting because I think that we don't talk about how multifaceted that problem is. I think that we spend a lot of time talking about bias, and I think that bias exists for sure. But if you wonder what I tell our underrepresented founders at YC, it's you can't change who you are. Like, you can't change the color of your skin. And so successful people have figured out how to overcome the color of their skin through a lot of hard work. And founders tend to be extremely motivated people who are not intimidated by that, and unrepresented founders have lived their whole lives having to be a little bit better to be counted as equal. So that part's not new. And it's not fair either, but it's not new.
Michael [00:16:57] And so most of the founders that I speak to, their number one barrier to doing tech startups is not bias. To be honest, most of the potential talented people—the number one barrier is economics. And I think that this story isn't told enough. You know, if you are a CS major, and you get hired at a large tech company, and you come from a poor family. Quite possibly a 23-year-old, you're the number one best paid person in your entire family. That means at 23 years old, you become part of the safety net of your family.
Michael [00:17:36] The risk-reward ratio for doing a startup when you're in that position is entirely different than people who grew up in families where, even if they're making a $150,000 a year, they're not part of the safety net [indistinct]. And so I think that we don't talk about that. But when I speak to underrepresented founders and when I speak to the ones inside the YC community and when I talk to folks who are considering startups, that's the question I don't have an answer to.
Kinsey [00:18:05] What do you think the startup landscape would look like if there were more socioeconomic diversity among founders?
Michael [00:18:12] I think that a great many more problems would be addressed. I think one of the things that I experience at YC is that if you are a young founder who grew up in an upper-middle-class family and went to a good college, a large number of people with that profile, when I ask them, hey, what problems do you have in your life? They can't come up with any, and they haven't worked long enough to kind of encounter problems in the business world and in their lives.
Michael [00:18:48] Like, a lot of their problems have been solved by growing up in the right family. They go to the right schools. And I don't want to deny those folks. They worked hard. They got good grades and so on and so forth. But I think that that's tricky. And I think that there is a bit of a challenge here where figuring out a way for people who've experienced really important problems to be a part of solving them is essential.
Kinsey [00:19:12] Yeah.
Michael [00:19:12] Because it's a lot easier to build a solution when you've experienced the problem than when you haven't. But to kind of go back to this wider point here, I think sometimes I am guilty, especially earlier in my career, of not acknowledging those economic issues. Earlier in my career, I had a lot of passionate discussions with founders who had the skills to do a startup, and for family reasons, they didn't feel like they could. And I disagreed with them. And I told them that they had to, and dah-dah-dah-dah. Only later in my career that I realized that like, no, this is a personal decision.
Michael [00:19:50] You don't have some societal obligation here. Like, if you're gonna do this, you have to be passionate about it. And it has to fit in your life. And you have to feel like you're not sacrificing too much, or else it's not for you. And like me twisting people's arms doesn't work.
Kinsey [00:20:07] What do you think changed your mind on that, or convinced you, or opened your eyes to this part of the problem?
Michael [00:20:15] Probably two things. One, later in life, I've had to become more of the safety net for my family. And I've made money and so it's a lot easier. But I think I understand it in a way that I didn't understand before. I grew up in an upper-middle-class family. I could always go home and crash on the couch. Now that I'm helping out with the safety net of my family, I think that it changed my personal perspective. And then having this conversation with founders over and over again.
Michael [00:20:50] And the stories are, you know, the stories aren't great. The stories are my mom has an illness. My little brother is in school. I'm helping them pay for tuition. It's like this person isn't working for themselves. They're working for their whole family. And so I don't think that's talked about enough. I don't think that it's talked about enough how many people out there have the skills to do this, but their priorities to their family?
Kinsey [00:21:18] Yeah, I think that so often we fall into this trap of if you don't have a mortgage or a kid, you can go work for a startup or start your own company because you have no responsibilities. And that's just not the truth. [Michael laughs] And I'm guilty of it myself. When I took a job at a media startup —
Michael [00:21:33] Yeah.
Kinsey [00:21:33] Who in their right mind would do that? [chuckles] But in my view, it was well, if it doesn't work out, I can always move back in with my parents.
Michael [00:21:40] Yep.
Kinsey [00:21:40] And I think recognizing that is really important. So I want everyone to think on that for a couple of seconds here. We're going to take a short break to hear from our sponsor. And we will be right back. —
Kinsey [00:21:51] And now back to the conversation with Michael Seibel. Michael, before we got into this break, we were talking about the kinds of people who get these resources that you need to start a company. The barriers to entry for gaining access to these resources. And you made a really interesting point that I want to talk a little bit more about. This was one of the two problems you mentioned, one that's kind of being solved. This lack of information is not as much of a lack as it used to be, I would say. Speak a little bit about this dissemination of information for founders, for potential founders, and why it matters to get people the resources they need.
Michael [00:22:25] Yeah. So I think that there's been an explosion in the early stage funding over the last 15 years. And I think that one extremely positive externality of that is that a lot of investors have to market themselves. And one of the best and most helpful ways for investors to market themselves is to write about what they say to their companies after they invest in them. [laughs] To write about how they help companies once they invest in them. And I don't want to be too capitalist. I'd say there's a huge motivation to market themselves.
Michael [00:23:04] But I think there's also motivation to give back and to share the hard-earned information that they've learned as well. And so I think the result of that has been just tons of information. Paul Graham, the founder of YC, has a whole series of essays that I think a lot of founders find extremely useful in their early days. [indistinct] has a huge database of advice called FirstSearch. YC, we have Startup School, which is like a massive online course for learning about startups. And we have the YC Startup Library, which is our own database of good advice.
Michael [00:23:36] And so much good information is out there now that I think people just have to be directed to it. I do think that, unfortunately, there are a lot of sources of bad information that have to be ignored. Scary enough, the two biggest sources of what I would call bad or slightly misleading information are your peers and Twitter. And I'll say Twitter, I might say more broadly, the media.
Kinsey [00:24:04] OK.
Michael [00:24:05] And the reason why is that your peers don't know anything most of the time. [laughs] They have no personal experience to draw on. And so they're actually drawing their information from some form of the media. And the challenge in the media—I'm not saying it's media reporters' fault—is that social networks amplify certain types of stories and they don't amplify other stories. And so you're not getting a complete picture when you're reading the news or when you're looking at information. So if you and all of your friends are basically getting a not complete picture about how the startup world works and then you're basing all your opinions on it, and you're not trying to get any primary information, you start making kind of simple mistakes.
Kinsey [00:24:49] Yeah. I think that maybe part of the problem here is that the news media is amplifying, to your point, the kind of polar opposite ends of the spectrum. We love to talk about an Uber IPO and we also love to write about WeWork being a huge, complete failure. [laughs]
Michael [00:25:06] Yeah.
Kinsey [00:25:06] There is really no middle ground because that's what gets people to click on stories. As much as we hate to admit it, that's how we make money. I mean, we, as in the media, not at this podcast. [laughs]
Michael [00:25:14] Yeah, yeah, yeah.
Kinsey [00:25:15] But at the same time, when you think about the social media aspect of media, this idea of failing in public has become so hot and cool and sexy recently because people think that it's this honest and earnest way of storytelling about founding a startup. But even that is incredibly performative. Whatever we're posting on Twitter, if we're trying to be totally transparent, is still performative transparency.
Michael [00:25:38] Yeah. And I think that what's interesting here is that no one has the responsibility to teach you about startup best practices. The tech press doesn't have that responsibility. The general news media doesn't have that responsibility. Twitter doesn't have that responsibility. Your peers don't have that responsibility. It's not their job to teach you about tech best practices or startup best practices.
Michael [00:26:03] And so it's your job to go find the information. And I think that if you want to outsource that to people who are really, totally, you know—this isn't a way to attack the media. I think it's a bunch of people doing their jobs. It's just that their job is not to teach you how to do a startup. Their job is to tell you about WeWork or to tell you about Uber. [laughs] Their job is to produce news.
Kinsey [00:26:24] Yeah.
Michael [00:26:24] And I think that that's very important. I think that it's your job to go find out the information.
Kinsey [00:26:31] But we're also flooded with information that, at times, is good and at times, is really, really terrible. I mean, you Google how to start a business. Half the resources you get are ads on Google. [Michael laughs] The other half is like, let's be honest, like Dave Ramsey bullshit of like [indistinct]. Like all of this stuff that we just want to hear.
Kinsey [00:26:49] And even if you go—I looked at the SBA's website. The top 10 steps to start a business is like pick a name, [Michael laughs] incorporate. A lot of it is super-technical, but you're not getting the actual resources that you need to make it successful. You know, after you incorporate, what comes next? Who do you need to talk to? What are the biggest mistakes you can avoid? I think that we're not getting [indistinct]. [laughs]
Michael [00:27:10] I completely agree.
Kinsey [00:27:10] Maybe it's just that we don't know where to look.
Michael [00:27:12] I completely agree. And I would argue that a lot of the reason why I talk about these resources and I highlight resources that aren't even created by YC, is to get that word out. And I actually think that if everyone who was consuming information from these primary sources told three of their startup friends about them, we could get the word out. And so I do think that's vitally important. Because I agree, if you're not part of the right networks, you might not know that any of these resources exist.
Michael [00:27:43] But damn, it's a lot better than it was 15 years ago, where like, the resources didn't even exist. [laughs] Like now we're in like publicize the resources as opposed to create them. And so, in my mind, this is great progress. And now we just have to do a really good job of telling people these things are out there. And let's be clear, like tens of thousands of people do the [indistinct] every year. That's very important to us. And of course, we want those folks to apply to YC. But regardless if they apply to YC or not, we want people to know the basic building blocks of how to make a successful startup because we want there to be more successful startups. We'll all become better.
Kinsey [00:28:21] When all of this information is readily available that anybody can access it if they want to, if they know the right people, if someone [chuckles] steered them in the right direction, do you think in any way that the quality of that information is sacrificed? Is there a reason that access is something of a commodity?
Michael [00:28:37] No.
Kinsey [00:28:38] No.
Michael [00:28:40] No. No. I think that all VCs would love if the average pitch deck was better quality. I think that all investors, all seed investors, would love if the average startup that pitched them had a technical co-founder. I think, no, there's some industries that are actually zero-sum games. In the mining industry, if I know where the gold is and I tell everyone, and I don't own the land yet, I'm screwed. [laughs]
Michael [00:29:09] Sometimes in the finance industry, these types of hacks exist too. I think in the tech industry, much more often this is every company is helping make the pie bigger. And let's be clear. YC, and specifically Paul Graham, has been distributing this information for 15 years. It hasn't decreased the quality of companies that have applied to YC; it's only increased the quality.
Kinsey [00:29:32] Right.
Michael [00:29:32] So I would say even in our own little world, no, this information should be widely consumed. I wouldn't mind if it was taught in school.
Kinsey [00:29:41] Should it be taught in school—entrepreneurship classes?
Michael [00:29:44] They are probably more important things. But like, is it somewhere on the list? Yeah. I'm not sure it's the number one change I'd make to school. Most people are not going to be entrepreneurs. In fact, I'm developing this sneaky little kind of hypothesis that, like—God, this is gonna sound really bad—not only are entrepreneurs rare, but it's OK that they're rare. We shouldn't be holding these people on the pedestal that we are. Someone who has a good job, enjoys their job, gets fulfillment, has a family, enjoys their family life, raises kids—they deserve a lot of credit. They deserve to be celebrated.
Michael [00:30:32] And I think sometimes young people kind of get confused, and they think that that is somehow failing. And unless you are the next Bill Gates or Jeff Bezos, you're failing. And what a lot of folks realize through the process of doing startups is that's not failing at all. I used to have this feeling like if you're not a founder, you're a nobody. And I was just totally wrong. [laughs]
Kinsey [00:30:55] Why do you think so many of us think that way, though? I agree.
Michael [00:30:59] I think we celebrate these people. I think people aspire to be the celebrities that are celebrated.
Kinsey [00:31:06] But the reality is we can't all be those people and we shouldn't all be those people. The economy is made up of millions of people. Everybody has a different place.
Michael [00:31:15] Yeah. Let's be even more controversial. In many cases, those people don't live enjoyable lives. Pound for pound, that thing that they have that you want—you're seeing the pluses and none of the minuses. And it was funny because, like, Obama gave this fun quote. He said, the biggest thing that he lost was anonymity when he became a famous politician. And you don't understand the value of anonymity until you don't have it anymore.
Michael [00:31:46] And you think about that, and it's just like, hmm, like, you're right. What does it feel like? Everywhere you go, you're recognized. What does it feel like to not be able to go places? And let's be clear. I don't want to say, oh, boo hoo. Like, rich and famous people have it so hard. No, I don't want to say it like that. What I more want to just say is that most of the people who I know who are running successful companies, their job is rewarding, but not fun.
Kinsey [00:32:13] Yeah.
Michael [00:32:13] Their life is rewarding, but not fun. And there are a lot of people who I think are leading more fun and emotionally satisfying lives.
Kinsey [00:32:23] This is certainly a hot take for this podcast. [laughs]
Michael [00:32:27] Yeah, [laughs] it's weird. I've started to think that something is a little wrong with entrepreneurs. Wrong is like the wrong way of saying it. A little off. A little different.
Kinsey [00:32:36] Yeah.
Michael [00:32:36] Where they're willing to kind of—I think they're willing somehow to sacrifice a lot of normal life to do this job. And like, once again, I'm not trying to make value judgments. They're not better. It's not that. They're just different. Like people are different.
Kinsey [00:32:55] Yeah. It's like call your therapist and then we can talk about [laughs] writing a check. I think that I don't want to conflate being the president with being a startup founder. They are obviously two very different things. But, as they say, you have to be a little crazy to want to be in politics. [laughs] You have to be a little power hungry. You have to be a little unhinged to want to put yourself out there in this way.
Kinsey [00:33:18] And I think that welcoming these kinds of challenges that we've been talking about, of which there are many, takes a certain kind of person, and just not everybody is that person. And to your point, that's a good thing. So let's think about that for a little bit.
Michael [00:33:31] Yes. [laughs]
Kinsey [00:33:32] We're going to take a short break, and we'll be right back. —
Kinsey [00:33:37] And now back to the conversation with Michael Seibel. Michael, a lot of what we've been talking about here today, when we think about the resources that you need to start a company and to be successful, the kind of person you need to be, what you need beyond just this idea, it brings to mind this sort of concept of the American dream. That the resources are there, you just have to grab them and take them and you can build what you want. Do you think that that story is still a fair one to tell today?
Michael [00:34:08] I think more and more how to accomplish the American dream has changed. And the information is not equally distributed. I think a lot of the American dream actually has a lot more to do with small business than it has to do with tech startups. And I think that the picture in America of small business has changed so drastically in the last 20 years. And it's a problem.
Michael [00:34:40] Because I think if you go back 20 years ago, and you were making a plumbing business or you were making a restaurant or you are making a barbershop, you could go to a plumber, a barber shop, a restaurant, and you could get advice and you could follow in their footsteps. I think nowadays, you can't. And nowadays, technology has changed those industries so much that you can't learn from the people in your community as easily anymore. And the equivalent of those small businesses in the online world is completely different.
Michael [00:35:17] Now it's an Etsy seller or an Airbnb host or an eBay seller or a pop-up restaurant on DoorDash. And so one of the things that's been kicking around my mind a lot is that on the positive side, building a small business on one of these technology platforms is way less expensive than building a traditional brick-and-mortar small business. But on the other side, I would argue that these platforms, the tech world in general, probably has an obligation to make sure that the rest of the country and the world understands the opportunities available on these platforms.
Michael [00:35:58] And I think that not enough people understand how to build a small business online. And I actually wish more of these platforms would get together and invest on informing everyone about how to do this. One, it would help them. [laughs] It would help the platforms. And two, I think it would help further this explosion of new online businesses.
Kinsey [00:36:23] Yeah.
Michael [00:36:24] And I think that it would actually also give more people access to being entrepreneurs and would refresh this American dream. And I think this is in the process of happening. But I want to talk it up because I want it to happen faster. You know, the platforms exist now. And so, you know, everyone should know how to create a Shopify store.
Kinsey [00:36:49] Well, I think it's important, though, to talk about geography in all this. When we think about this long-held belief that you have to go to this community to participate in it and that you have to go to the Bay Area or to New York or to Boston to participate in this startup community and startup culture. Do you think that that has been, maybe like degraded in any way by this pivot to remote? Is this, maybe could be a net positive for people in terms of access to information if we're all doing it, regardless of where we are remotely?
Michael [00:37:19] In my experience, COVID has more limited the people who can do startups than expanded. Because whereas remote, you know, theoretically, has an impact, whenever you have this level of unemployment, more people are under an economic burden to help support their family members and their friends. And so the math for doing a startup is worse when there's a higher likelihood that you have to help out your family.
Michael [00:37:48] So I actually think that effect is far greater than the remote effect. I think it's unclear what it will look like, how important San Francisco and the tech hubs will be once COVID clears up. I do think, though, that there is this negative kind of ecosystem competition that I think is toxic. You're not a representative of your tech startup ecosystem. You're representative of your users. You are serving your users. And you should be gathering every resource possible to serve them as well as possible.
Michael [00:38:27] And if you don't think you can consume resources from the global number one startup hub in the world, San Francisco Bay Area, then you got your head in the sand. That does not mean that you have to live here or move here. Maybe it does. Maybe it doesn't. But if you're not thinking, how do I take the Bay Area and use it as an advantage in some way, and your competitors are, they'll beat you. And so I kind of feel like this isn't about like, oh, I'm rooting for my team, like, you know, oh, my team is the New York team or the Boston team or the Atlanta team or the Chicago team. It's like no, your team is your users' team. [laughs]
Michael [00:39:09] And you got to do whatever it takes to help your users solve their problems. This other stuff is just bullshit. Like all founders of tech startups are in the same tribe, no matter where they are in the world. We're all in this tribe of people who are a little bit stupid, a little bit naive, trying to kind of do the impossible, and don't really know what we're doing. Like we're all in that tribe together. [laughs] It doesn't matter where we live.
Kinsey [00:39:35] Yeah. I love it. I think that's a fantastic and insightful way to [laughs] wrap a bow around this. It is about accessing the resources that you can access and taking advantage of the fact that while these communities are important, we have the means to access whatever we want at this moment [laughs] in time. You know, when we think about information at our fingertips, every single day that we walk around on this Earth, it's increasing. It's not getting smaller. It's getting bigger. [Michael laughs]
Kinsey [00:40:01] So let's take that to our advantage and recognize that—we're laughing, but I think that maybe we fail to see that sometimes. We've become so used to a quick Google search and sometimes it takes a little digging, but it's all there and it's getting bigger. So, Michael, thank you so, so much for coming on Business Casual. I thoroughly enjoyed this conversation.
Kinsey [00:40:20] I love that we got to think about this tech startup and startup ecosystem more broadly in a way that I think a lot of us probably have not going into this conversation—about what it takes to be successful, what it takes to be a founder, and the lessons that we can learn along the way, even if we aren't one of those delusional entrepreneurs [Michael laughs] who wants to start their own thing. [laughs] Thank you so much. I really appreciate your time.
Michael [00:40:41] Awesome. Thank you so much for having me.
Kinsey [00:40:50] Thank you so much for listening to this episode of Business Casual. One major task for you today. Like Michael said, as fulfilling as it is, it's not always fun to be a founder. But whether you're a founder or not, I hope you do something fun today. And remember, fun is a mindset. Second thing. Subscribe to my weekly column. If you want to know what the big theme of the week is before the episodes are out, that's the only place you'll find it. Sign up at businesscasual.fm/signup. That's businesscasual.fm/signup. And I'll see you next time. [sound of a ding]