# Inside the Group Partner Lounge: Advantages of a first-time founder

**Author:** Harj Taggar, Michael Seibel, Brad Flora
**Type:** Video
**URL:** https://www.ycombinator.com/library/J6-inside-the-group-partner-lounge-advantages-of-a-first-time-founder
**YouTube ID:** bp_kMA-eTsE

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

## Transcript

first time founders can actually take more risk on the ideas that they pick because they don't they don't have other startup friends or they don't care as much they're just working on stuff they find interesting i love that they have nobody to impress basically [Music] hello this is michael with harj and brad welcome to inside the group partner lounge as yc group partners we often find ourselves repeating the same advice over and over again to start-up founders

we work with before covent we'd often gather together in the group partner lounge at the yc office to try to figure out why this was the case and how we could help startups figure it out faster today we're going to talk about all of the advantages that first-time founders have over second time founders brad and hard shut this up so um we talked to a lot of founders where it's the first time they've ever started their business and some of you listening at home this might be working on your first startup ever you're thinking about working on your first startup and one thing we see is

founders love to read all the tech news they love to read vc twitter they're out there consuming all this content information about the startup world oftentimes they get pretty psyched out by the fact that a lot of the coverage is about repeat founders people that have sold companies they've ipo'd companies they've built huge companies had huge successes and now they are building some new company maybe in the space that the founder is thinking about starting a business in and it can be really discouraging how the heck are you going to compete with them considering

all the success they've had so hard one of the things that you mentioned before we started recording is the idea that as a second time founder you had access to a lot of expert opinions now on the surface that would seem incredibly helpful when creating a company but tell us why counter-intuitively maybe that uh that's that's not exactly what you want yeah i think as a as a second time founder you both have access to more people like more smart people who know a lot about startups and

you've had a lot more of your own experiences and so every time you have a decision to make you just have a lot more data to check the decision against and i think that obviously there are obvious reasons that's great having had the experience of choosing a startup idea or running a startup idea by your smart startup friends or mentors is has obvious advantages but it can also just slow you down i think this is something i felt myself is that it took me much longer to pick the idea or commit to working on an idea for my second

startup in the first startup and i think it's because we had so many people we could run the idea by and get feedback and opinions from and then digesting all of that feedback and thoughtful and thoughtful ideas can actually just mean you move slower and let's pick at what that means like when you're in that scenario you're not talking to your potential customers and your users there right you're talking to all these other startup people that you've made friends with as over the course of doing your first startup i remember i was at a camp yc once and i had this idea and i pitched it to 10 people and

they all told me it was terrible so i didn't work on it but had i gone and talked to actual customers for it maybe they could have helped me like find a better version of that idea that actually would have solved the real problem for them i also think this concept of expert is a really interesting concept right because i'm so happy you said this idea of separating the expert from the user because there are so many people who are really smart about startups but who don't really have the problem you're trying to solve and really can't give you great advice to be honest

but they will give you advice that sounds very expert and then there's other people who are users who might not be able to tell you whether this can be a billion dollar company but they can easily tell you they have the problem and i think as a second time founder it's it's just as hard to talk to your users but it's 10 times easier to talk to experts so almost by extension it's like even harder to talk to your users and that's a it's a it's a tricky it's a tricky thing um another area that's interesting is this idea of picking your market right

like oh you know like i don't want to get caught by the trap of having us be building in a small market you know god forbid i build a small company that only makes 100 million dollars in revenue but i see so many founders who don't understand that markets can grow or that you can move to an adjacent market you know it's like oh no i have to be in the trillion dollar energy market that's the only place that can contain my ambition have you all seen some of this um disadvantage for second time founders i call this like the dinner party or the drinks problem and it's that when you're

a second time founder you start optimizing for how impressive what you're working on sounds at like dinner parties when you go for drinks with people and so it's like yes i'm working on like like revolutionizing energy and blah blah right but like you don't want to sound like you're working on some dumb ideas like air bed and breakfast as like for example right and so like it actually is all like you know like come 2011 2012 like um if you were pitching the idea for coinbase like it's hard to do that as like a second time

founder because it would just seem so dumb um like first right like first time founders can actually take more risk on the ideas that they pick because they don't they don't have other startup friends or they don't care as much they're just working on stuff they find interesting i love that they have nobody to impress basically oh man now what about this concept of like the novel like it's as a first-time

founder you experience so many things for the first time which can be so energizing you know second time founder is like you know one of the things we've been saying is like the lows are just as low but the highs aren't as high like how have you guys seen that well with my company i know that that first time we got anyone to pay us anything for anything was incredible and we were dancing around the apartment right we were you know cracking beers left and right like what what a rush

and yet you know the next day we didn't feel that way it was just more more revenue and so yeah if you if you take away all those fun little moments um where do you find the motivation to go further and to push harder it's got to come from somewhere else yeah that one's also fun because you know the lows are going to suck right so it's actually it hits you on both sides like you know that they're going to be moments you hate your life as a second time founder but you also know like the first amazing hire

would just feel like yeah that's one of the first hundred people i have to hire great and then thousand people you know it's like none of these moments kind of stick as much anymore in your head and and that can be demoralizing um i think one of the other tricky advantages first-time founders is that like because they're gonna have harder times typically raising money or hiring employees they tend to have to innovate more like they they tend to have to they're constrained into building something good whereas like the lack of constraints

so often lead people astray yeah i think that's a common one that's a what's the phrase like constraints breed creativity like i definitely see that especially with early stage startups because yeah as a second time founder all of these things play in again like you can use you have an easier time raising funding so you don't need to have the product be necessarily as amazing to raise your first round um you often have other people who are willing to try it out and be beta users or testers or whatever so you can you know your your friends and family network is is potentially larger whereas

a first-time founder or you can get press to write about what you write what you're launching as well right whereas a first-time founder the only way you're getting your first few users is having a really great product and being really great at selling it i think you can just get a little bit lazy on that front as a second time founder yeah and then the other one is this idea of honesty like brad you think a second time founder it's really possible to get honest feedback from your investors or friends or things like that or or do people have

a hard time being honest with you yeah i think it's harder um i when you're a first-time founder nobody cares about you because they don't have any sort of relationship with you yet you know you talk to some investor and you're just the product and they tell you if the if they want to invest or not um and but then after you've been through a process with people and you've built some sort of rapport and relationship it's now costly to tell them what you really think about what they're working on it you know it basically it all just comes from it's just a continuation of the same the

first startup being carried through into the second one and not having like a clean break and resetting all those relationships um but but yeah i definitely um um just it's really hard to get uh you know real true feedback from people yeah it's just part of the the broader thing that first time founders often don't get is that when you're getting feedback on your idea from investors in particular like they're not their pure motivation is not to just give you the highest quality feedback they possibly can like they're often

playing a different game which is how do they set themselves up to get referrals to other good startups in the future and it's like when you're a second time founder the investors know that you know more people they don't want to um give you bad feedback right like they're incentivized to tell you nice things so that you'll continue being nice to them whereas when you're a first-time founder you're less useful to an investor in that way so they kind of can be a little bit more like just direct with what they think um about you they they can treat you without the the kid gloves or the

they don't wrap you up in cotton ball as much yeah what i've also seen for second time founders is that oftentimes for an investor it's more of a catch it like helps you build your reputation in your firm or it helps you get the deal approved and like so oftentimes there's like internal political reasons why you might be getting funded that have like nothing to do with your product being great or your users loving you you know and and you you're never told that stuff right like it's just kind of happening in the background and and

you don't really know that you're being graded on a different front whereas like you said when you're first-time founder you're nobody nobody cares you find that eventually though it's a little bit like taking out debt honestly where it's like maybe early on as a second time founder like maybe the seed rounds easier maybe even a series a is easier but the later the longer you're working your startup for the more people just care about the results and like sooner or later if you don't have a

product if it doesn't actually have product market fit if you don't have customers who love you and will do a reference course saying how great your product is like the whole thing falls down um and so i think that's another thing often we can see with like a first time founder like they never had it easy so they just have to learn how to operate like at a certain like level of execution from day one whereas the second time founder you sometimes it's a little bit like you're like driving on like autopilot or something and then it like the autopilot gets shut off and now you're like oh yeah like like i have to

actually figure out like how to get like a great product shipped i have to like actually fix all these problems because now i'm not gonna be able to raise investment or get to like the next revenue milestone unless i have something that's really good it's funny i love that analogy because in that analogy when the autopilot gets shut off you're like going 120 miles an hour down like a curvy mountain road right and it's like well i i thought everything was good though the computer was driving things fast

whereas elise is a first time starter you start on like some suburban road going two miles an hour oh man all right well let's be clear though like someone should play devil's advocate because certainly there are some advantages to being a second time founder um what do y'all think is like the the first kind of big boy here on on a massive advantage being a second time founder well i think if you have did your first startup and got some

semblance of financial independence from it then you don't carry the same like massive weight of asking yourself constantly how the heck am i going to survive eat sleep whatever that first time founders often carry with them right we we work with a lot of these first-time founders i we know lots of first-time founders that desperation in their eyes which is a great thing sometimes it helps drive them forward also comes with a cost of just being stressed out all the time and

it can lead to some short-term thinking in terms of what to work on how to sell your product what even what go to market strategy we i see a lot of companies that just want to do product led growth for example because they think that'll get them their first revenue when really they should be selling enterprise which might take a while but actually be the fit for their business for example um whereas if you have some financial independence like a lot of second time founders you can think bigger and actually like play out the implications of the business that you're going after and try to build something that's

optimized to get big from day one yeah you know and that's a big one when you want to have family or want to own a house just like you know being able to not if you're successful as you mentioned being using that money to free your life of distractions can be a big advantage you know you can up the child care you can up the quality of the home the quality of the space you live in and so on and so forth like for sure um that's one what do you think another devil's advocate position here on why second time advantages founders have an

advantage another very specific type of startup that seems to be suited to second time founders uh as capital-intensive businesses um and by that i mean you know any any startup where like more money raised or just more money is a strategic advantage second time founders who are good at raising money can benefit right so let's make some examples around it like there's famous ones like elon musk probably the most famous one right like he started i think it was zip to something then paypal but you know now

spacex and tesla but from our own orbit like we have examples i speak a personal one um a friend and former roommate mine eric woos the yc founder who started a company called moviet so acquired by trulia um pretty early on but like it was a good exit for him and then he started open door right open was now a public company worth billions of dollars i think open doors are coming he's raised like well over a billion dollars for that company and i think that was much easier for him to do as a second time founder well but people probably won't know why is open doors so capital

intensive oh because they're actually buying and selling houses they're like yeah it can be more interesting like they actually go out and just buy like tens of thousands of homes across america so yeah definitely helps definitely helps to have a lot of money good software not sufficient another class example is is blake from boom who started a software company and sold it and then decided to make you know a supersonic jet company right and

another example of a company that like will take a decade to make the first flight and at least and that's like on an aggressive time frame that would be a massive accomplishment and so you know yeah being able to say i've already exited i've already given my investors cash back like that's really helpful when you have to build a supersonic jack company any other examples here brad um i i mean i think you can look at cruz for example um and you know you can you can look at like what max

has done max levchin with all the different companies that he's built and each one just gets more and more and more and more ambitious um and it's just something you can do more as a second time founder i think what i will say though is that so many founders are confused about whether they're building a business where money is the real advantage like i would certainly say that's the minority of businesses here you know when we describe what's going on we have like large physical like our examples are large physical things right rockets cars

self-driving cars and um hypersonic planes right so large physical things clearly need a lot of money also lending right you know brex second time founders they extend credit to startups max webkin with the firm extending credit so it's like lending and big physical things definitely require a lot of money it's not obvious to me that there are many other business categories that require a lot of money where cash is the advantage so um if you're doing one of those two it might make sense yeah and and if you're

one of the many people listening at home who's thinking about building a software company like it's not gonna help the incumbents right having all this access to capital is not gonna do it you go out and talk to your users that's what's gonna make the difference in fact it'll hurt them right because they'll spend it on instead of spending it on you know rockets and stuff they'll spend it on too many employees and then yeah we'll see we all know what knows what happened then so maybe the last area is when you're building in a space you know really well you know hard you know parker um conrad well like you've

seen him build two companies in the same space what are your thoughts on this yeah parker's a great example right like you built zenifitz which was worth like four billion dollars at its peak and then like he started rippling which is now worth like over 10 billion dollars and i think if you if you sort of oh yeah if you ask him to explain that a little bit he'll say that the experience of working on zenefits gave him really deep domain expertise around how to build like high quality hr software and sell it and he used a lot of expertise to build something even bigger with rippling right he's clearly a world-class

um domain expert in how to build effective hr software and you know i've looked it up the workday vounder is very similar you know one of the workday founders was a ceo of peoplesoft and then he saw how the world was moving to the cloud and he decided to move along with it so there's definitely an advantage if you've got like intense deep knowledge about a space and by the way and you're not sick of that space and you want to go back to it for another couple decades but but michael that that raise that raises the

the other point i want to make about this which is that it's so common to talk to a second time founder and they just hate the market they were just working in and the oh like oh never do that's those one of those startups it's the worst what no whatever the market is if they did a startup in it it's terrible and yet we're highlighting that when they go back that's one of the times when it can be really good another really important point about that though brad is that it's why it's really important if you're a first-time

founder and you get feedback on your idea from a founder who had tried the idea before and failed is you have to be very careful because on the one hand there's probably interesting learning for you there but the other hand you have to remember that like sometimes when founders don't succeed in a market they end up hating that market and they kind of don't want anyone to succeed because otherwise it sort of like sort of hurts their own self-image right like and so this is something i notice i always i often tell i see founders to talk to other yc founders that have

worked on similar things before and maybe they've moved on but the trick is to listen to just the facts of what they did and what happened not what they think about it because we're all so deluded about why things happened or what they mean or the significance of them that it's just not useful signal to founders that are building a new business so if we're gonna wrap this up how for the person who is thinking about being a first-time founder but is worried that they don't have the

advantages what's the kind of party message we want to give them you're actually well situated to build a unique novel business that delivers um real value to your users and a lot of the um glamour that comes with being a repeat founder is a trap and they have their own problems that they're working through and it's not going to help them so don't be discouraged by that understand that you can you can and should take your swing yeah i'd say to first-time founders just

don't get sucked into grasses greener syndrome like don't think that just because you've got a competitor that's started by a founder who's on their second or third company that they're gonna crush you like we as we speak from our own personal perspectives here often those same second third time founders are wishing that they had the benefits and advantages of the first time founder and you know i think we would be remiss without adding that you know some of the biggest companies ever google facebook microsoft

first time founder so you're in good company as a first time founder always remember that you know your company is maybe the best founders who ever existed jeff bezos you know so with that good luck out there i'll see you guys later [Music]

you
