Interviewed and Rejected: How important is a shared background to an effective co-founder team?

[isurrendermylord]

TLDR: how important is it for a founding team to share a background in a particular field/industry? What do you recommend if the current co-founding team's internships/jobs have never overlapped?

My co-founders and I (3 of us) interviewed today and got rejected. They were nice and had good things to say, but I have a question about some of the feedback that i'd love the community's take on.

The feedback was:

1. they love how technically sound our team is

2. they love that we are clearly willing to change our idea and listen to customer demand but

3. they think we should come up with a different idea that "more directly ties into your jobs or research or internships and can take full advantage of what you bring to the table".

All 3 of our backgrounds are extremely different - between the three of us, we haven't worked in any of the same industries or problem spaces. Ultimately, that's why we ended up choosing an idea in the shopping/eCommerce assistance sector - it felt like something we all had personal experience and intuition around, even if just from the consumer side. Obviously, we now know that logic wasn't what it was going to take to get into the batch.

In your opinion, how important is it for a founding team to share a background in a particular field/industry? What do you recommend if the current team's internships/jobs have never overlapped? We could just pick one of our backgrounds to hone in on, but having 1 very knowledge co-founder and 2 green co-founders doesn't seem like a recipe for success.

 

[natanyah]

@isurrendermylord There is no recipe for success.

Vinod Khosla's advice to seeking investment: become too big to be ignored. You seem to be optimizing for YC process while you should be putting effort into creating something that makes their concerns irrelevant.

Once you build it, they wont question whether you can build it.

 

[skepticaldaniel]

@natanyah Great comment!!

 

[mae19681995]

@natanyah And at that point 7% for 500k sounds like a ridiculous proposition

 

[natanyah]

@mae19681995 It is actually worth it. Because that 7% loss will double your valuation but that's just half of the benefit.

Here is a question for you:

You are an investor. You see a company that you invested in becoming successful. What do you do with ~30% of unvested equity? Give it to the founder or take it yourself? Your duty is to maximize return for LPs. Any rational investor should get rid of the founder when the company is doing well. That happens very often.

The only thing you can do to protect your ass as a founder is to have the backing of an org like YC - they will shut down access to investment opportunities to any investor that does that. Otherwise, you can only hope that your investors are irrational.

This is really what you are buying for that 7%. More broadly, this might also be one reason why YC is seeing a higher success rate than traditional VC backed companies.

 

[mae19681995]

@natanyah Yes true, and it’s a good question. The premise was not for early stage to avoid investor risk rather give away 7% once a company is already established as a profitable/revenue generating enterprise

 

[natanyah]

@mae19681995 You go to YC with an intention to raise a substantial round in the future so it all still applies even when you are a cashflow positive business looking to grow rapidly.

I would still say YC is worth it when you are valued at $50M. You technically give up 3M worth of your company but both: valuation boost and protection is totally worth it.