Founders at Work.pdf

448 Founders at Work
were going to invest small amounts of money in startups and help them get set
up legally, just like Viaweb had been helped out by Paul’s friend Julian. Get
them set up, work closely with them on their products, and then introduce
them to investors to hopefully get more funding.
I remember when we first got started, we thought, “How do we even tell
people about this?” So Paul built a website—I think he stayed up all night
building it. We had a couple pages online that loosely described what we were
planning to do—we didn’t really fully know what we were planning to do—and
we had an application, with about 20 questions on it, and then Paul launched it
on paulgraham.com, which had a lot of traffic because of his essays. We started
getting some applications in. I was still working at the time, and I remember
Paul saying, “We have some good applications, you better quit your job.”
What was the point when you quit?
Livingston: If I remember correctly, it was the Monday after we conducted the
interviews. We got a lot of applications, more than we thought we would. And
then we chose about 20 groups to come to Cambridge to interview—over a
Saturday and Sunday, all day long. On Sunday night we called everyone.
We chose eight that we had wanted to fund, and all of them but one said
yes. I give the founders a lot of credit, because this was a brand new concept
and Y Combinator had no track record. The deal was: move to Cambridge for
the summer and get $12,000 or $18,000, depending on whether you were two
or three founders. We based the amount of money on the MIT graduate
student stipend, which was a couple grand a month. We said, “Come to
Cambridge and we’ll work with you, and we’ll get together for dinner and hear
from guest speakers every week.” (Unfortunately for Paul, we hijacked his personal
office to use for Y Combinator.) So seven of them said yes, and I went into
work on Monday thinking “Y Combinator is real now”—even though we didn’t
even have Y Combinator legally set up at this point. I gave my notice that day,
I think.
But that day something else very memorable happened. There had been
one group, two guys from UVA, who were still seniors and were graduating that
spring—Alexis Ohanian and Steve Huffman. They came to us with an idea that
we just thought was wrong for two young guys with no connections in the fast
food industry. Their idea was ordering fast food through your cell phone. And
we didn’t fund them. We told them, “Sorry, we really liked you guys, but we just
think your idea would be a bit too challenging.” But that morning when I was at
work, Paul called them and said, “We like you guys. Would you be willing to
work on another idea?” They were on an Amtrak train heading back to Virginia.
I remember Paul emailed me and the subject line was “muffins saved.” I had
nicknamed them “the muffins,” because I just loved them. It was just sort of an
affectionate name.
I remember thinking, “This is so exciting.” They had gotten off the train in
Hartford or something and headed back to Boston to go meet with Paul to
brainstorm new ideas. I thought, “These are the kind of people I want to
fund—people who would get off the train and go back and make it happen.” So
we wound up funding eight companies that summer.