market size

Dalton Caldwell is Managing Director and Group Partner at Y Combinator. Prior to YC, he was the co-founder and CEO of imeem (acquired by MySpace in 2009) and the co-founder and CEO of App.net. During his time at YC, he’s advised more than 35 YC unicorns, including DoorDash, Amplitude, Webflow, and Retool, and has worked across 21 different YC batches. He’s also racked up more than 6,500 office hours with founders. In our conversation, we discuss:

• Why founders need to adopt the mindset “Just don’t die”

• The most common reason startups fail

• When to pivot, and characteristics of a good pivot

• The concept of “tar pit ideas” and examples of bad startup ideas

• Why investors say no to startups

• The importance of market size in investment decisions

• The pitfalls of founders over-delegating

• Effective ways to talk to customers

• 20 ideas Dalton is looking to fund

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Find the transcript at: https://www.lennysnewsletter.com/p/lessons-from-1000-yc-startups

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Where to find Dalton Caldwell:

• X: https://twitter.com/daltonc

• LinkedIn: https://www.linkedin.com/in/daltoncaldwell/

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Dalton’s background

(04:41) The value of simple advice

(07:04) Dalton’s advice: “Just don’t die”

(08:39) Knowing when to stop

(11:45) Deciding to pivot

(14:26) Characteristics of a good pivot

(17:53) Knowing when to pivot

(19:03) Zip’s journey and finding a market

(21:22) Why Dalton says to “Move towards the mountains and the desert”

(23:45) Tar pit ideas

(26:49) Understanding why investors say no

(29:14) The importance of market size

(32:16) Avoiding over-delegation and hiring senior people too early

(36:43) Why startups fail

(40:30) Effectively talking to customers

(45:17) Examples of startups hustling to talk to customers

(48:01) Patterns of successful startups

(52:05) YC’s Request for Startups

(55:37) Early days of Silicon Valley

(01:05:33) Contrarian corner: growth hacking for early startups

(01:09:28) Failure corner

(01:11:15) Closing thoughts

(01:12:22) Lightning round

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Referenced:

• Y Combinator: https://www.ycombinator.com/

• Tiger Woods’s website: https://tigerwoods.com/

• Co-Founder Mistakes That Kill Companies & How to Avoid Them: https://www.youtube.com/watch?v=dlfjs_eEEzs

• Daniel Alberson’s LinkedIn post about Y Combinator: https://www.linkedin.com/posts/alberson_i-left-my-dream-job-as-a-product-manager-activity-7089677882431533056-jJ9H

• Companies in Y Combinator W17 Batch: https://www.ycdb.co/batch/w17

• Brex: https://www.brex.com/

• Retool: https://retool.com/

• Segment: https://segment.com/

• Mixpanel: https://mixpanel.com/

• Whatnot: https://www.whatnot.com/

• Andreessen Horowitz: https://a16z.com/

• Airbnb’s CEO says a $40 cereal box changed the course of the multibillion-dollar company: https://fortune.com/2023/04/19/airbnb-ceo-cereal-box-investors-changed-everything-billion-dollar-company/

• Rujul Zaparde on LinkedIn: https://www.linkedin.com/in/rujulz/

• Zip: https://ziphq.com/

• Lu Cheng on LinkedIn: https://www.linkedin.com/in/lu-cheng-973b7830/

• Avoid these tempting startup tar pit ideas: https://www.ycombinator.com/library/Ij-avoid-these-tempting-startup-tarpit-ideas

• Airbnb acquires Localmind to create crowdsourced advice about neighborhoods: https://skift.com/2012/12/13/airbnb-acquires-localmind-to-create-crowdsourced-advice-about-neighborhoods/

• Foursquare: https://foursquare.com/

• Razorpay: https://razorpay.com/

• Total Addressable Market: https://www.productplan.com/glossary/total-addressable-market/

• Lenny Bogdonoff on LinkedIn: https://www.linkedin.com/in/rememberlenny/

• Milk Video: https://milkvideo.com/

• Lessons from working with 600+ YC startups | Gustaf Alströmer (Y Combinator, Airbnb): https://www.lennyspodcast.com/lessons-from-working-with-600-yc-startups-gustaf-alstromer-y-combinator-airbnb/

• How the most successful B2B startups came up with their original idea: https://www.lennysnewsletter.com/p/how-the-most-successful-b2b-startups

• Collison installation: https://news.ycombinator.com/item?id=18400504

• Stripe: https://stripe.com/

• Patrick Collison on LinkedIn: https://www.linkedin.com/in/patrickcollison/

• John Collison on LinkedIn: https://www.linkedin.com/in/johnbcollison/

• Tony Xu on LinkedIn: https://www.linkedin.com/in/xutony/

• Grant LaFontaine on LinkedIn: https://www.linkedin.com/in/grantlafontaine/

• Ryan Petersen on LinkedIn: https://www.linkedin.com/in/rpetersen/

• Lessons on building product sense, navigating AI, optimizing the first mile, and making it through the messy middle | Scott Belsky (Adobe, Behance): https://www.lennyspodcast.com/lessons-on-building-product-sense-navigating-ai-optimizing-the-first-mile-and-making-it-through-t/

• YC’s latest Request for Startups: https://www.ycombinator.com/blog/ycs-latest-request-for-startups

• ERPs: https://www.ycombinator.com/rfs#new-enterprise-resource-planning-software

• Commercial open source companies: https://www.ycombinator.com/rfs#commercial-open-source-companies

• New space companies: https://www.ycombinator.com/rfs#new-space-companies

• A way to end cancer: https://www.ycombinator.com/rfs#a-way-to-end-cancer

• Spatial computing: https://www.ycombinator.com/rfs#spatial-computing

• New defense technology: https://www.ycombinator.com/rfs#new-defense-technology

• Bringing manufacturing back to America: https://www.ycombinator.com/rfs#bring-manufacturing-back-to-america

• Better enterprise glue: https://www.ycombinator.com/rfs#better-enterprise-glue

• Small fine-tuned models, as an alternative to giant generic ones: https://www.ycombinator.com/rfs#small-finetuned-models-as-an-alternative-to-giant-generic-ones

• Reid Hoffman on LinkedIn: https://www.linkedin.com/in/reidhoffman/

• Sam Altman on X: https://twitter.com/sama

• Sean Parker on LinkedIn: https://www.linkedin.com/in/parkersean/

• Owen Van Natta on LinkedIn: https://www.linkedin.com/in/owen-van-natta-444a7/

• Marc Andreessen on X: https://twitter.com/pmarca

• Picplz 1, Instagram 0 as VC firm Andreessen Horowitz chooses photo app rival: https://www.reuters.com/article/idUS2587232395/

• Gustaf Alstromer—How to Get Users and Grow: https://www.youtube.com/watch?v=T9ikpoF2GH0

• Getting to Yes: Negotiating Agreement Without Giving In: https://www.amazon.com/Getting-Yes-Negotiating-Agreement-Without/dp/0143118757

• Founding Sales: The Early Stage Go-to-Market Handbook: https://www.amazon.com/Founding-Sales-Go-Market-Handbook-ebook/dp/B08PMK17Z1

• Founder-led sales | Pete Kazanjy (Founding Sales, Atrium): https://www.lennyspodcast.com/founder-led-sales-pete-kazanjy-founding-sales-atrium/

• The Sopranos on HBO: https://www.hbo.com/the-sopranos

• The Wire on HBO: https://www.hbo.com/the-wire

• Columbo on Prime Video: https://www.amazon.com/Columbo-Season-1/dp/B008SA89HA

• Oura ring: https://ouraring.com/

• Apple watch: https://www.apple.com/watch/

• SiPhox: https://siphoxhealth.com/

• Dalton & Michael on YouTube: https://www.youtube.com/playlist?list=PLQ-uHSnFig5Nd98Sc9I-kkc0ZWe8peRMC

• How Future Billionaires Get Sh*t Done: https://www.youtube.com/watch?v=ephzgxgOjR0

• The Student’s Guide to Becoming a Successful Startup Founder: https://www.youtube.com/watch?v=O5KCB2p6SB8

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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

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Lenny may be an investor in the companies discussed.

Step inside the Group Partner Lounge to hear Y Combinator Group Partners Harj Taggar, Michael Seibel and Brad Flora discuss how you should handle rejection from investors and why you should "believe the no, not the why."  

Apply to Y Combinator: https://www.ycombinator.com/apply/

J+M kick off the show discussing TAM, SAM, and SOM on this week’s edition of VCSS. (2:40) Then, HubSpot Co-Founder and Partner at Propeller Brian Halligan joins Molly to discuss his $100M venture fund to invest in protecting the world’s oceans. (26:00)

(0:00) J+M tee up today's segments!

(2:40) Exceeding your TAM + overestimating your TAM

(7:39) House of Macadamias - Get 20% off at https://houseofmacadamias.com/twist by using code TWIST20

(9:07) Inducing a market and Bottom-up TAM

(21:15) AgeTech Collaborative - Find out more and apply at https://agetechcollaborative.org/twist

(22:49) Molly introduces Brian Halligan

(26:00) Why the ocean + from founder to investor

(38:00) AgeTech Collaborative - Find out more and apply at https://agetechcollaborative.org/twist

(39:39) Propeller’s investments, their EIR program & thesis

FOLLOW Brian: https://twitter.com/bhalligan

FOLLOW Jason: https://linktr.ee/calacanis

FOLLOW Molly: https://twitter.com/mollywood

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They made a list, and they’re checking it THRICE! Today, Alex (@AlexHormozi) shares the 3 criteria he and his wife Leila use when they are looking into investing in companies, how these indicators greatly help their screening processes, and "what is the value of the company based on the potential opportunities?"

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.

Timestamps:

(2:29) - 1st criteria: potential units sold, 2nd: potential profit

(4:56) - 3rd criterion: supply-demand or competitive dynamics

(7:20) - Alex's rule: 80%+ gross margin for service-based business

(9:59) - TAM not a good indicator for company size

Follow Alex Hormozi’s Socials:

LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Just remember that basically. No one knows you. Even when you think everyone does, no one does. Today, Alex (@AlexHormozi) talks about one of the earlier mistakes he’s made in his career which is not understanding how big the marketplace is and the players in the industry. He also talks about how you can avoid thinking that all eyes are on your business and unnecessary “peer” pressure.

Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.

Timestamps:

(1:48) - Pie size realization: avoid fixation on one competitor.

(3:04) - Focus on few competitors leads to confusion; be proactive.

(5:02) - Open-mindedness: many businesses, different platforms.

(7:10) - Remember, you're not as well-known as you think.

Follow Alex Hormozi’s Socials:

LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition