AARON HARRIS: My name's Aaron Harris.
I'm a partner at Y Combinator.
And I'm going to tell you a little bit about my experience
at YC and how crashing the company that I started at YC
has actually made me better at being a partner,
giving advice, and helping people
avoid the same fate that we endured.
So that's a reasonably decent picture of me.
Ignore the watermark behind it.
And that's how you can find me on Twitter.
If anyone wants to get in touch, that's
probably the best way to do it.
So what is Y Combinator?
I know a lot of people know.
But the truth is a lot of people are kind of confused
about what we do.
It's actually pretty simple.
YC is actually just a big orange room
where once a week we have really interesting speakers--
this is Mitch Kapor-- come and talk to our founders
and tell them, here's what happened
to me when I started my start-up.
Here are the things that I learned.
Here are the things that I screwed up,
did well, funny stories, war stories,
all these kinds of things.
And it's pretty great, because sitting out there,
especially as someone who is a first-time founder,
you have no idea what's going on.
And at YC, our goal is to take really, really
amazing founders, whether first time or repeat founders,
and try to make them better, try to give them
advice, along with some money, and improve
their chances of success.
So actually, this was my YC batch.
And that's me right over there.
I'm lucky I made it into the frame of this shot,
because I almost got bumped off, and then I
wouldn't have a good visual.
But this was me in winter of 2011.
So about four years ago I went through YC Combinator
with my company, Tutorspree.
Now, when we first came up with the idea for Tuturspree,
we had really, really bad design skills.
And this is basically what we put up.
And we said, we're going to make an online system for connecting
parents and tutors for one-on-one learning.
We're like, this is going to be amazing.
No one's ever tried anything like this before.
It's revolutionary.
It's amazing.
What's the first step?
Well, we're going to send out a lot of emails to people
and just try to sign up a bunch of tutors.
And in order to do that, we needed a sign-up form.
And so we put this up.
Now, I wouldn't call this a launch
of any kind, because maybe 30 people saw it.
But we sent it out to a couple people,
and we didn't make a big deal.
We didn't want to send it out to everyone we ever knew,
because we thought, meh, not really ready to be a company,
not ready for launch.
We couldn't set up any lessons.
We couldn't take payment.
We didn't have profiles.
We didn't really have anything.
It was really just a landing page.
And so we went back to the drawing board.
We're like, OK, we've got to make this a little better.
It's got to be prettier.
Let's show everyone all the tutors that we have.
And maybe now we're ready to be a real company.
Now we're ready to go raise money and do this thing
and do that thing and run people through it.
But actually, this was still just a landing page.
And while it had a little bit more,
honestly, still not ready.
But it was at this point that we said, OK, we
want to build this.
We're committing to this full time.
Let's see what we can do.
And so we went and applied to Y Combinator.
And we applied with just the shell of the website.
This is actually roughly what we applied to YC with.
Still not that great looking and really,
really basic functionality.
Basically, if you filled that little form out,
if you entered an address, it would
show you a list of local tutors.
And we could kind of match you up with them,
but we couldn't take any payment from you.
We had maybe 20 profiles on the site.
Really not much there.
But we got into YC anyway, because apparently we
fooled them into thinking that we were actually
fairly credible and fairly good and had
some idea of what we were doing.
And as soon as we got there, PG said, OK, launch.
No, no, no, we're not ready to launch.
Launch site, it's unpolished.
It doesn't do the thing.
We don't have full coverage in all of our cities.
They said, no, no, no, launch.
Nah, we've got to build all these new features.
We know that people are going to want fancy scheduling,
launch this, launch that.
And he kept hammering away at us,
and we said, ah, what the hell.
Let's just launch the damn site and see what happened.
And that was terrifying.
That was kind of a weird moment, because we didn't have any idea
whether or not anyone would actually react to this thing.
Would anyone actually use it beyond the friends
that we had forced to create profiles?
And on the day of our launch, we got this really nice headline
off TechCrunch that Tuturspree was the Airbnb for tutoring,
which was exactly our message.
That was our pitch.
Airbnb for tutoring, that's so cool.
Airbnb was YC, we're YC.
They help people make money off things that they have.
We're going to-- it's going to be great.
Our basic logic boiled down to this.
Airbnb is successful.
We're kind of like Airbnb, therefore we'll be successful.
It was simple.
It was honestly-- it was a full-proof plan.
It couldn't fail.
And we even worked out a really nice flow
for how our customers would interact with us.
Parents or students would get to the site.
They'd search for a tutor.
They'd find the tutor.
They'd send that tutor a message,
and we would make money.
The problem was it didn't work.
There was this thing that we saw that started
to happen where we definitely had people starting
to come to the site and looking for tutors.
We got that because we had had some nice press.
And they were actually sort of finding tutors,
because we were localized to the Bay Area and to New York.
And we said, if you're here, enter
your information and a tutor's going to pop up.
We were pushing through as many tutors as we possibly could.
And then we're like, OK, now the Airbnb thing happens, right?
We grow, we get really rich, everyone's happy.
Amazing.
But there was something funny happening
between the finding the tutor and the booking the lesson.
We weren't sure what it was, but we
started taking a look at our messaging layer
and actually watching the message
traffic go back and forth between parents
and tutors or students and tutors
and watch what was coming back.
And this really weird thing started
happening that was completely counter to what we believed
before we had launched Tutorspree.
We had this perfect platonic ideal
of what our company would be, of how the users would actually
use it.
And the real world brutally reminded us that we were wrong.
So here's the things that we learned.
First of all, our customers weren't
students, as we initially believed.
We thought, well, if the student was matching up with the tutor,
then that student was the customer.
But in reality, the parents were the ones paying for things,
and they where the customer, which is a completely different
set of user behaviors and user models
around what actually people want and how
they're going to interact.
And so the thing that we were missing
in this wide open marketplace model where people were
basically bidding on tutors and tutors
had all these crazy prices and no one
knew what to do with anything was that we were lacking trust.
And what we really needed was the trust
of not just the students, not just the tutors,
but of the parents.
And we didn't know how to get that.
We didn't know why they weren't using it.
We could kind of see in the messaging
that people were not responding at quite the level
that we needed them to, but we had no idea why.
And so the thing we needed to do was we needed to talk to them.
And we needed to talk to them a lot.
This is one of these really unsexy things.
It's the thing that you don't want
to think about as a founder.
You want to think that, OK, I built this brilliant product.
I'm perfect, it's perfect, so therefore it's
going to do great.
The users will do what I tell them to do.
There's actually a core message that we
tell our startups at YC.
And this is-- this was like me learning a lesson really
well by running face first into a brick wall, Which is probably
the best way to learn things, because otherwise you
don't really remember it.
And the truth is what you have to do
is you have to get the product out there,
and then you have to talk to the users
who you think are going to use it, who you want to use it.
But more important than the ones that you
think are going to use it, you have
to talk to the people who are actually using your product.
Because if you haven't talked to the people who are actually
using it, you won't understand the behaviors
that they're going through while using it
or their rationale for wanting to use it.
And so we started doing this thing where
we're talking to them, talking to them, talking to them.
And it actually led us to completely change
the core model of Tutorspree.
We realized that we weren't this wide-open marketplace.
We were not this ideal of a place where people magically
find each other and agree to pay one another for lessons.
We were a system where we actually had to hold hands.
We had to work with each parent and make sure
that they were happy until we really figured out
how things were going.
So we did that.
And it worked really, really well.
In fact, in the six months between when
we started doing that-- well, within six months,
we'd increased our revenue dramatically.
We had increased our profit even more dramatically.
And the thing that was actually most important to us
was we increased the engagement of our customers
by three times.
That meant they were doing three times more lessons.
They were also getting to the point of booking lessons
much more quickly.
They were much more satisfied.
They sent us love notes instead of hate mail, which was better.
We were on the phones with them, so they knew us.
They saw us as a partner and not just a random utility
that they could run back and forth, in from and away from.
And we never would have known that had we
sat inside of our office, which was just the living
room of our apartment, not putting a product out
and had we not been talking to the customers.
And that's the core of Y Combinator.
We actually tell our companies that there's
really only two things to do during YC.
You write code and you talk to your users.
And by doing those two things, you
end up making something people want.
And at the end of the day, a startup
is about making something people want.
A company is about making something people want.
Now, there are variations of this.
You could say you make something people need.
But the truth is, if you make something people need and they
don't want it, they're probably not going to use it that much .
And certainly, they're not going to tell their friends about it.
There aren't a lot of school kids-- well,
let's say a lot of kindergartners
who are really excited about broccoli.
But they probably need to eat broccoli.
They don't want to, but they need to.
And so if you can get to want, if you
can be the thing that people really want,
that's when you start winning.
And as we started building this product that
was working, as people were starting to interact
with it more, we noticed that more people
were showing up at the site.
We hadn't really thought enough about why that was happening.
And what we discovered was there was a very good reason
why it was happening.
There were some very intelligent people
sitting in some buildings in this campus,
creating algorithms that were sending people to our site.
Google was where we got our customers.
And we were getting our customers,
because at that point we had created something
that customers actually wanted, which Google saw and measured.
Google saw people hitting our site,
sticking around, transacting, and it worked out really,
really well for us.
And so let's put that aside for a second.
We said, OK, well, SEO is working really, really
well for us-- just brilliantly good traffic.
It's basically free for us, converts really well, amazing.
What else should we be thinking about?
Well, we had ideas around other things, right?
There are other ways to acquire customers.
You've got display advertising, Facebook, SEM.
We started to do partnerships.
We talked to-- about doing Rev shares.
We talked about doing affiliate marketing, giveaways,
flyering communities.
We talked to administrators of schools, PTAs, colleges.
We tried to get guest blogs.
And everything we did paled in comparison to the channel
that we had.
But that led us to do something a little strange.
Because as we were focused on SEO,
we actually started forgetting about our customers.
We started forgetting about what it was they wanted
and started thinking only of what
was going to drive more traffic to the site.
So we basically tried to play games with SEO.
We didn't do anything particularly shady.
But what we did start doing was things
that were probably not what customers actually wanted.
And Google picked up on that, because the algorithms
are designed to send people to the things that they want.
And so on March 16th of 2013, our traffic fell by 80%
overnight.
It was a really crappy morning.
Along with our traffic dropping, our revenue fell off a cliff.
Our customers couldn't find us, new customers couldn't find us.
And everything basically went to hell.
And we sat around, and we kind of were tearing our hair
and trying to figure out, well, what
was it that caused this to happen?
Hadn't we done the right things?
We had some customers that liked us.
They found us.
They were using us, so what was going on?
So we started trying to figure out
why it was that Google had decided that we were
no longer making a thing as good as our customers wanted,
because they were starting to bounce more.
They were getting more confused.
That's when we started learning about the algorithm updates.
Now, we had known how the algorithm worked
when we started Tutorspree.
We had paid a lot of attention to it,
and it dovetailed perfectly with our strategy
for making something that our customers actually wanted.
But the new algorithm saw that we
were doing things that weren't great.
We had duplicate content within our site,
because we had tried to create a lot of pages representing
different categories.
We hadn't done it in the best way.
We had thin content on pages.
So for instance, we had a single math tutor in, let's say,
Wichita, Kansas.
And for that one math tutor, we had a page
for math tutors, algebra tutors, calculus tutors, calculus II
tutors, and trigonometry tutors.
That one tutor was showing up on seven or eight pages
and is the only content on that page.
That was bad.
If a customer had hit that page and then said, oh, well, let
me see what else you have, they were
going to see the same thing again and again,
get frustrated, decide we were full of crap, and leave.
And that's what we were learning.
Wrapped up in that was the fact that our navigation
wasn't good enough.
People couldn't find their way around the site.
Yeah, they could get from the home page to one other page.
But we discovered they were actually
landing on deeper pages first and then not understanding
what they were going to have to do to get to where they needed.
And finally, the freshness of our pages,
the speed with which we updated the pages
and actually made things look like somebody was home,
fell off.
And so looking at all that, what we realized was we
had gotten lazy.
We had had a model originally, in the first days
of Tutorspree, of how Tutorspree worked.
And we brought that out to market
and discovered it was wrong.
And that led to all this great iteration
and all this great building of what people wanted us to do,
which is like the core message of YC.
But then we were out of YC, and we stopped paying attention
to some of these signals.
And as a result, we started optimizing,
not towards what our customers wanted
but what we've perceived certain channels wanted
us to do in order to bring customers to us.
So we took a step back, and we redesigned everything
about the site.
We actually built the site to be what our customers wanted,
to model on their behaviors of how they worked
through the flow of our site, how we held their hands, how we
matched them up with tutors, how we resolved conflicts
with tutors or made them happy when things went wrong.
And in doing so, we completely changed
the architecture of the site and what we had.
We cut over a million pages from the site.
We made sure that every single important page
had fresh, good, useful content that
explained to our users exactly what was on that page, what
kind of value they'd get from it, what they could expect
to pay for tutors-- all kinds of good information
that they actually found useful.
At the same time, we eliminated duplicate geographies.
If someone was looking for 90023,
they should see the same thing as 90024, or that location
if they entered in words.
In New York, say, 1023 and 1024, both the Upper West
Side of Manhattan.
It should show the same page.
And as we started doing this, we started seeing improvements.
Our rankings on Google improved.
Our better UX and better UI led to our customers being happier.
And overall, our site was faster.
It was friendlier.
And quite frankly, it was just straight
up betterer, which is not a word, for all of our customers.
And it was great.
It was starting to work really well.
But at the end of the day, it didn't help enough.
When you try to get to Tutorspree now,
you just get a 404.
The reason was we had fallen too far behind in that process.
Startups basically are constantly
fighting, in my mind, against two things.
They're fighting against apathy, because no one
knows who you are.
No one cares who you are.
And they're fighting against time.
You only have a certain amount of time to do things.
And that's whether you run out of money or the people who
work for you get bored or the customers who
thought you had decide you're not doing the things
that they want.
Any of those things can kill you.
And for us, what it came down to was
we realized that we just could not
put enough people onto the site in the way
that we thought was best to keep it
as a rapidly scaling business.
It was pretty tough to understand,
because we had gotten lazy.
We have forgotten the right things to do.
And by doing that, we had doomed our own startup.
And that's kind of a tough thing to say
when you spend two or three years
of your life on something.
But what it does is it makes it so that when
I talk to our new companies, to new companies in the batch,
I can tell them how important it is
to just get their product out there
and to iterate-- and not only that, never stop iterating.
Launching doesn't just mean getting your site up
on the internet for the first time
or getting your first press hit.
It means constantly launching things for your users
that they want to use, that they love, that make them happy.
Because if you do that, you actually
make something that they want.
At the end of the day, that's the only thing that counts.
So if you ever find yourself drifting away
from what people want-- and you can
track that in a million ways.
You can use Google Analytics to see
how people are interacting with your site.
You can watch your revenue, you can watch your user growth,
engagement, all these things.
If you find that you're moving away
from what they want, and you're honest about that,
then you just repeat the first step.
You figure out what they want, you talk to them,
and you launch new things.
And that's kind of the message that I
try to give to every single one of our founders.
And hopefully it'll sink in better for them
than it did for me.
That's it.
Thank you.
[APPLAUSE]
AARON HARRIS: What?
Oh, thanks.
I think I have about 10 minutes left.
If anyone has any questions, I'd be happy to answer them.
I also have two of my partners.
Kevin Hale is back there and [INAUDIBLE] is over there,
so they can also-- I'm volunteering
them to answer questions as well.
If anyone has specific questions about YC afterwards,
we'll be hanging around.
So any questions?
Yeah.
AUDIENCE: [INAUDIBLE].
AARON HARRIS: Yeah.
AUDIENCE: [INAUDIBLE].
AARON HARRIS: Yeah, so the question
was, when our traffic dropped off, why did it do that?
Didn't people still need tutors?
And so the reason that we-- our core hypothesis on this
is that it's an incredibly fragmented market.
Actually, most of the tutoring goes
to these little mom and pop shops that are local.
And that's what we were fighting with.
So we had to create a better experience
than local recommendation from one person to another.
That's really, really hard.
And so as soon as we started falling below that,
we lost a lot of our customer base.
And once your reputation starts getting tarnished,
it's really, really hard to win it back.
Parents don't give you a second chance.
Anyone else?
Yeah.
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: Yeah, so the question was,
was there a specific set of metrics
or were there specific metrics that convinced us
that it was-- we were done?
It wasn't any one metric.
It was sort of a cumulative view of everything
that was going on, looking at what our user acquisition
cost was doing relative to our value of a customer,
comparing that with where we needed
it to be to rapidly scale through multiple channels.
And we realized that those things just
were no longer going to work out the way that we
thought they would.
We couldn't figure out how to really make them work.
So it's kind of just-- at some point
you hit this confidence interval that-- alright, it's better
if we try to do something else.
Yep.
AUDIENCE: So the mentality of walk
before you're ready and [INAUDIBLE] can sometimes
lead to quality loss, so how do you balance
reaching more users versus [INAUDIBLE]?
AARON HARRIS: Yeah, so the question was,
launching before you're ready and iterating
can lead to quality loss, so how do you
balance getting new customers by launching
new features versus pissing off your existing customers
because you break something?
It can be a tricky balance.
But part of it is in defining what your problem space is,
right?
And so defining the things that you're going to launch
and iterate on.
And your customers, if you're good to them, and your users,
if you're good to them and you've
done good things for them, they'll
deal with a little breakage, as long
as you don't break the core of what they want.
If you ever break something that's really, really important
to them, you've got to be apologetic,
and you've got to do good customer service
and explain to them what happened.
Google goes down-- Gmail goes down every once in awhile.
And it's crazy, but you expect that it's normally up
and you know they're trying to do good things for you.
Same thing happens with Facebook,
although you could argue their users aren't-- their users are
locked in in a different way.
But it's really always a balance in trying to figure out.
In the scope-- in the decision of launch,
don't launch, it's basically like
if it's going to get out there and not--
and it's slightly imperfect, do it, experiment with it,
and be able to roll it back.
And roll it back as soon as you realize
it's hurting your customers and hurting people who love you.
And then do it again and again.
Yeah.
AUDIENCE: [INAUDIBLE] customers, how did you
know what to focus on? [INAUDIBLE] 10 customers,
you've got 20 different opinions.
AARON HARRIS: Yeah.
So when we first started and started talking to customers,
how did we know what to focus on.
So this is kind of where-- one of the things
we tell founders is to work on problems that you have
and things that you know.
So I had been a tutor.
I had had tutors.
So I knew the initial set of criteria we had to work with
and so spared the first iteration cycle.
But then you've got to keep talking
and you've got to form consensus to some extent.
You don't want to just go with exactly what users tell you,
because sometimes they'll tell different things.
It's a judgment question.
There's no there's scientific method to say, do this thing.
When Steve Jobs launched the iPhone, it wasn't
like they had a whole bunch of user groups who told them, hey,
we want a computer in this form factor that makes calls
or whatever.
He kind of understood what people would want eventually.
For us, it was constantly talking to the users,
figuring out whether or not what they wanted matched up
with how we thought the product should grow
and ultimately making product decisions
based on our own expertise on how to fit that advice in.
AUDIENCE: Did you by talking to them
or by measuring the way they acted?
AARON HARRIS: Both.
Did we measure by talking to them
or by quantitative methods?
Both.
You have to combine both.
There's pretty much never an excuse
not to talk to your customers in person.
Even when you get to scale of hundreds
of thousands or millions of users,
you can still talk to pieces of them.
This is why community-- the community sites or community
forums work really well as you scale,
because you start seeing the best-- the most active users
start rising to the top, and you engage with them,
because they are your biggest fans and your best customers.
And if you make them happy, they'll
spread the love of how happy they are with you.
So you've got to do both.
Yeah.
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: So how did we find our users to do user testing?
So initially, the people that we targeted,
it was friends and friends of friends.
But then it was our actual users.
We had people paying us money to use our service,
so we would call them on the phone-- email them,
call them on the phone, badger them, go meet them for coffee,
just get-- find any way we could to go talk to them.
We never used a user testing service
to find us probable people.
We actually focused on the people that we had.
Because we had them, so it made sense to use them.
Yeah.
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: Yeah, so I mentioned
that we cut a million pages-- or the million pages we had ended
up being one of the things that Google penalized.
So we made that optimizat-- and whether or not
that was actually bad for users, that
was an optimization we did-- what?
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: So you're saying that's not product,
but I disagree.
Part of our product was the search interface,
the browse interface of how people actually located
a tutor.
And so the tutors were distributed
across this large corpus of pages.
And how they interacted with each individual page
was the start of their experience with our product.
AUDIENCE: [INAUDIBLE].
AARON HARRIS: So where they unqualified users because
of [INAUDIBLE]?
Even if they were qualified users,
they weren't having the best possible experience
on those pages.
Yeah.
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: So how many people were working and our revenue
numbers-- so I'll tell you how many people were working
for us, but-- at our peak, we had,
I think, 10 full-time, 5 part-time, and then
a whole group of distributed people doing
even more part-time work-- so 15 to 20 people.
AUDIENCE: [INAUDIBLE]?
AARON HARRIS: I'm taking it to the grave with me.
No, we were generating good revenue.
We were profitable.
We were edging on profitability, growing quickly.
It was going well for a while.
What?
How much money did we raise?
We raised one-- just shy of $2 million-- just shy
of $2 million.
Anyone else?
Last question.
AUDIENCE: Going back to the [INAUDIBLE] position,
did you have a really weird niche that you were going after
and it might not be your [INAUDIBLE]?
AARON HARRIS: So how do you do user acquisition when
your users are not your circle of friends?
It's like a weird niche?
I would go and talk to them.
I don't know.
Every niche of users is going to have
slightly different behaviors.
Go find them and talk to them.
Find out where they hang out, what they do, what they read.
And you can start building off of that.
So, yeah there's no science to user--
there's some science to user acquisition,
but the science is in-- there's no-- the science is constantly
iterating on and trying different things
and then measuring and then trying it again and altering
it.
All right, thank you very much.