Biggest Founder Regrets

Dalton Caldwell 0:00 It's a hypothesis. Your startup is a hypothesis, right? And for any good scientist, how often is their hypothesis correct? It's like not that often.

Michael Seibel 0:07 Correct.

Dalton Caldwell 0:08 And so you're running this test, and it's okay if things don't work out the way you expected. [upbeat music]

Michael Seibel 0:18 This is Dalton + Michael. Today, we're gonna talk about the biggest regrets founders have when they're shutting down their companies. I think that, um, one of the interesting jobs and maybe important jobs of a YC partner is to, to be there kind of at the beginning, but also to be there at the end.

Dalton Caldwell 0:37 Yep.

Michael Seibel 0:38 And so often we have to do the postmortem... Not have to, actually. Like, we want to-

Dalton Caldwell 0:44 Yeah

Michael Seibel 0:44 ... do the postmortem.

Dalton Caldwell 0:45 It's part of the job.

Michael Seibel 0:45 It's part of the job, right?

Dalton Caldwell 0:47 If we, if we're signing up to fund someone-

Michael Seibel 0:48 Yeah

Dalton Caldwell 0:48 ... we're signing up to work with them-

Michael Seibel 0:50 The whole way

Dalton Caldwell 0:51 ... to the bitter end, all the way.

Michael Seibel 0:51 The whole way.

Dalton Caldwell 0:52 [laughs]

Michael Seibel 0:52 And there isn't like some associate that takes over when, like [laughs]

Dalton Caldwell 0:56 No.

Michael Seibel 0:56 It's like for the good times and for the bad times. And so of course, because of the power law, that means that we've done a lot of postmortems. So let's talk about some of the regrets. Let's talk about some of the, the, the general themes of those conversations.

Dalton Caldwell 1:13 Yeah. I think to, to start this one off, um, you all have probably seen blog posts or viral tweets or what have you about regrets that people have on their deathbed, where there are some folks whose job it is, if you work in hospice, you spend a lot of time with folks on their deathbed.

Michael Seibel 1:27 Yeah.

Dalton Caldwell 1:28 And if you do that for a long time, uh, themes emerge.

Michael Seibel 1:31 Yes.

Dalton Caldwell 1:31 Right? You start to hear similar stuff that people say at the end of their lives.

Michael Seibel 1:35 So let's be clear. Your startup dying is nowhere close to-

Dalton Caldwell 1:38 Exactly

Michael Seibel 1:38 ... [laughs]

Dalton Caldwell 1:39 So what, again, where I'm going with this, though, is that there are themes. Like we've done-

Michael Seibel 1:42 There are themes. There are themes

Dalton Caldwell 1:42 ... I've probably met with definitely hundreds, probably not thousands, but-

Michael Seibel 1:46 Hundreds

Dalton Caldwell 1:46 ... hundreds of people.

Michael Seibel 1:47 Yes.

Dalton Caldwell 1:47 Including, like, I got a text message from someone I talked to two days ago being like-

Michael Seibel 1:51 Yeah

Dalton Caldwell 1:51 ... they're shutting their company down.

Michael Seibel 1:52 Yeah.

Dalton Caldwell 1:52 So, like, it's still-

Michael Seibel 1:53 Still happens

Dalton Caldwell 1:53 ... still, still part of the job.

Michael Seibel 1:55 Yeah. Yes.

Dalton Caldwell 1:55 And so what we're gonna share with you is what do actually, what does that actually look like? Like, what do people talk about doing their final office hours as they're shutting down?

Michael Seibel 2:03 So I would say the first thing that comes up over and over and over again is, "I wish I could go back to a year ago," and, like, there's a set of decisions, there's a set of hard truths that maybe I embraced in the last three months, but that I had strong hints of a year ago. And had I... I would have given my startup a better chance had I been willing to face those hard truths with a year of money in the bank versus three months of money.

Dalton Caldwell 2:36 I call that sunk cost fallacy.

Michael Seibel 2:38 Yeah.

Dalton Caldwell 2:38 And it's some version of, "I know I should have done X, but I did Y-

Michael Seibel 2:43 Yeah

Dalton Caldwell 2:43 ... because of reasons." [laughs]

Michael Seibel 2:46 Well, and it's tricky because, like, in this weird world where you're a startup founder, you're actually not that constrained.

Dalton Caldwell 2:55 You can do anything.

Michael Seibel 2:55 Yeah. Like, the expected outcome is death, and so it's not like the people around you are unaware of the fact this is a high risk [laughs] venture.

Dalton Caldwell 3:05 That reminds me of some, some YC batch advice I would give-

Michael Seibel 3:08 Yeah

Dalton Caldwell 3:08 ... which is, like, look, a lot of you need to pivot.

Michael Seibel 3:10 Yeah.

Dalton Caldwell 3:10 This is a fact. Do it as soon as you can.

Michael Seibel 3:14 Yes.

Dalton Caldwell 3:14 Be- and you won't lose any face with me.

Michael Seibel 3:16 Yeah.

Dalton Caldwell 3:17 Like that, again-

Michael Seibel 3:18 Yeah

Dalton Caldwell 3:18 ... the re- the reason someone might not pivot even though they know they need to is they're afraid of looking stupid-

Michael Seibel 3:23 Yeah

Dalton Caldwell 3:23 ... to authority figures. And I'd be like, "I'm the authority figure. It's fine. Like, just do it." Like... [laughs]

Michael Seibel 3:26 Well, and it blows my mind because it's, you know, it's a hypothesis. Your startup is a hypothesis, right? And for any good scientist, how often is their hypothesis correct? It's like not that often.

Dalton Caldwell 3:36 Correct.

Michael Seibel 3:37 And so you're running this test, and it's okay if things don't work out the way you expected. No one around you is gonna be like, "Oh my God," like every hypothesis should turn out or you're an idiot.

Dalton Caldwell 3:48 Yeah.

Michael Seibel 3:49 But I will say on the flip side, maybe the second-biggest regret I see is when people spent that two to three or four years, they had a hypothesis, and they don't actually feel like they really ran it down.

Dalton Caldwell 4:02 [laughs]

Michael Seibel 4:02 Like, they don't feel like they really ever delivered that thing to the customer that they believe the customer-

Dalton Caldwell 4:09 Yeah

Michael Seibel 4:09 ... wanted. Um, they don't ever... They don't leave with closure that we ran the experiment and we got these results and we learned something. They leave with a little bit of, like, "Oh, man," like, "the experiment was left half done. We got distracted."

Dalton Caldwell 4:22 And just as a side on that, that's so tricky because it's, it's hard when you see someone not realize that they're the main character in their own story, and they feel like things are happening to them and not that they have agency.

Michael Seibel 4:37 Yeah.

Dalton Caldwell 4:37 You get what I'm saying?

Michael Seibel 4:37 Yeah.

Dalton Caldwell 4:38 Like-

Michael Seibel 4:38 Yeah

Dalton Caldwell 4:39 ... what were you doing then the past four years? Like, what, what were you doing all day? Like, somehow they're telling a story-

Michael Seibel 4:45 Yeah

Dalton Caldwell 4:45 ... where they're not the main character.

Michael Seibel 4:47 Life's happening to them. Yeah.

Dalton Caldwell 4:47 It's, like, f- super weird.

Michael Seibel 4:49 But I think that that's the, the tricky thing, is that almost in the end you confront... Because, like, when you're a founder and you're shutting your company down, you're, you're the main... You are the... You, you have to do it.

Dalton Caldwell 5:00 Yep.

Michael Seibel 5:00 So you, you, you almost realize how much power you had all along at the end. So I think for me that, that, that's the second big one. What else comes up in these?

Dalton Caldwell 5:08 I, I think the biggest one that I would point to is it always comes down to, to people issue and team issues.

Michael Seibel 5:15 Mm-hmm.

Dalton Caldwell 5:16 And so it's either some version of maybe I should have spent more than two hours finding a co-founder. [laughs]

Michael Seibel 5:23 Ugh.

Dalton Caldwell 5:24 Like-

Michael Seibel 5:24 Mm

Dalton Caldwell 5:25 ... like maybe my-

Michael Seibel 5:27 Ugh

Dalton Caldwell 5:27 ... random stranger I met in a meetup was not the right person to get into, like, a very long, intense co-founder relationship with. Whoops. Very... I'd say that's honestly the most common one.

Michael Seibel 5:38 I hate those 'cause it's kind of like the seed of my destruction was kind of sown at the start.

Dalton Caldwell 5:44 A little bit.

Michael Seibel 5:45 Yeah.

Dalton Caldwell 5:45 And so it's like, yeah, that was... I really should have not started a company with, like, a random stranger that I met at a hackathon.

Michael Seibel 5:51 Yeah.

Dalton Caldwell 5:52 Um, so yeah. I would argue that probably most common.

Michael Seibel 5:55 Yeah.

Dalton Caldwell 5:55 And then they're like, "And then I'm gonna do a new company but with a different team."

Michael Seibel 5:57 Yeah.

Dalton Caldwell 5:58 And the same thing goes with employees as well, is it'll be like- Maybe the co-founder thing was fine, but they might have people that were key to the company, either employees or sometimes even investors-

Michael Seibel 6:07 Yeah

Dalton Caldwell 6:07 ... where they're like, "Yeah, that was bad."

Michael Seibel 6:09 Yeah.

Dalton Caldwell 6:10 "And I should have done X, Y, and Z to fix this people issue that I'm happening, having, but I didn't and it burned me out."

Michael Seibel 6:17 I mean, I'll, I'll riff on that one. The number of times I talked to founders who basically is like, "We had money. We used it on people. We expected the people to accomplish X. They weren't accomplishing X, and we didn't do anything about it." And it was like, if you're increasing your burn and you're bringing on people and management and da, da, da-

Dalton Caldwell 6:36 And it's not working

Michael Seibel 6:37 ... and it's not working, like you kinda have to undo that. And-

Dalton Caldwell 6:41 And again, it's an agency thing. It's like-

Michael Seibel 6:43 Yeah

Dalton Caldwell 6:43 ... oh, well someone should have fixed that. It's like, well, that's you. Like [laughs] you hired them.

Michael Seibel 6:47 You, you hired them. [laughs]

Dalton Caldwell 6:47 Like that one's on you, right?

Michael Seibel 6:48 Yeah. Yeah. And I, and I think that, you know, there's always this misconception of just like, well, like, you know, they're supposed to be doing this. It's almost like this like intent versus facts, right?

Dalton Caldwell 7:00 It's like there's this, uh, invisible observer that they wanna be performing for.

Michael Seibel 7:04 Yeah.

Dalton Caldwell 7:04 Like, oh, I'm running a business and I'm, I'm being a good manager-

Michael Seibel 7:07 Yeah

Dalton Caldwell 7:07 ... and I'm, I'm being really nice to these pe- Like it's like there is no hidden observer.

Michael Seibel 7:11 No.

Dalton Caldwell 7:12 You are... [laughs]

Michael Seibel 7:13 No.

Dalton Caldwell 7:13 You're a live player here.

Michael Seibel 7:15 Yeah. And it's working or it's not working.

Dalton Caldwell 7:16 Yep.

Michael Seibel 7:17 The other one I think they talk about a little bit is the Hail Marys, and like Hail Marys can come in a lot of forms. It could be a lot of different pivots. It could be the story they tell themselves about just one more fundraise or just some article or just one more launch where, you know, I'd argue like a Hail Mary is an attempt to make your startup work that is like not engaged with any of the facts and any of your reality. It's like a story you tell yourself about how to go from zero to hero overnight versus a lot of the times what they wish they had done was taken a beat with a year left of money, really think hard about the play they wanted to run, and run that play. And even better, figure out if there was a way to save money at a year ago so that instead of having a year to run that play, maybe they had two. And I think that unfortunately, there's this kind of weird myth, I mean, remember it was around Cursor where everyone was just like, "Cursor went from zero to infinite revenue in six weeks." And I'm like, "That's verifiably false."

Dalton Caldwell 8:23 Yeah.

Michael Seibel 8:23 But like I think a lot of people told themselves, "We can do that" in a Hail Mary fashion when we're nearing death, and then they, they wasted time.

Dalton Caldwell 8:32 I think one way to imagine this is that every founder has like a health bar.

Michael Seibel 8:38 Yeah.

Dalton Caldwell 8:38 Like it's a video game.

Michael Seibel 8:39 Yeah.

Dalton Caldwell 8:39 And what you wanna do is not burn out your health bar before you get to the right thing.

Michael Seibel 8:45 Yeah.

Dalton Caldwell 8:46 And so ways to preserve your health bar to not burn out would be to make the hard decisions earlier.

Michael Seibel 8:52 Yeah.

Dalton Caldwell 8:53 Whether it's if you need to change co-founders-

Michael Seibel 8:55 Yep

Dalton Caldwell 8:55 ... do it right away.

Michael Seibel 8:56 Yep. Yeah.

Dalton Caldwell 8:57 Before it ruins your life.

Michael Seibel 8:59 Yeah. Yes.

Dalton Caldwell 8:59 [laughs] Which is-

Michael Seibel 9:01 Yes

Dalton Caldwell 9:01 ... what people say. If you need to change the team-

Michael Seibel 9:03 Yes

Dalton Caldwell 9:04 ... do it right away before-

Michael Seibel 9:04 Yep

Dalton Caldwell 9:04 ... it burns your health bar.

Michael Seibel 9:05 Yep.

Dalton Caldwell 9:06 If you need to create boundaries with investors that are very annoying to you-

Michael Seibel 9:10 Right away

Dalton Caldwell 9:10 ... just do it. If you need to pivot, just do it 'cause, 'cause again, it's crazy how, how often people actually kinda do figure stuff out, but they're just like, "I just don't wanna do this anymore 'cause I'm burned out." Like they, they exhausted themselves.

Michael Seibel 9:23 Like at the moment of learning-

Dalton Caldwell 9:24 Yeah

Michael Seibel 9:24 ... right? Like insights, 99, health, 1%.

Dalton Caldwell 9:29 Yeah.

Michael Seibel 9:29 Uh, or motivation, 1%. That's never-

Dalton Caldwell 9:31 Yeah

Michael Seibel 9:31 ... don't get there.

Dalton Caldwell 9:32 And so you just wanna do everything you can to do those hard things fast-

Michael Seibel 9:37 Yeah

Dalton Caldwell 9:37 ... before you get burned out. It's like you're a r- you're like racing against getting burned out. That's the clock.

Michael Seibel 9:44 I wanna bring up another one, and it's around investors. The number of times I'll have this conversation and someone will basically say, "I am obligated to do X, Y, and Z to make sure that I give my investors their money back." And it's weird, like if I were to, if I were to kind of think about this compassionately, right, like there are very few situations that you've experienced in your normal life where like someone gives you a lot of money and you're not supposed to give it back [laughs] to them, right? Like, but how often do we have to explain to people, "You were given this money to take a long shot bet. The person who gave you the money was more educated about the chances of you succeeding than you were." And so the most important question you should ask yourself is, did you spend the money well? Were you ethical? Did you try your hardest? And if you did that, like your obligations were made, right?

Dalton Caldwell 10:39 Yep.

Michael Seibel 10:39 You're running an experiment. But sometimes I see people who the last year, or God forbid, two years of their lives, they didn't believe in the experiment. They knew this wasn't going to work, but they felt some deep obligation to return very high-risk capital to their investors, and so instead of shutting down, they kinda kept the ship that wasn't gonna work running. And to your point, now their energy level is lower. Their investor is hedged. They didn't care.

Dalton Caldwell 11:08 Yeah.

Michael Seibel 11:08 Their employees who could have been doing other things, starting companies, working with a great- like were kinda trapped. No good was done because there was this kind of fake expectation that I have to give this extremely leveraged investor who's investing other people's money in a quasi-speculative manner back all their capital. Like that, that is a false expectation, and oftentimes the founders realize it at the very end when the investor's like, "Oh, it's fine."

Dalton Caldwell 11:34 Yeah.

Michael Seibel 11:34 "Hey, and by the way, what are you gonna do next? I, I'm happy to fund your next thing." [laughs]

Dalton Caldwell 11:38 There you go.

Michael Seibel 11:38 And they're like, "Oh, wait, I could've been working my next thing two years earlier." [laughs]

Dalton Caldwell 11:41 Yeah.

Michael Seibel 11:42 So frequently this, the, this, this happens.

Dalton Caldwell 11:44 Again, this goes back to the sunk cost-

Michael Seibel 11:46 Yeah

Dalton Caldwell 11:46 ... which is don't fall for it.

Michael Seibel 11:50 Yeah.

Dalton Caldwell 11:50 [laughs] Um-

Michael Seibel 11:51 Yeah.

Dalton Caldwell 11:51 And I'm sure that investor would've been happy if you made evasive action earlier-

Michael Seibel 11:55 Yeah

Dalton Caldwell 11:55 ... with your existing company or if you just shut it down earlier. Like either way-

Michael Seibel 11:58 Either way

Dalton Caldwell 11:59 ... it's fine.

Michael Seibel 12:00 Yeah. It, either way it shows- You taking the reins, you treating yourself like- Yeah. And I guess actually that's the big theme here. In all of these statements, it's like acknowledging that you did have agency- Yeah ... and that you maybe didn't use it. Yeah. Maybe you weren't aware, or maybe you felt powerless to use that agency. Yeah. But you're like, "Man, I wish I would've had more agency." [laughs] Yeah. Yeah. Like, like, "I wish I would've done more stuff- Yeah. Yeah ... instead of letting this stuff happen to me." But here's the fun one. What

Michael Seibel 12:31 I never hear is, "I regret doing a startup." Yeah. Isn't that crazy? And, like, you watch someone basically have, you know, top one to five hardest, most stressful, most painful experiences of their life, but there's never regret. There's regret about specific decisions, but there's never regret about the journey, which I think is really counterintuitive for most people. I think it's easy to forget how much personal growth happens- Oh, yeah ... even when it doesn't succeed. It opens your mind. Like, your, your whole way of approaching the world, the whole way of thinking about business- Yeah ... is different. Yeah. Um- Well, it's funny 'cause I think it's like you go from being a normal human to, like, a minor superhero, right? [laughs] You're not Superman, but, like, you're way stronger- Yeah ... than you were when you started, right? Like, if you go to the gym for two years, you're not gonna be world's strongest person, but you're gonna be way stronger [laughs] Yeah ... than when you started. And I think the other thing you see is, like, you see your peers who didn't do it, and you kinda see how you started pulling away from your peers because you were living so much more life. You were- And- ... performing so much more work ... even in a job situation, a lot of people would way rather hire you- Oh ... because you actually understand- Oh, yeah ... how the world works. Oh my God. Like, basically, you just went to this... [laughs] You went to, um- Yeah ... you went through some really hard stuff. Yeah. That makes you way more- Yes ... interesting as a potential employee somewhere, right? I think this is not understandable by young founders, but, like, when I work with people who've only worked in big companies and I'll say something like, "Oh, have you talked to users?" They'll be like- [laughs] ... "That's not, that's not my job." Like, I had someone say this to me, and it's like, "Legal won't let me." Like- And, and like, I don't even know if that was right or wrong, but it was just like th- it was hilarious 'cause it was just somebody who was building- Can you imagine a founder saying that? [laughs] Yeah, yeah. Like, "Legal won't..." You know? But it's like, this is somebody who was building a product for consumers who had never talked to a single user. Yeah. So imagine when you're a founder looking to hire, and you're like, "Well, I can have a team of those people," [laughs] "or I could have people who, like, know how to talk to users, know how to iterate quickly, have grit." And then we, we tease this out, but let's be explicit. The number of founders who find fundraising 10 times easier on their second startup- Yep ... s- what, 90%? It is definitely much easier. Shockingly. And so there's this kinda weird counterintuitive thing that happens where it's like going through this once makes it a lot easier to do it the next time. That is something that they're often surprised by because at their moment that they feel like they ha- are at their, like, weakest, their most defeated- Yeah ... people are like, "Oh, yeah." [laughs] You're like, you're like, "Wow, what's up?" Like- [laughs] And people are always surprised when I'm like, "So what are you gonna work on next?" Yeah. You know? And they're like, "Oh, maybe I'm- Life- ... not a failure." [laughs] Yeah, life keeps on going. Yeah. Like, maybe I showed grit, determination. I learned a ton. Maybe I am more worthy of investment now than I was at the start of the journey, and it's like, probably.

Michael Seibel 15:33 Not maybe. [laughs] Yeah. Why probably? [laughs] So yeah. So to kinda end on a positive- Well- I think it's counterintuitive that these conversations often are more positive- Yeah ... than I think people would think. It's, it's actually usually... They're tired- Yes ... but it's usually pretty positive. And, and I guess, again, why are we even making this video? I think it's the following. The reason the posts about what humans say on their deathbed go viral is because you can read them- And do that shit. [laughs] ... and do that shit. You can, you basically have agency to change your life. Yes. Yeah. And if you're reading, hey, a lot of people on their deathbed say they wish they would've spent more time with their family, and they wish they wouldn't have... You know. Yeah. You can do that. Yeah. Like, that's a, [laughs] that is an option- Yes ... available to you- Yes ... is to change your life. Yes. Right? If you have a year of money left, you have so much agency. And so that is o- our advice. That is my advice to you here is act like you're doing this now. Like, pretend like you have- Yeah ... no money left and you have to shut down. Yeah. What is your takeaway? What are the things you wish you did? What are the things you would do differently? Yeah. And then just do them. Yeah. Like, no one is stopping you. We give you permission. Yeah. Yes. [laughs] Make those changes today. Yes. The people in the video give you permission. [laughs] Yeah. Make the changes today- Yeah ... that you would make if this were, like, the very end, and then that makes this a very helpful exercise. Yes. Incredibly helpful. All right. Good chat. All right. Sounds good. Thanks, Michael. [laid-back music]