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Should You Keep Working on Your Startup?

Dalton Caldwell and Michael Seibel discuss why you should continue working on your startup. Discussion includes: Running out of hope is why most people give up, the natural state of startups is that they are failing, if it doesn't feel like it's working you are probably right but you can fix it, founders get stuck thinking that things happen quickly, repeating year one, good reasons to quit, why you should stop being your worst critic, copying other people, not talking to users, enjoying the ride, disassemble the "if I only had a job at Anthropic" myth, seeking agency, why you are not alone, why you should find wins, why you shouldn't compare to others, escaping the trough of sorrows, and more. – Standard Capital is the AI-native Series A fund. Learn more at standardcap.com – About Dalton: Dalton Caldwell is Co-Founder and Partner of Standard Capital. He spent 12 years at Y Combinator, where he served as Managing Partner, worked across 25 YC batches, and advised more than 1,000 startups. His investments include Whatnot, Brex, GitLab, PostHog, Retool, Rappi, Razorpay, and Oklo. Before becoming an investor, Dalton founded imeem and App.net. About Michael: Michael Seibel is a Partner Emeritus at Y Combinator, where he served as a group partner and leader of the early stage accelerator from 2014 - 2024. Michael also serves on the board of three companies: Reddit, Dropbox, and Kalshi. He moved to the bay area in 2006, and was a co-founder and CEO of two Y Combinator startups Justin.tv/Twitch (2007 - 2011) and Socialcam (2011 - 2012). In 2012 Socialcam sold to Autodesk Inc. for $60m and in 2014, under the leadership of Emmett Shear (CEO) and Kevin Lin (COO) Twitch sold to Amazon for $970m. – Are you an AI builder? Check out StandardDB. Discover offers, credits, tools, and partner programs from the StandardDB ecosystem.

Michael SeibelhostDalton Caldwellhost
Sep 7, 202614mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:29

    Startups aren’t an EV math game: agency traded for risk

    1. MS

      If you're basically doing money expected value calculations, this is not your game.

    2. DC

      Yeah, your math is correct.

    3. MS

      Don't do it.

    4. DC

      Exactly.

    5. MS

      Like, yeah, yeah.

    6. DC

      Like, yeah, you're doing the math right.

    7. MS

      Exactly. [laughs]

    8. DC

      Don't do a startup.

    9. MS

      Don't do it.

    10. DC

      Like, that's totally correct. You're making a trade-

    11. MS

      Yeah

    12. DC

      ... where you're giving yourself more agency-

    13. MS

      Risk

    14. DC

      ... for more risk. [upbeat music]

    15. MS

      This is Dalton Post and Michael. Today, we're gonna talk about why you should keep working on your startup. So, uh, set this up for us.

  2. 0:29 – 1:04

    Why most startups die: quitting when hope runs out

    1. DC

      Look, it's well understood, I think, that, um, most startups die of, uh, suicide than homicide. [laughs]

    2. MS

      Yes. Yes.

    3. DC

      And that running out of hope is the, is the thing that causes people to give up.

    4. MS

      Yes.

    5. DC

      And so I know a lot of our audience is startup founders or startup employees.

    6. MS

      Yes.

    7. DC

      And I like to think, or they, they tell me that, um, sometimes we inspire them to, to feel fired up about what they're doing.

    8. MS

      Yes.

    9. DC

      And so this is one of those videos where we are gonna do our best to help you feel fired up and hopefully bring logic and reason behind it, not just... [laughs]

    10. MS

      Yes. Add fuel to the tank.

  3. 1:04 – 1:21

    The simplest logic: quitting guarantees failure

    1. DC

      I guess to start with, if you give up, there is no way you will succeed. There is 100% chance that the day you decide to give up, you- your startup will not have succeeded, right?

    2. MS

      Yes.

    3. DC

      This is just logic.

    4. MS

      Yes.

    5. DC

      The natural state of startups is that they are failing.

    6. MS

      Yes.

  4. 1:21 – 1:47

    Startup “dysmorphia”: it only looks like everyone else is winning

    1. DC

      And I think there can be, like, this dysmorphia thing going on where it seems like everyone else's startup is going better than yours.

    2. MS

      It's not. [laughs]

    3. DC

      And so... It is not. [laughs]

    4. MS

      It is not. It is not.

    5. DC

      Um-

    6. MS

      We can tell you. We, we, we spoke to them.

    7. DC

      We know. We, we were aware.

    8. MS

      [laughs]

    9. DC

      And so right there-

    10. MS

      Yes

    11. DC

      ... you- if you feel like it's not really working, A, you're probably right.

    12. MS

      Yes.

    13. DC

      And B, that's kind of what you should be expecting.

  5. 1:47 – 3:27

    Most successes take longer than you think (and “year one” repeats are a trap)

    1. MS

      It's funny. It's kind of like if you are, you know, a freshman in high school and you're racing against seniors and you're losing to them, that's kinda-

    2. DC

      That's the game

    3. MS

      ... that's the game, right?

    4. DC

      Yeah.

    5. MS

      You're gonna... You- you're- they've had four more years [laughs] of growing, of training, and, like, you, you can do the same thing. Founders get in their heads that successful companies succeed quickly, and they always have, like, a couple of, like, what I call pop examples.

    6. DC

      Yep.

    7. MS

      Like, things that would appear on Twitter or, or TechCrunch. And one of the things that I think is now very possible with AI is to actually get the real facts.

    8. DC

      Yep.

    9. MS

      Like, make a list of the 10 companies you like. Go to your phone and look at the 10 companies that are on your phone and just ask AI, "How long did it take them to do blank?" And you're gonna find some, right? YouTube sold for a billion dollars-

    10. DC

      Yeah, it was quick. Yeah

    11. MS

      ... in 18 months or so.

    12. DC

      Yeah.

    13. MS

      And then you're gonna have, like, Nvidia, like, which didn't figure out their business for, like... [laughs] And, and I think that what I try to comfort founders with is that, like, there are a lot of roads to success, and most of them are longer than you think.

    14. DC

      Yep.

    15. MS

      So if this is, like, year one and you're not Cursor yet, it's like you don't have enough evidence yet to know-

    16. DC

      Yeah

    17. MS

      ... like, whether it's gonna work or not. And I think that, like, one of the things that I see a lot of founders do is, like, repeat year one over and over again. Like, "Oh, we're gonna pivot," or, "I'm gonna do something new, but I'm n- I can never get past year one. I can never get to the point where I actually know something, I can actually build a good product. It's like if it doesn't work too quickly, I'm onto the next thing."

  6. 3:27 – 4:25

    Valid reasons to stop vs. ego-driven reasons to quit

    1. DC

      And I think the caveats are, like, you know, if you are literally out of money, okay, then that's a reason. If you are literally suffering-

    2. MS

      Health reasons.

    3. DC

      Yeah. Okay. Those are great. Yeah.

    4. MS

      Yeah.

    5. DC

      Cool.

    6. MS

      Yes. Yes.

    7. DC

      Like, the, those are really good reasons. But if, if what's going on is you're just like, "Wow, why aren't we taking over the world yet?"

    8. MS

      Yes.

    9. DC

      And we feel embarrassment or, like, our expectations are not being met, I think you can just reframe your thinking-

    10. MS

      Yeah

    11. DC

      ... and give yourself enough surface area to be lucky.

    12. MS

      Yes.

    13. DC

      And to be your own worst critic. Like, if you have a voice in your head that's telling you negative things about your startup-

    14. MS

      Yeah

    15. DC

      ... um, don't do that. Like, [laughs] like, that's, like, self-defeating behavior.

    16. MS

      Yes. Yes.

    17. DC

      And if you think about it, like, you're sort of validating the bad kind of authority figures-

    18. MS

      Mm-hmm

    19. DC

      ... by giving up too early.

    20. MS

      Mm-hmm.

    21. DC

      Like, don't you wanna stick it to the man?

    22. MS

      [laughs]

    23. DC

      Like, don't you wanna, don't you wanna prove everyone wrong?

    24. MS

      Yeah.

    25. DC

      Like, don't you? [laughs]

    26. MS

      [laughs]

    27. DC

      Right?

  7. 4:25 – 5:20

    The ‘trough of sorrows’ is normal—and success stories hide it

    1. MS

      It's funny because, like, this period of time is so common it has a name. So, like, it's called the trough of sorrows, right?

    2. DC

      Yeah.

    3. MS

      And so that's just another indication that you're not alone. [laughs] Like, if someone's named it, um, almost everyone is going through it, and almost everyone had to go through it.

    4. DC

      Well, and again, founders can talk about this after they're successful. Like, "Yeah, now we're worth a zillion dollars, but man, we really sucked for a while there."

    5. MS

      Yes.

    6. DC

      So you hear it from them, but otherwise, people won't really talk about this.

    7. MS

      No.

    8. DC

      Certainly investors are not like-

    9. MS

      "Here's all my shitty investments." [laughs]

    10. DC

      "Here's all the investments I made that went horribly."

    11. MS

      Yes.

    12. DC

      I guess we're willing to talk about that. But, uh-

    13. MS

      Fair, yes. [laughs]

    14. DC

      But, like, you know, like, there's kinda no incentive to be honest about... Again, this is the natural default state of things.

    15. MS

      Y- yeah. Th- this is like m- there's 100% evidence over all of time that most startups fail, [laughs] that most startup investments fail.

  8. 5:20 – 6:38

    What the trough feels like: thrash, trend-chasing, and not talking to users

    1. DC

      Just to kinda, like, put ourselves in the shoes of the people experiencing this, I remember going through this-

    2. MS

      Yes

    3. DC

      ... when I was a founder. You come into work, you're working hard, but you're not really sure what to build.

    4. MS

      Yeah.

    5. DC

      And the ideas shift every week. Like, we have a new conversation every day.

    6. MS

      Yeah.

    7. DC

      And we're like, "Oh, what if we added, uh, agents?" Or like, "Oh-

    8. MS

      Yeah, yeah. [laughs]

    9. DC

      ... like, how about let's put in an MCP."

    10. MS

      Yeah.

    11. DC

      And so you're just kinda, like-

    12. MS

      Yeah

    13. DC

      ... gluing together random ideas. You unfortunately might be reading a lot of tweets or tech press about how everyone is doing better than you.

    14. MS

      Yes.

    15. DC

      And that some combination of that makes you wanna pivot to copy what's working.

    16. MS

      Yep.

    17. DC

      And to be like, "Well, those guys aren't so great. We're better than..." You know?

    18. MS

      Yeah.

    19. DC

      Some kind of, like, emotional feeling about this.

    20. MS

      Yeah.

    21. DC

      Probably bad.

    22. MS

      Probably not talking to your users.

    23. DC

      Yeah. And unfortunately, a lot of people in this state-

    24. MS

      They want advice from authority figures to make them feel better. Yeah. And so- Yeah ... you know, again, I, I, I guess we are sort of doing that- Sure ... which is to keep going. Yeah. But I think they sometimes, sometimes I would do office hours with people, and they would be like, "Dalton, what should we pivot to?" And I'm like, "I don't know, man," like [laughs] Yeah, exactly. [laughs] Exactly. What should I spend the next 10 years of my life working on? [laughs] Um, and so I think you just wanna learn to enjoy this process and realize it's normal and realize that you just

  9. 6:38 – 7:38

    Reclaiming perspective: being in the game is already a win

    1. MS

      have to dig deep and find the answer as a consequence of talking to your users and shipping product and not getting in, like, a bad mental state, right, man? Well, and I remember this time very clearly, and I remember I would always come back to, "I'm 23 years old, and I'm running a company." Like, holy shit. Like, how... Even if the graphs look like it's a failing company [laughs] like, like in the scheme of how enriching an experience and how lucky I am- Yeah ... this is winning. Being in this game is winning, and I think that would always kind of, you know... Or I could have some East Coast job where I'm, like, the grunt of the grunt of the grunt of the grunt of the grunt of the person who makes decisions, and I can wait 25 years. Like- I, I think the- [laughs] ... more common, uh, black pill, let's just address it now- Yeah ... is that I've seen a bunch of tweets that's like, "Well,

  10. 7:38 – 10:40

    Debunking ‘you should’ve joined Anthropic’: hindsight and wrong incentives

    1. MS

      if you just would've got a job at Anthropic four years ago- Yes ... you would've made way more money." And so let's, let's disassemble that argument. Number one, um, how would you have known Anthropic was gonna be the one and not, you know, Airtable or whatever? Yeah. Okay, so that's- Yep ... that's a point. Number two, could you have actually gotten hired at Airtable? [laughs] Like, like would you pass the Anthropic technical screen? [laughs] I don't know, maybe. I- I like that ... who's to say? But, like- I like that. You know? I like that. That's like a, "Of course, of course I would in hindsight." [laughs] Yeah, maybe you would've, but I don't know if you actually could've gotten hired there, even if you wanted to. Yes. Um, number three, is that really what it's all about? And if what you're trying to do is make the most money in the lowest risk way possible, don't start a startup. Thank you. Thank you. Don't do it, man. This is not what you want. [laughs] This was math you could have done from day one. [laughs] Like, if you're like, "Oh, gee, I should've just worked at Anthropic-" Yeah ... it's like, well, why did, why did you start a company? Yeah. You thought it was gonna be easy, and you thought the odds were high? This is what I kind of hate, is there's this like, if you're basically doing money expected value calculations, this is not your game. Like, just, just- Yeah, your math is correct. Don't do it. Exactly. Like- Yeah, yeah, yes ... like, yeah, you're doing the math right. Exactly. Don't do a startup. Don't do it. Like, that's totally correct. And, and, and it's like, I'm not saying that that's bad, right? Like, if that's kind of what motivates you, I would argue go figure out what's gonna be the next great company, and, like, you can get a ton of great EV. Yeah. But if you wanna have your hands on the controls- You're getting agency. You're making a trade- Yeah ... where you're giving yourself more agency- Yes ... for more risk. Yes. And that's not the right trade for everybody. No. Again, this is... I don't actually think startups are for everybody. I agree. You just need to look yourself in the mirror and be like, "I made a trade- Yes ... for more agency, for more risk. And- Yes ... by making that trade, I should at least keep doing this long enough- Yes ... to have the chance- Yes ... [laughs] To maybe- For something interesting to happen. Yeah. Right? Well, and it's interesting 'cause it's like, what EV calculation are you doing? If you're doing a cash EV val- calculation, go work at Google, bro. Like... [laughs] If you're doing an agency excitement adventure EV calculation, talk to those people. Yeah. Well, they'd seem to be like, "Well, it was really exciting to work at Anthropic," and I, again, I'd be like, "Okay, yeah, but who... Did you know that that was gonna..." [laughs] Could you have pred- if you could have predicted that what was going to happen at Anthropic is what happened- Yeah ... you should just, like, be an investor or something. Yeah. [laughs] Like you're, like, you're, you're a super genius, man. Yeah. [laughs] I, I don't think most people predicted that. No. Right? No. And it's funny because anyone who's been around startup and the startup game enough, these are silly conversations. Like, "Oh, I could have worked at Anthropic," right? Like, "Oh, I could have angel invested in blank. Oh, here's all the money I could have made but didn't." It's like, come on. Like, go, go cry in your soup. Like, that's not the game we play here. [laughs] Yeah. I mean, you're just gonna drive yourself nuts. Exactly. Right? Exactly. So long story short, if you enjoy

  11. 10:40 – 12:13

    Keep going long enough to learn the outcome of your hypothesis

    1. MS

      having your hands on the wheel, um, if you enjoy kind of feeling like you get to call the shots, and if your health or your bank account or etc. is not getting in the way, you don't have to stop because it's not working out. It's not working out for anyone. [laughs] You're not the only one. You're not the only one. You're not alone. And, like, if it does work out for you, you will be so happy that you went through this. You'll value it more. Get through this phase as long as possible. And I would argue this. It's very different when I talk to a founder who's kind of, like, one year in, and they're like, "Oh man, this is painful," and a founder that's four years in. Um, I would argue that, like, embedded in every startup is a hypothesis, and it takes some period of time to learn the results of that experiment, right? Do our users want this? Can we provide it? Et cetera, et cetera. I think that the failure mode is to quit before you actually have clear information about whether your hypothesis was right. I think that if you wanna pivot or make a different decision because you've learned about your industry, you've learned about the product, you've learned about the customers, and you've realized something important about the hypothesis is not correct, great. Like, that's fine. But if you are stopping because you don't yet know the answer to your hypothesis, but you are not succeeding as fast as you expected- Yeah ... some tactical suggestions are

  12. 12:13 – 12:58

    Tactical mindset: find wins, learn, and value customers—not comparisons

    1. DC

      To enjoy the process and to try to find wins-

    2. MS

      Yeah

    3. DC

      ... and to try to feel like you're providing value to your customers, which has always been a big theme in our videos.

    4. MS

      Yes.

    5. DC

      Like, if you view this as this all or nothing thing and you're comparing yourself to others, bad news, guys, if you compare yourselves to others, um, you're ... No matter how successful you get, you're still gonna be sad.

    6. MS

      Yeah. [laughs]

    7. DC

      You know? So that's like an aside. That's gonna, like, haunt you for life.

    8. MS

      Agreed.

    9. DC

      Uh, just like FYI. But you know, if you're instead are valuing your progress on how much you're learning-

    10. MS

      Yes

    11. DC

      ... or how much agency you have-

    12. MS

      Yes

    13. DC

      ... and how much you're helping customers, you can actually be making progress even when things aren't going super well.

    14. MS

      Even during the trough of sorrows.

    15. DC

      Yes.

    16. MS

      Yes. And, and everyone who gets out of the trough of sorrows is learning while they're in the trough of sorrows.

    17. DC

      Yep.

    18. MS

      Yeah. They're not just kind of twiddling their thumbs and feeling bad about themselves.

  13. 12:58 – 14:11

    A resilience case study: two years of failure before it finally works

    1. DC

      Yeah, I, I don't ... It's not public, uh, when we're recording this, so I, I, I can't talk about this specifically with the company.

    2. MS

      Yeah.

    3. DC

      But there's a recent investment, um, that I did, and I, I know the founder. And, um, yeah, man, it just like all went wrong for two years. Like, like, really good idea, but-

    4. MS

      Yep

    5. DC

      ... like, what are the things that can go wrong? Um, launched early, got beat by competitors, didn't grow for two years, fundraising was hard, co-founder quit.

    6. MS

      No.

    7. DC

      Considered applying for jobs.

    8. MS

      That's all the things. [laughs]

    9. DC

      [laughs] Like, everyone gave up on him.

    10. MS

      Yeah, yeah. [laughs]

    11. DC

      You know? Like, and like, it's like, totally working. And all I can say that I learned from that story is that just the guy's hardcore, man. Like, respect.

    12. MS

      Yeah.

    13. DC

      Like [laughs] -

    14. MS

      Yeah. Sure

    15. DC

      ... like, there's really no lesson there, uh, about why his-

    16. MS

      There's no piece of advice that would've-

    17. DC

      Yeah

    18. MS

      ... gotten him through that, right? [laughs]

    19. DC

      I, I don't know. Like, a lot of ... It's like you keep flipping a coin.

    20. MS

      Yeah.

    21. DC

      And he kept getting tails.

    22. MS

      Yeah.

    23. DC

      And then finally, okay, it came up heads.

    24. MS

      Yeah.

    25. DC

      Like, all these things went wrong over and over and over again for two years.

    26. MS

      Yeah.

    27. DC

      And he could've completely justified send, sent me an email saying he's shutting down. And I'd be like, "Yeah, it makes sense."

    28. MS

      Yeah.

    29. DC

      Like, I have ... No, no pushback from me. Um, and like, it worked out.

  14. 14:11 – 14:35

    Closing message: success often requires enduring the hard times

    1. MS

      It's interesting is I think that that is the story of almost every success.

    2. DC

      Yeah.

    3. MS

      And if you're not willing to go through the hard times, you're probably not gonna reach the successful times. All right. Keep going. Good luck.

    4. DC

      All right. Thanks, Michael. [laid-back music]

Episode duration: 14:35

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