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CHAPTERS
- 0:00 – 1:59
Setbacks Are Part of the Game
Michael Seibel frames the talk with a boxing analogy: founders can dodge some punches but others will land. Dalton Caldwell adds that setbacks keep recurring, so founders should learn to recognize them as a normal part of the job.
- •No founder avoids taking punches; some will land
- •Setbacks are as routine as the sun rising and setting
- •Dalton encourages founders in office hours to think about the meta pattern, not just one issue
- •Developing a skill for recognizing a setback as 'one of these' is valuable
- 1:59 – 4:26
Fundraising Setbacks and Feeling Wronged
The hosts discuss how fundraising can leave founders with a bloody nose. Dalton describes the sense of being wronged after expectations fail, and Michael recalls a partnership meeting where a VC tore apart his startup for 45 minutes.
- •Founders often expect a fundraising outcome and feel wronged when it doesn't happen
- •One fundraising process can produce many setbacks
- •Michael was criticized for 45 minutes in a full partnership meeting while others stayed quiet
- •Any startup can be logically taken apart at an early stage
- 4:26 – 6:26
Rejection from YC and Failed Series A's
Michael describes how the best founders who don't get into YC treat it as a game that isn't over, and reapply after improving. Dalton explains that failed Series A's go unannounced, creating a warped view that everyone else is raising easily.
- •Most applicants don't get into YC
- •The best rejected founders take the feedback and apply again
- •The worst founders act as if the game is off after a failure
- •Nobody announces a failed Series A, while successes are announced loudly
- •This makes founders think bad things are happening only to them
- 6:26 – 7:59
Co-founder Conflict
Michael explains how co-founder disputes can shake you more than investor problems because it's your home. The hosts argue that building with friends gives you a fighting chance, and that friction in a co-founder relationship is inevitable.
- •Co-founders compare your progress with startups raising big rounds and question the fundraiser
- •Co-founder fights hit harder than investor issues
- •Without a strong relationship, things going badly is guaranteed to break it
- •Every co-founder relationship is tested, so build enough connective tissue to survive friction
- 7:59 – 9:12
The Magical Deal That Isn't
Michael describes how a long-awaited deal can punch you in the face whether or not it happens. His first six-figure Microsoft advertising contract led to a site redesign, a live TV show in LA and over $100,000 lost.
- •The magical deal can hurt both when it fails and when it succeeds
- •Michael's Microsoft advertising deal cost three months and more than $100,000
- •Founders reduce the whole startup to needing one thing to happen
- 9:12 – 11:22
After the Deal, the Credits Don't Roll
Dalton uses the image of movie credits rolling to describe the belief that one win means you've won. The hosts say getting a deal or getting into YC doesn't end the difficulty, and successful companies keep having setbacks for years.
- •Sometimes you get the deal and the credits don't roll
- •Getting into YC doesn't mean you're rich or successful
- •Founders expect the moment to come in the first two and a half years
- •Alums take eight to 10 years to reach very successful companies, and public companies still face setbacks
- •Michael repeats the boxing analogy: taking punches is the sport
- 11:22 – 13:27
When a Launch Goes Bad
Dalton says people expect launches to play out like the movies, with everyone caring and users signing up. In reality, most people don't care, and some respond with hostility, which is why launching fast helps flush the fantasy out.
- •Launching fast gets the movie in your head out of your system
- •Most people don't care about a launch most of the time
- •Worse than being ignored is being criticized, such as on Hacker News
- •The work is to keep launching again and again
- 13:27 – 15:25
How Movies Distort Startup Reality
Michael contrasts a movie premiere, with a burst of attention that fades, with a startup, where nobody cares for a long time and then people care years later. Dalton imagines a camera on Mark Zuckerberg's head for the first 10 years and concludes movies mess up people's sense of normal.
- •A movie premiere's trajectory is the opposite of a startup's
- •Startups often see long stretches of nobody caring before attention comes
- •A realistic Facebook movie would be someone typing code and staring at graphs
- •Early milestones like adding a new school were small moments
- •Movies inspire but distort what people think is normal
- 15:25 – 16:44
Getting Sued
Michael says movies also distort expectations about legal trouble. He went from a first angry letter to being sued by Italy's prime minister's company and the UFC and being invited to testify before Congress, and he now tells founders who get sued that it comes with running a business.
- •Michael's first angry law firm letter felt like a disaster
- •He later was sued by a company owned by the Italian prime minister and by the UFC, and was invited to testify before Congress
- •He tells YC founders that being sued is part of running a business
- •You can't do big things without setbacks like people telling you you're bad
- 16:44 – 18:39
Two Silver Linings: Everyone Faces This, and You Can Improve
Michael offers two silver linings: everyone you respect has dealt with this and more, and you can get better at handling setbacks. Dalton stresses that you can't control setbacks but can fully control your reaction.
- •Everyone who has done something hard has dealt with this and 10X more
- •Setbacks are not about you personally
- •You can learn to take a punch and improve over time
- •Reactions like anger, fear, bartering and denial are choices you can practice changing
- 18:39 – 19:59
You Are the Example
Michael adds that how a founder reacts to setbacks shapes how co-founders and employees react to their own. Staying calm and saying it will be fine can make a room pause and reconsider.
- •The punch in the face is a moment where you can still win points
- •Your reaction influences how co-founders and employees will react
- •Employees will learn the good or the bad from you
- •Freaking out doesn't help anyone
- 19:59 – 21:18
Taking Inventory and Worst Case Analysis
Dalton recommends taking inventory after a setback: runway, product, legal trouble and whether it's recoverable. Michael calls it a worst case analysis, naming the five biggest fears and checking whether they have actually happened.
- •Check basics like runway, whether you still have a product, and legal exposure
- •Sometimes the situation really is bad, but often it isn't
- •Michael lists the five things you're most afraid of and says them out loud
- •Check whether feared outcomes, like customers leaving, have actually happened
- 21:18 – 22:27
The Superpower and Wrap-Up
Michael calls the ability to take a punch a superpower you can gain even if the company fails. Dalton says a calm, assessing person is valuable to have around, and Michael wraps up that bad things will happen but your reaction is under your control.
- •Learning to handle setbacks is a superpower, even if the company fails
- •A steady person is valuable in a family or friend group
- •Bad things will happen and your reaction is under your control
- •Leveling yourself up can level up your team
