If we were on a cheap VPS, we would have crumbled to pieces like Cobb's limbo in Inception. As we were on Heroku, we could simply increase the number of dynos. I still vividly remember when our traffic hit. I was away from my desk, so I reached for my iPhone and dialed us up to 20 dynos using Nezumi. A few seconds later, we had scaled.
One thing I've been wondering - how does rapportive remove the Google Adwords in the right sidebar without pissing off Google? This has got to be a violation of their TOS or something isn't it?
It makes me wince for HN to see so many people upvoting the parent. It's not just the meanness of it; it's that it's both mean and wrong. Surely at this point everyone is at least familiar with the strategy of launching something minimal and then expanding it. And yet here is a startup doing exactly the right thing, and they have a mob jeering at them.
Part of the difficulty is convincing a strongly technical crowd that companies and products live or die for reasons other than technology.
Unless they're solving crazy hard problems, a lot of engineering types are just going to be underwhelmed. Add in a lot of early success and that quickly turns to cynicism and frustration.
"... Part of the difficulty is convincing a strongly technical crowd that companies and products live or die for reasons other than technology. ..."
That is a really good point but part of the entrepreneur bit is unlearning to a degree - tempering if you like - and thinking how can I convert technology into something users want. I see ample evidence of pure technologists viewing ideas without this frame of mind. Entrepreneurship is the union of the hacker mindset of building things and an eye on the business of selling - "make things that people want ... and will buy".
Speaking as one of the technical crowd, it is hard to adjust to the fact that all of your skills put together contributes only a few percent to the success of a product.
It is obviously true, but it still takes a while getting used to :)
Oh I agree and it's my reaction too, "yeah but what problem are they solving? how are they doing it?"
That's the extent of my evaluation. And that's also why I'm not an entrepreneur. :)
There's a definite mismatch between the valuation function I (and a lot of us, I think) use and what the market uses which is addressed by the YC's of the world.
But the bottom line is I don't think pg should misconstrue the confusion (and sometimes frustration) as malice.
Even if we immediately see how wrong the feature comment is, it's still likely many of us won't come up with anything as useful as Rapportive's "gmail feature". That's the real kicker.
I fell in love with Rapportive the moment I installed it, but probably because I'm a regular blogger and glutton for info about people.
I had no idea it had 10k users in 24 hours, that's Facebook like numbers.
What I'm most surprised at is that they went into YCombinator after such amazing traction and gave up equity for such a small cash offering. The could have had any angel round they wanted with that type of fire. That's a big compliment to YC, but a strange business move for a new company.
The question is whether the connections to investors and the advice is worth it, not whether the investment itself is worth it. In most cases, it's probably a resounding yes.
This is the second or third time I've something like that. First time was from Mark Suster who said the best way to raise an angel round is to get a few key angels on board with a great deal 2% for 10k, then have a larger angel round afterwards using social proof to get introductions to more potential investors.
Do you think the YC brand increases your valuation for subsequent funding and/or exit price by 6% or more? I do. That alone makes it a wash. The investor intros, mentorship, cash, free PR, free legal stuff, etc., is all gravy.
I somewhat agree - but when we're talking about minimal people usually mean a minimal feature set on a clearly much bigger product. It's hard to imagine a full product being built around this. I think what's also frustrating is for some is that it's hard to imagine anyone ever paying for this.
It is cool and useful though, so lets certainly not belittle that.
WTB a PG essay on how our angry and competitive culture results in people being mean and wrong about things they don't really know about, why it's a mindset to be assiduously avoided in favor of a pensive and open-minded one, and some prescriptions for doing that.
This problem seems to permeate our culture these days, from the Internet to politics to road rage. It seems to result from a combination of a highly competitive society that has adopted the trash talking mental games of sports and anger at the traffic/opposite sex/government/corporations/world/whatever people are angry about. Trash talking is fashionable and being mad is the new black.
The consequence is a crowding out of thoughtful, rational thinking about things, to the detriment of all of society. If anyone could give such a topic the treatment it deserves, it would be PG.
It may look like that today, but when you pitch investors you sell them on the team, the market and the vision. You paint a compelling picture of how you get from where you are today to somewhere incredibly exciting.
Just to clarify: I have nothing against you and your team. Good luck to you and kudos!
It's just that I remember a time when starting a business meant creating a product, finding a market and people in that market willing to pay for your product.
I completely fail to see any of that in your case. But maybe building a feature for an existing product of a company in the idea of selling to that company IS a viable business model.
We do have plans for features that we think people will be happy to charge for. Right now, we're not ready to talk too much about those features, but we think there is real pain we can remove.
We feel validated by the fact that people love the features we have right now so much that many have asked if they can pay for them.
Free is a strategy. We'll let you know how it works out :)
Right on. And I am looking forward to what you do next.
Having said that though, what you have right now is a "nice to have" and it excites everyone for the soft value it adds. But I wonder if the current product can pass the Penny Gap. I know you don't think its meant to, but I am really not sure if the current users will be the ones who would pay for whatever it is that you will build in the future. Xobni is a good example of it. Dropbox on the other end is a great example of a free strategy that sold users on the same product that they expected users would pay for. Basically with a strategy where you acquire a lot of free users thinking they will pay for what they have not seen as yet, can be a dangerous one.
There was also a time when "product" meant something mass-produced in a factory so expensive that the number of products on the market was tiny, and all it took to get consumers to buy anything was a bit of TV advertising.
These days just getting people to even try out your product is a major accomplishment. Sure, they haven't built a successful company yet, but for the capital expenditure they've made so far they are way ahead of the curve. What's the point of having a clear plan about how you will make money if it ultimately fails like most startups? You are going to need to pivot anyway, so the focus on users over revenue is totally a reasonable strategy. Even beyond the getting bought exit, the value of an audience is tremendous. Look at how 37signals transitioned from a dime-a-dozen agency to a very profitable company based largely on it's blog reach within the target market.
You guys seem really positive. How do you stay positive in the face of so much negativity that must come your way? This post is one example, but I assume there's a lot more where that came from.
1. If at every point you're taking what you believe to be approximately right decisions, given all the information you have at that time, then you can ban regrets from your mind. This is a good frame of mind to be in: you can focus on the future. The corollary is to arm yourself with information. For more on this, and more besides, see: http://bhorowitz.com/2010/05/30/how-andreessen-horowitz-eval...
2. Although we face a lot of negativity, it comes only in a few limited forms. Any negative statement, such as "your business will fail because Google will crush you like the tiny ants you are", should only have an impact the first time you hear it. You then decide what you think of the statement, and unless later information convinces you otherwise, your mind should be made. No regrets.
3. I consciously try not to emotionally react to situations. I also try to smile :)
Rahul, awesome reply. Kudos to your team for a well executed product.
I am curious to know if you are using Rapleaf to get social profiles or if you are doing it yourself (which is tough/only partially possible). If you are using Rapleaf, aren't you loosing money with every lookup?
That's one of the canonical dumb investor questions. We try not to ask those. Google could blow most startups out of the water if they chose to focus on building exactly the same thing. What protects startups is that in practice big competitors can only focus on a limited number of things at once.
User indifference is a much, much greater danger for startups than competitors, big or small. So we advise startups to focus on that. What's going to kill you is the Back button, not Google.
we didn't ask that question because we don't care what the answer is. the biggest threat is almost always from another startup anyway, not google/microsoft/etc so we want to back the best founders. if you've met the rapportive team, you'll see pretty quickly why we funded them.
Could you elaborate on why you wouldn't care? A competitor is a competitor, no matter if they're an elephant that can make waves, or a cheetah that can pivot on the dime. Shouldn't the mantra be to focus more on what your customers want/need rather than worry about threats from other companies?
because at the stage we invest at, we assume the idea is inevitably going to change so we're really looking at how strong the founders are. that's why it doesn't matter to us if google could 'do it themselves' or if there's competition from other startups, since we're funding the team not the idea.
YC has invested in the company, not the product. They see enough good signs to be interested in networking into the company and investing in its potential success.
Even if the sub-20k investment doesn't pan out, YC is going to get good press and goodwill out of this. Other YC companies will absorb some of the buzz around any YC success.
The above all increases Rapportive's chance to flip the company even if only under the Greater fool theory.
Because frankly, Google does half-assed work these days. Small companies can do very well just by cloning and supporting various features and applications that Google has already abandoned. Worrying about what Google might do in the future is just silly.
Consider all the posts made to HN by users mourning the loss of Etherpad, for instance... and look back at them in light of what's happened. Google fashioned the technology into a proof of concept called "Wave," shipped it, started to build a user base, then - oh, look, a bicycle. I wonder if it's one of the new carbon-fiber Cannondales?
Basically, Google has a severe case of corporate ADD, just like any number of organizations who have failed to capitalize on assets they already owned. Believe me, entrepreneurs can eat very well from Google's table scraps.
Thanks! We are very fortunate to be working with a truly awesome designer (@limedaring on twitter). We simply did not stop working on the site until we felt it was awesome (I think I spent almost a week fulltime on it, and I wasn't doing the design).
There's an incredible amount of cool stuff you can do with this kind of email integration, and mostly it's done in-house by companies for competitive advantage reasons.
A real world example I've seen: A potential clients emails you, the system checks if they know any of your colleagues or friends, pull up data on the client's company (company news, figures, creditworthiness, etc.), finds common interests, etc. With the extra information instantaneously to hand, your chances of converting the prospect to a client go up by an order of magnitude.
That kind of functionality can be worth a fortune. But at the moment it's only large enterprise companies that can build it, making it affordable to small to mid-size companies seems a pretty solid business plan. I think Rapportive in going the more "generic" route (api, etc.) are going to steal etacts thunder and the marketplace. It's a brilliant idea.
When I first saw Divvyshot (YC09?) I thought that it was more of a feature than a startup. And I guess I was kind of right because Facebook eventually bought the company - the incredibly talented company led by Sam Odio.
I'm sure that if Facebook hadn't bought Divvyshot but had instead tried to replicate the feature set on their own that the company would still be in existence though maybe working on a different product.
The investment would still have been worthwhile in terms of YC - perhaps even more so because the founders had shown the ability to identify an opportunity and actually built it.
Great write-up. I'd heard of you but couldn't remember what your product was. Have you thought about putting a PR-type blurb at the top of your blog, like "Rapportive shows you everything about your contacts right inside your inbox." with an obvious link to your website?
I'm not familiar with posterous. If you don't want to change your template, you could copy & paste the link/lead into each blog post as if they're press releases, which they might effectively be.
Yes, there is a Rapportive API. It doesn't allow for Rapportive to go inside other applications, but it does allow folks to embed their own applications inside Rapportive. Would that be useful at all to you?
I'd second that request. It would be great if I could utilize the Rapportive engine to show all the juicy details you guys can grab on someone based on their email, within my app.
That MailChimp integration is a _great_ idea! I could _so_ easily sell some of our clients on that. (I don't suppose you've got anything in the works with Campaign Monitor on that front?)
A meta-social network profile. In all seriousness this seems like an awesome tool for people in HR, PR, or anywhere you have to deal with unknown peoples. Integration with desktop email clients- OutLook, ThunderBird, Mail, ect- would also be nice. I see a bright future if they play their cards right.
We have plans which we're going to test in the coming months. As much as we can say right now is that it will be freemium: we intend to keep the core service you see today free, and to charge for premium features.
I like the idea and love to see it working for a long time, but I totally see GMAIL doing something like this in the future or hopefully buying you out...
I agree with most of this post except that you should build to scale. Scaling isn't what you should be focused on. If you focus on this you will loose sight of the product you should be developing and responding to user feedback.
You're quite right - spending significant effort on scaling when you're building an MVP is probably wrong. The point is that we got our first 10,000 users without any scaling effort.
When writing this post we talked a lot about this, and the wording is quite carefully chosen: be ready to scale. Having a contingency plan in case you need to scale, however, is a good idea if it doesn't cost too much (in either money or distraction).
The observation we make in the post is that cloud hosting like Heroku or Google App Engine makes it much more likely that you can be ready to scale without any substantial effort early on.
Obviously the "cloud scales easily" line only gets you so far. For example, while the web tier scales easily, if you built on a relational database that will impose a limit on your magical cloud scaling powers. Once you hit that limit, you still have to face up to the fact that scaling takes care and effort. But cloud hosting lets you delay that effort until you're at a size that warrants thinking about it.
Maybe we should have made this point more directly in the post: be ready to scale, because (for many applications) it no longer costs you very much.
Great response. I would say that developing on Heroku and Google App Engine drives practices that lead to the ability to scale. This can be done with any hosting provider, as long as you are ready and know what to do.
Right place, right time, good product, and a little luck. That's awesome to read, hear, and see. I wish them the best and hope all my endeavors bear such tail winds.
If we were on a cheap VPS, we would have crumbled to pieces like Cobb's limbo in Inception. As we were on Heroku, we could simply increase the number of dynos. I still vividly remember when our traffic hit. I was away from my desk, so I reached for my iPhone and dialed us up to 20 dynos using Nezumi. A few seconds later, we had scaled.