Snaptalent Blog

Friday was the first perfect day that we’ve had here in Boston in as long as anyone cares to remember, and to celebrate this nascent springtime, I think that we should consider what it means to the economy as a whole. For one, despite purported pessimism that VCs are skeptical about a skittish market - which, by the way, rallied some 228 points on Friday - we should not forget that an army of cheap labor in the form of recent college graduates is about to sign on at corporations across the country and world.

But that’s not the real issue at hand. It seems that the summer instills in the market a certain audacity to climb. Taking tech’s flagship, Google, as an example, we see that over the last 5 years, the company has locally peaked somewhere in mid-to-late summer. (By comparison, Yahoo! has not had the same success, nor has Microsoft; however, Madame Fortune has smiled on Oracle several times before the leaves changed color.)

But how does all of this apply to Snaptalent? In an economy turning bullish, those bold-new-outlook generals - to continue the metaphor - at companies big and small will need more troops. Call it summertime optimism, but we expect to take our core business, linking the right people, to the limit this year.

Conditions are right; we know where your ideal candidates are. Are you ready to meet them?

 

 

The report is a big, comprehensive study that reinforces what everyone already kind-of knew, or at least suspected. It tracked a total of 922 venture deals worth $7.1 billion — in terms of dollars, that’s an 8.5 percent drop.

We’ve been seeing mass hysteria hit the press about the slowdown in venture funding linked to how people are being cautious about investing in new startups. In my opinion there are are a number of overlooked points in that

1. The overall $ value of investment decreased by 7.1%. So that just means people are investing less. Perhaps more seed deals are being done, which is actually a net positive for the industry. Maybe average deal size is smaller. Maybe there are other sources of capital available for entrepreneurs (micro funds, venture debt, hedge funds and private equity money)
2. Startups aren’t really affected by economic cycles right now. You are betting on the future (if you are in it to build a serious company) so if in 4 years we are in recession then you are screwed. Relax, your competitors will read the press and panic now. Let them lose focus. The best businesses were started during economic downturns (Google, Paypal etc) and rose with the economic tide.
3. There is a myth that its harder to get funding. Its true its harder to get funding, for the wrong businesses. When investors had fresh$300m funds waiting to invested in an industry with renewed optimism (read Web 2.0), where the patterns of success were less defined, a lot of people were getting through the gate. Now, with 10-35 investments made per fund, people are slowing down. They will only invest in companies with the right fundamentals - solve a real problem, have a long term outlook, know how you are going to make money and get to scale. Again, this means your competitors will only get funded if they are genuine. 

Techcrunch’s write up about startup FatDoor changing their idea after taking $6.5m of funding puts huge pressure on their founders to turn their situation around. 

They now have a huge problem, and illustrate the pitfalls of taking on too much money at such a fragile stage of the business. This is the problem of overcapitalization. 

1) Expectation: taking on too much money means their new idea has to give their investors at least a 5-10x return to be viable. Lets say Fatdoor gave away 35% of the company that means after the money went in (post money) they were worth around $19m. That means they have to sell the company for at least $100m (5x) for their investors and existing shareholders to be satisfied. 

2) False comfort: Ok, so we’re entering a recession climate in the US (not in the rest of the world), so having more money is a good thing. But having too much money makes you treat it like a slush fund. This means lavish salaries, expensive office chairs and generally a hunger killer for execution. 

The founders Chandu Thota (an ex Microsoft engineer) and Jennifer Dulski ( ex Yahoo exec) now have a pretty serious executional problem, where they need to find an idea and bring to traction without failing to get to the $100m level. 

This is going to be hard for the following reasons:

1) Being in a big company doesn’t necessaily teach them how to act when the sticks are down. They don’t know how to act when the company may not exist day to day.

2) Their chosen idea Center’d is entering the no mans land between Evite and the hugely successful Eventbrite run by early PayPal investor and Xoom founder Kevin Hartz.

3) The level of expectation of the result gives them no margin for error.

The result in my opinion, is a very steep himalayan climb with no shoes. With more seasoned entrepreneurs I would bet that there might be a chance of pulling themselves out of the mire. In this case there is no way in hell this is going to change, particularly with a track record of launching no products in a 12 month period. 

The key lesson here in terms of funding strategy for entrepreneurs is to take enough financing to give you the appropriate runway to test a few key hypotheses to remove risk, maintain the incentive for you to increase your valuation for the next round without creating an expectation that is impossible to achieve.

Undercapitalization is the converse, running out of money before you had enough evidence of reduced risk sufficient to get you to the next round. The optimal strategy right now is to start a cash generative business and use the first round of funding to get you to the information points which will enable you to scale appropriately without taking any more funding. 

Although the fact that they recognized that Fatdoor wasn’t a great idea and are willing to change is a great example of being decisive.

Don’t do a Fatdoor with your funding strategy. 

Launch has been good. We’re really gonna get in gear in the next month. Stay tuned for some great new updates.

As a company from the latest Winter batch of Y Combinator (YC), I can promise you that the YC experience will change the trajectory of your company forever.

What are the main benefits if you get in?

It’s important to remember that Y Combinator is the stepping stone for you to turn a dream and a hobby into a real business. For me, it was the first time I could focus on really making a go of building a big business with some very talented co founders (Jamie, Tim and now Brad) and really make the transition from PhD drop out to full time entrepreneur. Many of you have been in jobs you hate, have just left school, or even dropped out to make this happen. Remember that feeling of being trapped and having a dream? Take that frustration and put your all into making this interview happen.

For Snaptalent, YC was a great platform for generating more opportunities for our company and really allowed us to focus on gathering enough evidence to launch, build a product and get more funding to move our dream to the next level.

YC has three main benefits for startups that make it through.

1. Product advice: Paul Graham is one of the most astute product advisers i know. Having seen a lot of startups, his experience from building Viaweb and his experience with YC Paul gives you the confidence to go after a big market by focusing on making a product users will hug you for when they see you in the street. It’s that blend of great design, usability and technical savvy that characterizes a YC startup. If you have the ingredients now, some of the stuff Paul will say will make you go ‘you know what, thats actually right’ after disagreeing initially. This stuff is Gold dust.
2. Peer group: As the alumni group gets larger the range and depth of experience and contacts just grow. It can be product advice, scaling advice, funding advice, visa advice, experts in different functional languages and platforms, acquisition advice or just contacts to do deals - the YC alumni network can connect you to anyone from Silicon Valley to Europe. Its not just the alumni network, as each batch arrives (there were 21 startups in the Winter ‘08 batch) the range and depth of experience in your immediate peer group is rich and diverse. For example In our batch Heroku and Rescuetime were second time entrepreneurs, Chatterous guys were python superhackers from Amazon etc and everyone swapped contacts and advice like crazy. You may have even spoken with YC alumni pre-interview. In a few years people won’t just talk about the paypal mafia they will talk about the YC mafia. This is a phenomenon and you want to be part of it!
3. Opportunity: YC is an opportunity to make encounters and gain the advice of people who can really help you make the most of your idea. Every second is an opportunity to learn and evolve. From YC dinners with people like Chris Sacca, Evan WIlliams, Marc Andressen, Paul Buccheit to Demo days to open houses everyone could help you succeed if you talked to them. YC gives you credibility like no other but its up to you to make the most of it. These folk could be advisors, investors, mentors or give you valuable passing advice. YC is an amplifier for such interactions for you to get funded and move to the next stage from product to company.

So who are YC looking for and how can you be best prepared for your interview?

YC are looking for teams of entrepreneurs who are incredibly ambitious, determined to succeed, can listen and learn and who can really get things done in a short amount of time. These are people who love building great products and are interested in building a business around that product, doing whatever it takes. Remember YC has to at least return its investment to keep going, so if you get in, your company’s eventual success could help not only you get rich but seed future generations of YC startups.

In the space of a weekend the YC partners will interview 50-60 startups. Each interview only lasts 10 mins and the objective is to get a sense of whether you are a good team. The idea is secondary, but as i will discuss the way you present the idea and what you say all link back to showing that you are a good team.

So here are the things to do well.

1. Have a Demo: you have 2 weeks now to get something up that can show off what you can do. Lock the door and get to work. It doesn’t need to be complete but if you can show evidence for good design and speedy execution than thats great evidence to have you be part of YC. Work on a usable interface (pg loves that) and be prepared to walk through it if you get the chance. Even if you don’t show the demo the experience of knocking one out will show you the intensity of YC. Our demo helped show our ability as a team to do something fast. When we got the interview we were all panicked by how little time we had. Its natural, expect it to be like that.
2. Don’t be verbose: Don’t waffle, you only have 10 mins. Be thoughtful and articulate. Pack as much meaning into as little words as possible. Be concise and clear. Pg and co get so many applications and have so little time to read them that you should expect that the YC partners don’t have any idea what you do. Practice the following questions: ’so what do you do’, ‘why is that different to what exists now’, ‘why will people use this?’
3. Be flexible: you will be caught off guard. Expect the interview to uncover areas you haven’t even thought of. The YC partners are going to see how you react to this. There have been previous teams where YC has hated their idea and they’ve had to change it on the spot or had 24 hours to come back with a new idea. This is where your team shines through. Good entrepreneurs learn, are open minded to feedback and can adjust. These are the kind YC wants to fund. We didn’t even apply with Snaptalent, we changed our idea after we were accepted. YC backed the team. Expect the same with your interview.

When you get to California, take some time to relax and get into the mindset. I remember how nervous we were before our YC interview. We solved mental arithmetic problems in the car to keep us fresh and mentally alert. I thought the interview went terribly. We were challenged on everything, why was our idea different, how could we do better. Just relax and be yourself. Don’t be stubborn and have fun meeting and hanging out with the other teams. There will be YC alumni hanging out too - grab as much of their insight as possible. One surefire way of predicting success is when prospective applicants take a lot of time to learn from alumni. It means you care - if you see one of us, grab us and feel free to chat.

The fact that you have been selected for interview shows you are on the right track and are super talented. You now have a great odds of getting in. This could be the chance to make some personal history.

As YC alumni we’re happy to answer any questions, feel free to add a comment to this post or email me on Sumon [at] snaptalent [dot] com . Wishing all of you the best of luck!

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Django Hacker? Join the Snaptalent team. Sumon [at] Snaptalent [dot] com

This went out to over 250,000 people. Thanks Andrew G.R.

Snaptalent launched a few weeks ago and its been pretty crazy since then. It took 3 months of Y Combinator, a lot of coffee, not much sleep and a lot of banter to get us out the door, so it’s a pleasure to get this blog going and tell everyone about the work we’re doing in revolutionizing recruitment advertising.

We’ve been covered on Techcrunch, Venturebeat and numerous places in the recruiting blogosphere. Here are a few choice pieces to whet your appetite.

TechCrunch: Snaptalent Targets Job Candidates Where They Work and Spend Time Online

Jobacle: Target Top Talent, Find Niche-Specific Jobs

VentureBeat: Ten Y Combinator companies that want to revolutionize social networking, search, databases, and anything else you can think of

Companies, publishers, and industry insiders absolutely love what we are doing:

• ” That ad kicks ass” Ken Miller, CEO, Anchor Intelligence. Former head of fraud at Paypal.
• “Many people have had similar ideas, no one has conceptualized it like you guys have” Matt Robinson, CEO of Rollbase, Creator of Taleo Small Business Edition”
• “I really think you guys are onto something, we rarely go down the traditional advertising path on the recruiting front” Oliver Ryan, HR Director, 23andMe

Sit tight, the best is still to come. We look forward to delighting you over the next few months and years as we unfold the Snaptalent story.