The Story of Cruise (YC W14): How 4 people built a self driving car in 7 months.

Cruise

The Beginning: One is the Loneliest Number

Spend any time on HackerNews and you’ll hear one piece of advice repeated ad nauseam : “Find a great co-founder”.

For Kyle Vogt, this was a no-brainer. Kyle has had great success following this advice in the past (he’s the former co-founder of Justin.TV and Twitch.tv). There was just one problem; He couldn’t find one for his new startup, Cruise.

What does Cruise do? Cruise will take control of your steering, braking, and acceleration to keep you in your lane and a safe distance from the car in front of you. It will automatically slow down for traffic, even to a complete stop if needed, and will accelerate once the traffic clears.

“I talked with a lot of friends and people with domain knowledge that would be great potential co-founders, but things always broke down. Sometimes the timing just wasn’t right, or they weren’t able to commit 100% right away.”

It was the perfect storm of inconvenience.

“I ultimately decided the opportunity cost of waiting for the perfect co-founder was too great a cost, so I just got started myself.”

“Nothing but a pile of parts and a 5 minute pitch”

The second month, Kyle committed to solving two problems. Raising money and fleshing the product out.

“When I went to investors, I had nothing but a pile of parts and a 5 minute pitch”.

Editors Note: One thing that Kyle also brought was his reputation which certainly helped fill any holes in his deck.

Kyle was able to raise his target round quickly (roughly two weeks) which let him focus on the product and putting a team in place. Two weeks after that, he had his core team built and “the pile of parts” began to take shape.

Joining the (YCombinator) Mafia

ycombinator-logo
After assembling the team, Cruise joined YCombinator. I thought it was a little strange that a YC Alumn with two successful startups under his belt would join YC again so I asked him his thought process.

“It was a little strange for me too. When I first started Cruise, I didn’t think I would do YC again. I was showing Justin Kan and Tikhon Bernstam (the Founder of Parse) what I was working on and they highlighted 3 big benefits of doing YC.

First, even if you don’t feel you personally need the mentorship (having gone through it previously), it’s still great motivation for the team. It helps get everyone on the same page and there is a little competition (ex: Who can grow the most in a week, etc.) between companies that helps build comradery.

The second thing is that it helps immensely with connections inside the current YC batch.

The last thing is Demo Day. For us, that alone was worth the cost of YC. Demo Day is the best place for a startup to be. You have most of the top-tier investors in the same room, at the same time, and they’re all watching your startup present.”

Sprinting To Launch

“Our entire team was focused on Demo Day. It was an external deadline that we had to meet together. We were in sprint mode.”

ios app

I asked Kyle for a specific example (besides being more intense) of how Cruise operated differently when they were in “sprint mode” and he told me this story:

“One of our testing cars had an issue with it’s motor on Thursday and we needed to run tests on in during the weekend. We called around and nobody had the part we needed in stock. They said our only option was to wait until the next week when they could have the part shipped.

With Demo Day coming up we knew that we couldn’t afford to lose a weekend of testing.

We had to get the part no matter what. We called every shop we could find and eventually found somebody that had it 3 hours away. We sent a courier service (so the team could keep working) to go pick it up and ride back with the part in the trunk.

Under normal circumstances, we would have just waited until the following week. When your whole team is in sprint mode facing external deadlines, you have to deliver.

Another anecdote – We broke the entire steering rack on our only prototype car 2 weeks before demo day (long story). It was going to take 3 weeks just to get a replacement part shipped from Germany, and it wasn’t available at any warehouse in the US or anywhere in Europe. So we just found the exact same car online and leased it – got it to our garage in about 2 hours and spent the next 36 hours swapping our equipment into it.

“Working hard on a tight deadline is contagious”, Kyle said before quickly adding, “If done in moderation.”

After the team presented at Demo Day, everyone took a week vacation.

Do You Have Any Advice for Solo Founders?

“There are two things I think are really important to have when you’re going solo: mentors (for when you get stuck, since you don’t have cofounders) and an anchor like a significant other, family members, or very understanding friends (to help you deal with the emotional ups and downs).”

Check Cruise out at getcruise.com and follow us on Twitter (@startupfoundry) for more startup news.

I Want To Write About Your Startup – Relaunching TSF

tsfbig

I want to write about your startup. I’ve been putting together new content for the TSF relaunch and I wanted to reach out to longtime readers to see what you’ve been working on as a “thank you” for your support.

I’m relaunching TSF within the week with some killer content (Alexis Ohanian – cofounder of Reddit, Randall Bennett – On how his startup got on CNN, etc.) and would love to find a way to get your startup story in the mix.

Drop me an email – paul@thestartupfoundry.com and let’s talk about your startup.


Location with brains: LocalMind

LocalMind isn’t just another local check-in app. LocalMind is going to change the way you discover information around you. Trying to figure out if there is a long wait at a restaurant? Use LocalMind. Want to know what beer is on tap at a pub? Use LocalMind. If LocalMind can gain mass market appeal, it will be an app I use at least once a day.

I sat down with a co-founder of LocalMind, Lenny Rachitsky for a quick 20 minute interview. We talk about what LocalMind is, why they aren’t just another location based checkin-service, and how they hustled an interview with Robert Scoble at SXSW.

Lenny’s blog post that he mentioned. Be sure to checkout LocalMind.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Leaving a Million Bucks on the Table: Why Flotype Pivoted in Y Combinator

When entrepreneurs talk about pivoting, it’s most often because they’ve failed to see a future for their idea. This wasn’t the case with the Y Combinator backed company, Flotype. Flotype’s original idea was to change the way we shop online. Their MVP was an iPad app that greatly improved the shopping experience. Early user feedback was fantastic, and they received an invest offer of one million dollars.

They were ready to go full steam a head with their shopping idea until Paul Graham talked them out of it. Don’t miss this 12 minute interview with Darshan Shankar (a co-founder of Flotype) where he explains why they took Paul Graham’s advice and decided to pivot.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

How GiftRocket (YC W11) is changing the way we think about gift cards


I hate getting giftcards. Rather, I hate that I have to carry a giftcard around in my already bulky wallet (unless I want to risk losing it in a random drawer at home). GiftRocket (a Y Combinator backed startup) is looking to take some of the pain out of giving, receiving, and redeeming gift cards.

I caught up with a co-founder of GiftRocket, Kapil Kale for a quick chat. In this interview we give TSF readers an inside look at what GiftRocket does, the biggest challenges they had to overcome, and their experience with Y Combinator. Don’t miss this interview!

What is GiftRocket? Who would use it, and why?

GiftRocket is the easiest way to send a gift. It’s a new type of online gift card. The way it works is that recipient of the GiftRocket checks in at a specified gift location, and receives an instant credit via PayPal.

There are two huge advantages to our service. The first is that you can pick any business on Yelp as the place to gift. It’s easier than ordering a gift certificate. The second is that delivery is instant & electronic, so it works great for friends in other cities. Want to buy your friend a gift to a cool cafe in New York? Use GiftRocket.

For example, I just sent my sister a GiftRocket one for her high school graduation to an ice cream shop across the country. I wouldn’t have been able to do that without our service.

What other sorts of challenges does your startup face

Product definition was fairly critical for us. I think that a lot of people who tried to do stuff with gifting struggled because their product was very complicated. We spent a lot of time figuring out how to simplify our product. For example, one decision we made early on was to eliminate apps and accounts from the redemption process. Yet another difficult part was explaining this entirely new service to users. We spent an immense amount of time figuring out the right language on our site.

We were defining a new space ourselves, and that was cool and fun, but made our brains hurt.

Tell us a little bit about GiftRocket’s creation story.

Nick and I quit our jobs and moved back into Nick’s family’s house in Berkeley. They were very gracious and let me stay in the guest room for four months. They kept us well fed. We converted a workbench into our office and Jonathan would come over whenever he was back visiting from grad school. Anyway, GiftRocket was born at 3am or something like that around a kitchen island.

Did GiftRocket have a smooth launch?

We had a frantic but successful launch. We launched on Demo Day. We had literally rebuilt the site’s front-end at 2am the night before TechCrunch. We also had no idea when the article would go live, so before going to bed we set Jonathan’s computer to play a sound when we got a new visitor. Then we plugged it into Nick’s speaker system, put the volume on full blast, and went to bed. At about 9am, we started hearing people sign on. Just a few drops at first and then it picked up rapidly. For large chunks of the day we weren’t even at a computer, but fortunately nothing broke. We got lots of feedback, which made launching worth doing despite the fact that we were distracted with other stuff.

How have you gained users?

The easiest way to get lots of users is to solve some sort of earth shattering-problem. That way your users just flock to you. We don’t solve an earth-shattering problem. Our challenges have largely been around marketing. Our main goal is to cut through the noise. It’s similar to some of the problems Airbnb faced early on.

You were asked to interview with Y Combinator, and when you met with PG you pitched a completely different idea. How did they handle the last minute change?

YC is pretty cool with last minute changes. They operate under the assumption that a third of the companies that they *accept* will change their ideas at some point. We were advised by Harj and YC alums to just pitch the new idea cleanly.

So the interview went something like this. PG: “So, you guys are doing local business referrals?”

Nick (my co-founder): “No, erase that from your mind. We’re doing a gift card startup.”

At one point in the interview, PG said to Paul Buchheit something like “Marketing? These guys don’t know how they’re going to market this, they’ve been working on it for what, 8 hours now?” He said it with a dash of excitement, like he thought what we were doing was just a little ballsy. We really didn’t think of it that way– we just knew we wanted to work on this idea.

Knowing what you know now, would you do YC again?

YC is a great shop. I’d say we all had a really good experience. Nick and I were both new to Silicon Valley so for us it was an instant stamp of approval on our startup, and made it really easy to connect with different companies and build out our product. The product and user acqusition feedback alone was invaluable.

We rented a “vacation home” in Mountain View maybe 1 mile away from the YC headquarters. We had a pretty absurd culture– we basically worked all day, with the exception of runs, trips to the gym, and the occassional game of Settlers. Nick’s dad would come down and drop off rations from our favorite sandwich shops in Berkeley. It seems really intense but the time flew by pretty quickly.

I’d still probably do it again for a new startup, because I believe it takes a period of super-intense work to get a startup off the ground. YC made what we did somewhat socially acceptable. I told my friends that I’d be busy for a while “hibernating” through the Winter.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

TSF is looking for funded startups to cover. Will you tell me about yours?


I’m constantly looking to improve TSF. One piece of feedback I’ve received is to cover more startups. I’m taking this to heart and I’m going to make it happen. I would love to feature some TSF readers startups.

What I’m specifically looking for:

• Funded startups (I’m going to ask for bootstrapped startups in the next few weeks).
• A sentence description of what you do
• Your story (how you got started, how you met your cofounder, etc…)
• How are you measuring traction?
• Give me a hook to work from.

Bonus points if you “Make your Startup ridiculously easy to write about. Put Together a Great Press Pack”

To submit your startup, email me at tipbox@thestartupfoundry.com.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

How a band got into Y Combinator. The Earbits story (YC W11).


Earbits is a Y Combinator backed company that’s looking to replace Pandora for your music streaming needs. Unlike Pandora, users are completely free to skip songs, change channels, listen for hours on end, and even share tracks with their friends. Earbits has none of the same restrictions that Pandora has, and then on top of that there are no commercials. Earbits hasn’t signed the major labels yet, but they’re gaining traction. Earbits makes its money by letting labels, bands and concert promoter buy airtime, and display their own relevant ads during the broadcast.   If you’re listening to a band on Earbits, you’ll only be shown relevant ads by someone with a vested interest in that artist getting more exposure. For example, you might be shown an ad for an upcoming show that the band is playing. Essentially, Earbits is to music, as Google Adwords is to advertising.

I had the privilege of interviewing a co-founder of Earbits, Joey Flores. In this interview we talked about how Earbits identified a problem, their big turning point, and how his band made it into Y Combinator. You don’t want to miss their story.

Tell TSF how you got started.

My co-founder Yotam and I met in 2005 when he moved to L.A. from Boston and posted an ad for drum lessons.  At the time, I was Director of Marketing for Experian after they had acquired an affiliate network I worked at.  A few months after I started taking drum lessons from Yotam I told him that I had been performing slam poetry a lot and wanted to start a band where I would rap over jazz and funk.

We ended up putting a band together and deciding to record an album. Yotam said that he would produce the album, which he had done before, but that I had to market it. I was managing about $60M a year in performance marketing at Experian, so marketing an album sounded pretty easy.

When did you realize there was a problem?

Our album got great reviews and we could fill up smaller clubs here in L.A. We got invited to open for Grammy winners Arrested Development and it seemed like we had a product people liked. However, after about $20,000 in various marketing and touring expenses, we realized that for all the buzz about how easy it is to be a musician in the age of the internet, all of the services out there either help you sell products to fans you don’t really have, or claim to help you get fans but they really just rely on you to spam Twitter or otherwise try to achieve some viral effect.

Where did the idea come from?

One day, Yotam and I were in the car on the way to San Diego and I was complaining about how miserable I was marketing products I don’t care about – mortgage leads, etc. And Yotam says, “How do we do what you do, but for music?”

We kicked around some terrible ideas until finally he says, “The problem with marketing music online is that nobody can tell what you sound like from an ad. Give them 10 seconds of listening to you and they’ll know if they like you or not.”

Within about 10 minutes, we were rabid talking about turning radio into a performance “ad network”, with affiliate stations on hundreds of music sites, and good artists could just buy airtime like you would with Google Adwords.

It becomes painfully obvious that there is a problem when you explain to people that, in the age of the internet, bands still hand out fliers.  Fliers cost about $0.15 a piece.  Meanwhile, all you’re hoping for as a band is that someone actually takes that flier home and goes online to listen to you.

What was the big turning point for Earbits?

If you consider that Pandora tries to make $0.05 per hour in ads and commercials, and there are 15 songs played every hour, then we can introduce a band to a new listener for $0.01 and make 3 times what Pandora does, while providing massive value to artists.

Once we started telling that story, we got advisors on board from Google, EMI Music, and Yahoo! Music. We raised a bit of money from friends and family, started getting traction with bands and labels, and closed a partnership to power a country music channel for Nashville.com.

What was the Y Combinator interview like?

With these partnerships under our belt, I talked to a lot of the Y Combinator alumni to see whether YC was a good fit for us. They all assured us it was. I believe the quote was, “If you think you might need Y Combinator, you need it. If you’re not sure, you need it. If you’re positive you don’t need it, you probably still need it, but maybe not.”

We decided to apply and we got an interview. We walked in to the interview room, and I think it was Jessica immediately asked how long I had been growing my hair.  There were 7 of them on the other side of the table, and Ben, Yotam and myself on the other.  We all shook hands and started the interview.

A good YC interview is just a brainstorming session with about 6 questions thrown at you every minute in an excited flurry, where you’re trying really hard to answer them well but being cut off about 5 words into every sentence. If that’s happening and the tone is friendly, it means everyone is excited to be talking about your idea.

That being said, you have to wrangle in the conversation, especially if you want to demo your product. So someone would ask me a question and I would say, “Let me show you.” and they would keep going, and finally I just turned the computer toward them and said, “Let me show you.”

When we showed them Nashville.com’s country station, that pretty much sealed the deal.  They understood how we would solve the marketplace problem, and it made the whole thing very clear to anyone how excited country musicians would be to have their music on something like that.

We left and went to hang out at Yotam’s brother’s place in Redwood City. Ironically, I wasn’t at all nervous headed into the interview, but the next few hours were unnerving. Finally, Harj called us, said they wanted to fund us, we feebly tried to negotiate with them, and then took the deal.

What’s the biggest challenge you have going forward?

We’re solving a marketplace problem. We need content so that we can get listeners, and listeners so that artists want to work with us. I’m very happy with our progress in that regard. We have some big distribution deals coming up, and more and more labels are actually reaching out to us. So, I think we have plenty of struggles looking forward. Acquiring more mainstream music is just one of them.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Why two engineers left Apple to build a Flash alternative: The Hype (YC W11) story


Hype is an HTML5 Animation Builder for Mac OS X. It allows you to build interactive sites in HTML5 that rivals Flash. Hype launched last Friday and they are already the top grossing app on the mac app store.

Earlier today I had a chance to catchup with one of the cofounders, Jonathan Deutsch, to talk about his experience leaving a safe job at Apple to launch a startup, where his inspiration came from for Hype, and his experience with Y Combinator.

Where did the idea for Hype come from?

At one point after a trip to Europe, I wanted to make a photo website that would be as nice as a beautifully bound photo album, and use lots of effects.  Coding this with HTML5 would have been a nightmare.  There had to be a better way, and that’s how the idea for Hype was born.  It stuck with me, and eventually I realized this was going to be a great opportunity for a business.

Where did you work prior to launching your own startup?

I worked at Apple. I was the engineering manager for the Mail.app back end (Mac OS X), but also worked on software updates, automation technology, SJ keynote demos, and other engineering projects.

I met Ryan at Apple as well, celebrating after a successful WWDC kickoff. He was working as an engineering project manager for Mac OS X. It was a really central role; he (and the team he was on) were responsible for coordinating the entire release of Mac OS X. Sometimes at bars we’d run into people who were Apple or ex-Apple, and Ryan would introduce himself, and they’d reply, “Oh, I’ve gotten emails from you!”

What made you decide to leave a “safe job” at Apple and build a risky startup?

I had always wanted to have my own company; I suppose its “in the blood.”  It was getting to be pretty clear that there was a new wave coming to the web, much like “Web 2.0” but instead of it being called “Web 3.0” it was called HTML5.  It’s a marketing term really, generally referring to new HTML5 tags, CSS3 styles/animations, and better JavaScript performance.  It also refers to being able to have the full web on your phone.  It was always in the back of my mind that for any technology shift you’d need tools to help out.  I’m really a tools guy, though we tend to call them “apps” nowadays.

I was faced with the decision of continuing to work with the great people on my team on a clearly high impact project, living with the “what if” syndrome, or trying to forge my own path.  “Regret Minimization” is what should win out in life, so it did.  I had done a lot of different projects at Apple, and felt I made my mark both internally on the company and externally on Mac OS X.

I had established a fair number of relationships at Apple, and felt if my startup failed I could always go back.  At Apple the question is often “how many times have you worked here?”  When you’re hired, you get new hardware… so I like to joke that the worst case is I’d end up with a new Mac Pro out of the deal.

Walking away is bittersweet, and there’s definitely a social and professional net that you leave behind.  That’s one of the main reasons we decided to pursue Y Combinator.  We didn’t want to be on an island by ourselves.

Apple is publicly against Flash. Did this have any influence on your decision to build Hype?

Not specifically.  While Flash enables some really great content on the web, there’s lots of people who aren’t favorable on it due to its lack of accessibility, CPU usage, or crashes.  It isn’t appropriate for mobile.  To Adobe’s credit, they’ve been more active lately in trying to address these issues.

What perhaps had more of an influence is Apple’s driving the web forward.  WebKit is really a great project.  I think a lot of people forget that innovation in the browser was basically dead until Safari.  The canvas tag, while controversial at first,  showed that new standards could be made and adopted by other browsers.  The JavaScript performance wars have moved the world forward.  Now WebKit is on almost every smartphone.  It’s great to see HTML5 as a new platform, and Apple deserves a lot of credit.

How did you get into to Y Combinator?

We got in through Y Combinator through the normal interview process. Ryan and I both found the questions from the initial application were great for helping to clarify our business plan, realizing our target markets, and helped ensure the two of us were on the same page. I’ve recommended to everyone I know that even if you’re not going to apply to YC, fill out the application.

What has been your experience with Y Combinator?

YC is definitely worthwhile. The network effects are staggering… it gives any YC company an advantage in making the right contacts, finding investment, and being in a support net with others in the same boat. And if you’re starting a company, why wouldn’t you want every advantage available to you? Paul Graham, Paul Buchheit, and Harj Taggar all give great advice with brilliant ideas sprinkled in. The dinners are fun, and there’s a lot that we learned from the speakers. Most founders would come early before each dinner just to hang out and discuss their startups or demo their products. The atmosphere is electric and contagious.

Y Combinator is also heavily focused around finding additional investment. Startups always need more cash! Finding funding was not a major concern to our us, as our “old school” business plan was to sell Hype from the get-go, and we had confidence it would be able to generate revenue. In that regard, we didn’t take as much advantage of YC as other companies are able to. We did make several strategic connections through investors to other companies and individuals in our space that have already been of benefit.

As an aside, during the YC timeframe we were so focused on developing our product that Paul Graham actually emailed us and was concerned that we hadn’t gone to enough office hours!

Don’t forget to checkout Hype!

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Co-founder of Disqus explains why they raised a $10 million round.

At 1pm today, Disqus announced that they had closed a $10 million round with North Bridge and Union Square Ventures. Last night I had the opportunity to sit down with Daniel Ha (co-founder of Disqus) to talk about the news. In this interview we cover why Disqus decided to raise additional funds and the future of the platform. I also ask Daniel if Facebook entering the commenting world had any influence on their decision to raise money. Don’t miss this interview.

This video is sponsored by:
This is a really great eBook that takes you behind the scenes of some very successful startups. Use discount code “foundryfive” for $5 off. Check it out!

Details of the Disqus Deal:

Five hundred

With this latest financing, we will be expanding the team, our products, and on building our long-term business. In the last 12 months, Disqus grew at least 500% across all of our core metrics: traffic, users, and communities. In fact, just this past November we announced hitting 200 million uniques/month and we’re now already approaching 500M! We’ve taken our time to carefully build the foundations of our core platform, and it’s allowed us to handle — admittedly with plenty of challenges — the accelerating growth with a small team.

You can read the full press release on their blog.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Marketing HipMunk with hustle

Alexis Ohanian came on TSF to talk about marketing HipMunk with hustle. HipMunk is a travel search site that focuses on what travelers actually care about. Before Alexis joined the HipMunk team, he cofounded Reddit and created BreadPig. There are some fantastic lessons in here for startups looking to give their marketing a boost. I’ve included a summary of the interview below the video.

What is HipMunk?
HipMunk is an online travel site that filters trips by agony instead of just price.

There aren’t any ads on HipMunk. How do you make money?
Our profits come from referrals. Our goal is to help you find a great flight as fast as possible, not sit around on the site and click on ads.

When did you have your first “ah ha” moment with HipMunk?
The user interface came together a few weeks before launch. When I saw it I knew HipMunk was going to be special. It was incredibly easy to use and focused on what travelers actually care about, “agony”.

Fun Fact:
Before HipMunk launched they were using the word “Suckage” instead of “Agony”. They decided to change it because it “might not fly in some parts of the country”.

What makes the User Interface so compelling?
For most people it’s worth $25 to avoid a 4 hour layover in Chicago. Our user interface recognizes this and tries to find the balance between price and comfort.

Some startups have fantastic tech, but they still struggle to get traction. Do you have any tips?
Generate the “Ah ha!” moment. If you have something that is 10x better than the competition and you’re struggling to gain traction, you might need to make the benefits more obvious. Be relentless that people have a good experience with your brand. Make things simple.

What does a non technical co-founder do?
Grunt work. A non technical co-founder needs to hustle all the time. It’s time consuming, not glamorous, and incredibly necessary for your startup to succeed.

Marketing:
First you need to have an awesome product. It’s much easier to hustle for something that kicks ass. Second, you want to focus on making things personal. Be as genuine and as cheap as possible.

Find a few people outside of your company that love your product. They will be your best salesman.

Thanks to Alexis for coming on TSF. Be sure to checkout HipMunk!

For more startup news, follow us on Twitter @startupfoundry