YC
Alfred Lin with Justin Kan
@ Y Combinator
07/31/14
Takeaways
AL
Alfred Lin
07/31/14
@ Y Combinator
Tony and Sanre started a company building websites in the late 1990s, solving the problem of getting traffic to those sites by linking them together, which created a powerful network effect.
AL
Alfred Lin
07/31/14
@ Y Combinator
I was in a PhD program in statistics, but I had a passion for business, which was a difficult conversation with my traditional Asian parents who valued academic careers highly.
AL
Alfred Lin
07/31/14
@ Y Combinator
We decided to forgo our initial revenue from website creation to focus on building a network, which made it easier to attract more companies to join Link Exchange.
AL
Alfred Lin
07/31/14
@ Y Combinator
One of the early companies that joined Link Exchange was Auction Web, which later became known as eBay, highlighting how even successful companies needed promotion in their early days.
AL
Alfred Lin
07/31/14
@ Y Combinator
After selling Link Exchange to Microsoft, we started an angel fund called Venture Frogs in 1999, which was a challenging time due to the impending dot-com crash.
AL
Alfred Lin
07/31/14
@ Y Combinator
At TellMe Networks, we pivoted from a consumer-focused business to an enterprise model, automating voice recognition for businesses, which positioned us as one of the first SaaS companies. We focused on a select group of 12 to 24 large customers, ensuring multi-year contracts for successful engagements.
AL
Alfred Lin
07/31/14
@ Y Combinator
When I left the company, we grew from zero revenues to about $150 million in recurring revenue, leading to a sale to Microsoft for around $800 million.
AL
Alfred Lin
07/31/14
@ Y Combinator
Tony almost deleted a voicemail where he pitched the idea of selling shoes online, despite doubts about whether people would buy shoes without trying them on.
AL
Alfred Lin
07/31/14
@ Y Combinator
The shoe business is a $40 billion market, with $2 billion already being done through mail order, supporting the investment thesis that the internet would surpass mail order.
AL
Alfred Lin
07/31/14
@ Y Combinator
Building a business that people think can't be done can lead to less competition in the early days, allowing for necessary pivots and learning.
AL
Alfred Lin
07/31/14
@ Y Combinator
During the early days, we faced challenges in raising funds, leading to personal sacrifices from the team, including Tony selling his apartments to keep the company afloat.
AL
Alfred Lin
07/31/14
@ Y Combinator
We were often surprised by the lack of investor interest, especially given the size of the market and the potential for e-commerce.
AL
Alfred Lin
07/31/14
@ Y Combinator
Many e-commerce companies raised large sums but failed due to poor customer acquisition strategies, which we aimed to avoid by focusing on profitability.
AL
Alfred Lin
07/31/14
@ Y Combinator
We aimed to be profitable on the first order, which was uncommon at the time, and this focus on profitability helped us succeed.
AL
Alfred Lin
07/31/14
@ Y Combinator
At Zappos, we learned that maintaining a strong company culture requires daily investment, or it can deteriorate over time.
AL
Alfred Lin
07/31/14
@ Y Combinator
Zappos was undercapitalized for a long time, relying on debt and credit to build the business, which was a risky but necessary strategy.
AL
Alfred Lin
07/31/14
@ Y Combinator
I faced a moment of panic when I learned that a glitch in our ordering process would lead to a loss, jeopardizing our bank covenants shortly after moving to Las Vegas. We had to find $10 million to reduce our debt and ensure we could make all payments without missing payroll.
AL
Alfred Lin
07/31/14
@ Y Combinator
Once you get through tough situations once or twice, you know you can handle them again.
AL
Alfred Lin
07/31/14
@ Y Combinator
During the late 1990s and early 2000s, there were many ups and downs for e-commerce companies, but by 2005 and 2006, many were starting to recover.
AL
Alfred Lin
07/31/14
@ Y Combinator
You have to be an emotional rock and absorb shocks to the system to persist in business.
AL
Alfred Lin
07/31/14
@ Y Combinator
If you're off in inventory management, it can lead to significant issues, whether it's overstocking or missing sales opportunities.
AL
Alfred Lin
07/31/14
@ Y Combinator
Solving a hard problem and making it your core competency is crucial for success in business.
AL
Alfred Lin
07/31/14
@ Y Combinator
We recognized that many online stores lacked good customer service, and we aimed to bring that back to our customers.
AL
Alfred Lin
07/31/14
@ Y Combinator
Running our distribution center and call center 24/7 allowed us to pick, pack, and ship orders within four hours, which was innovative at the time.
AL
Alfred Lin
07/31/14
@ Y Combinator
We achieved close to 100% accuracy in inventory management by assigning unique license plate numbers to every item in our warehouse.
AL
Alfred Lin
07/31/14
@ Y Combinator
Amazon had been interested in acquiring our company for a long time, and their offer was compelling because we could remain a separate brand and business.
AL
Alfred Lin
07/31/14
@ Y Combinator
Companies that start from personal passion and aim to solve a personal pain tend to perform better than those that do not.
AL
Alfred Lin
07/31/14
@ Y Combinator
Don't be discouraged if your business growth seems slow at first; it takes time to get the flywheel going.
AL
Alfred Lin
07/31/14
@ Y Combinator
Look for investors who are partners rather than just looking to buy low and sell high; it's important to build a relationship with them.
AL
Alfred Lin
07/31/14
@ Y Combinator
Spend time getting to know your investors before allowing them to invest in your company, as the journey can be long and complex.
AL
Alfred Lin
07/31/14
@ Y Combinator
We look for founders who are unstoppable, have deep industry insights, and can focus on a few key strategies to disrupt their industry.
AL
Alfred Lin
07/31/14
@ Y Combinator
Successful companies like Stripe, Airbnb, and Dropbox had clear reasons for being disruptive forces in their respective industries.