The Definitive Y Combinator Demo Day Debrief
“Mint.com for small businesses.” “Foursquare for sports games.” “Facebook without Facebook.” Comparing your idea to some existing and fabulously successful service, then saying why it will be even better, seems to be one of the modern formulas for pitching a startup—and it was on prominent display yesterday at Y Combinator‘s Demo Day, the culminating event in the Mountain View, CA-based venture incubator’s summer session.
Such comparisons may be convenient and arresting. The problem is they often mask what makes a startup truly interesting. In the last few weeks I’ve had the opportunity to spend time with the founders of eight different Y Combinator startups, and I’ve learned that each one has a unique story and a special passion for their chosen product or service. I’ve been writing up what I’ve learned in an ongoing series of in-depth profiles examining where each founding team got its business idea and what makes them believe in it.
At the same time, though, I’ve been looking forward to Demo Day, where each company is forced to boil down their story and their passion into a two-and-a-half minute pitch to an invitation-only group of venture and angel investors and journalists. It makes for an intense afternoon—made more exhausting this time around by yesterday’s sweltering heat in Silicon Valley, by the faltering air conditioning system at Y Combinator’s warehouse on Pioneer Way, and by the fact that this summer’s class, with 36 startups, is the largest cohort ever to pass through the program.
“YC S10″ may also be the most successful Y Combinator class ever, at least if you measure in terms of early revenues and seed-round support from angel investors. Several of the companies are already profitable, and many have already lined up angel support beyond the basic Y Combinator investment (roughly $11,000 plus $3,000 per founder). The name-dropping also was rife yesterday, with Silicon Valley celebrities like Paul Buchheit, Mitch Kapor, Dave McClure, Keith Rabois, and Naval Ravikant mentioned over and over as early investors as the pitches progressed. (There were some real celebrities in attendance, too—Ashton Kutcher and his wife Demi Moore, apparently there trawling for startups to invest in, just like everyone else.)
“I was just floored by the quality,” Rich Aberman, co-founder of San Francisco-based group payment startup WePay, told me after attending a practice pitch session at Y Combinator on Monday. WePay was part of the summer 2009 class at Y Combinator. “A lot of these companies are building real, sustainable businesses,” Aberman says. “In our batch, we had some good companies, but nothing compared to the companies now.”
Of the three dozen companies in this summer’s class of Y Combinator companies, 22 have launched their services publicly, and 14 are still in stealth mode. Of those 14, one didn’t present at all yesterday, and the other 13 gave off-the-record presentations, so I can’t even tell you their names. But I can tell you that they’re just as interesting as the companies described below. I’m looking forward to covering them as they emerge into the open.
Below are summaries of the on-the-record presentations, based on my Demo Day notes. For the companies I’ve already profiled in depth, I provide briefer descriptions, along with links to the published articles.
Jonathan Good, Brett Huneycutt, Rudy Adler
Every year, Americans spend $30 billion on funerals and other arrangements for the deceased. Placing a single obituary in the San Francisco Chronicle costs $1,300. 1000Memories hopes to tap into some of that consumer spending by offering a freemium online site where people can create “memory pages” in honor of their lost loved ones. Basic online memorials are free, but the company may eventually charge for services such as custom domain names, design templates, and extra storage. For the full story behind the startup, see my August 16 profile, “1000Memories Confronts Death by Celebrating Lives.”
Antonio Garcia-Martinez, Matthew McEachen, Argyris Zimnis
AdGrok wants to make it easier for average mortals to manage their search engine marketing campaigns. For most people, search engine marketing means one thing—bidding to place keyword-based text ads on search result pages through Google AdWords. So AdGrok, which launched a private beta test two weeks ago, has started out with an expandable browser sidebar, the “GrokBar,” that lets people manage their Google AdWords campaigns all in one place. The sidebar shows how much traffic each keyword is bringing to the user’s site, and lets users add or remove keywords, edit their ads, or change their bids. “You’ll never log into AdWords again,” says founder Antonio Garcia-Martinez. Almost 750 companies have signed up to use the service since its launch, including quite a few advertising agencies, Garcia-Martinez says.
Steve Sprang, Kurt Revis
Brushes is unusual for a Y Combinator company in that it had a widely known product before it even joined the incubator. In fact, Brushes is the best selling art application in the iTunes App Store, and paintings produced using the app have appeared on covers of The New Yorker magazine. The company has over 250,000 paid users, and holds the record for the most profitable Y Combinator startup as of its cohort’s Demo Day. Now the company wants to grow into “the Adobe of touch computing,” in the words of co-founder and Apple veteran Steve Sprang, who gained fame for his onstage appearance with Steve Jobs at the iPad launch event on January 27. “The mouse really shook up user interfaces thirty years ago, and multitouch is creating a similar shakeup now,” Sprang said. “There will be new opportunities and new winners.”
Dan Levine, Dave Fowler
Chart.io, as its name suggests, makes chart software. Its Web-based tool connects with any database and creates attractive, live charts. Co-founder Dan Levine says he saw the need for an easy chart creation tool after helping tech blog TechCrunch develop its Crunchbase company database and seeing how slow and expensive it was to hire consultants to turn the data into infographics. There are, of course, enterprise database analytics software packages that create nice charts, but Levine says they’ll set you back at least $25,000. Chart.io, which launched a private beta test on Monday, will cost much less, and “everyone can use it,” says Levine.
Vishwas Prabhakara, Joe Pestro, Art Chang
Think of FanVibe as the Foursquare or Facebook Places of the sports world. Launched at this year’s Super Bowl, it’s a mobile app that lets users check into a specific sports event, even if they’re just watching it on TV. Users can see who else is checked into the same games and start conversations (which is to say, trash talk). The company’s user base is growing at more than 50 percent per month, and it expects that partnership agreements recently signed with the NHL, the NBA, and Comcast will bring it more than 4 million users by the end of this year—all potential consumers of ads for personal goods, game tickets, and team merchandise.
Austin Chang, Alex Chung
Co-founder Austin Chang calls The Fridge “Facebook without Facebook.” It’s designed for those times when you need the functionality Facebook provides, such as group discussions or photo sharing, but you don’t want all the complications of the real Facebook. For example, families can use The Fridge to set up private, invitation-only sites for sharing baby pictures, or couples planning weddings can use it to create temporary communities where guests can connect and share photos “without having to add Cousin Larry to their friends list,” as Chang puts it. The company launched its service to the public on Monday, and Chang argues that the new social graph that will emerge there could be more valuable to advertisers than Facebook’s, because it will be more directly based on users’ interests and contexts.
Bo Lu, Jon Xu
FutureAdvisor is a Web-based service designed to help average consumers plan their financial futures without having to hire expensive personal financial advisors (spelling the beginning of the end for yet another category of trained professionals, alongside tax advisors and travel agents). Users connect their existing brokerage accounts and 401K accounts to FutureAdvisor, and the service analyzes their performance and offers alternatives—suggesting how users might have enough money to retire earlier, for example, if they switched to lower-cost mutual funds. The advice will be better than what human financial advisors dispense, FutureAdvisors’ founders argue, since it won’t be biased by the sales commissions that help pay these advisors’ salaries. Just two and half weeks into its public beta test, FutureAdvisor already has $170 million in funds under analysis.
Chris Carlson, Fred Barbagli
Gantto has set out to displace Microsoft Project with a simpler, browser-based method for visualizing and tracking large projects. (Its name comes from the Gantt Chart, a type of bar chart displaying a project schedule.) The company’s strategy is to “exploit key weakness in Microsoft Project,” says co-founder Chris Carlson, including the lack of a group editing function and the fact that charts for Project usually have to be drawn by hand using related tools such as PowerPoint. Users can build charts from scratch in Gantto or import them from Project, and export finished charts back to Project or to PNG images files for use in presentations.
Brian Krausz, Joe Gershenson
Gazehawk lets Web designers and usability experts commission inexpensive eye-tracking studies to determine which parts of Web pages users are looking at most, and which they are neglecting. Study results can help e-tailers and marketers adjust page designs to optimize sales. For more details see my August 17 story, “The Eyes Have It: GazeHawk Introduces Low-Cost Eye Tracking Studies for Web Designers.”
Companies like Brightedge and Covario offer costly, enterprise-class tools to help big companies measure and improve the performance of their websites in organic (non-paid) search result rankings. Ginzametrics—the creation of lone founder Ray Grieselhuber, a former product development director at Covario—aims to offer the same automated analytics to smaller organizations in subscription-based, Software-as-a-Service form. “I can deliver this to my customers in a way that is faster, cheaper, and easier,” says Grieselhuber, who launched a private beta test last week. “This is taking big data out of the hands of the few and putting it into the hands of the many.”
Steve Huffman, Adam Goldstein
Hipmunk is out to reduce the complexity of purchasing airline tickets, and eventually other travel products, online. It has developed a flexible new Web interface that organizes flight search results in a way that makes it easier to find best flights. For all the details see my August 18 profile, “Hipmunk, Conceived by David Pogue’s Teenage Co-Author, Embarks on Mission to Make Travel Search Easier.”
David Albert, Nicholas Berson-Shilcock
The premise behind HireHive is that companies learn most of what they really need to know about a job candidate in the first 30 seconds of a face-to-face interview. The startup makes software that lets job seekers record short videos using their home webcams; companies can then use the recordings to pre-screen job applicants before spending time reviewing lengthy paper or digital CVs. “You know that hiring is a hair-on-fire problem, and it will only be more so in the future, so the only thing you have to decide is whether we are the guys to solve it,” co-founder David Albert told investors at Demo Day.
Jessica Mah, Andy Su
“What Mint did to Quicken, we are doing to Quickbooks,” says co-founder Jessica Mah. The company has built a real-time financial dashboard that small businesses can use to track their spending without having to rely on a bookkeeper. For the complete story see my August 11 profile, “InDinero Co-founder Sees ‘Humongous’ Market in Small Business Expense Tracking.”
Cole Krumbholz, Jonathan Beilin
Koduco aims to become the premier maker of multiplayer games for the Apple iPad and other tablet devices. It has already released versions of chess and checkers, and its most recent game, a Pong/Space Invaders hybrid called PongVaders, went live in the iTunes App Store this week. “The iPad is the first in a new class of devices, one that is going to create a completely different kind of game that is social, tactile, and collaborative,” says co-founder Cole Krumbholz. “We believe the next generation of gaming is going to be two or more people using the same device, sitting next to each other, sharing a game…with this new platform there is a huge market potential for huge winners.” Huge is right—Koduco’s games have already been downloaded a third of a million times.
Amanda Peyton, Jason Gavris, Sean Ahrens
MessageParty marries old-fashioned online chat with location. Any group unified by a location—fans at a concert, businesspeople at a conference, students in a school—can use the MessageParty iPhone app to communicate in a chat room tied to that location. “Not until recently have we been able to take it for granted that people have location-aware devices,” says co-founder Amanda Peyton. “Somebody is going to make an incredibly successful location-based messaging system that allows for interactions that previously wouldn’t have happened. As an MIT team that is fast, aggressive, and loves to win, we will make it happen.”
Lionel Jingles, Rajiv Ghanta, Jyotindra Vasudeo
HDTV displays are so cheap these days that most companies can afford to buy a few and mount them around the office. Leftronic, which came out of stealth mode at Demo Day, is developing “ambient dashboards” that use these displays to show key company metrics. Leftronic lets customers choose from many kinds of visualizations. Y Combinator alumnus WePay, for example, has a Leftronic display that shows real-time data about where customers are coming from, how much they’re spending using the company’s group payment service, and what they’re saying about the company on social media streams. “There’s a viral effect,” says co-founder Lionel Jingles. “When people see one they want one for themselves.”
Shawn Gupta, Reman Child
Co-founder Shawn Gupta calls OhLife “a personal journal that you’ll actually keep.” The startup’s secret: e-mail. Once you join, OhLife will send you an e-mail message once a day asking, “How did your day go?” You can write as much as you like in response, and your reply will be deposited in a private online journal. A full 50 percent of users, Gupta says, reply to the prompts at least once every other day. “Way more people want journals than blogs, which is why we will become an order of magnitude bigger than blogging,” he says. To monetize the service, the startup will eventually place targeted ads into the e-mail prompts.
Alex Solomon, Andrew Miklas, Baskar Puvanathasan
“We wake you up when shit breaks,” says PagerDuty’s blunt-speaking co-founder Alex Solomon. The company makes software that monitors IT systems and alerts the responsible engineers when something isn’t working. The system sends alerts via phone, SMS, and e-mail, and can automatically escalate alerts if the first contact doesn’t respond. Companies like 37Signals and AdMob are already using the system to respond to breakdowns faster, and the potential market includes 3 million system administrators around the world, Solomon says. “It’s a problem everybody has,” he told the investors at Demo Day. “Some of your portfolio companies already use us, and the rest should also.”
Rahul Vohra, Martin Kleppmann, Sam Stokes
Rapportive’s plugin for Gmail replaces the ads that usually appear in the right sidebar with rich data about your contacts. The startup hardly needed to pitch at Demo Day, as it’s already raised $1 million in seed funding from venture firms and angel investors including BoldStart Ventures, Charles River Ventures, 500Startups, Kima Ventures, and Zelkova Ventures, Paul Buchheit, Scott Banister, Jason Calacanis, David Cancel, Shervin Pishevar, Naval Ravikant, Roy Rodenstein, Dharmesh Shah, and Gary Vaynerchuk. I just profiled Rapportive on Monday—see “Rapportive’s ‘Social CRM’ Gmail Plugin Makes E-mail Social Again.”
Mike Johnston, Fred Cheng
Simperium’s first product was SimpleNote, a list-making app for the iPhone and iPad whose leading virtue is its ability to sync lists automatically across your computer and all of your devices. But the synching technology behind SimpleNote blossomed into an entire platform, one that’s now used by more than 400 mobile developers to synchronize application content across iPhones, iPads, Palm devices, BlackBerry phones, and Android phones. The company lets developers use the platform for free, and plans to earn money through promotions and premium subscriptions to a whole suite of mobile-centric products. “It’s a lot like Windows, in that our platform powers our product and our products fuel the growth of the platform,” says co-founder Mike Johnston.
Jong-moon Kim, Andrew Sugaya
Teevox’s founders, a pair of MIT-trained hackers nicknamed Jiggity and Suggy, want to turn smartphones like the iPhone into remote controls for a variety of content on the Internet. The startup’s first product is a free iPhone app that you can use to select and play TV shows and movies inside your desktop or laptop browser. “We call it ‘One-tap watching,'” says co-founder Jong-moon Kim (he’s Jiggity). The company will be releasing an application programming interface that allows third-party developers to connect their own Web services with the Teevox app, so that “any visitor to your site can pull our their mobile device and use it to control our site,” says Kim. “This is a game changer.”
Mick Johnson, James Gregory
Millions of parents in the United States already pay AT&T, Verizon and other wireless operators a monthly fee for services that periodically report the locations of their cell-phone-toting children based on their proximity to cell towers. Whereoscope has built an iPhone app that taps the smartphone’s built-in location sensors to provide far more detailed and versatile location tracking services. For example, parents can program the service to report when their children arrive at school or at an after-school location. Members of a couple could sign up to receive an alert whenever a significant other is getting close. The company plans to charge families $100 per year to use the service, which will eventually be available on Android phones and other location-aware devices.