Dealing With Setbacks And The Startup Gut Punch

**Michael Seibel** (0:00)
It's like saying that you want to be a boxer, but like after you get really good at boxing, you'll never have to take a punch again. It's like, no, the sport, people, that's the sport, that's the game we're playing. All right, this is Michael Seibel with Dalton Caldwell, and today we're gonna talk about dealing with setbacks. Needless to say, in both of our startups, we experienced a wide variety of setbacks. And I think working with so many startups over the last 10 years, what's probably become most obvious to us is how I don't think I've ever seen founders who don't get hit with a lot of punches. Dodging the punch is impossible. Even, I'll phrase it another way, you might dodge some of the punches, but some of the punches are gonna land.
So this is gonna be a bit of a talk about what types of punches land and what you might have to deal with if you're in this game for a long time.
What do you think, Dalton? Did y'all have a couple punches land over the years?

**Dalton Caldwell** (1:01)
Yeah, I mean, that was my experience as a founder, was taking punches constantly. And I think what comes up in office hours with me a lot, man, is I think people wanna talk to me about one specific thing and asking for advice about that thing, and I'm happy to do it. But a lot of what I wanna encourage them to think about is the meta thing, which is that the thing will keep happening over and over again. And so developing a set of skills of identifying a situation of like, oh, this is one of these where like something bad happened and approaching it is part of like the sun rises, the sun sets, bad things happen.
You know, like this is as much a part of being a startup founder as literally anything else, versus thinking you're never gonna have them or that each setback is different. They're not, they just come just like every sunrise comes, right?

**Michael Seibel** (1:59)
So let's jump into the first area that produces setbacks, investors and fundraising, the classic, the classic.
I went in fundraise with this expectation. I came out with a bloody nose and a black eye.

**Dalton Caldwell** (2:14)
Yeah, I thought they liked me. I thought they were my friends. I thought I was special. I thought everyone else is raising, you know, everyone else is this. Oh, I got all the right intros.
I know they're interested in my thing. I did the networking. Like, it's some version of I believed with good reason X was going to happen. X did not happen.
Like, how dare they? You end up going kind of nuts on feeling wronged by a person or a system or whatever you want to call it. Like, someone did you wrong, right?

**Michael Seibel** (3:01)
What I think the scary thing about fundraising is that one fundraising process can produce so many of these experiences.

**Dalton Caldwell** (3:09)
Concept.

**Michael Seibel** (3:10)
Well, they...
So many of them. And I remember personally, the first full partnership meeting, like, we were raising a round from a real investor and I had my first full partnership meeting and I remember thinking, like, this is it. This is destiny. This is going to happen. It's taken me so many meetings to get here. And I remember in front of everyone, one of the VCs in the meeting eviscerated me for 45 minutes and everyone else was quiet. And the person who, like, invited me to the meeting was quiet.
And I just watched that person very logically take apart my entire startup, almost in a way that I would have had our roles been reversed.

**Dalton Caldwell** (3:55)
Well, they were probably right, right?

**Michael Seibel** (3:57)
They were right. No, no, it wasn't. They weren't wrong, right? But like, you know, in some way, they were right. In other ways, I think we were right. I mean, our company did well in the end, but you could take apart any startup logically at that stage, like, where there's no defense. And I just remember leaving that meeting being like, oh shit, like, I can't imagine how I felt an hour ago compared to how I feel now.
Like, literally, those seem like two different years of my life.

**Dalton Caldwell** (4:26)
We see this at YC where, like, you know, statistically, most folks don't get into YC. This is the game.
And you see the way folks react to it in very different ways.

**Michael Seibel** (4:40)
When we deal with it in the context of YC founders, the best people who don't get in realize this isn't a one shot game. Yeah, they apply again. They make progress to their company. Like, you know, we send the reject email to every company and, like, the best people will be like, you know, you're making good points. We're going to we're going to improve on those things and we'll apply again. And I think that, like, they realize that that's that's a plus one. Like you like you, you've earned some respect in that moment.