Steve & I ventured up to Cambridge, MA on our senior year spring break to hear Paul Graham read his essay, "How to Start a Startup". He announced Y Combinator shortly thereafter and we sent in the following application, which PG & Steve have allowed me to publish. We hope it's somewhat instructive, or at least entertaining.
Oh, and we'd love for someone to actually do this startup so we can stop waiting in line.
We were rejected after our interview, but Paul called us the next morning as we rode back to Charlottesville to say we could join YC if we came up with a new idea. That idea was reddit.
Steve has since co-founded another YC company: Hipmunk.com (and I'm helping out as the brand/marketing department).
I've redacted Andy's personal info since his relationship with our startup didn't go beyond the application (he didn't come interview with us and had decided to stay at UVA after graduation).
Please list your company's name, url (if any) and a phone number (preferably a cell phone).
Redbrick Solutions, LLC
http://www.redbricksolutionsllc.com (No website, yet).
Please list the founders, one per line, with age; year, school, degree, and subject for each degree; slashdot id; email address; and url. Put unfinished degrees in parens. List the main contact first. Put asterisks before any who won't come to Cambridge.
Alexis Ohanian, 21; Senior, University of Virginia, (B.S. Commerce in Management & Intl. Business and B.A. History); kn0thing (870409); [redacted]@gmail.com; http://www.eyeswide.org.
Steve Huffman, 21; Senior, University of Virginia, (B.S. Computer Science); mrhat56 (760594); [redacted]@gmail.com.
Andy [redacted], 21, Senior, University of Virginia, (B.S. Computer Science); [redacted]; [redacted]; [redacted].
Tell us in one or two sentences something about each founder that shows he or she is an "animal," in the sense described in How to Start a Startup.
Animals? We're a freaking zoo.
Andy: When Paul described the type of person whom he believes is an animal at his "How to Start a Startup" talk, Andy was the first person of whom I (Steve) thought.
Steve: Steve regularly works extra hours at his current programming job, even when over-time isn't an option (i.e. working for free) to fix nagging bugs. At school, Steve often works late nights with Computer Science friends helping them get assignments working.
Alexis: See current schedule. When it comes to design, Alexis literally won't rest until every pixel is aligned--sleep deprivation is the status quo and when it comes to working in general, coffee makes sure he's the last one to go to sleep at night and the first one up in the morning.
Tell us in one or two sentences something about each founder that shows a high level of ability.
Alexis is currently writing 80page Honors thesis on 20th century German history, taking a 21 credit hour semester (7 classes), acting in the lead role of a student film, preparing for an International Business German exam in April, fulfilling the final requirements for his dual-concentration degree in the McIntire School of Commerce and planning a startup software company.
Steve: Steve was hired out of high school to work as a programmer/systems administrator for a local software company (Image Matters LLC).
For founders who are hackers: what cool things have you built? (Extra points for urls of demos or screenshots.)
Steve: Steve is currently working on his undergraduate thesis, which is a web application written in Lisp. Other notable projects include a rigid-body simulator to lay out graphs and a distributed raytracer. (Some screenshots from the raytracer are at http://www.people.virginia.edu/~slh6d/raytracer/ ).
Andy: I wrote a set of php scripts to accept an image, find barcodes, decode the barcode, and look up prices on amazon. (Note: Paul, if you recall from when we spoke in Cambridge, this was something we spoke about).
Alexis: He's done our logo. View at http://eyeswide.org/RedbrickSolutions.png
How long have you known one another and how did you meet?
Steve + Alexis: Going on 4 years, we lived across the hall from one another in a freshman dorm -- we met over a game of Gran Turismo.
Steve + Andy: Have been in the same CS program for nearly four years but did not really meet until about a year ago.
Alexis + Andy: Met two days ago over dinner arranged by Steve.
What is your company going to make?
We are going to build an infrastructure that will allow consumers to order food from their cell phones (via a text-interface, rather than voice), drive to the restaurant and pick up their order. The consumer will already have registered with us and submitted their credit card information. When the consumer actually orders a meal, the transaction is completely cashless.
Restaurants will also have an account with us, through which they can access their menus via a web interface. Restaurants will be free to update their meals, update the prices, and offer specials (etc.) as they wish.
There is a possibility that we will need to design some type of hardware that can be installed in a restaurant that will receive orders from our system (e.g. a box that sits under McDonald's counter and puts orders into their already-computerized system).
If your project is software, what OS(es) and language(s) will you use, and why?
Steve likes Lisp; Andy likes perl. We haven't begun implementation yet, so we will see what works best when the time comes.
As far as OS(es) go. We will likely use a *nix OS as that is what we use best.
If you've already started working on it, how long have you been working and how many lines of code (if applicable) have you written?
No code written yet.
If you have an online demo, what's the url? (Big extra points for this.)
How long will it take before you have a prototype? A beta? A version 1 you can charge for?
We are hoping to implement a working prototype (i.e. an end-to-end implementation) by the end of the summer. This prototype should take an order, charge the user, and deliver the order to the target restaurant.
How will you partition the work this summer; who will work on what?
Steve and Andy will do the coding, Alexis will work on the company's website, market research, finances, general PR, and business plan development. Also, Alexis is handy with graphics and HTML and will likely do websites and graphics-design to earn the company some extra cash (which we do currently).
If you already have a business plan, what's the url? (Don't send us your business plan. Put it on a server and tell us the url. Ascii text preferred. Don't password protect it.)
How will you make money? Who will your customers be, how many are there, and how will they hear about you?
We will make money by charging a % commission on every order made through our service. Our business model is B2B, and our business clients will be restaurants. We already have a restaurateur in our starting market who is very interested and once we have a proven service, we'll directly sell it to other restaurants. The product benefits greatly from word-of-mouth advertising (particularly as recent graduates of the local University), but direct sales to clients will be made by Alexis.
Will you do price discrimination?
Depending on the size of the restaurant (and order volume) we would be dealing with, yes we would charge different buyers different prices for our service.
Who are your competitors, and who might become competitors? Who do you fear most?
- Waiter.com (Partnered with OracleMobile.com, a subsidiary of Oracle Corp.)
We suspect if our plan actually works, competitors will appear out of the woodwork. We can beat smaller competitors (like the current ones we have listed) because we will offer a superior product.
What we fear most is probably a competitor with a huge bankroll steam-rolling us to market.
Who will lose most if you succeed? (This need not be a competitor; TV networks have been hurt by email.)
Restaurant employees who will be displaced by structural unemployment as our service reduces the labor costs of restaurants.
Which companies, in order, are most likely to buy you?
An IT company (e.g. Oracle and Waiter.com)
A Telecomm company
A fast-food chain (e.g. McDonald's, Subway)
What do you know about your business that other companies in it just don't get?
That our type of service is far superior to the existing browser-based online ordering format, which restaurants (despite the inferiority, still pay for). Restaurants are the real customers in our business and should be interested in a more robust service that would take orders faster and without error; consumers don't want to be waiting in line to get the same burger meal they order every Tuesday at lunch.
What's new about what you're doing?
Ordering food from cell phones is not an option currently available to consumers. This is a convenience that has been talked about in passing but never implemented successfully.
The restaurants will have an easy (free) method of managing their menus that are available to consumers.
Why would it be hard for someone else to duplicate?
It's not, but if we can establish relationships with restaurants and develop strong brand loyalty from end-users, we should be able to secure a niche in the market.
Have you made any discoveries you consider patentable?
What might go wrong? (This is a test of imagination, not confidence.)
- Restaurants are not interested.
- Consumers are not interested.
- We cannot offer a smooth-enough user experience to promote the growth of our business.
- We botch the handling of users' credit cards and cost them money, eventually costing us money and users.
- A restaurant may botch the order, reflecting poorly on us. Or, a restaurant does not manage their end of the system (e.g. their fax-machine breaks, preventing the delivery of orders).
- Unreliable data transfer from cell phones could cause an order to be dropped or duplicated.
- Fraud (and other nefarious activity).
If you're already incorporated, when were you? Who are the shareholders and what percent of the company do each own? If you've had funding, how much, at what valuation(s)?
Our LLC was organized in Virginia on October 22, 2004. Steve and Alexis are the 2 shareholders and each own 50% of the company. We have been entirely self-funded up to this point.
Andy is a recent addition. We will divide the company into thirds the next time we meet with our lawyer.
If you're not incorporated yet, please list the percent of the company you plan to give each founder, and anyone else you plan to give stock to. (This question is more for you than us.)
If you'll have expenses beyond the living costs of your founders, Internet access, server rental, etc., what will they be?
Describe, in one sentence each, any companies any of you have started before. If they failed, why? (We consider failed companies valuable experience too.)
If you could trade a 100% chance of $1 million for a 10% chance of a larger amount, how large would it have to be? Answer for each founder. (There is no right answer.)
Steve: A million dollars is a lot of money. Considering the paltry amount we need to actually build the system (we need to eat), a million dollars would go a long way. Since we would have only a 10% of the larger amount, I would expect $1 million to be 10% of the large value (i.e. $10 million).
Andy: The statistician in me wants to say that the expected value of the second item would need to be more than $1 million (so $10 million).
Alexis: See above. I tend to be more risk-adverse (ironic, given how gung-ho I am about this startup despite the pitiful odds of its success), so it would have to be a few million more than $10mil.
Note: Andy and Steve came up with their answers seperately. Alexis copied us.
If your startup seems at the end of the summer to have a good chance of making you rich, which of the founders would be likely to commit to continue working on it full time over the next couple years?
All of us want to work on this full-time. The only reason we would not would be for strictly financial reasons.
Which of the founders would still want to be working for this company in 10 years, if it were successful, and which would rather sell out earlier and do something else? (Again, no right answer.)
Alexis: Hard to say at this point, but if the opportunity to sell presented itself, I'd likely seize it and enroll in a graduate program in foreign affairs.
Andy: I think half the fun is coming up with the ideas.
Steve: Ten years from now I hope that we would have either sold the company for gazillions of dollars, or realized we could not do so and tried to come up with something new.
Are any of the founders covered by noncompetes or intellectual property agreements that overlap with your project? Will any be under consulting contracts this summer?
Was any of your code written by someone who is not one of your founders? If so, how can you safely use it? (Open source is ok of course.)
Will any of the founders have other jobs, responsibilities, or consulting work this summer?
Steve has accepted a programming job offer from a small software company (he has not signed any restrictive agreements); pay from which was going to fund the beginnings of our company. Whether he continues with this company depends largely on the outcome of this application.
Tell us something surprising or amusing that one of you has discovered, and who discovered it. (The answer need not be remotely related to your project.)
Steve has been convinced for a while that it is possible to use neural networks to predict the stock market. He recently heard word of someone succeeding in doing such.
What else would you have asked if you were us?
How much of your life are you willing to give up to start a company?