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Speaker 1

00:00

Really bright and sunny today, I can't even see the slides, but I guess that's okay. Hi everyone, my name is Maria. For the past 4 and a half years, I've been building a company called Sunbird. Sunbird is a fragrance subscription service, and we help people date fragrances before marrying them.

Speaker 1

00:17

I'm really happy to be here today because Sunbird is, you know, it's probably 1 of the hardest things that I had to do in my life, but it's also 1 of the most rewarding. And the YC community has been instrumental in helping me get to this point. So it's really, I'm really happy to be here today. Now I would like to take you, I guess, behind the scenes of how we build the company and some of the early mistakes we've made, and God knows there were plenty.

Speaker 1

00:43

So chapter 1 of our story, It's called the year of misery. I kid you not, that's how I refer to that time. It was the year where I think we read every book under the sun about building an MVP, yet we didn't talk to a single customer. I'm a huge fragrance junkie, so let me set the story straight.

Speaker 1

01:00

The company was built out of my passion for the category. I love fragrances, I hate shopping for them. When you walk into a store, like a thousand fragrances in the air, the lady is spritzing something in your face, the pushy sales assistant, I hated that. The coffee beans don't work.

Speaker 1

01:14

Long story short is I had a dream. And that dream was, what if I could discover my next fragrance from the comfort of my couch? The 1 thing that was missing was a really good fragrance recommender or scent recommendation system. So Michael Founders and I set out to build 1.

Speaker 1

01:32

So the first landing page was very quick, and I was the original person who recommended fragrances. I doubt I was really good at that. Then we brought technology on board, and I think we built like 6 different ways for you to discover fragrances online. This 1 feature, we call it smart search, but basically you can say, okay, like I want a fragrance for a workout that smells like oranges, and we basically got your back.

Speaker 1

01:53

The problem was we all decided as founders to quit our jobs, and this was the business model. Oh, wait a second, You cannot really monetize a recommender, can you? Because people are not going to pay you. I think it took us about 6 months to realize you cannot really monetize a recommendation platform.

Speaker 1

02:09

And then we had to figure out what is it that we can build that can actually charge people money for. And so the first idea was, well, why don't we build a discovery kit, send discovery kit? So it was basically, it looked like this, if you can see. Basically 6 small little samples.

Speaker 1

02:25

People would pay us $9 for that. And the idea was that if they liked a scent, they would purchase a full-size bottle from us. Long story short, they purchased the kit. They never really purchased the bottle, so all we made was $9 off of like 100 people.

Speaker 1

02:40

Not really a billion dollar business. So we went back to the drawing board. And mind you, we still haven't talked to 1 single customer about what is it that they really truly wanted. So we're all still living in our heads.

Speaker 1

02:52

So, oh, and this was a fun time for me because we're operating on a shoestring budget. I basically don't have a job. My savings are dwindling down. So I found this really fun hack.

Speaker 1

03:02

You know when you go to Sephora, they give you 3 samples for free? You know when you go twice at 6 samples, you can sell them for $9? It's an amazing business model, or not. So I feel like I literally went to all 12 Sephoras in Manhattan a few times a day.

Speaker 1

03:16

I asked my friends to do that. Not fun, I felt like sales clerks literally recognized my face. They're like, what is she drinking, the fragrances? I don't know.

Speaker 1

03:26

Long story short, we moved on to the new business model. So we were like, okay, well maybe the problem with our first business model is that it takes an additional step for people to buy the full-size bottle so why don't we ship them the full-size bottles right away so we came up with this try before you buy a model for fragrances 3 full-size bottles of fragrances and little samples attached to them. We would just ship to people for free. Obviously, we would recommend them the scents based on all our algorithm and data.

Speaker 1

03:54

And they had 5 days to try the fragrances and ship the full bottles back if they didn't want any of them. So that was a really fun experience because we saw a 30% fraud rate on that business model. So it would ship a box and more often than not it would not come back and we would then not be able to charge somebody's card. So at the time, we were able to get into an accelerator program out here in New York called ERA, and they give us $40,000.

Speaker 1

04:20

So basically, that's all the money that we had to play with. And I think we wasted about 20,000, which is half on trying to make this work, and got very much in the red, got very upset. I think, I mean, saying that this was blood, sweat, and tears is really not saying much. So I think we came to a point where, let me skip that.

Speaker 1

04:42

We came to a point where I think we really wanted to give up And that's where we come to chapter 2, the glimmer of hope. So you know when the going gets really hard, you call this 1 person who you hope is going to support you. So for me that person was Michael Seibel. Michael is currently now the CEO of the accelerator program at YC.

Speaker 1

05:02

At the time, he was just a successful entrepreneur, sold his company to Autodesk. So I wanted to call Michael to cry on his shoulder, basically. I was like, Michael, fragrances really suck. I don't think we can make them work.

Speaker 1

05:13

I think we're going to build a makeup company. And he goes like, wait what? Maria, you spent the last year failing at fragrances, you're telling me that you're gonna go and build a makeup startup and spend another year failing at makeup? He goes like, makes no sense.

Speaker 1

05:27

No, no. If I were to put my money into someone and or back a team that I think has the best potential to make fragrances work, it would be Sunbird. Something shifted for me. And I think sometimes we all need that 1 mentor to kind of like hold our hand through something when the going gets really tough.

Speaker 1

05:46

Michael also shifted my thinking a little bit because he said, Maria, what if people are not looking for a signature fragrance? What if they would like to change fragrances like they change clothing? I was like, huh, interesting idea. I hung up the phone.

Speaker 1

05:59

2 hours later, we had the winning business model. And it was a fragrance rental, basically. So we said, okay, full bottles are not really working for us. We keep just losing money every time we try to sell full fragrance bottles of perfume.

Speaker 1

06:13

So we decided that we are gonna rent, quote-unquote, or ship people a 30-day supply of a design of fragrance of their choice for under $15. So basically instead of committing to 1 full bottle you can kind of get it in increments and build your collection and we decided to make it a subscription. So we basically turned off all the fancy features on our site. It was a one-pager, really ugly looking with this ugly picture.

Speaker 1

06:37

That's why I have it up on the slide. And basically it worked like magic. People paid us money first, we ship them product later. Amazing.

Speaker 1

06:47

We got, well you can't really see the picture, but we got 105 orders in the span of a week, and for us that was like, I've never felt this successful in my life. We're finally making it, oh my god. Now, we had our 9 to 5 as startup founders. If you can tell from the picture, that's me on the left, 2 of my co-founders.

Speaker 1

07:06

After hours, we would spritz perfumes. Like literally trying to get them from a big bottle into our little guy until 2 a.m. Every day. That's how we fulfill our first orders.

Speaker 1

07:16

These are the little guys all packed up and ready to go, all 105 of them. I counted, I took them to the post office myself. And then we get to the real fun part. The darkest hour, and that's chapter 3, the darkest hour is just before dawn.

Speaker 1

07:31

As our business was scaling, well, scaling, 100 customers is not really scaling, it's really early on, and you know we went through an experience of pitching a demo day at the first accelerator here in New York. Nobody really wanted to give us money, And I was looking at our bank account. I think out of the 40,000 that the first accelerator gave us, we had about 5,000. And e-commerce is a business that requires a lot of working capital.

Speaker 1

07:55

It requires a lot of cash. So I realized I would have to raise. And for the longest time, it was like the biggest disconnect. Because we were looking at this.

Speaker 1

08:04

And this is the rendition of like our first version of a Sember dashboard. You can hardly tell but they're like literally 3 KPIs on here and the most important 1 is how many orders a day we're getting. So we're getting 10 orders a day. For me, it's huge.

Speaker 1

08:17

It's like I'm making it. But the rest of the world is not really caught up to that. They're looking at my product. They're like, it's kind of ugly.

Speaker 1

08:24

Would anybody want this? And a lot of investors are like, you know what? My wife doesn't use fragrance. I don't think you'll ever be successful.

Speaker 1

08:30

I'm like, OK. So I go ahead and I pitch people. I didn't count, maybe 40 people, everybody told me no. But the no's never really upset me.

Speaker 1

08:40

What upset me were the crappy yeses, and I'll tell you what those are. So I was pitching this 1 investor couple, they were angels, and I told them, hey, I'm raising $250,000 to get this company off the ground, look, it's killing it, clearly, 500 orders. And they basically took me for a spin. It was like 8 meetings, send us this due diligence, send us that, like build a financial model for us.

Speaker 1

09:05

So I was legitimately thinking they were gonna give me $250,000 after all of this work. And then we get to the close, quote unquote, to that last meeting when I asked them for the check. And they're like, okay Maria, we're gonna give you $25,000. And they promised me a valuation that was 3 times lower than the lowest that I could accept at the time and they said that they would also want 5% advisory shares in my company because they didn't think I was qualified to run this business.

Speaker 1

09:32

I walked out of that meeting and walked into another meeting and it was probably even worse, although I don't know, it depends, but it was a real estate investor and he said, Maria, Sandbird is awesome. I love your idea. How about you give me 10% of your company for free office space for a year for you and your 3 co-founders. I looked out of that meeting.

Speaker 1

09:51

I told both of them no, obviously, although at the time I was pretty close to actually saying yes to some of those deals. And then I went back to the only person who I thought would listen. His name is John. He's an angel investor.

Speaker 1

10:03

He doesn't listen in commerce. But for me, he was a mentor and I was always afraid to ask him for money. I would always ask him for advice. I'm like, John, how do you do this?

Speaker 1

10:10

How do you do that? And that was also the time when we applied for YC. By the way, it was the second time that we applied for YC, the first time we got rejected. It was fine, I was the wrong business model anyway, I would have rejected myself many times over.

Speaker 1

10:27

And basically I came to John and I said, John Sunbird is raising a hundred K, I want you to put all of it, and I'm gonna give you a good deal, and the reason you should do it is, A, we're growing like crazy. B, I'm gonna get into Y Combinator in 3 weeks, and our valuation is gonna triple. So now is the perfect timing for you to invest. So John wrote us a check for $100,000.

Speaker 1

10:54

And then that brings me to our next chapter, Y Combinator. Well, We applied to Y Combinator for the second time and we didn't get in. So I had to call John back and say, John, so no, the company's valuation is not 3X, but by the way, we have another 500 customers, so you should be really happy because we're basically a rocket ship. And then I had to go back to the drawing board and start and keep raising money basically because we needed more working capital to build inventory and 1 thing though I think I discovered with that experience with John is the rule of scarcity Because all I said was hey, I have a hundred K and I want you to fill that whole 100k.

Speaker 1

11:33

There's no room for anybody left in that round. So what I ended up doing afterwards is every investor pitch that I had, I would come in and say, hey, so SendBirds round is 150,000. I already have a hundred in my bank. So all I have left in the round is 50k Do you want to be the last 50k in?

Speaker 1

11:52

So I pitched 6 people and like funds and I think I got 5 yeses out of that So that kind of really gets you over that like 150 real quick And so I think that the big lesson learned there is, you know, if you're going for like a million, say you're really going for 1 quarter of that and then just keep over subscribing, eventually you'll get to that million. But, you know, again a lot of my mentors, a lot of my friends are Y Combinator alums, and although the business was growing, I still didn't feel that the DNA of the company was there and we truly had the product market fit on some level. And so a lot of my friends were like, Maria, Are you applying to YC? And I'm like, what, a third time?

Speaker 1

12:32

To get rejected a third time? I did apply to YC, and long story short, we got in. Hence, they invited me to speak here, because if I didn't get in for a third time, probably wouldn't make it to this stage. But basically, it was the best experience of our life.

Speaker 1

12:45

We moved out of California, and I really think it changed the DNA of our company. So hyper-focused on growth, not like yearly growth and quarterly growth, week over week over week over week. And when you go through that experience, you always feel like in your batch, every company's growing faster than you, and everybody's smarter than you. But by the way, you walk out with the best peers and the best friends out of this.

Speaker 1

13:05

And the 1 thing that YC also taught us is to have true user interviews, to really try to understand what people think. And this 1 funny 1 that stuck with me, it was probably 1 of the first ones. Somewhere in the Palo Alto area, we met with this lady in a coffee shop, she wasn't a user of the product, and we're like, hey we wanted to meet with you, see what you think about our product. She goes like, are you dying?

Speaker 1

13:25

Is Sunbird going out of business? Is that why you're talking to me? Oh I bet you're dying. Don't die, please don't die, I'm gonna buy 10 subscriptions.

Speaker 1

13:32

I'm like, what? She clearly cared, and that was probably the most, that was probably the first time when I truly realized we might just make it. Because when people are willing to just pay you 10x, just like, don't die, please, it's, you know, You kind of know that you're building something that people want. And now, chapter 5, life after YC.

Speaker 1

13:52

Most companies end up making it. The bigger chunk of their life would be post-YC, not prior. I kind of wanted to leave you with a couple of last thoughts. Some of the things that I wish I knew or I just need to remind myself.

Speaker 1

14:09

So the first 1 is surround yourself with 10X people. And what I mean by 10X, it's not like 10 times more people. There is this basically concept, like in more traditional industries, somebody who is really top of their game is just about maybe 2 times better than your average person. In startups, because it's like really out of the box thinking, really creative, top people, Le creme de la creme, like the smartest people are 10 times better than your average person.

Speaker 1

14:34

And I wish I knew that when I started hiring my team because I would always go for the cheapest person. Like you know, oh you're cheap and you're kind of hard-working, welcome to Sandbird. You know and I was like well I could have hired probably 3 times less people, just hired the 10x people and we would have probably gone further ahead. So that's the 1.

Speaker 1

14:54

2, it's actually has been said before here today, have an audacious dream. And not just have an audacious dream, communicate it, kind of like come out, tell the world that it is your dream because when you do, you're helpable, right? So and you know, the world actually can get on board with you. I think as women, we do tend to be very shy and that sentiment has been shared here today.

Speaker 1

15:18

You know, pronouncing the billion word is really hard, but I think we have to. I mean, I've heard pitches from men who are like, we're gonna be 50% of this industry in 3 years, and I'm like, yeah, you really won't. But, you know, as women, we kind of prefer to get there first and then say that we really wanted to hit that target. I think we have to start reversing our thinking and first setting that audacious goal, communicating it to the team, to the partners, to everyone, and then hitting it.

Speaker 1

15:44

Then last but not least, which is also a big lesson learned for me, don't take advice from people that don't have what you want. I don't know how many of you are building your companies. I certainly, when I got started, I felt everybody wanted to give me advice from my mom, and I do welcome her advice, to everybody else, friends and family and everybody. And 1 of the conversations really stuck with me.

Speaker 1

16:09

So it was my successful friend. She has built a business like a hedge fund, very rich. And so I told her, hey, you know, I kind of want to build this tech startup in the fragrance world. And she goes, have you ever worked for a fragrance company?

Speaker 1

16:22

Do you even know what, I'm like, no, I have not worked for a fragrance company, but I think I might just make it. And basically, she was very discouraging. And I'm really happy I didn't listen because in that moment I was this close to going like maybe I should apply to L'Oreal and spend my next 10 years working for $60,000 a year or something and being really miserable at my desk. I'm really happy I didn't.

Speaker 1

16:47

So in other words, only take advice from people who have what you want in life. Just you know to like wrap this up. Sandbird has come a really long way. We're now a team of about a hundred people.

Speaker 1

17:00

We're shipping fragrances to about 250,000 people in the United States, we are eventually going to expand international, we've raised about 25 million people, but 25 million dollars not people, luckily. Yeah and I think that a lot of what we accomplished is definitely thanks to YC. So if you guys are running companies and you haven't applied yet, I strongly encourage you to do so. It will change your life.

Speaker 1

17:25

Thank you you