My friend just told me one of the best and most motivating startup stories I’ve heard.
Here it is, told chronologically.
Background Information:
My friend, we’ll call him David, has free and paid programming classes and bootcamps in NYC. These classes are pretty popular.
The Story:
-Some kid, we’ll call him Ted, shows up to one of David’s free programming classes. At the end of the class, Ted goes up to David, says that he’s fluent in HTML/CSS, and asks if he can be a teacher’s assistant (TA) at the unpaid & paid classes. David says they’ll start with the unpaid classes then go from there.
-Ted shows up to the classes. David realizes he was exaggerating and doesn’t know much HTML/CSS, but recognizes that Ted has a great personality and is a go-getter type person.
-David takes Ted under his wing and begins teaching him programming at night via Skype.
-David lets Ted TA the paid classes without making Ted pay for the learnings he’s getting.
–David continues teaching Ted. “Ted’s not some brilliant, Einstein-level IQ guy, but he really has the right personality,” David tells me.
-David finishes teaching Ted.
-Ted starts TAing David’s bootcamps. These bootcamps are David and his business partner’s most lucrative offerings.
-While TAing these bootcamps, Ted approaches David and his business partner and asks if he can join the team. Ted wants to work with them, and get equity in their programmer classes company. Ted isn’t a great programmer and David and his business partner can’t imagine a role other than TA that would right. David and his business partner take too long to think of something that would be worth equity.
-Ted continues TAing bootcamps. It’s now 2-3 months after David finished teaching Ted 1-on-1. Ted gets a job as a programmer at a tech startup. His yearly salary is $60-70,000. This impresses David because 1. he got this job pretty quick after finishing his teachings and 2. Ted’s programming still isn’t very good.
-David stops TAing the bootcamps because he’s working as a programmer now full time.
-David works as a programmer at this startup for 6 months.
-The startup runs out of funding and goes bankrupt. Ted is out of a job.
-David has lunch with Ted. David looks at the code that Ted wrote while at the startup. It’s not very good. David tells Ted this. David tells Ted that he’s not a very good programmer, but he is a very good CEO and founder type. It’s meant to be a complement and a bit of motivation. David drills it into Ted’s head that he is not a good programmer, but that he would be a good CEO. This kind of ends their friendship.
-3 months later, Ted calls David and asks if he can come to David’s office to catch up. When David was teaching Ted, David was using coding a marketplace as teaching material. As a result, Ted and a friend of his decided to do a marketplace startup. The startup is a marketplace for low income restaurants and food wholesalers and it’s purpose is to allow these restaurants to more easily obtain the food that they sell. David tells Ted that he’s here to help if Ted needs anything.
-Ted goes to a presentation given by a panel of investors. One of the investors, we’ll call her Susan, talks about how there are no Hispanic startup founders. Ted is Hispanic and emails Susan, telling her that he is a Hispanic startup founder. Days go by. She doesn’t respond.
-Ted finds out that somebody he went to college with, we’ll call this guy Joe, became an investor. Ted and Joe set up a meeting.
-Susan finally responds. She sets up a meeting with Ted.
-Ted and Joe meet. Ted doesn’t even have a full MVP. Ted has no traction. All Ted and his business partner/friend have are their great personalities. Joe doesn’t seem interested. Ted tells Joe that after this he is going to be meeting with Susan. Hearing this makes Joe more interested. Joe knows of Susan. Joe is in fact friends with Susan’s husband. Joe calls Susan with Ted and Ted’s business partner in the room. Joe and Susan chat. Ted hypes up the startup after the call.
-Joe and Susan talk more. They agree that they’ll each invest if the other invests. They both invest.
-Another investor sees that Joe and Susan invested and decides to invest as well. This social proof is intense, but is about to get even more intense.
-Due to the previous investment they received, Y Combinator accepts Ted and his business partner’s startup into their accelerator and invests $200,000. The startup still doesn’t have an MVP, but Y Combinator is making an investment in the founders’ abilities, especially since they were able to get three investors already without any traction.
-This all happened in a whirlwind. It’s only been 2 months since David and Ted first met at David’s office. David hasn’t heard from Ted since that meeting. David randomly looks Ted up and finds Ted’s startup on Crunchbase. The first round of funding from those three investors totaled to 1.3 million. This means that Ted’s startup has received 1.5 million total in funding. David sees that the startup’s valuation is 3.5 million. David knows that Ted has ~30% equity in this startup. This means that just over a year after David finished teaching Ted, Ted became a millionaire.
In Summary:
David and his business partner made a mistake taking too long to find a position for Ted. David acknowledged to me that if he had tried harder, he could have found a role for Ted that was well worth equity. David recognized Ted as having a ton of talent and work ethic, but didn’t act fast enough to snatch up the talent.
Ted, meanwhile, never got discouraged. Despite not being a great programmer, having no savings, and having less than two years tech experience, he used his natural hustle and CEO personality to get into one of the most renowned and exclusive Silicon Valley tech accelerators and to make $1,000,000 (on paper)- without even building a functional MVP.
