The Exchanges

Q Can I jump on the YC element there? Because it's super interesting for me in terms of kind of your learnings going through that process. So what did you learn from your time there that you'd really recommend to other founders who maybe are applying today or interviewing soon that you'd kind of pass on the wise wisdom?

A Yeah, you know, I'm a huge, I drink the YC Kool-Aid. I had so much admiration along the way after having met so many YC founders, just The level of care and concern that YC really has for founders. And so, you know, I think what I tell people who are applying in interviewing is, is really just be yourself. Do not try to build a company that you think other people will like, because you'll get so out of sync with yourself and you won't be able to pitch it the right way. And it has to be something that you really deeply care about. And so when you're applying in interviewing, just do that. And hopefully that will resonate. The other thing that I would really recommend is that It kind of goes back to that first point, but you're going to get a ton of advice along the way through the sort of analogy of like being shoved off of a cliff and having airplane parts. And the advice is people with older planes flying by you and telling you what to do. And so you're like, well, I'm building a different version of the plane and you have to build it before you hit the ground splat. And so YC can definitely be that way, right? Where you have all these partners who are trying to help. And then you have, you know, part-time partners and then you have other YC founders and then you have your peers and And so really what it comes back to is saying like, okay, well, what is true for me and what is…

AI assessment note: “what I tell people who are applying in interviewing is, is really just be yourself”

Q Can I jump on the YC element there? Because it's super interesting for me in terms of kind of your learnings going through that process. So what did you learn from your time there that you'd really recommend to other founders who maybe are applying today or interviewing soon that you'd kind of pass on the wise wisdom?

A Yeah, you know, I'm a huge, I drink the YC Kool-Aid. I had so much admiration along the way after having met so many YC founders, just The level of care and concern that YC really has for founders. And so, you know, I think what I tell people who are applying in interviewing is, is really just be yourself. Do not try to build a company that you think other people will like, because you'll get so out of sync with yourself and you won't be able to pitch it the right way. And it has to be something that you really deeply care about. And so when you're applying in interviewing, just do that. And hopefully that will resonate. The other thing that I would really recommend is that It kind of goes back to that first point, but you're going to get a ton of advice along the way through the sort of analogy of like being shoved off of a cliff and having airplane parts. And the advice is people with older planes flying by you and telling you what to do. And so you're like, well, I'm building a different version of the plane and you have to build it before you hit the ground splat. And so YC can definitely be that way, right? Where you have all these partners who are trying to help. And then you have, you know, part-time partners and then you have other YC founders and then you have your peers and And so really what it comes back to is saying like, okay, well, what is true for me and what is…

AI assessment note: “what I tell people who are applying in interviewing is, is really just be yourself.”

Q Oh, you are so kind, and what a way to button me up at the beginning, but I would love to kick off with a little bit on you, so tell me. Did you always kind of dream of recreating how we think about living in our cities, and what was that real founding moment with Star City?

A Yeah, so my parents eloped from the East Coast in the 19 sixties to San Francisco, California, and this was like during the middle of the counterculture hippie movement, and so they did live on communes, but eventually settled in Palo Alto. My dad was pursuing a medical degree at Stanford, and they ran a little experiment on our small family, which was that they had Stanford students living with us, so this was kind of Co-living sit 0.1, and it was impactful for our family because the students got a cheap place to live. My parents got inexpensive childcare, and my brother and sister and I had all these people from around the world living with us, and we had Stanford engineers helping us win every science fair project. This was a hack of ours. But I really fell in love with, with sort of cities when we went back to visit family in Manhattan, and I remember just sort of staying up one night when I think it was like seven or eight, just looking at the city skyline, and I think Every drawing I did after that in elementary school was of a building or of a city. I fell in love with sort of entrepreneurship when I graduated college and reconnected with a good old friend of mine, Trip Adler, who had started a company script. He was in the second batch of Y Combinator and called me. He's like, Hey, John, I know you do real estate related stuff. Can you help me build out a new office? An…

AI assessment note: “I really fell in love with, with sort of cities when we went back”

Q Okay, so with the tangible in mind, I want to discuss funding. You know, the prop tech spaces, it's not had the most love from VCs over the past few years, but it's suddenly become a very hot space. Can I ask, why did it take so long for prop tech to become hot with VCs?

A Yeah, it's a great question. I think it comes down to really, like, will they be able to provide returns to their LPs? And you know this now, there's a fund manager. And so it was really kind of like, what are the, the established companies that have grown to be multi-billion, tens of billion dollars. And so it kind of took a while, like, you know, Airbnb can kind of be considered a prop tech company, but it's more of a marketplace. And I think WeWork was the first one that really sort of set the stage. Before that, there was really only like LoopNet and Zillow and Renfin. And, you know, those were really taking a very, you know, web two point O approach to prop tech of, Just being sort of like a website and things like that, but I think it was really WeWork that sort of set the tone for PropTech to really get to where it is today. And also, I think it's, you know, there's the two sides of the valley, right? There's the side of the valley that says, look, we're only going to do the traditional VC stuff. And then there's the other side of the valley that says, like, look, building another social media app is just going to get blown up by Facebook or Instagram because they're going to launch a feature and that company will be dead. And so, Just because all the fan companies can knock companies out of their seat. More of the traditional VCs are sort of like, let's just continue to…

AI assessment note: “will they be able to provide returns to their LPs?”

Q Okay, so with the tangible in mind, I want to discuss funding. You know, the prop tech spaces, it's not had the most love from VCs over the past few years, but it's suddenly become a very hot space. Can I ask, why did it take so long for prop tech to become hot with VCs?

A Yeah, it's a great question. I think it comes down to really, like, will they be able to provide returns to their LPs? And you know this now, there's a fund manager. And so it was really kind of like, what are the, the established companies that have grown to be multi-billion, tens of billion dollars. And so it kind of took a while, like, you know, Airbnb can kind of be considered a prop tech company, but it's more of a marketplace. And I think WeWork was the first one that really sort of set the stage. Before that, there was really only like LoopNet and Zillow and Renfin. And, you know, those were really taking a very, you know, web two point O approach to prop tech of, Just being sort of like a website and things like that, but I think it was really WeWork that sort of set the tone for PropTech to really get to where it is today. And also, I think it's, you know, there's the two sides of the valley, right? There's the side of the valley that says, look, we're only going to do the traditional VC stuff. And then there's the other side of the valley that says, like, look, building another social media app is just going to get blown up by Facebook or Instagram because they're going to launch a feature and that company will be dead. And so, Just because all the fan companies can knock companies out of their seat. More of the traditional VCs are sort of like, let's just continue to…

AI assessment note: “it comes down to really, like, will they be able to provide returns”

Q Oh, you are so kind, and what a way to button me up at the beginning, but I would love to kick off with a little bit on you, so tell me. Did you always kind of dream of recreating how we think about living in our cities, and what was that real founding moment with Star City?

A Yeah, so my parents eloped from the East Coast in the 19 sixties to San Francisco, California, and this was like during the middle of the counterculture hippie movement, and so they did live on communes, but eventually settled in Palo Alto. My dad was pursuing a medical degree at Stanford, and they ran a little experiment on our small family, which was that they had Stanford students living with us, so this was kind of Co-living sit 0.1, and it was impactful for our family because the students got a cheap place to live. My parents got inexpensive childcare, and my brother and sister and I had all these people from around the world living with us, and we had Stanford engineers helping us win every science fair project. This was a hack of ours. But I really fell in love with, with sort of cities when we went back to visit family in Manhattan, and I remember just sort of staying up one night when I think it was like seven or eight, just looking at the city skyline, and I think Every drawing I did after that in elementary school was of a building or of a city. I fell in love with sort of entrepreneurship when I graduated college and reconnected with a good old friend of mine, Trip Adler, who had started a company script. He was in the second batch of Y Combinator and called me. He's like, Hey, John, I know you do real estate related stuff. Can you help me build out a new office? An…

AI assessment note: “Every drawing I did after that in elementary school was of a building”

Q your product should be. Totally with you there. As an investor, a common cause of up So amongst that community with YC companies is the valuations. And we chatted before about valuations and how to think about them. And I'd love to hear your thoughts on when it comes to valuation and kind of investor selection in what situation, John, would you maybe take a lower valuation against other offers?

A I think the valuation thing is really funny in the early days, right? Like I think Gary Tan from initialize actually had a tweet recently about this is like, if you're trying to value invest at the seed stage, it's kind of a silly exercise. So I think that like optimizing between a six cap and a 12 cap is really like, I just don't know that that's going to be the right way to invest. I think you're just kind of like, is this going to be an enormous company? Let's go or let's not go. What a lot of founders forget is that you put somebody on your board, you have an investor that you really want to have this really deep connection with and close conversation with all the time, because they're going to be there through all the ups and downs. And especially as the CEO, you know, you're really beholden to the board and you want to make sure that the investor's Have a lot of confidence in you. And so if that relationship isn't really good, then you can run into a lot of pitfalls. And so what I see a lot of founders do is they'll end up taking evaluation that, you know, a partner, but just because of a name or whatever it is and not really doing a diligence. And so you want to kind of think of it as hiring. So in our case, there's multiple times in our fundraising process where, you know, we had some of the folks with the sort of big names come to us and In one instance, I actually had…

AI assessment note: “you want to have this really deep connection with and close conversation with all the time”

Q your product should be. Totally with you there. As an investor, a common cause of up So amongst that community with YC companies is the valuations. And we chatted before about valuations and how to think about them. And I'd love to hear your thoughts on when it comes to valuation and kind of investor selection in what situation, John, would you maybe take a lower valuation against other offers?

A I think the valuation thing is really funny in the early days, right? Like I think Gary Tan from initialize actually had a tweet recently about this is like, if you're trying to value invest at the seed stage, it's kind of a silly exercise. So I think that like optimizing between a six cap and a 12 cap is really like, I just don't know that that's going to be the right way to invest. I think you're just kind of like, is this going to be an enormous company? Let's go or let's not go. What a lot of founders forget is that you put somebody on your board, you have an investor that you really want to have this really deep connection with and close conversation with all the time, because they're going to be there through all the ups and downs. And especially as the CEO, you know, you're really beholden to the board and you want to make sure that the investor's Have a lot of confidence in you. And so if that relationship isn't really good, then you can run into a lot of pitfalls. And so what I see a lot of founders do is they'll end up taking evaluation that, you know, a partner, but just because of a name or whatever it is and not really doing a diligence. And so you want to kind of think of it as hiring. So in our case, there's multiple times in our fundraising process where, you know, we had some of the folks with the sort of big names come to us and In one instance, I actually had…

AI assessment note: “you want to kind of think of it as hiring”

Q the term sheets. And it's like, so you're going to choose someone who you've met three days ago, who's given you a high valuation on a term sheet, and they're going to join your board and work with you for 10 years, and you're going to do that for efficiency's sake. That seems quite crazy to me. Am I wrong in thinking this? Am I too VC in thinking this?

A No, I mean, look, I think you're tapping into something really interesting, which is just like before this, we were talking about relationships and love and Harry's relationship world. And that was, that was really fun. We won't get into that now, but you know, you want to think of this exactly the same way. You may have love at first sight with an investor and that's okay, but you still want to do your diligence, right? And so I think that it's important to run a process and actually as a founder, you should know that you do have leverage in that process. And furthermore, those investors are professional investors. And so they should be ready to participate in your process so that you can get back to work and continue to work on your startup. A lot of the common pitfalls that I like to talk about are just preparedness, like not having your shit together as you're getting ready to fundraise. And what people often do is they just start fundraising before they've actually talked to partners. They haven't built any relationships with any partners. They just kind of say, look, it's time for me to raise. I'm going to build a deck and I'm just going to go out and do it. But without sort of soft pitching people throughout a series of meetings and You know, you really don't get a chance to build that relationship and your chances of success are just so much lower. Whereas I think you s…

AI assessment note: “No, I mean, look, I think you're tapping into something really interesting”

Q But, uh, but when we chatted before, we also had a discussion on less tangible elements, and I would like to touch on some of those. One of them was mental health, an area that we often see more and more in the news today. So starting on that, and maybe an element of causation, why do founders forget about this During that journey as an entrepreneur, do you think?

A Yeah, so look, I have to say that I'm not a qualified therapist, but I was raised by a psychiatrist, my father. So mental health is something that our family really talks a lot about. He had a nickname, actually, his nickname was Warm Norm, because he had this, just like he was such a warm guy, and like, he is a warm guy, and he had a hot tub that everybody would hang out in and just ask for advice. So anyways, all I want to say here is that like, I think that there's And I actually have to give kudos to the initialized guys for taking down the notion of sort of hustle porn, as I would say. There's this concept in the valley that like you should just grind to the limits of your existence and think about yourself secondarily and just really like focus on the product and build an awesome startup and all that kind of stuff. And I think that like what we found is, or at least as what the founding community has found is that they end up, even if there's a great outcome, having really not enjoyed the experience along the way. And so what you have to do is actually reprioritize yourself as number one, right? And this is kind of hard to do because you have so many people asking for so much stuff. And as a founder, you're probably really deeply care about solving people's problems. And so what you do is you sort of forget about yourself. So what I like to do, the trick is to just sort o…

AI assessment note: “There's this concept in the valley that like you should just grind to the limits”

Q But, uh, but when we chatted before, we also had a discussion on less tangible elements, and I would like to touch on some of those. One of them was mental health, an area that we often see more and more in the news today. So starting on that, and maybe an element of causation, why do founders forget about this During that journey as an entrepreneur, do you think?

A Yeah, so look, I have to say that I'm not a qualified therapist, but I was raised by a psychiatrist, my father. So mental health is something that our family really talks a lot about. He had a nickname, actually, his nickname was Warm Norm, because he had this, just like he was such a warm guy, and like, he is a warm guy, and he had a hot tub that everybody would hang out in and just ask for advice. So anyways, all I want to say here is that like, I think that there's And I actually have to give kudos to the initialized guys for taking down the notion of sort of hustle porn, as I would say. There's this concept in the valley that like you should just grind to the limits of your existence and think about yourself secondarily and just really like focus on the product and build an awesome startup and all that kind of stuff. And I think that like what we found is, or at least as what the founding community has found is that they end up, even if there's a great outcome, having really not enjoyed the experience along the way. And so what you have to do is actually reprioritize yourself as number one, right? And this is kind of hard to do because you have so many people asking for so much stuff. And as a founder, you're probably really deeply care about solving people's problems. And so what you do is you sort of forget about yourself. So what I like to do, the trick is to just sort o…

AI assessment note: “as a founder, you're probably really deeply care about solving people's problems”

Q So aligned with you on that. And then the final one, John, next five years for you and star city, like just how big could it get?

A Yeah. So we want to be the brand that is recognized for making cities affordable and accessible to people again. And I think that the world is our oyster right now. There is so many cities that people really want to get their foot in the door to, whether it be San Francisco to start a startup, whether it be LA to produce a movie or whatever it is. But maybe they have to be a barista or a bartender first to get there. They can't uncrack those cities because it's just so far out of reach, and they can't get close to those places of action. And so we would love to be the globally recognized brand for people getting that foot in the door in the best cities in the world. And so we're actually building the buildings. We're actually building the community. We build software to make that experience really great. And so taking a holistic view is soup to nuts of like, What is the customer experience of moving to a new city? We would love to just be known as that, and then it kind of fundamentally goes down to hope. So if you're in the middle of the country, and you've always had this dream of moving to one of these great cities, well, if you're looking at the headlines today, you say, I can't do that. Fast forward five to seven years, that same person could say, I can now do that because of Star City. That's my dream.

AI assessment note: “we would love to be the globally recognized brand for people getting that foot in”

Q contrarian with you? And as a VC, at first glance, one could look at Star City, and obviously not me, because I'm incredibly open-minded as a VC, but they could look at it and say, oh, it's really asset-heavy, no thanks. Why would I, or that VC, be wrong in this case to take that automatic view that asset-heavy, counter-lean startup offering, and why would that be a wrong view?

A Yeah, so we didn't really approach the problem from looking at What would VCs think from the outset? We sort of said, like, let's build the best thing we possibly can, and then see what part of the capital markets would actually be open to helping us scale. And so, we started the company by talking to 750 people who were making 50 to 120,000 dollars a year, who had full-time jobs, and were living in cities 20 to 50 years old. And we said, what do you hate about your apartment? What do you hate about the living experience? And obviously, after that, going through that, we found that there was a real hair on fire situation for that demographic. So then we talked to the supply side, and these were like real estate developers and builders and things like that, and we found that nobody was really focused on this problem, and so then we said, okay, we now have to build our first Star City, right? This is co-living as we see it, so our MVP, and what I did is I went out and I raised friends and family money in order to do that, and I built my founding team. Along the way, I reconnected with Trip. Trip was the founder of Script, and he was like, look, I can introduce you to VCs, and I was like, well, I don't know that VCs will really be excited about this. And then I met with Jared, his co-founder, who is now a partner at YC. And so I pitched Jared in this cafe, and this is in 2016. And…

AI assessment note: “we didn't really approach the problem from looking at What would VCs think”

Q contrarian with you? And as a VC, at first glance, one could look at Star City, and obviously not me, because I'm incredibly open-minded as a VC, but they could look at it and say, oh, it's really asset-heavy, no thanks. Why would I, or that VC, be wrong in this case to take that automatic view that asset-heavy, counter-lean startup offering, and why would that be a wrong view?

A Yeah, so we didn't really approach the problem from looking at What would VCs think from the outset? We sort of said, like, let's build the best thing we possibly can, and then see what part of the capital markets would actually be open to helping us scale. And so, we started the company by talking to 750 people who were making 50 to 120,000 dollars a year, who had full-time jobs, and were living in cities 20 to 50 years old. And we said, what do you hate about your apartment? What do you hate about the living experience? And obviously, after that, going through that, we found that there was a real hair on fire situation for that demographic. So then we talked to the supply side, and these were like real estate developers and builders and things like that, and we found that nobody was really focused on this problem, and so then we said, okay, we now have to build our first Star City, right? This is co-living as we see it, so our MVP, and what I did is I went out and I raised friends and family money in order to do that, and I built my founding team. Along the way, I reconnected with Trip. Trip was the founder of Script, and he was like, look, I can introduce you to VCs, and I was like, well, I don't know that VCs will really be excited about this. And then I met with Jared, his co-founder, who is now a partner at YC. And so I pitched Jared in this cafe, and this is in 2016. And…

AI assessment note: “we didn't really approach the problem from looking at What would VCs think”