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Apr 29, 2022 · 15m · y-combinator

Investors Said No, Now What? · Y Combinator

Michael Seibel · 5m spoken Brad Flora · 4m spoken Harj Taggar · 4m spoken
0:00 / 0:00
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In this episode of Inside the Group Partner Lounge, Y Combinator partners explain how founders should navigate investor rejections by ignoring superficial excuses and focusing on business execution. By demystifying investor psychology, the hosts encourage entrepreneurs to maintain core conviction, rely on customer insights, and drive progress through real metrics.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The partners hold 68% of the talking time here. How this is scored →

The partners as informed peer 7.4 Guest teaching 2.4 Guest disagreement 0.8 The partners pushing back 1.0
05100:0010:000:13–4:03 · The partners as informed peer 7/10 Title Sequence: Inside the Group Partner Lounge The hosts and guest discuss the common trap founders fall into when receiving rejection emails from investors. Michael Seibel and Harj Taggar share concrete insights regarding investor failure rates and how rarely investors genuinely know a domain better than founders.4:03–6:29 · The partners as informed peer 8/10 The Danger of Debating Feedback and Changing Direction Harj Taggar and Michael Seibel outline why changing direction or debating an investor's quick email feedback damages founder credibility. Michael details the glaring real issues founders often overlook in favor of polite rejection notes.6:29–9:13 · The partners as informed peer 7/10 Evaluating Feedback and Identifying True Patterns Brad Flora outlines how founders should evaluate consistent feedback across dozens of pitches without blindly internalizing it. Michael Seibel presents his explicit heuristic algorithm for filtering investor rejection signals.9:13–13:51 · The partners as informed peer 8/10 Real Rejection Reasons: Leadership, Pattern Matching, and Stack Ranking The group breaks down the unvarnished reasons founders get rejected, including leadership presence, stack ranking, and pattern matching. Harj Taggar and Michael Seibel note that over 60 percent of YC companies were previously rejected before showing tangible growth.13:51–15:33 · The partners as informed peer 7/10 Changing Facts Through Progress and Final Advice Michael Seibel and Brad Flora conclude with the final core takeaway: change the facts through progress rather than words. The segment concludes harmoniously with final advice for fundraising founders.0:13–4:03 · Guest teaching 2/10 Title Sequence: Inside the Group Partner Lounge The hosts and guest discuss the common trap founders fall into when receiving rejection emails from investors. Michael Seibel and Harj Taggar share concrete insights regarding investor failure rates and how rarely investors genuinely know a domain better than founders.4:03–6:29 · Guest teaching 2/10 The Danger of Debating Feedback and Changing Direction Harj Taggar and Michael Seibel outline why changing direction or debating an investor's quick email feedback damages founder credibility. Michael details the glaring real issues founders often overlook in favor of polite rejection notes.6:29–9:13 · Guest teaching 3/10 Evaluating Feedback and Identifying True Patterns Brad Flora outlines how founders should evaluate consistent feedback across dozens of pitches without blindly internalizing it. Michael Seibel presents his explicit heuristic algorithm for filtering investor rejection signals.9:13–13:51 · Guest teaching 3/10 Real Rejection Reasons: Leadership, Pattern Matching, and Stack Ranking The group breaks down the unvarnished reasons founders get rejected, including leadership presence, stack ranking, and pattern matching. Harj Taggar and Michael Seibel note that over 60 percent of YC companies were previously rejected before showing tangible growth.13:51–15:33 · Guest teaching 2/10 Changing Facts Through Progress and Final Advice Michael Seibel and Brad Flora conclude with the final core takeaway: change the facts through progress rather than words. The segment concludes harmoniously with final advice for fundraising founders.0:13–4:03 · Guest disagreement 1/10 Title Sequence: Inside the Group Partner Lounge The hosts and guest discuss the common trap founders fall into when receiving rejection emails from investors. Michael Seibel and Harj Taggar share concrete insights regarding investor failure rates and how rarely investors genuinely know a domain better than founders.4:03–6:29 · Guest disagreement 1/10 The Danger of Debating Feedback and Changing Direction Harj Taggar and Michael Seibel outline why changing direction or debating an investor's quick email feedback damages founder credibility. Michael details the glaring real issues founders often overlook in favor of polite rejection notes.6:29–9:13 · Guest disagreement 1/10 Evaluating Feedback and Identifying True Patterns Brad Flora outlines how founders should evaluate consistent feedback across dozens of pitches without blindly internalizing it. Michael Seibel presents his explicit heuristic algorithm for filtering investor rejection signals.9:13–13:51 · Guest disagreement 1/10 Real Rejection Reasons: Leadership, Pattern Matching, and Stack Ranking The group breaks down the unvarnished reasons founders get rejected, including leadership presence, stack ranking, and pattern matching. Harj Taggar and Michael Seibel note that over 60 percent of YC companies were previously rejected before showing tangible growth.13:51–15:33 · Guest disagreement 0/10 Changing Facts Through Progress and Final Advice Michael Seibel and Brad Flora conclude with the final core takeaway: change the facts through progress rather than words. The segment concludes harmoniously with final advice for fundraising founders.0:13–4:03 · The partners pushing back 1/10 Title Sequence: Inside the Group Partner Lounge The hosts and guest discuss the common trap founders fall into when receiving rejection emails from investors. Michael Seibel and Harj Taggar share concrete insights regarding investor failure rates and how rarely investors genuinely know a domain better than founders.4:03–6:29 · The partners pushing back 1/10 The Danger of Debating Feedback and Changing Direction Harj Taggar and Michael Seibel outline why changing direction or debating an investor's quick email feedback damages founder credibility. Michael details the glaring real issues founders often overlook in favor of polite rejection notes.6:29–9:13 · The partners pushing back 1/10 Evaluating Feedback and Identifying True Patterns Brad Flora outlines how founders should evaluate consistent feedback across dozens of pitches without blindly internalizing it. Michael Seibel presents his explicit heuristic algorithm for filtering investor rejection signals.9:13–13:51 · The partners pushing back 2/10 Real Rejection Reasons: Leadership, Pattern Matching, and Stack Ranking The group breaks down the unvarnished reasons founders get rejected, including leadership presence, stack ranking, and pattern matching. Harj Taggar and Michael Seibel note that over 60 percent of YC companies were previously rejected before showing tangible growth.13:51–15:33 · The partners pushing back 0/10 Changing Facts Through Progress and Final Advice Michael Seibel and Brad Flora conclude with the final core takeaway: change the facts through progress rather than words. The segment concludes harmoniously with final advice for fundraising founders.

speaking balance: gold is the partners, purple is the guest (3 minute bins)

0:00 · the partners 55.1% · guest 44.9%0:00 · the partners 55.1% · guest 44.9%3:00 · the partners 68.3% · guest 31.7%3:00 · the partners 68.3% · guest 31.7%6:00 · the partners 63.1% · guest 36.9%6:00 · the partners 63.1% · guest 36.9%9:00 · the partners 60.8% · guest 39.2%9:00 · the partners 60.8% · guest 39.2%12:00 · the partners 88.7% · guest 11.3%12:00 · the partners 88.7% · guest 11.3%15:00 · the partners 87.3% · guest 12.7%15:00 · the partners 87.3% · guest 12.7%
Sharpest disagreement ▶ 5:16 Dismissing founder overreaction to rejection emails

Brad Flora sharply critiques founders who pivot their entire company based on an email an investor spent two minutes writing, pointing out it demonstrates a complete lack of conviction.

 Hardest push from the partners ▶ 10:18 Reframing leadership criteria for early founders

Michael Seibel immediately steps in to nuance Brad Flora's statement on leadership, clarifying that founders don't need to be giant org leaders today, but must show an aspiration to grow into one.

 Biggest teaching moment ▶ 7:28 Framework for assessing repeated rejection feedback

Brad Flora educates on how to methodically log, assess, and filter repeated rejection reasons across 25+ meetings without letting it contaminate the founder's core mindset.

 The partners hold their own ▶ 10:45 The blunt reality of pattern matching and stack ranking

Harj Taggar delivers an insider breakdown of the hidden mechanics of VC decisions, demonstrating deep authority on why polite feedback masks comparative stack ranking.
the scores for every segment, with the reasoning behind each
ChapterTopicThe partners as informed peerGuest teachingGuest disagreementThe partners pushing backWhy
Title Sequence: Inside the Group Partner Lounge 7211 The hosts and guest discuss the common trap founders fall into when receiving rejection emails from investors. Michael Seibel and Harj Taggar share concrete insights regarding investor failure rates and how rarely investors genuinely know a domain better than founders.
The Danger of Debating Feedback and Changing Direction 8211 Harj Taggar and Michael Seibel outline why changing direction or debating an investor's quick email feedback damages founder credibility. Michael details the glaring real issues founders often overlook in favor of polite rejection notes.
Evaluating Feedback and Identifying True Patterns 7311 Brad Flora outlines how founders should evaluate consistent feedback across dozens of pitches without blindly internalizing it. Michael Seibel presents his explicit heuristic algorithm for filtering investor rejection signals.
Real Rejection Reasons: Leadership, Pattern Matching, and Stack Ranking 8312 The group breaks down the unvarnished reasons founders get rejected, including leadership presence, stack ranking, and pattern matching. Harj Taggar and Michael Seibel note that over 60 percent of YC companies were previously rejected before showing tangible growth.
Changing Facts Through Progress and Final Advice 7200 Michael Seibel and Brad Flora conclude with the final core takeaway: change the facts through progress rather than words. The segment concludes harmoniously with final advice for fundraising founders.

Statements from this episode (11)

Insight
Seibel: Founders should believe an investor's no, not their why
“Our saying at YC is, believe the no, don't believe the why.”
Michael Seibel Apr 29, 2022 ▶ 0:48
Insight
Taggar: VCs lack deep insights and know enough to be dangerous
“It's like, I think investors end up knowing just enough to be dangerous. And it's a job where you're often selling, so you're very confident in sort of how you articulate your opinions. But like, yeah, you don't actually get the deep insights because you're no…”
Harj Taggar Apr 29, 2022 ▶ 3:09
Assertion Not checkable as stated
Seibel: VCs Offer to Invest After YC Admission Despite Earlier Rejections
“I think we see this in practice, too, because we will see founders who will pitch to investors, get no's, apply to YC, get into YC, and those same investors will say, now I want to invest in your company, and nothing has changed. No fundamental thing has chang…”
Michael Seibel Apr 29, 2022 ▶ 3:32
Insight
Taggar: Changing product direction based on investor feedback repels good investors
“So if a founder actually, like, actions on your feedback in sort of like a material way, like, it makes you less than like, if you're a good investor, I think it makes you less than likely to want to invest. You don't want to invest in someone who is relying o…”
Harj Taggar Apr 29, 2022 ▶ 5:00
Insight
Taggar: Investors understanding users better than founders is a bad sign
“If a founder can't come back, if I feel like I better understand the user than the founder does, that's a bad sign.”
Harj Taggar Apr 29, 2022 ▶ 7:07
Disclosure
Seibel: Ignore investor rejection reasons until hearing them across 15 to 25 pitches
“When founders are fundraising, it's like the first thing, the first time they tell me there's a rejection and a why, I ignore it completely. If they've gotten like 15, 20, 25 rejections, I then ask, are the whys consistent? And only if then the whys are consis…”
Michael Seibel Apr 29, 2022 ▶ 8:35
Insight
Taggar: Investors reject founders due to failed pattern matching or stack ranking
“They're pattern matching to previous successes and answering the question, like, do you pattern match to founders I've had success with in the past? And then they're stack ranking, like of all the founders I've worked with and are currently pitching me, like, …”
Harj Taggar Apr 29, 2022 ▶ 10:52
Assertion Not checkable as stated
Seibel: 60% of Y Combinator companies were previously rejected by YC
“60% of the companies that do YC were rejected at some point in the past.”
Michael Seibel Apr 29, 2022 ▶ 12:55
Insight
Taggar: Monthly updates can convince rejecting investors to change their minds
“One of the pieces of advice I repeat after demo days over, over and over again, is keep a list of the investors that said no, like, who seemed reasonable about it, and like, just keep, like, keep sending them updates. Keep sending an update every month. And st…”
Harj Taggar Apr 29, 2022 ▶ 13:18
Insight
Seibel: Investors value business progress far more than pitch deck changes
“If you actually just change the facts of your business, right? Like make progress more often than not. The investor will look at that prognus as a much better signal than any modification you made to your deck or any modification you made to the words in your …”
Michael Seibel Apr 29, 2022 ▶ 14:08
Disclosure
Seibel: YC evaluates repeat applicants by tracking their progress
“And that's probably the secret behind YC is that with multiple applications, we can see progress.”
Michael Seibel Apr 29, 2022 ▶ 14:29
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