In this episode of Startup School Radio, host and YC partner Aaron Harris sat down with Taro Fukuyama, the co-founder of AnyPerk.

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AnyPerk has built a platform aimed at letting companies of all sizes deliver perks and discounts to their employees.

Earlier in this episode, Harris also interviewed Bill Clerico, the co-founder and CEO of online payments platform WePay. You can listen to the entire episode in Soundcloud right here, or via iTunes.

One highlight of the episode was hearing Taro talk about how AnyPerk’s founding team started out by building a completely different startup, and went through many different ideas before finding one that really stuck — and how the inspiration came from their experience at the time. This portion starts at around 31:30:

Aaron : So how do you get from this [dating site] that makes introductions easier to AnyPerk, which helps companies set up perks programs?

Taro : We joined Y Combinator in 2012 of January. We knew it wasn’t working, but we didn’t know what to do.

Aaron : So how do you know it’s not working? No one was using it?

Taro : Yeah. Everybody who is on the site is either my friend or family. And no one is coming back to the site until I ask them to come back.

Aaron : Okay. Usually a bad sign.

Taro : Right. But it’s hard for founders to admit that it’s failing, because you’ve been convincing a lot of people, investors, families, that this is going to be the next huge idea. But one day, you have to say, “No, it was failing.”

Aaron : Yeah, that family pressure and the honesty with yourself thing is so difficult. Again, you came to the States to be the Ichiro of startups, which means that you should immediately have huge success, right? So being honest with yourself and saying, “Oh, wait a second, this thing is not working at all,” is so, so, so difficult. How did you finally convince yourself that it was time to move on?

Taro : The first day I think PG was speaking at YC, and he was saying that, “Hey, three months later, there is going to be a day called Demo Day and you are going to present to all these investors.” In 2012, more than 500 investors were going to be at Demo Day. In your entrepreneurship life, you’ll never have a day that you can pitch to more than 500 investors. That means that will be your most leveraged day in your life. You should have the best idea that you really believe in, and you should have the best growth you can ever have. That’s what you have to [work on] for three months.

So that made us think, “All right, do we really think this is the best idea that we want to present three months later?” And then we were saying, “Actually, we don’t think so.” So that’s how we started thinking, alright, let’s find the next idea.

Aaron : This is the power of these forcing functions, right? It’s actually a consistent point for startups overall. And this is why raising too much money or something like that can be dangerous, because it means you never have that forcing point. Right? “We have to hit this milestone by this day, or basically we are dead.”

Okay, so you have that realization. Where does the company come from?

Taro : Right. So we have three months in Y Combinator. And the first month we pivoted seven times. We tried to pivot from the dating site to something a little similar to the dating site… And after fifth pivot or something we felt that, “Right. Introduction is not working for us. Let’s find something from scratch, completely new, that we really truly believe in.”

Then on February 1st, that’s one month later, we came up with this idea and then we felt, “All right, this is the best idea that we want to work for.”

Aaron : But why did the idea come from you? You didn’t work at a big company that had a great perks program? Why did you think this was good?

Taro : So there are a few reasons. One of the reasons was that if you’re in Y Combinator, because you’re YC founders, you can access a lot of discounts, on like Amazon servers, or on [printing] business cards, or gym memberships, that kind of stuff. I was so excited about it, and when I showed it to non-YC founders, they were like, “Hey, can I pay you 10 bucks to get access to those discounts? Because that’s so awesome.”

That made us think, “Alright, this might be something that we can actually sell as a business.”

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