by Y Combinator1/30/2019
Avni Patel Thompson founded Poppy, which helped parents book the best caregivers. They went through the YC Winter 2016 batch and recently shut down. Avni asked to come on the podcast to talk about what the process of shutting down was like.
Kat Manalac is a partner at YC.
00:05 – Kat’s intro
00:45 – Avni’s intro
1:45 – When did it become clear that scaling Poppy wasn’t working?
5:20 – Experiments Avni tried with Poppy
9:25 – The last six months of runway
12:55 – Choosing to shut Poppy down
16:55 – Pivot or shut down?
19:40 – Who did Avni have these hard conversations with?
24:05 – Communicating with investors during the process of shutting down
30:50 – How does Avni feel since shutting down Poppy?
38:00 – Tying self-worth to your accomplishments and how it feels after shutting down
39:00 – “This is what trying looks like.”
43:30 – The effects of having raised money
45:30 – Starting to think about what’s next
48:30 – Struggling with unstructured nothing
49:15 – Kindness
Craig Cannon [00:00] – Hey, how’s it going? This is Craig Cannon, and you’re listening to Y Combinator’s Podcast. Today’s episode is with Avni Patel Thompson and Kat Mañalac. Kat’s a partner at YC. Avni founded Poppy, which helped parents book the best caregivers, and they went through the YC winter 2016 Batch. They also recently shut down. Avni asked to come on the podcast to talk about what the process of shutting down was like. You can find Avni on Twitter at @APatelThompson and Kat at @KatManalac. All right, here we go. Kat, you haven’t been on the podcast in a while.
Kat Mañalac [00:32] – I haven’t been.
Craig Cannon [00:33] – Why don’t you introduce yourself before we talk about Avni for an hour?
Kat Mañalac [00:36] – Why don’t you introduce yourself before we talk about Avni for an hour? I’m Kat Mañalac, I’m one of the partners at YC. I work a lot on outreach to applicants. Everything we do with an external focus at Y Combinator, and I help a lot of companies in the Batch with their launches. I had the pleasure of interviewing Avni at least once.
Avni Patel Thompson [00:52] – Yes.
Kat Mañalac [00:53] – One of the times she applied to YC.
Avni Patel Thompson [00:55] – When you rejected me.
Kat Mañalac [00:55] – Yes, and I had to send her the rejection email. Since then, I’ve gotten to see her go through YC, and go through the process that we’ll talk about today, so, I’m excited to be here.
Craig Cannon [01:08] – Thanks for coming on the show. Avni, you’ve been on the podcast before.
Avni Patel Thompson [01:12] – I have.
Craig Cannon [01:13] – But for people who haven’t heard of you, what do you do? What’s your deal?
Avni Patel Thompson [01:17] – My name is Avni Patel Thompson, I suppose, was, the founder and CEO of Poppy. What we did with Poppy, the mission was to build the modern village. How I envisioned that was to find and vet really amazing childcare providers, and then connect them to families when they had gaps in childcare. We started that in my neighborhood in Seattle about three and a half years ago, grew it, and continued to build it out as kind of the testing ground for something that could help the millions of families across the country, and recently decided that, looking at all of the things, the economics and everything, that it wasn’t a viable scalable proposition, and so, made the hard decision to shut it down in December, and going through the process of all of that last month, this month, and just think that’s something interesting to think about.
Craig Cannon [02:11] – Absolutely. There are a million things to talk about here. Maybe we can talk about the economics in the beginning and then we can shift towards the emotions, how you felt, how it went down. At what point did it become clear to you that this couldn’t scale? Many people would say, that’s a YC, maybe even a YC interview question. How do you grow this thing to massive scale? Why did it take three years for you to realize that?
Avni Patel Thompson [02:37] – It’s a multilayered kind of, question. For me, at least in this space, even from the beginning, I knew that parts of it were against the odds, and so, what I mean by that, is if you know the category that I’m working within is childcare, it’s already an inherently margin challenged kind of category. What I mean by that, what parents are willing and able to pay for this kind of work, and then what caregivers need to make, the ones that are highly skilled and everything like that. Then, can you make some kind of margin in between as a company that then facilitates the stuff? Even from the beginning, I really kind of built this company and looked at this company as this series of experiments. Kind of like a mad scientist. And so, in that vein, I knew that we were up against kind of, challenging economics, but I always thought about it knowing that. We then took a look at pricing from a membership model and transaction revenue, and I certainly can go into the details of that, but it was always understanding that it was going to be a challenging category. It’s not where things like travel, maybe the frequency isn’t there, but there’s high ticket, there’s high average value that you can make some good margin. This one had higher frequency, but you had to then believe that you could also make decent margin on that frequency. That was all what the hypotheses were based on. One other thing that I think is important to note, is that what it looks like at a certain scale
Avni Patel Thompson [04:05] – is very different than what it looks like even at the next level. What I mean by that is, when you’re doing 10 bookings a week, it looks like something, with maybe three caregivers and maybe 50 families, or whatever. It looks very different at the next level when you’re starting to do 100 bookings a week, and it looks different yet again when you’re doing 500 bookings a week. Why did it take the three years to really understand that, is because every single time you kind of go through those step changes, it changes. To dig into that a little bit further, when we started doing something like 500 bookings a week, now you’re talking about working with hundreds of caregivers and thousands of families. Well, that is a very different thing than when I started as a mom in the neighborhood that knew every caregiver by name, and had personal conversations with every parent. You have to look at everything as a variable that you’re experimenting with, but by necessity, when we were smaller, we did feel like that mom and pop shop. Doesn’t matter that we were building the software, but it felt like that. It felt like we were an SMS-based kind of platform from the interface, it felt like people knew who were on the other side. But again, if you’re going to look at scaling, you have to think about that differently, right? Now you have to have a team that is going to be behind the SMS. You have to not necessarily know every single caregiver personally.
Avni Patel Thompson [05:26] – Those have implications, because that changes the value proposition. Where that caregiver might’ve felt like, “Oh, I have an in with knowing exactly who the team is, and all this kind of stuff,” it changes my work. At a bigger scale, it turns into yet another kind of gig economy job, which isn’t good or bad, but it just, you know, has an implication when we’re looking at, is that what that labor pool wants to do, is yet another kind of, gig job? And so, that just changed the economics.
Kat Mañalac [05:50] – Can you talk a little bit about some of the experiments you tried that made you optimistic about the space and the work?
Avni Patel Thompson [05:56] – Absolutely, lots of different things. First of all, there’s tremendously talented people that live within our neighborhoods, and I don’t think I need to say that, but folks who are teachers, or students, or stay at home parents, all these folks, my hypothesis was always, they do exist in our communities, and it is our job to not only find them, qualify them, saying that they’ve been vetted, and then do the connecting part. We weren’t making them, we weren’t creating them, they did exist in the community. Anyways, that was a big hypothesis at the beginning that we did prove was in fact true. Because if it started to become that, actually, they don’t exist, then that would’ve been a bigger problem earlier on, but no, they were there, and we created a mechanism for folks who are otherwise working at Trader Joe’s, and just had recently graduated, we had more than a few who were pursuing dance careers, but they were working at Trader Joe’s to make ends meet, they then started Poppying, and then quit their Trader Joe job, because it worked within their construct of dance was their first career and their first priority, but then they got to live their second passion, which is working with kids. Well, this is supply that isn’t on other, like Care.com or any other kind of marketplace, so were unearthing supply that wasn’t otherwise in the category. I thought that was tremendously powerful, because otherwise we were giving access to people that weren’t working in the space. That was a really positive and encouraging dynamic.
Avni Patel Thompson [07:28] – Other things were, for example, we started running experiments towards the end where we did a thing that started as a marketing, kind of, community thing, called Bring Back Brunch. We partnered with a really great restaurant that had a kid’s area, and we would have Poppies there for a couple of hours in the morning on Sundays, and parents would come, and they could enjoy brunch while the kids enjoy themselves under supervision. Well, the hypothesis there was just, we’re trying to enable this modern village where parents can enable connection and everything, and kids can still enjoy themselves. Some of these things were really successful experiments, but again, when it comes down to the core of what we were trying to do, which is connect a large number of caregivers with a large number of families, against a number of different dimensions, that started to get complicated. One of the other things that started to get complicated was, that has a good and a bad side, which is, people were very skeptical that parents would be okay with a range of different people for their kids, right? If you don’t really care who your Uber driver is as long as they get you from point A to point B, and people were highly skeptical that we would be able to solve that, because their thesis was that you really only want the one or two people. Well, we were able to successfully get parents to a great range of people. The average towards the end was six to eight folks. The reason was because we had, my counter thesis was that,
Avni Patel Thompson [08:57] – if you have standardization, and you have a great range of people, actually, it’s amazing to have your kids interact with a range of different folks. This person is a drama teacher, and this person is a nurse, and that came to bear. But in so much as this population is somewhat transient in the sense that they’re doing this for some period of time in between grad school, or while they’re in the early days of their dance career, they eventually move on, as most parents know. That proved to then be a little bit tricky, because once you then have them all moving on, and then you have the number of folks the parents want, eventually again, over time, you start to see how that gets complicated, where in the beginning it’s like, “Oh no, this is actually working quite well.” Over time you start to see different economics and dynamics.
Craig Cannon [09:46] – Was that just a growing sense that you had? Or was there one particular moment where you’re like, “You know what, I think we might have to shut it down.”
Avni Patel Thompson [09:54] – No, I think I would say probably about a year ago, it’s always something I’ve tried to be mindful of. I do, and I can speak to this a little bit later, because I think it’s really important, but I’ve always done monthly investor updates. Mostly because I think it’s important to have that discipline against myself as a CEO, to have to read out to somebody else the results that we’re seeing, and all that kind of stuff, but also to be able to understand, what are the dynamics that are going on? Then if other people are seeing, is that successful? Is it not? Is it growing fast enough? That’s all a relative kind of thing. Throughout the growth of Poppy, we’ve always been solid, we’ve always been solid and growing, but to the point of maybe five to 10%, and that’s not bad, in fact, for some of these kind of marketplaces, that’s really good. It wasn’t though, taking off in the ways of 15 or 20%, just like as… Earmarks on that. It is something that was in the back of my mind for the last maybe year of just trying to understand, what are the dynamics going on? That just made me want to experiment more, and more boldly. Now, the other thing that I think is super important is, even from the beginning, had the mind towards revenue. We certainly weren’t profitable, but we were always making revenue, and I think that’s also important, because I was able to then that the little bit over two million that we raised, and have that last over three years. That’s just important,
Avni Patel Thompson [11:24] – because that bought us the time, then, if we weren’t growing necessarily as fast, that bought us the time for more experiments. That’s the way I thought about that. The writing was starting to be written on that wall, and for me, I wasn’t done with the experiments, right? I still thought there was, maybe we could do Poppy Pool, which is pair parents, or pair kids together and get a little bit of leverage out there, and make it cheaper. I thought we could use stay at home parents as another tier, because they’re people that live within the community, and so maybe you won’t see the same amount of turn. While I still had these experiments and hypotheses in my head, I wanted to live to fight another day and run those experiments. It wasn’t until the last probably six to eight months where we started to experiment a lot more boldly, because it was becoming quite apparent then with the scale that we were at that that vehicle wasn’t necessarily going to work, and so, we start experiment with some of these other things, but at some point, and that’s also where runway is necessarily a good forcing factor, where as we started to dwindle down now
Avni Patel Thompson [12:30] – to six or eight months of runway, that’s when it really, I will say that that was a forcing function of having to make some important decisions, but I will say it was always, it had been for some time, a consideration. We can get into it, but it was at that point that I was like, “Okay, no, now we have to really look at what’s in front of us, and what are the different options?” But it’s not like it was one day, I’m like, “Oh, this is completely different,” it was a slow build. As a founder, you can read data in multiple different ways, right? Anybody can, and it was more as the evidence started to stack itself up in not what it is today, but will it get better? Or will it improve with even further scale, further investment? All that kind of stuff That’s the real question that I had to ask myself. And as it became apparent that it wouldn’t, that’s when it really was, let’s evaluate this.
Kat Mañalac [13:20] – Can you talk about that moment of, what was the final moment where you decided this is how I have to move forward, we have to shut it down?
Avni Patel Thompson [13:31] – There was a moment, and it was probably some time in November, where it was more the realization of, I don’t think this is working the way it is, and so, some change has to happen. Ror me, I looked at it with sort of three options. One is, because we were still burning, the money that we were burning, we could pivot, and that’s a hugely popular option, but what that would’ve necessitated was cutting probably 75% of our team, bringing that burn really down low, and essentially starting again. To make that happen though, I would’ve also had to shut down the service. Now, Poppy wouldn’t have had to stop, but the service would’ve had to stop, and I would’ve had to axe 75% of our team. Truth be completely told, that was my ingoing assumption that that’s what we were going to do. That was option number one. Option number two was, get ourselves acquired, and as you guys know, it’s a very lofty and a very optimistic kind of view that somebody’s going to ride in and I don’t know, throw us some money for the things that we’ve built, and then also our formidable team, but it was an option, and so, I wanted to explore that with folks that I thought would be good partners. That would enable us to continue our mission, just in a different way with different resources, so I thought that was an admirable option to pursue, and then the last one was truly shut it down, call it, and do all that. For me, I pursued all of those. I had conversations with folks that I thought were
Avni Patel Thompson [15:01] – interested in acquisition, or good partners. I will say, this is an interesting learning through that process, was that, these CEOs were very willing to get on the phone. They also showed me a kindness in the fact that they knew what this call was about, and without having to play games around it, very quickly in the beginning of the conversation, because you’re also like, how do you go into a conversation like this? I was talking to my team like, “What are you going to say?” I was like, “I have no idea.” But as you go into these conversations, they kind of know what this conversation is about, and a lot of them were, towards the beginning was like, listen, this is really great to connect, let me just get it off right off the bat, we’re not in a position to acquire, so if you want to do partnerships or think about some of these things, but that for me was a kindness, because if we could just not beat around the bush, and you could really know what it is that I’m kind of looking at, and kind of say it, then that definitively removes that option for me. That is the hardest thing for founders, is that, you’re always trying to assess all the information you have in front of you, and there are very few paths that get definitively shut down. As much as you’re able to kind of do that, that actually helps you to go figure out what the path is. That isn’t to say that there couldn’t have been someone out there that eventually could’ve done, but also, as I was evaluating that, that would’ve meant you’re having to continue
Avni Patel Thompson [16:27] – to operate your thing, because if you’re trying to go for acquisition, you’re trying to go from a position of strength, and what would it take to actually continue with the team to continue to grow, and all that kind of investment as you’re ticking down the clock? Because again, runway, and did I believe that we were going to be in that ultimate position of strength to be able to negotiate from? Again, take off the rose colored glasses and truly truly, what is the probability of that thing actually coming through when the most likely acquirers had already said, bowed out? It was at that point where I was like, if that chance is going to be less than two or 3%, then let me understand that, but keep it over here, but that’s not going to be my go-to. I’m not going to be unduly optimistic, and run my company into the ground, so then I’m going to have to go from a position of, I don’t have very many options. Then it was the option of, are we going to pivot, or are we just going to call this one? I think that’s a much harder question, because I don’t think that there’s a right answer, I think it was just, what was the right answer for us? I think the truth of the matter is, is if we had wanted to pivot, we probably should’ve done that six months prior. If I was going to cut the team and leave a good chunk of money in the bank to be able to do that, I probably needed more time. I started to evaluate that, which part of the team would I be cutting? And what would it be enabling? And then more importantly, pivots,
Avni Patel Thompson [17:56] – as a lot of people know, aren’t these magical things that just happen. You actually have to have a compelling idea that you’re going to then be putting forth, almost again, from the beginning. You have to be pivoting from something, right? As I was looking at the probability of success to do that successfully, with the team, and with the amount of money that I had left, it was interesting, Fred Wilson actually wrote a post, I want to say maybe the same week after we’d decided, and I think it’s called something like Pivot or Die. His point there was, a lot of people want the pivot to work, but pivots sometimes, if they do work, they’re still painful, because investors more likely than not didn’t invest in that idea. Sometimes consumer companies turn into B2B companies, and things like that, it’s certainly not what the employees came on to sign up for, and it just gets messy. It isn’t to say that it isn’t a compelling option, and it can work for a lot of folks, but as I was thinking about that, before even having read that, a pivot was unlikely. If it didn’t do right by the mission of what we set out to do, what we raised that sum of money, what we got this team assembled for, then for me, that’s ultimately when I started to consider, is it better to cleanly call it? I’m not saying that any part of that was easy, but it wasn’t a morning that I said, I think we need to call it, it was more that I started to live with the idea of oh, actually, what if we called it? Because even through this whole process,
Avni Patel Thompson [19:27] – I still assumed Poppy would kind of continue, even if we shut down this business line, or kind of, product, most of me was like, “Okay, no, it’s going to be okay, because I’m still going to be CEO of Poppy, and we’re still going to figure it out.” There was a day though, right around Thanksgiving, that it became clear that actually, the right thing to do is call it, because we set out with a hypothesis, and we raised money on it, and we built a team on it, and if that hypothesis wasn’t going to pan out the way that we thought it was, then let’s shut it down as well as we could, and start afresh.
Craig Cannon [20:03] – Were you communicating this all with your team? Or were you talking to your partner, your investors? Bevause I think leadership, a lot of it, is being optimistic and excited about the future, and you talked about it in your article about founders living the present and the future, right? You have to be excited, but then when you’re facing this reality of maybe we’re running out of money, it’s not going to work out, how do you go about having those conversations, and who did you talk to?
Avni Patel Thompson [20:30] – That’s a really great question. For me, even towards the later months, I think it’s a hard thing when you start to have a team that has striations, and some folks are junior, some folks are your lead team. I learned the lesson, I generally as a leader, try to be as transparent as possible. Even towards the end, our investor update went to everybody, from the most junior folks to my COO, I believe in transparency, I believe in educating people on what do the numbers mean? Even that very last investor update, every single person saw exactly how much we had in the bank balance, the defaulted headline. It isn’t comfortable, but I don’t think, we’re not in the business of being afraid of uncomfortable, right? I wanted everyone to understand the place that we’re at. The difference though, was I had to have a lot of these conversations with just a couple of the folks on my lead team that I deeply trusted with not only the hard conversation, but I think in the beginning when we were only about three or four people, we would have conversations in the open with everything. What I soon realized as we started to grow towards eight, 10 people, is that I can talk about these super ambiguous things, but I also have the power to do something about it. For more junior folks, what’s the kinder thing? Because you can certainly talk about transparency, and kind of, tell everyone everything, but if they don’t have the power or the tools to do anything about that… That’s anxiety provoking, right? You’re not giving him the tools to do anything about it,
Avni Patel Thompson [22:01] – you’re just giving them information, and then there’s nothing else there. I tried to tow the line, also to keep in mind, if I made that decision maybe the Wednesday before Thanksgiving, and we made the final announcement on December 3rd, there wasn’t a lot of time, and I can certainly go through that, because I also thought that that was important, because I didn’t want to operate in a space where part of the team knew something, and we’re also not that big. Part of that decision was, or the decision making process was, there’s some folks that I trust immensely, everything from some investors, some mentors, all that kind of stuff, folks with whom I talked, and I told them, this is what I see, what are my options? Even after only five or six conversations, it really came down to these things. One, what do I want to do? Because the reality is that, anything is possible. There’s a massive variety of things that are possible, but it has to be led by, what do I want to have happen? While that wasn’t helpful hearing it, it was tremendously powerful in the doing of it. The reason is, is because what I ultimately realized, is there is power in choosing how this went down. Even though all of this is painful, nobody made us doing, there was no outside forces driving us to do it, and folks that have gone through this will understand what I’m saying, but when you can control the narrative, when you can control how this happens, there’s tremendous power there. Just to come back to your question about
Avni Patel Thompson [23:40] – who did you talk to, and how did you do that? There was a short period of time where I tried to collect information from people I respected, had been through it, all that kind of stuff, to understand the range of possibilities, then understanding that, what did I want to do? It was becoming more clear that I think it was better to shut it down. I did have conversations with our investors, because I think that was important, because from any sense of the my duty, just doing right by their investment, and then around the same time, I was also talking to the rest of our team. It was through that process that it became increasingly clear that I had made a decision, and then I was communicating it. There was a smaller number of people that I was taking data from, but once a decision was made, then it was about let’s communicate it.
Craig Cannon [24:29] – You got a bunch of questions from Twitter and this one could’ve been related to a few things, but Osborne asks, what was the biggest hurdle you had to overcome from investors? On the topic of investors, I’m curious about like, how did that interaction actually go down? Because that’s definitely not talked about. People write Medium posts about, “Oh, I’m winding down my company, it didn’t work out,” but they don’t talk about, this is how I dealt with my investors after I raised millions of dollars.
Avni Patel Thompson [24:58] – Obviously, I can only speak from my experience and from what we did, I think it actually, part of it stems from how I ran the company. I believe, anyways. As I mentioned, I’ve always done monthly investor updates. In retrospect, was tremendously helpful in doing this, because I was completely transparent about what was going on, how we were doing it, how we were thinking about things, and the state of how much money was left in the bank, and what their capital was being deployed towards. If at any point there was disagreement on what that was being deployed towards, I was open for that conversation. Super super importantly, when I started to have the conversations, I shot out the emails, I picked up the phone to talk to them, it wasn’t a surprise, right? People knew that this was coming, it was within the realm of possibility. Where it gets complicated is when, this is the same thing that I’ve always believed in feedback to folks that report to you, it should never be a surprise, right? If you’re trying to deliver hard feedback, if it’s a surprise that’s a failure on you, that’s not a failure on them. Something similar here, that wasn’t a surprise, right? Because people had seen the economics we were battling, the challenges, the status of the bank account, so that was one piece that was, in retrospect, really really helpful for that hard conversation. But that was investment that I’d made over the process. Then when it came down to actually having that communication, here’s the other piece,
Avni Patel Thompson [26:31] – I’m going to say, I’m tremendously lucky, or grateful, for the people that I have on my cap table, but was also work, that was also a decision made very early that we were only going to have the folks that really believed in the mission. I can say that that’s really nice and easy to say now, but I scrapped to get that money together, so I don’t say that lightly. But it is in times like this where it becomes so evident that they were, and are, a part of the team, that I was then reporting back and saying, “Hey guys, this is what’s happening, this is what I’ve decided to do, and I’m sorry that this is where the story ends, but you know, this is where it’s at.” I will say, I was frankly surprised, but pleasantly surprised, almost to a one, everyone was like, “I’m sorry, because that sucks, but it’s quite clear that you did everything possible to take this to where it needed to be, and what’s next?” That was also heading into probably the hardest week, that was tremendously powerful, to know that you had the backing of the people whose money you took, and I think… I have stewardship and duty to that. They gave me the gift of saying, “No, I understand, there’s times that this doesn’t work, and you did what you were supposed to do.” That’s a really important point, is that we as founders have these really amazing ideas of how we’re going to change the world with these concrete kind of plans, and then we raise money, or capital, and we bring these teams together to go do that.
Avni Patel Thompson [28:01] – Well, I did what I was supposed to do, right? I did all of those things in a very transparent way, and the fact that it didn’t work out the way that I had necessarily thought, that isn’t failure necessarily, that’s just a different way that it ended up going, and so, that’s my experience.
Kat Mañalac [28:19] – It’s rare that you know, having founders who keep their investors so closely tied in, and doing those monthly updates is so helpful throughout the process, and I think that’s probably what, in the end, made all the difference.
Avni Patel Thompson [28:34] – I agree with that, and I will say, it’s like, it’s painful, it’s hard. When it’s going well it’s super easy. I’ve got all the emojis, and the exclamation marks, and the bolding, and that’s all really fun, and when it’s not going well, it’s embarrassing, it is. I feel like I’m failing in micro kind of failures. But because I held myself to the standard that by the fifth of every month there had to be an email going out, that, in many ways, saved me from the harder conversations at the end, because there was transparency. If there’s one thing, there’s other founders out there that, just start doing that if you don’t do that right now. Mostly because even during the time, it wasn’t for the eventuality of something like this, it was because it held me accountable for what I thought was super important. For me, from the investor side, I think doing right by what you set off to do was ultimately the thing that people wanted to see.
Craig Cannon [29:26] – Right.
Avni Patel Thompson [29:27] – Of course everyone wants to see the 10X, the whatever X return.
Craig Cannon [29:28] – Sure.
Avni Patel Thompson [29:29] – But understanding that that’s not going to happen for a great percentage of the portfolio, I believe that they’d rather have the transparency, the honesty, and visibility into that.
Craig Cannon [29:39] – Absolutely. Most of your investors, I assume, invest in more than just Poppy. They’re all over the place.
Avni Patel Thompson [29:44] – Absolutely.
Craig Cannon [29:45] – I’ve head it talked about many times at YC that when those updates start to get a little bit slower, a little infrequent, they’re just assumed to be dead. They kind of know the deal anyway.
Avni Patel Thompson [29:55] – Right.
Craig Cannon [29:55] – Right.
Avni Patel Thompson [29:58] – Because here’s the other thing. I should hope that the vast majority of founders that did a thing that didn’t work out, you take all that learning, and then you put it towards the next thing.
Craig Cannon [30:06] – Exactly.
Avni Patel Thompson [30:08] – Well, when there’s a next thing, you want to then work with the best folks, and you want to work with the folks that you enjoyed working with the last time. Well, for me to have a chance at salvaging that, I have to do right by right now, right? Again, this is not perfect, and that’s the way that I just believed was the way to move forward. There’s so much stuff coming at you in that, it’s very much like a swirl, right? As I was thinking about how to make this decision, I tried to break it down into, well, who are my constituents, right? I have duty to investors, obviously, and how do I think about that? I have duty to my employees and my team and I deeply felt that, because those are the people that you’re interacting with everyday, duty to my users, right? What does right by them? One thing that gets underlooked as well, but duty to myself and my family, right? What is right for me and my family in kind of going forward? All of those things are really important in making that ultimate decision, because the decision to have Poppy go forward in some different form, or to be able to call it, in some ways, had to do right by all of those folks.
Kat Mañalac [31:20] – I actually wanted to ask, how are you? So many founders, their identity gets wrapped up in their company, and so, now that you have shut down Poppy, how is that making you feel? How are you doing right now? Let’s start from there.
Avni Patel Thompson [31:37] – If you had asked me three weeks ago, it’d be a different conversation. I think that’s absolutely right. I started Poppy when my second daughter was four months old, so for me, Poppy isn’t even just a part of me, but it’s a part of my family, right? We had so much of it, it takes up a presence within your life, and so, part of it, my identity is very much a part of Poppy in the last kind of, couple of years. The more important thing for me, is that my passion for the space doesn’t go away, even if Poppy, it isn’t carrying forward. It took me some time. The thing for me was that there was the… The heat of the moment, which is that, you have to make the decision, you have to act, and so, there was those months, or weeks, that that was necessary, and in that, I didn’t really think a lot about myself, because I don’t think you can. This is just me speaking from my experience, but I actually didn’t talk to any of my friends, I couldn’t. I had lots of friends that were reaching out, because I knew if I started talking to them, I would break down, and then I wasn’t useful for all the things that had to happen for our users, for our team. People also don’t know all the things that you have to do, right? When you send out the little newsletter that says we were no longer going to be doing this, there’s still a tremendous amount of things that have to get done. Also, that’s your choice, right? But for me to do that, we announced,
Avni Patel Thompson [33:05] – and then we made a decision to do a number of things to help our users, so that they could still connect with caregivers on their own, and kind of vice versa to do right by that. There’s our team, so you have to make sure that they’re landing in good places, and try to see how you can help to make sure that they have good jobs. That’s excruciating, let me tell you. You work so hard to find these amazing people, and then it breaks your heart like, a thousand times to hear how you’re going to have to go give them up to other people, so that’s painful. Then there’s all the legal, the accounting, the stuff, all that litany of things that you have to go through. For a period of time, I didn’t think about me, because I couldn’t, because I just had to be sort of robot, and just go through the motions of doing the things. But there’s also a reason why I wanted to do this at the beginning of December. Because there was the decision of, if we’re going to make the decision to do it, we can either go forward for a couple more weeks and we can belabor, and do it in January, I thought using the holidays was actually a really helpful thing for everyone involved, because then it would be almost forced time for folks to be able to take time, process, all that kind of stuff, and figure out their next path, myself included. If you’re thinking about in terms of runway, right? Every month that you continue to kind of persist, you’re burning money, right? For me, it didn’t feel responsible to continue to do that. Instead, could I repurpose that,
Avni Patel Thompson [34:29] – and say, “Hey, we’re going to call it as quickly as possible,” conserve a little bit of that capital that might go towards severance, or doing this as rightly as possible for your employees, not a ton, but a little bit of breathing room. In doing that, then set the team up as best as possible, and users as best as possible. And then for my part, I literally just said, I had to get to December 17th, that was my date in my mind where then I would be able to take a break. We announced on December 3rd, December 17th gave two whole weeks to deal with a lot of things. Then December 17th was okay, let’s take stock. Everyone processes things in different ways. Part of the realization, and I wrote even a post, because for me, I write to process things, almost as personal therapy, I think for me, there’s a grieving process. I don’t want to liken it to people, but there is, and for me anyways, Poppy was an entity, was almost a living, breathing thing that was with me for four years, longer than any other person was, right? There’s a grieving process that I had to be okay, and that’s with other founders. I will say this, the notes that other founders sent me on that day was by far the most meaningful. It isn’t to mean that so many people, you realize how well you’re loved and all that kind of stuff with all the notes that you get, but the other founders really understand the complexity of emotion that you’re feeling. For me, a lot of them were saying, give yourself the time and the space to grieve it,
Avni Patel Thompson [36:03] – to appreciate what it is, and then give yourself just the time to not consider anything. That’s for me, what the magic of three weeks over the holidays were, because I could take time. There was nothing I could be doing on email or Slack, or nobody asked me for anything, any of that kind of stuff, and so, to spend time with my family over the holidays, that was the best, I think… Healing, I guess, I could kind of give myself. And then, there’s a lot of folks that will reach out and say, “Hey, I think we should go grab coffee, and what’s next?” All that stuff. I also set for myself a goal to say, I’m not going to have any of those conversations until January 4th, and so, doing those little things gives you then, it’s the same way that I loved about YC, when you’re in batch, you’re able to just tell everyone, I’m sorry, I’m doing YC, so I’ll see you in 12 weeks, right? It’s a beautiful space that you give yourself to then do nothing but this one thing. In that same way, I kind of gave myself the three weeks to say, I am doing nothing, nothing that is going to be of anything, but that thing is just me kind of, healing. I will say, I feel, I still grieve Poppy, it’s more in jabs now. If I walk into our offices, which we’re still trying to wrap things up, that hurts because you, all the memories you associate with that, if I see something that’s Poppy branded or something. Or if someone talks about it. In good ways, because we had tremendous impact in Seattle, and so, now people talking about in the past tense,
Avni Patel Thompson [37:36] – but the role that it had, it’s nice, but it’s turning into nostalgia, but it’s still there. Because you can’t take for granted spinning up a company and getting it to be a thing, right? None of us do or can, and so, part of me, there’s the doubts of, can I ever do that again? Will I ever do it again? You sort of have to live with those things. Also, in so much as our, not our society, but we try our accomplishments with our beings and our worth so so tightly. For me, going to networking things, or just those things, it’s complicated. It’s like, so what do you do?
Craig Cannon [38:15] – That was my next question. Because I know it’s… Unfortunate in many cases, that people just identify as their job, like, “This is my thing.” Pople who start companies even more so, right? They’re like, “I’m the founder.” When it comes to your family, do you find that they care at all?
Avni Patel Thompson [38:32] – No. It’s interesting, I was talking to a friend, they were saying, “Do your daughters kind of get it?” They’re four and six, so no. They only know that I, so it’s funny, they’re like, “But you’re the boss, right?” They think about it in terms like that, like, “What does the boss do?” That’s kind of cute. They don’t really get it. Here’s the thing, my friends, my husband, all the people close to me, my parents, my brothers, they know I’m not done, right? I think that’s the bigger thing, that’s the conversation I want to have more broadly, is that, again, it’s a total choice of some people are like, this was my thing, I’m tired, I want to go back and do a different thing, but for me personally, I found the place I’m supposed to be working in, and that is in the frontiers of trying crazy ideas out, and spinning up teams, and doing that. For me, I’m not done. That’s why also, for me, the way that I think about this is that, this is what trying looks like, this is what this whole endeavor looks like. It’s a little bit more messy and public, because I think a lot of folks go through these processes of pivots and things like that within the private confines of, I raised a bridge round, and I pivoted to this product, and I had to go through layoffs. If you listen, you’re actually hearing this narrative everywhere, people are going through these processes.
Avni Patel Thompson [39:53] – For me, I’m choosing to do it this kind of way where I had this hypothesis, I raised the thing, and went to do it, and now who knows, what’s the next thing? For the folks who are closest to me, they want to make sure that I’m personally okay, mentally, and emotionally, and I appreciate that, but I think because I still see so much work to be done, for me, actually surprisingly, I’m good. After three weeks of taking some time, and that isn’t to say I’m rushing into what the next thing is, I don’t know what the next thing is, but I’m not done, right? And that’s what I hope also this conversation, or for other folks who are in similar situations, one thing over the last six months was, I don’t know if I can shut… It feels like a dead end, it feels like failure, it feels like investors are going to be super angry, users will never love you again, all that kind of stuff, and so, I think it’s an important conversation to have, that it is an outcome, it isn’t the desirable outcome, not by anybody, but it needs to be an okay outcome, because the more that we can have this conversation, the more that we can be okay with it, the more we can get through it, and do it in as right a way as possible if there is that, because there are considerations, as I’ve realized. There is a righter way to, if you think about your team and what’s next for them, they’re not getting any kind of financial thing, none of us are, but if you think about setting themselves up for the best next chapter, there’s a right way, there’s a better way to do that.
Avni Patel Thompson [41:29] – If you think about investors, and if you kind of know that you’re not going to be doing that, if there’s a possibility of you know, returning capital maybe. Again, not the outcome, and not why they deployed the capital, but if that’s the thing then yeah, sure, let’s go do that, let’s be responsible with that. And that goes with even for myself, I didn’t want to go through a belabored process on an Hail Mary kind of belief that we could either get acquired, or do some kind of pivot, because that would’ve drawn into all of our emotional stores as well, in a way that I wasn’t comfortable with if this was what the call is. Again, it’s very different for different people and different situations, but that was sort of how I looked at that.
Craig Cannon [42:10] – Side note, I love the philosophy of not stopping, because the people that make me most angry are the people that do one thing and quit forever, even if that means do one thing and make money and then they quit.
Avni Patel Thompson [42:20] – Right.
Craig Cannon [42:22] – It’s like, “Ah, you had so much potential and you stopped forever at like, 25.”
Avni Patel Thompson [42:26] – The thing is, I don’t know what the arc of the timeline is, but certainly for me, I don’t look at what we built for three and a half years was, I mean, it was meaningful, it was valuable, but more than that, it was learning. Again, this is the way that I think about things almost academically, is that my job was to have a question, put forth a test plan, and then push forward the knowledge and the learnings in this space. What are the mechanics? What are the economics? All that kind of stuff. Well, I just spent three and a half years in learning a thing, and all the different ins and outs, to not continue with another hypothesis is almost like, not irresponsible, but it’s incomplete, right? And I’m not going to judge any other founder, because I get exactly how hard these years are, and with different sacrifices, and things like that, but for me it’s that, if we can have these conversations with more fluidity between this effort and the next, then maybe the hurdle between one and the next isn’t quite so big.
Craig Cannon [43:32] – I just don’t know why the myth is so pervasive. Because if you look at people like Michael Seibel or Justin Kan, a bunch of these people, they didn’t start one thing, but yet people think you just try once and it works out.
Avni Patel Thompson [43:45] – It’s also narrative on how we think about, but a lot of other folks did try their first thing, the Airbnb, and Amazon, and Apple, right? I don’t think that there’s any one way to do this. I think the other problem is how much money we raised, and I think that’s an important point to think about. We raised a significant amount. I have great gratitude for the amount that we did raise, but at a little bit over $2 million there weren’t massive checks from any one of our investors, and so therefore, the theatrics, or the gymnastics I had to do to do right by the capital was different, right? Than if I had raised maybe $15 million from a couple of different folks, I think it just changes how people have to think about of what they need to get back. Or what promises were made. Again, for me, I tried to be very careful about which promises were made, and then how transparent I was on how I’m doing against them. That allows certain leeway on some of these things. It is hard, different people have different businesses. I didn’t have CapEx, and I didn’t have these assets, or I didn’t take user’s money, or things like that, because of the type of software we were building. Fifferent things are different, but I think as cleanly as we can keep each try, and then just say, okay, well, that one didn’t work, let’s get on to the next thing, I think that’s where you do see the building, right? If you look at the folks like Slack, or Twitter, they are this notion of serial entrepreneurship,
Avni Patel Thompson [45:18] – it’s not that they magically turned into, or even Pinterest. It isn’t magically that they started on this thing, it’s that they collected knowledge in disparate kinds of things and tries, and that they finally put it together in a way that really unlocked the big thing. I’m still hopeful that that’s what I’m going to do.
Craig Cannon [45:38] – I have faith. How are you thinking about what’s next? I know you don’t have a thing, you’re not here to announce a venture fund or anything.
Avni Patel Thompson [45:46] – Definitely not.
Craig Cannon [45:47] – Thank god, thank god.
Avni Patel Thompson [45:48] – Still going to need to get funded.
Craig Cannon [45:51] – You’ve learned a lot with Poppy, obviously you like the space, how do you start thinking about what you want to do next?
Avni Patel Thompson [45:58] – YEven a part of the three weeks I had to assess things, I still wanted to understand, what am I deeply still passionate about? What am I deeply still curious about? What do I want the work to be? I gave myself the space to say, it could be anything, right? I’m deeply interested in books, and travel, and it really could be anything, because I think that’s the nice thing about this moment, but I think what it ultimately comes down to, I’m still so passionate about the problems of the parents. Moreover, the problems of working mothers like me, if I had to pick one person, I’d pick myself, right? I pick the problems that I, and the friction that I still experience in the world, and that I think millions of other people are. And again, Poppy was one hypothesis, let’s build the modern village to provide safety nets for these parents, because my parents don’t live in the same town, or whatever else it is, that doesn’t go away. I think for me, I’m still thinking about what do those problems look like? How might I want to tackle it? Which piece of that do I want to do? But I think ultimately, I feel that my life’s work is in this space. I don’t know what it looks like specifically. Does it start another venture? Do I go work with someone for some period of time to again, learn? The other thing that needs to be understood is that startups are ultimately creative endeavors. If you think about artists and things like that, you need to have space and time to actually have collected
Avni Patel Thompson [47:28] – some kind of inspiration to go off and do that, right? And so, for me, I’m also trying to do disparate things, like, I’m actually finally trying to learn how to code.
Craig Cannon [47:37] – Cool.
Avni Patel Thompson [47:38] – I’m doing cooking classes, I’m doing art classes, and I’m having just conversations with other parents, and things like that. I’m trying to observe, go back into the space of observing, and noticing. Like, retail spaces, how are they concocted? How do people come together? Those are all things I’m super interested in, and without terrible judgment of, what’s it for? I’m just trying to let it all sit, and kind of see where it goes, because I think that was the beauty of Poppy that I learned, which was, it came from an ultimate curiosity that it was a thread that I just had to, I felt compelled to keep on going, and then solving the next problem next. I want to get back into that space, and until I get to that bar of things, I think it’s actually irresponsible to try to say, I’m going to start another company, what it’s going to be, I don’t know. That’s kind of how I’m thinking about it. I personally can’t see myself going back to a big company. I’ve done that for a good chunk of my life, I loved that experience, it has formed kind of who I am, and how I do it, but I love this idea of imagining a future. This whole idea of imagine the future and build what’s missing, I think that’s hugely compelling.
Craig Cannon [48:47] – We talked about this in the last podcast, before Poppy, you’re pretty tracked person, right? You had your fancy MBA, you had your fancy job.
Avni Patel Thompson [48:57] – Yeah, so fancy.
Craig Cannon [48:58] – Yeah, yeah, you get married, you have kids, you do all that stuff, right? Now you’re just like, in the wild west.
Avni Patel Thompson [49:04] – I got to say, I’m very uncomfortable. I literally have to sit on my hands. It’s funny, because my husband, so, when I said, I’m doing the coding, and all this kind of stuff, I actually realized, I’m not someone that can just do unstructured nothing, like, unstructured sitting on the couch and watching Netflix, and that’s okay. I can be someone that needs to check off a box that said, did I do my hour of coding today, and did I do my hour of whatever? Because that for me, tames the monster that says, you’re doing nothing with your life. But still allows me to continue to explore in kind of a productive way along some kind of timeline. I have my little things like that. It’s also to be, again, if there’s an overall lesson in this, it’s going to sounds really silly, but it’s kindness. Because it’s kindness to myself to say, I’m sure I didn’t get this all right, but it’s that it’ll be okay. It’s kindness to say, give me space, and get yourself the space to figure out what’s next. It’s kindness in saying, what is the kindest thing, even though it doesn’t look like it, to your team, to your users, to not labor under false pretenses,
Avni Patel Thompson [50:12] – to call it, have super hard conversations, but then kind of move forward. It’s really really weird, but maybe that’s why I’m as whole as I feel for right now. But it’s just that leading with that point of view of kindness kind of gives you space to do these interesting things. I miss terribly, and I can’t believe I’m saying this, but my 9:30 am stand ups, right? There was purpose, there was, everyone has to fire until 9:30, and now at 9:30, I have to shut off the Slack notification. But it’s like, join the thing, and it’s just little reminders. But now it’s getting to a place of no, no, no, I know I’m going to make it back to that, but there isn’t a rush to get there. I hope that that’s what other folks are just kind of like, in similar areas. The thing for me, is that the one challenge is that, yes, I think you could take a look and say, Poppy was a failure, I think in some lenses, that’s the narrative, but I sort of push back on that, because I don’t think Poppy was a failure. Poppy set out to do, and did the thing, especially for thousands of parents and hundreds of different caregivers, it did exactly what it was supposed to do, and it did it tremendously well. The fact that it doesn’t go on to then scale, and scale was what I was interested in. There was also an option to say, let’s just make this a nice high end tech-enabled agency. Folks were like, why didn’t you just raise prices and do all that? I could have, I 100% could have, and turned it into a nice kind of, side business,
Avni Patel Thompson [51:45] – or whatever else it is, that wasn’t my mission, that wasn’t my intent, and that still isn’t. What I want to do, is go find the solutions that work for the millions of people. I never was two ways about that, right? Some people have a hard time understanding that, especially users, which is unfortunate, because Poppy could be still existing if I had chosen that path, but that isn’t what was true to me, and true to what I thought our mission is. I think that’s the thing that I think we need to have more conversations around, is that as long as you’re true to that, I think you have lots of leeway to make some of those decisions, because yeah, they’re hard, and there’s not one right answer, but as long as you can articulate that, I think it gives you some space.
Craig Cannon [52:36] – Cool. Well, this has been great, thank you, Avni.
Avni Patel Thompson [52:38] – Thank you.
Kat Mañalac [52:38] – Thank you.
Craig Cannon [52:40] – All right, thanks for listening. As always, you can find the transcript and video at blog.ycombinator.com. If you have a second, it would be awesome to give us a rating and review wherever you find your podcasts. See you next time.
Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200). The startups move to Silicon