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Kicked Out of Y Combinator, Still Raises $1.5M

A recent Venture Beat article shares the tale of a CEO who was literally kicked out of Y Combinator, and yet was able to raise an impressive $1.5 million from VCs such as Kleiner Perkins. Despite the letdown of being let go, Crawford did not give up, and was able to secure the investment a mere six months later.

What is Y Combinator?

Y Combinator began a new way to fund startups in 2005. Two times annually, they will invest a small amount of cash, usually about eighteen thousand dollars, in several different startups. This past year, they invested in eighty four. The start ups are required to relocate to the Silicon Valley for ninety days while they work with Y Combinator to improve their business as much as possible. They also get the chance to give their business pitch to investors during this time.

A large number of investors are in an audience during the final days, as each startup gives a demonstration of their product or service. Then Y Combinator continues to work with the startup as it grows into a company, and even further. According to their website, http://ycombinator.com/,

“Since 2005 we’ve funded over 460 startups, including Loopt, Reddit, Clustrix, Wufoo, Scribd, Xobni, Omgpop, Weebly, Songkick, Disqus, Dropbox, ZumoDrive, Justin.tv, Heroku, A Thinking Ape, Machine Zone, Airbnb, Heyzap, Cloudkick, WePay, Bump, Stripe, CarWoo, MixPanel, Cardpool, Optimizely, AeroFS, E la Carte, and Hipmunk.”

How Was Crawford Kicked Out of Y Combinator?

The story started when Crawford and his colleagues were accepted into the Y Combinator for the Summer 2010 batch. The excited group moved from Austin, Texas all the way to the San Francisco Bay area in order to participate in the class. Unfortunately, they were thrown out on the very first day because Crawford has made the decision to part ways with his co-founders and shut off the part of the business which actually generated revenue…a T shirt printing service. Y Combinator officials felt that it was just too much change too quickly. Most would have been devastated and simply given up, but not Crawford. He struggled and fought to make his start up, Storenvy, a success.

What is Storenvy?

As Crawford explains in the article, “Storenvy started because e-commerce is still too hard for most people. Opening and operating your online store should be as easy as blogging and as social as Twitter. We set out to bring the usability of the consumer web and the community focus of the social web into a new area: custom online storefronts.”

Storenvy is not only one of the simplest storefront platforms in the world, but also serves as a social networking marketplace as well. There are currently over twenty thousand stores which use Storenvy to sell over three hundred and fifty thousand products. Pet accessories, T shirts, and other novelties are among the product available via Storenvy, and each store has its very own URL. And the success is due to Crawford’s determination not to give up.

According to the Storenvy website, http://www.storenvy.com/, they are the only store builder and marketplace in one. With twenty thousand, eight hundred and two stores, Storenvy sells three thousand seven hundred and fifty one products. It is listed as one of Entrepreneur Magazine’s 100 Brilliant Companies, and is also included in Business Insider’s 20 Hot Silicone Valley Startups You Need To Watch.

The Storenvy office is located on the Mission District of San Francisco. Several artist studios as well as other successful startups have made this location their home.

Learning Lessons Without Changing a Thing

When asked by Venture Beat what he learned from being kicked out of Y Combinator, the CEO answered, “It showed me what I was made off. Getting kicked out sucked. A lot. People dream about getting into Y Combinator and then cry over rejection. But to get in and then get kicked out? That’s way worse! It was a big emotional setback for us. But we didn’t let it stop us. We powered through and built enough buzz and traction that we were able to get the business funded anyway.” He does admit that he has not changed one thing about his business idea, even after the incident with Y Combinator. He did, however, take a few months off to regroup and learn how the start up scene works in San Francisco.

Crawford says that he does not mention the fact that he was kicked out of Y Combinator as a business pitch, and adds, “I don’t want to be know as “the guy that got kicked out of Y Combinator. I want to be known as the guy who built an amazing product that people love.”

Jon Crawford’s blog http://joncrawford.com shows him to be a fun loving, easy to work for type of “boss.” Photographs show that not only does his team work, but they know how to have fun as well. For example, a whole day’s photo shoot features images of the team jumping on a trampoline. Crawford mentions in his blog that he is hiring engineers and designers http://www.storenvy.com/jobs. Be sure to check it him out!

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