Building in a high-competition space, building in public, and educating customers: Arjun Mahadevan (doola, YC S20)
Welcome to the fourth episode/edition of YC Founder Stories. I started this experiment curious to learn from the best founders who went to YC and take this opportunity to narrate their stories.
The Format: The interview is divided into two parts: 1) Q&A and 2) BONUS CONTENT. I’m still experimenting, so bear with me as I iterate. Let’s get started.
Today’s guest is Arjun Mahadevan from doola (YC S20), a “Business-in-a-Box” for creators.
Mahadevan previously worked at Dropbox as a Product Manager and started doola in 2020.
doola (formerly StartPack) is a “Business-in-a-Box” for creators. We take care of everything creators need to form an LLC, set up their bank account, accept payments, and manage ongoing compliance and tax filings.
We realized how difficult it was to set up the full stack of software and accounts you need to get a business off the ground. This is the same problem faced by online businesses, who begin their business as a side hustle, and just want to focus on growing their business, not annoying administrative work.
That’s why we built doola: to take care of it all. Today, people on every continent have launched companies with doola. 
Read on to learn more about Mahadevan’s YC application and journey!
Prefer to listen to the interview? Just hit play or get it on Apple Podcasts or Spotify.
Q&A:
What is your startup idea?
doola is a “Business-in-a-Box” for LLCs. Typically, when you wanna start a company, you would Google how to form an LLC or a C-Corp. And our customers have told us Google produces migraine inducing information. There’s tons of mismatching information from different sources. Customers aren’t sure whether they should form in Delaware or Wyoming or somewhere else entirely. And here’s a tip: you should form in the state you live in if you live in the US. If you live outside the US, any state is fine, and Wyoming is typically the most popular.
But then that’s just the first step. Founders wonder how to open a US bank account, whether they need to fly to the US, if they need an EIN, whether they should be paying taxes to the IRS, and it’s all very stressful.
What we thought is, wait a second, there are many ways to form a company today, but you form the company and effectively, founders feel like they've been thrown to the wolves where they're left to fend for themselves. Sure, they have a checklist of things to do, but they don't have that true long-term partner or the products and services to help them not just start their company, but run and grow it.
With doola, that's our goal: we don't just form the company and give you confidence that it was done correctly, but we serve as that longer term partner. We can help spin up your bank account, we can help do your taxes each year, and for everything we can't do, we try to partner or integrate with best in class companies around the world too, whether it's Amazon for AWS credits, HubSpot for a CRM, or anything else, we'll have the right tools, either in-house to doola or with partners to help you, again, not just start, but run and grow your business.
How did you come up with the idea?
When we were going through the formation process, and I think many people have done this, typically lawyers or CPAs will charge you by the hour. And that doesn't mean lawyers or CPAs don't have value, but if it is a rather cookie cutter or repeatable process, you can use technology to automate and then bring the cost down. When forming a company, you could pay lawyers 10-20 thousand dollars. That might sound very high, but that was quite literally the situation that we found ourselves in. The idea was what if you could click a button and initialize a company? And that's where it started.
There are many options that help serve US companies, US customers, people living in the US, but no one was really thinking about resolving the specific needs for folks based outside the US, which are a bit different. There's different tax concerns. Maybe there's different concerns on opening a bank account. But it started there with, let's focus on helping non-US founders quickly and compliantly open up a US business.
And what we've seen today is that the offering very much resonates globally. There's folks in the US who can use this as well. But internationally, what we saw was this massive gap of companies that were willing to help founders who didn't have a social security number. Quite literally, they would say, “Hey, if you don't have a social, you can't work with us.” I actually thought, “Wait, is it illegal or not possible to form a company if you don't have a social?” But it just turned out that the right tools and solutions really focused on that segment weren't quite there and our offering really resonated with those founders.
When did you get into YC?
We got into YC and went through the batch in the summer of 2020, but we actually ended up deferring Demo Day and went through that in the spring of 2021.
What are the key elements to focus on when applying to YC?
First thing is: I think there is zero downside from doing the YC application and applying. The reason why is because the only downside or the cost of applying is the time it takes to write the application. But for anyone working on any business, VC backed, bootstrapped, or anything else, the types of questions YC asks in the application are the exact questions that you need to have answers for. And you might not know exactly if the answers are right, but having no plan is a recipe for disaster. Having any plan is better than no plan. And by going through that YC application, where questions are asked such as, “What is your business? What does your business do? How are you gonna acquire your first 100 customers? How are you gonna get to X million in revenue? Who are the competitors? Who are you most scared of in the competitive landscape?” Those types of things are things you need to do in terms of research anyway.
And you do that research anyway, you get to submit the application, and if you get an interview and you get in, you have the optionality. You can decide if you wanna go in. Worst case is you've gone through this rigorous thought process or exercise of turning over the stones that need to be turned over to understand what could work for this business if it works really well, and what are gonna be the biggest obstacles up front as well.
The advice is, I would say, is write the application and do it regardless of whether or not you want to apply. You then have the optionality of actually submitting it and seeing if you get in. And if you do, congratulations. There's major benefits to YC. Obviously, many folks going in are maybe first-time founders or it's the first time going through. And YC gives you that advice that they've seen from thousands of businesses. The way I like to think about it is they help you look around corners that you didn't even know existed.
So you're looking around the corner, you didn't even know that there was a wall and a corner there, but YC is giving you that advice. And it's effectively binary whether or not your business gets the next level or not. So I believe in stacking the deck and getting as many people, companies, investors, wherever it is, supportive of you to ensure or maximize the chances that you get there.
Share your YC interview experience in 1-2 sentences.
What's really cool is YC took this process that typically was gated by warm intros and they trimmed it down to an application that anyone could submit and a standardized 10-minute interview. From that, they're able to decide, whether to fund this team, which sounds pretty wild on the surface. How can you evaluate that from an interview and a 10-minute conversation? But since they’ve worked with thousands of founders, they're able to determine the right traits and signs quickly.
They've also seen thousands of applications and because of that,they know what works and what’s unique. In terms of the experience itself, once the application's submitted, the interview is a very cool experience because in 10 minutes, you're getting rattled or rattling off answers to questions.
The biggest thing, and this is something which every single person can improve upon, is especially in 10 minutes, when someone asks a question, it's very easy to restate the question and maybe answer it tangentially versus just giving the direct answer. And in a 10 minute interview, that's pretty critical because then it gives you the chance to surface more information to best sell yourself and best sell the company.
Did you pivot your idea during or after YC?
We pivoted into doola during YC.
How did YC help you go from 0 to 1 to N?
The biggest thing for any founder, let alone a first time founder, is that there's so much you just don't know. YC can give a lots of advice and I love how they've even open sourced a lot of this advice. But a big benefit of YC is that when you're in the batch, you have this target date on the calendar. And it's not this date when things magically finish and you can hit pause. It's Demo Day though, and that's the day when you're going to be pitching in front of a lot of investors and maybe that can start the time for transitioning into a fundraise.
Leading up into that, obviously the best way to pitch yourself is validating that people need what you're making. And the best way to validate that is, ideally revenue, but if not revenue, usage. People who are using your product and love it.
In the 8 weeks leading up to Demo Day, how are you working towards those goals? What I really liked about YC is that every week there's the Office Hour. You're there with other companies, your group partner, and you have this weekly target. Did you do it or did you not? What stopped you?
If week after week there's some obstacle or you're not hitting the number, eventually you can't point the finger anywhere else. Either you're not executing well or you are executing and taking the best bets and it's not working. So is the insight off, is the execution off, is maybe both off. That accountability and that time spent with other ambitious companies levels you up.
You don’t have to be in YC to get that, but you are a product of your environment. So if you are surrounded by those people in that structure, you are stacking the deck again and maximizing the chances that week over week, you’re going to be focussed and try new things.
Share a “do things that don’t scale” story in your startup journey.
There's many. Early on, people were coming on to my Calendly through the doola website - there was no sales or customer support team, we were just doing everything.
A recent “do things that don't scale” from last year is that we had launched this new offering and we had worked on a partnership with this company called Syndicate. And I was coming up with ways to announce the partnership and I thought that for the next 66 days, I’m going to post a thread on a different DAO. every single day. And I decided 66 days because I had read in James Clear’s “Atomic Habits” that on average it takes 66 days to build a habit.
We announced the partnership, posted on Product Hunt, and then for the next 66 days, I didn't miss a single day, I posted a thread every day. A thread on LinksDAO, for golf enthusiasts. There was a thread called SpiceDAO, which actually bought the original manuscript for the book Dune, the series, and each day I just did a different thing. Sometimes it was, “Explain it like I'm 5” on DAOs, other times it was profiling a DAO. Fast forward 66 days, what happened was we became the go-to option for forming DAO LLCs. Now obviously macro-wise there's been changes, maybe there's less DAOs being formed, but if you go to Google and search DAO LLC, we're the first, if not the second or third organic search results.
Over 30% of all DAO LLCs ever created historically have been formed with doola too. And in that short period of time, we went from quite literally no product offering to being the go-to option or the market leader.
I think that what that showed me is that you can be sitting anywhere in the world, but with the right focus and consistency, you can brute force your way into any conversation or any room or any search result with enough time.
Does that scale forever? I guess technically you can scale it. You could have more writers, more contents, but I think that just really showed me that we're capable of so much more than we believe. That could be for pushing out a new product and end of day, every single company in person, especially today is fighting for attention. That's the single biggest thing.
You have your days that you're processing and going through. How do you get in front of someone? That's the key. How do you capture attention from a customer or even someone and it's possible you just have to sometimes get creative and be persistent and consistent too.
How did you get your first 1,000 users?
A combination of things. I think the very first thing is that we DMed between 10-100 folks asking if they knew anyone looking to form an LLC. Most people didn't respond, but our first couple customers came from word of mouth that way.
We also tested a small paid budget campaign on Google Ads, where we know what people are searching for, how to form an LLC, non-US resident, things like that, starting to run some ads into a landing page, and the second someone hits the landing page, we pounce on it, asking if they want to chat and always responding right away, which wins a lot of businesses
It was really just that brute force to get the first customers. Then, over time, what happens is you start to get word of mouth. Founders know founders. You can iterate on those paid ad campaigns. You can start to put content out as well. And I think those are the main combinations of things to get to the first 1,000. It's a combination of paid, organic word of mouth, and that brute force outbound.
Over time, each of those things compound. More so now, since we're also trying to partner with individuals, communities, accelerators and networks, so that if founders need help with anything from entity information to banking to taxes, we can be that go-to partner.
Share 3 tips for founders who are trying to get into YC.
Actually apply: That might sound like a silly tip, but actually you should just apply. You have to apply actually. It will be helpful even if you don't get in. It's a good exercise for yourself.
Read others’ applications: Read the successful applications of others who've gotten in. I don't say that to say there's a formula. There is no formula. You cannot hack the application. But I think what you will see is how direct, succinct, and to the point a lot of these applications are.
Don’t make anything up: You should never do that. But it's not a big deal if you aren't that far along. What is a big deal is how fast can you iterate and how you demonstrate you can do that week over week.
How was the Demo Day experience?
It was a really cool experience. Again, one of the values of YC is they're teaching you a lot about how to start a business for people who've never done it before. And then on Demo Day, they pull together a group of the world's best investors and it makes it easier for you as a founder to run that fundraising process.
Post Demo Day, you have this time period where you're able to, as much as possible, run a parallel process where you can stack your day and have many of these conversations, versus having one conversation a week, and then the process runs for a full year.
52 conversations in 52 weeks or 52 conversations in two weeks. You're gonna be busy, but at least you can finalize the process a little earlier.
BONUS CONTENT: Deep insights, more tactical advice, and an open discussion.
How was your experience pivoting doola?
First thing is, and YC will admit this too, YC doesn't determine if your business succeeds. You do and the market does. Ultimately the market will. It doesn't matter how hard you try. If people in the market don't need what you're making or timings off or a combination, it's not going to work.
The thing I think YC can help with is if they've seen your idea in the past, they will tell you if it hasn't worked and that there are structural reasons why it hasn’t. That doesn't mean that you can't take a unique approach to solving that problem.
First thing in terms of a pivot is that if a YC partner says something could be a problem, you should perk up your ears and listen. They're not making that up. It's in their best interest. Quite literally, they're an investor of yours and they've seen things too. So I think just taking that and listening to it and acting on it's critical.
Where YC does a great job is holding you accountable to your primary metric and I wish I had that in my previous projects. They’re also great at pattern matching - if they've seen things which have worked or haven't worked, you should take that seriously.
However, the third thing is that they don't decide. The fact that we got into YC and then we pivoted means quite literally that the idea that they thought would work didn't work.
But the most interesting part of a pivot is that you have to believe you can brute force something into the world. It's possible. It’s hard, but it’s possible. I have so much respect and empathy for anyone starting something and who is continuing to push it out there into the world and I’m always rooting for them.
It's so easy for someone to be a backseat critic, but the loudest boos come from the cheapest seats. I have respect for the person actually trying. That's very hard to do. It's much easier said than done.
But I think anyone building, creating, putting content out there, whatever it might be, is taking a massive leap of faith. And kudos to them. Like I'm rooting for them and I love seeing people try to do it too because they're taking the plunge and they're in the arena at the end of the day.
How do you educate founders on the company-making process?
Step 1 is educating folks outside the US that this is actually possible. And then Step 2, once you know it's possible, it's about anticipating questions and answering them. We started off answering the questions 1:1 and then we started to productize it by creating an onboarding flow which feels like someone's hand holding you through. Most times people don't want to talk to a human if they don't have to. You usually do that if you can't get a question or if you want peace of mind.
So if you can grant peace of mind using copy, UI/UX, and in an immersive way, that’s powerful and also hard to do. That's the goal: make company formation into a process that people feel such peace and confidence in that they're comfortable going through the flow.
Part of that comes from word of mouth. You have the social proof, you have the trust. People say that doesn't matter. It absolutely does. The testimonials, the validation from investors, whatever it might be, all of those things have an impact and they compound.
Once you do have the onboarding flow in place, you want to replicate that for other parts, like opening a bank account or doing your taxes. It's never going to be 100% zero touch, but the goal is can you automate or at least make it as self-serve as possible?
The way you do that is through education. That’s why content is so important. We're launching a video library called Doola University to make it as easy as possible for folks to find the answers. If you need to talk to someone, you get a free consultation as well.
To summarize it, I would call it a high-tech, high-touch experience, where, if you need handholding, fantastic. Our goal is to win you as a customer long-term, and you can build that relationship via content or 1:1 consultation. It means that in 15 minutes, you've won a customer who's not only gonna work with you, but then they'll refer 10 of their friends over the next 10 years, which is amazing.
How did building in public help accelerate doola’s growth?
From building in public or even posting content, there's three main benefits. One, customer acquisition. People see that and they get interested. Two, there's candidate acquisition or talent, and then three, there's investor acquisition.
It keeps you top of mind and all three of those things can help. It's hard to measure the immediate impact. The absence of building in public means you're reducing the surface area for the serendipity or the chance that any of these three things can happen.
How did you convince YC and investors that doola is a differentiator, given existing products like Stripe Atlas?
There are many ways to form a company. You mentioned a few like Atlas, which is an awesome tool. They've had a huge impact. Other methods are lawyers and CPAs.
The first thing is that a rising tide lifts all boats. I am fully in support of anything to help more entrepreneurs get started. That being said, entrepreneurship is never going to go away and Census data has shown all-time highs in formations.
This means the market can support multiple players. Now, that being said, it's hard to build a business just forming companies. It's not impossible, but if you think about it, forming is a one-time event and it isn’t high-revenue. So the thing that investors will be looking for and we look for is how can you deepen the relationship and add additional products over time to help those businesses grow and for your business to grow.
If you can do that and investors believe it's possible, then the market can support multiple businesses doing it. It's not the type of thing where it's winner take all. As long as more people are forming companies, then you're in a good spot there. So both Atlas and doola have their niches and we’re carving out trenches there.
Whether it's a niche like e-commerce or SaaS or consulting or creators, whatever it might be, if you're able to take one of those niches and become the go-to option, then there are a lot of different avenues for growth.
What advice would you give founders who are building in spaces with heavy competition?
Competition isn't always a bad thing. It means that there could be a need that no one's perfectly solved yet, and that's why there is competition. It also means that people need this thing if there's multiple people trying to solve that problem. Also, if you don't want competition, then you shouldn't do a startup. What you want is just a job then.
There's always going to be competition. Even if there isn't now, when your project starts working, others are going to try and jump in on it. So it's inherent to business, it's going to happen.
The important thing is to think through is to ask if there's a way that we can carve out some niche? At least an initial foothold where there's less competition. Because if you're facing competition on every single avenue or axis, then quite literally a bigger company just has more resources. But if you aren't facing competition on one resource and you can dominate that area, that's the opportunity for a startup.
That's the battle: Can a startup reach scale before the incumbent reaches innovation? And if you can move fast enough as a startup, you can reach that critical threshold where maybe it's not winner take all, but you can carve something out there.
Any last few thoughts that you want to share before we wrap up?
Biggest thing I'd say is that I truly believe every person has some side hustle inside them. Every single person, doesn't matter how big or how small, we all start in different ways. And the best time to start that business is yesterday. The second best time is today. There's nothing stopping you other than that voice in your head. But believe it or not, people are rooting for you.
There will always be critics, but the critics aren't in the arena. The loudest boos do come from the cheapest seats, but they're the cheapest seats for a reason because they're not in there.
So I'm rooting for anyone out there looking to start. whether or not you do it with doola, but I hope that something in this conversation or something that you see in the future does inspire you to finally take the leap.
Thank you for sharing, Arjun! Where can people find you?
Next week: Learn how Kathryn Cross from Anja Health (YC W22) went through YC!
That’s it for today. I have some awesome founders lined up for the next episodes, and I can’t wait to bring them to your inbox.
Meanwhile, if you like this interview, please share it with your founder friends - nevertheless, grateful for your time 🙏🏼
Let me know your thoughts and suggestions in the comments below 👇🏼