think you have what it takes to launch an internet startup? where does the money come from and who should you hire? three brand new ceos who know all the tricks, sit down for a wide ranging conversation about success in silicon valley. this week on "press:here." >> good morning, everyone, i'm scott mcgrew. every once in a while we take the format of this show, three reporters talking to one ceo and turn it around on its head. one reporter, me, talking to three ceos. we'll do that this morning. three ceos, three young ceos.

there is no question the three of them are young. in fact, jessica ma is sort of famous for her youth. she started her first company at 13, graduated high school at 15 and secured more than $1 million in funding for her company indeniro by age 20. >> that was kind of cool. >> it looks like it's dean thely formatted. >> ryan dimico spent three years launching his company, crocodile. >> this is one. okay. >> which plans to take on silicon valley behemoth adobe. >> we have, this is a view of the dashboard. >> ron ibrahimi sold his first company at age 17 and now at age 30 runs ready for zero, an

internet site that helps americans shed credit card debt. the three ceos and their companies have one other thing in common, they're part of a graduating class from something called y-combinater, a charm school meets boot calm for startups where entrepreneurs ink y inkubate to full-fledged company. >> we invest entirely based on the people. if we think the team looks good and determined we'll fund them. >> you've met them on video, ryan d'amico, jessica ma and ryan ibrahim. there's somebody out there watching saying i have an idea. i've kept it secret all this time. how do i know it's a good idea? jessica? >> you don't always know it's a

good idea. we honestly didn't think the company was a good idea. we talked to a bunch of people, they said it's a terrible idea. there's quickbooks out there and they're making a bunch of money. how are you going to take over this market? we didn't think it was a good idea, actually. >> we'll talk about your discouragement more in a minute. ryan, how does somebody know something is worth pursuing? >> like jessica said, you don't know up front that it's possible but you can feel an inkling if it's a good idea or not. if it's something you're passionate about and you can see yourself doing it in the long run, that's a good idea. you have to validate your idea. >> we'll get to that in suft a second. how do you validate it, prove that this is a good idea? your mom's going to tell you it's a good idea. >> sure. >> that doesn't really necessarily help you. >> even your friends may do the

same thing. in our case we actually built paper prototypes. we had interactive prototypes. we just started building it. we went through several iterations before we realized we had something here. that's the mistake first-time entrepreneurs make, they fall into the business plan, thinking about it too much, they just really need to start building. >> what's better, any of you, having great people working on a dumb idea or a dumb idea -- you know what i mean? is there some point in which you can say to your company, hold on, let's refocus and do something else? >> absolutely. we did that ourselves. there was a totally different product called webnotes. it was a weekend projette. we rebranded this thing, made up a crazy name called croa-a-dock. >> most people think of it i

have some friends, i work with them at hewlett-packard. you went on a dating search to find your founders. >> a three-year dating search or so. i swear we must have gone through a dozen different people before we found the three co-founders we have now. most of that -- some of that was a lack of luck. a lot of it we didn't know what we were doing. we were working with anyone who was interested. we didn't really know what to look for in a founder. >> you say we. it's -- you had a partner -- because most companies when they start out, you look at apple. it was clearly the steve and the steve. most companies, there's a core, it's not as if that's going to change. you know what, let's not have you be a founder. you can't kick out somebody with whom you've created the idea. how does that work? >> i say we because our time is so tight. everybody is about us together. >> you went and and tried to find the supporters. >> yes, it's been worth it. >> it's been difficult to try a

good co-founder. it's not just trying. it's looking for the perfect significant other. for indinero, he wasn't my first co-founder. i looked for years to find the perfect programmer who i could buddy up with to start a company with. >> that does bring into the idea if someone has a great internet idea but has no technical experience, you all three are coders, have high-tech nickal skills. >> we r. during the dotcom boom there were a lot of business people, very bright business people didn't know a darn thing about computers who tried to start up internet -- >> it's still happening today. >> it's still happening today. why not? if i had this great idea, why can't i have the idea, find the funding and i'll just go to craigslist to find the programmers or india. >> i think it's possible, actually, absolutely. in our case we have a team that's overseas as well. although we're a technical team we can leverage their skill set

as well. while we're sleeping there's code being written and checked in. >> that is a huge advantage, because the cycle is so different. literally you are doing all your coding, right? >> i do a lot of it myself. we don't outsource any of the programming. i think it's just too important to outsource. >> the thing that people are going to want to know about you, we talked about it in the beginning of the setup cases, you are now how old? >> i'm 20 now. >> you're 20. all right. you have how many -- you have more than a million dollars in funding, correct? >> right. >> okay. you don't understand that's strange, right? okay. what does a 20-year-old do with a check for, we'll rounded it down to a million. what does a 20-year-old do with a check for a million dollars? >> i didn't know what to do at first. we didn't celebrate when we raised the money. we just put it in the bank account and said let's sleep on this for a month and not do anything rash with this money. >> this is available to you to -- the people who invested in

you, they want to see expansion, they want to see hiring, an office. that's what the money is for, right? >> that is what the money is for. even then you don't have to be frugal with the money. i saw a bunch of my friends paying themselves 80k salaries. i thought that's absurd. you're wasting your -- the money you just went out to raise. i thought if we could get all of our new hires to take superlow salaries, minimum wage level salaries, this money will last us that much longer. >> and in return part of the company? >> sorry? >> what's the return? i mean, your hiring pitch is not that great for me. we're going to pay you minimum wage in return for? >> you compensate them with stock, too. they have a vested interest in the company. >> the two of you, you've had some funding. more money than most people see at your age. i'm not saying you're going to run off and buy beer with it. and jessica legally can't buy beer with it.

but that's a huge responsibility. >> absolutely. >> when you have money in the bank like that. >> it's so important, like jess sa said, to not spend it all. you want to stay lean, stretch out your runway as much as you possibly can and focus on building a business. i think startups sometimes feel like they have the money in the bank, they can do whatever they want. but i think the right thing to do is focus on making money and create a viable business as soon as you can so that you're profitable and don't have to raise more money. >> i disagree to a certain extent. i think the money is designed to drive growth, right, like you mention. you've been given -- it's a great responsibility but part of that, these investors expect you grow twice, three times, four times. >> do something with it. yes. >> to a certain extent you should be frugal but you need to be spending it, too. that's the way you grow a business. >> when is it time to grow? when is it okay, we're on our feet, we know what we're doing. we have a product. how do you know when it's time to expand fast?

>> in silicon valley they call that the product market fit. once you have traction, i think ryan was mentioning that, once you have a little bit of a core user group that's like really using the product, i think at that point you know that if you spend "x" dollars on marketing you can expect this much growth. that's the point at which you just like -- >> you as around entrepreneur -- >> you're nodding as well. >> i agree with that. >> a lot of people tell you a startup's life can be before product market fit and product market fit. us personally, we're just on the edge, hoping to flip on to the other side of the equation. at that point i think growth is what's most important. you have to aggressively go after that tune. >> the we learned something called product market fit. we'll takeui a qomck ciamerc l. a quick commercial. we'll be back in just a minute.

welcome back to "press:here." we're talking to three very successful young ceos about how to get a company off the ground. funding. obviously i want to keep it in the family as long as i can, right? i don't want to go out and get fundingfy can fund a company myself, which in my apartment could be a couple guys and a couple computers. >> i think it depends a lot on what you're doing, right? angel investing, for example -- >> explain angel investing to the folks at hole. >> angel investing is a small amount of money, up to $250,000. usually from an individual high net worth person. and in silicon valley, those people are very well connected. they help you with not just the capital, in our case one of our angel investors is right next door to us and helps us a lot, introduces us to people. it's money plus a little bit of help. >> when i get an angel investor,

what am i giving away? what's in it for him? or her? >> it depends on the structure of the investment. in the convertible note case, all three of us did that, it's usually capped at some valuation. so at the next round, it's like a loan, a bridge loan. it has interest that accrues and then it actually converts into equity at some trigger point. so that's simple structure. >> you move on to something venture capital, if i want venture capital i don't suppose i walk down sand hill road knocking on doors. with a laptop, saying, look at this. although that might work. who knows. >> you have to have the right interest for that. >> that comes through your angel. >> it comes from your angels. occasionally they'll e-mail you asking you if you're looking for money. >> interesting. >> that's always nice. >> i think for any entrepreneur, getting networked and being part of the community around you with other entrepreneurs and investors, it's generally a small world. everyone knows everyone.

it's a great way to get introductions and get help. that's an important part. >> what have you learned or not learned it yet, about the big, bad dangerous venture capitalist who will take over your company? surely somebody has warned you about something. we've seen movies after all about the control of a company. >> i think there's investors that are very, what they call, entrepreneur friendly. at least they position themselves that way. there are firms that -- once you're at that level of venture capital it's clear what your path is, right? i think at the angel level, this is a big exit. we're expecting returns. >> even with an angel investment, you still make the decisions, walking in and reporting to no one, saying this is what we're going to do today. at some point you have a board of which some of the members are coming from the venture capital firm? >> that's when the dynamics shift a little bit. there's someone who may or may not know about your industry or

product. >> to their credit they may know a heck of a lot about business. >> absolutely. >> is that something you fear? indeniro is yours to the point that you wrote its dna. at some point when it is wildly successful and i say i was the first to interview her, you're a multibillionaire, you say this is not my company. is that something you fair. >> i don't think that will happen. >> the billionaire part or the company part? >> i will be a billionaire. this will still be my company. i thought a lot about it. if your company ask doing well, you could raise money on very good terms. you don't have to give up board seats. >> ryan, you're nodding. >> look at mark zuckerberg and facebook. a grate example of that. there are more and more angel investors and venture capitalists are having a harder

time getting in on the deals. they're not giving up control or board seats. it's an interesting shift in dynamics there. >> one of the things that you went to good schools, you learned business. but then you went to an organization called y-commidator. i shorthand it as boot camp, beauty school or incubator. we try to figure out little words to describe things. i suspect none of those words are exactly right. >> i would agree. >> feel free to disagree. what is it? it's a school for young, bright entrepreneurs but take me further. >> well, i think -- i think it's unique specifically because of paul graham and the ethos around him. >> the founding of y-comminator? >> yes. he has created something that

attracts a certain type of entrepreneur. it's not just any entrepreneur. he's basically created this environment where his opinion really matters and the people around him including angel investors and that entire ecosystem looks to him to lead the way. >> but is school fair? it looks like a school. >> i think boot camp is probably a better dripgs. you start with a small amount of capital, just enough to get by for three months. >> y-comminator gives you that capital? >> yes. you have dinners every week, meet up with your peers and your class. you hear people speak. it's really an experience, i think. the value in one part is that you're in it with so many other entrepreneurs that you can learn from. there are some companies that are getting started, some have been operating and are profitable already. the community you get thrown into is a huge part of the

experience. >> jessica, i'll put you on the spot. why do they call it y-comminator? >> i don't know the full story. >> we'll have to look that up. >> there's a mathematical formula. i think it's -- my co-founder ignacio is really good at explaining it. it's a startup that creates other startups. that's similar model that -- >> in mathematics. >> you can tell who the english major was. all right. you go to this school and you learn these things but there are other entrepreneurs there who are also trying to take on adobe. they're going to steal your ideas, aren't they? >> i think it's fairly rare for people in y-comminator to take ideas. >> is it because it's all on the table now anyway? if i have a great idea, this fantastic idea that will change the internet, i'm not going to tell anybody until i have my

pieces in place. by the time you're there, you're going or you're not. >> i agree with that. >> is that fair? >> we changed our idea through y-comminator. i think that's not necessarily the case where you come in and you know exactly what you're doing. >> i guess you don't have the fear of somebody stealing your business. >> sure. >> it seems strange in a competitive landscape that you would -- >> sure. >> reveal to the crowd. >> we spoke about minimal viable product earlier. i think a mistake we made in the days of webnotes, wep ke spent year of keeping this to ourselves. there's morris income not showing your idea rather than someone stealing it. >> there are lots of people coming into these classes, i met one the other day from spain. one of the requirements is that in order to be a y-comminator

company you have to come to silicon valley. why? >> this is where everything is, the angel investors, the vcs. you have to be here. >> the ethos, the whole -- >> it's really important. and for us, like all of our potential hiring market is in silicon valley. >> sure. >> there's a lot of event activity. the ecosystem, there's facebook events, it's all happening here. unfortunately, it's not happening anywhere else, right? in a lot of cases. >> we'll stop theret jusor jtus minute. we'll take a quick commercial break

remember these names and companies. ryan demeco of crock-adock and rob ibrahim of ready for zero. startup entrepreneurs. we have three ceos, one reporter. we were talk during the break about how people underestimate how difficult this is and the lack of glamour in an internet startup. you wrote once it's like being an actor waiting for a part. there's still and there's also luck. and the more you can share your struggle, the more people will stick with it.

>> it's a lot harder than people think. look at tech crunch. you see the success stories about facebook and youtube. you don't realize how much work went into that. my company right now, we've been struggling for almost two years, actually. although we had a really successful fund raise, everyone has been complimenting us on $1 million in the bank, a year ago we tried to raise money and not a single person was interested. >> i couldn't agree more. just before we start ed, we wer having so many problems. >> was that the first time you fired anybody? >> it was. that's been one of the hardest things i've had to do, as a matter of fact. we came out here, hit the reset button and through persistence, it's starting to finally pay off. overnight successes take years in the making. that's something i keep in mind

all the time. >> is there a point where it becomes personal, you start to take it personally, a failure or a reset? >> it's always personal. especially when you give everything to your company. it's like your child. you're raising a small child. >> we don't have a million dollars funding, i can guarantee you that. >> part of being in silicon valley, actually like having entrepreneurs around you going through the same struggle is phenomenal, because then you can see all these companies are having issues, it's not just my company. >> mark zinga was not mark's first company. rarely is it your first company. how do i bring my idea to market? in the sense of were you not dealing with documents and taking on adobe, were you not dealing with books and taking on intuit? were you not taking on credit card debt and solving that

problem for people? what would you be doing? what is the startup you would have done if you wrnts doing the startup you're doing now. >> good question. it's a hard question, right? it's not just the idea, right? i think it goes back to what you were saying, a dumb idea, smart team. it's a process. it's almost like you start with something in mind and you narrow through this path. i don't know what you think. >> i agree. going through startups gives you a sense of how you attack this problem, how do you find opportunities? i think it takes years to develop. it's hard to say what the idea would be. it's not really about that. i think it's about the process and areas you're generally passionate about but the specific idea could be just about anything. >> you are actually really like -- well, we tried really hard to come up with an idea. >> this continues to surprise me. i think it's one the biggest surprises of the show is -- i always assume it's the idea that makes all the success. >> it's the myth. >> you keep saying we didn't

know what the idea was. >> we started with a problem basis, actually. we looked at the energy business and we looked at money. and we liked money better. we looked at your idea. we wanted to help people get out of credit card debt. ultimately we -- there's another company, it helps you with investing your money. we looked at that idea, too. ultimately we started to look around and we wanted to help business owners with their money. >> let me rephrase the question. now you're an angel investor, what area interests you? what area would you say, i'd put money into that? >> the area of search and organizing all the information out there still has a long way to go. there's so much information, everyone is still bombarded with it. through search, organization, aggregation, things like that, there's huge opportunities to make all that more accessible to everybody and help people deal with it? >> ron? >> i think the internet is still young as we know. but i think bringing things like from a very manual, like,

offline world and bringing them online is still huge a huge opportunity there. things like there's call centers and things like that. i think we can still automate a lot of that using the internet. >> i like that. i think ideas that revolve around making money, that's a big trend. back in the bubble, people didn't care much about products that made money. >> absolutely. >> i think investors care a lot about that now. >> i know you're tired about being teased about how young you are. how old were you during the bubble in 1998? >> i was born in 1990. i was barely using a computer back then. >> and i'm sure you're sickened to death about being the 20-year-old multimillion funded entrepreneur. well, it beats -- >> it's kind of fun, actually. >> i suppose it does. so i've had three entrepreneurs here, all from an organization called y-combinater. more informaas far as the nameso as far as the names and

companies go. we'll be back in just

my thanks to our three young ceos this week, jessica mah, demeco and eastbound rahbrahim. i'm scott mcgrew, thank few yore making us a part of your sunday morning. ♪

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