We were in a related field but not there yet. We were still honing in.
Also, we were pre-prototype, and I'm not even sure if we had revealed our secret sauce yet (important, because we had to patent it).
At the time, it was a compressed air powered scooter that was to be the product.
Note: I applied three times. I think YC was right to reject the first two, as suboptimal ideas, further sub-optimally suited to still further sub-optimally configured teams (Paul rightly surmised that I was grabbing whatever resources at hand to complete some kind of made dash across the Antarctic).
The last application was for a proto-LightSail Energy. We didn't have much and it was an even bigger project than the first two, which, it should be said, never went anywhere notable. If I were YC judging DaniFong circa 2008 applying with LightSail, I'd wonder if she'd ever make it happen, and gently encourage narrowing the scope of the problem. Which they did.
PG and Trevor Blackwell wisely suggested that we consider industrial applications, which turned out to be half right -- nobody really needed to replace industrial air compressor, but many places needed energy storage (e.g. islands reliant on expensive liquid fuels for power, renewable energy developers held up by transmission infrastructure or volatility saturation).
The size of this market -- literally in the billions, somehow eluded us in the early phase because it just wasn't visible -- we seldom think of how we get electricity, it seems like a practically natural resource for us hackers.
Vinod Khosla and his partner Ford Tamer finally got through to us. Ford dutifully sat through the first presentation, but kept coming back to (at every slide!) how this might be useful for the grid. Steve says he made the most important decision in his career, said "we'll get back to you," and we made the decision to rewrite the whole business plan on the drive back. Two weeks later, we engaged with Vinod and Ford together, and after a lengthy period of due diligence we raised capital.
The basic reasoning -- that it was unnecessarily difficult to try to make a compelling mass produced vehicle and invent a new power train technology, took time to dawn on us. We were somewhat blinded by the sexiness of many of the electric car startups of the time, and had the impression that, with the money for YC to hack together a slick and basically functional scooter prototype, that money would flow.
The advice -- and acting on it -- spared us. The disasters that were at that very time befalling Tesla Motors and its now clearly less fortunate ilk were evidently well known on Sand Hill Road, but not to us. Focusing on stationary applications was incredibly important for us at that time, and I'm glad we had a chance to switch.
Still, the dream of an air powered vehicle floats above us.
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I should also say, over and over again YC supported me (and thus us as a team.) They connected me with a cadre of super fantastic entrepreneurs (one of which I consulted for, providing the necessary funds to keep going), hosted the amazing and free startup school, hosted this amazing community, and provided the essay example I needed to start my own site, which really launched my professional identity. I posted my essays on HN, where, read by a few fellow entrepreneurs, I both found housing (provided in exchange for my cooking dumplings!) and through a couple more links, my cofounders Steve and Ed.
I have zero sour grapes; YC has been awesome to me.
My only interest is in mollifying the sting of rejection. The YC process is by nature and necessity fallible.
Of course PG himself mentions this in his own writings, describing AirBnB as a strange kind of bad seeming idea, Dropbox as another one of those iDrives that never took off, and describes how people shouldn't read too much into things:
http://paulgraham.com/randomness.html
http://www.paulgraham.com/judgement.html
However! I still felt rejection strongly and painfully, at least the first two times. So if folks were reading this, have heart.
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I dearly hope that this won't be taken the wrong way. The YC application process launched me, and countless others. Nothing's perfect. But for every one person they dissuade or distract, 99 must have been launched, just like me.