by Y Combinator1/12/2018
We operate a platform called Bookface for YC founders to connect with each other, ask questions, find intros, and share advice. Recently on Bookface Zach Dixon, cofounder of the gaming company Players’ Lounge (W18), asked a great question:
1. What are some things that you should’ve known as a first-time founder but did not?
2. How did you learn them?
3. How did they help?
There were so many useful answers that we’re going to share them here. The numbered answers are replies to the three questions above. The lettered answers are multiple answers to the main question.
1. I should have known that recruiting a lot of free interns to solve vague tasks is not effective in reality. It generally leads to poor results, we spend a lot of time on communication and management and they don’t even have a really good time. Only hire for roles where you know exactly what the tasks are, and where you have tried doing it yourself.
2. We have had many interns over the last two years, and in most cases it was not an effective way to spend our time or theirs.
3. We now have a significantly smaller headcount, but a higher absolute productivity. Communication is simpler and the culture is better.
1. We relied too much on other people’s advice, including board members and investors. When you are starting something new, it takes time to figure out what you have and how to make it work. All of us want to narrow it down to some analogy or comparison to simplify the analysis. You ask around and people tell you: “It’s like Salesforce for giraffes” or “It’s like McDonald’s for fish”. Then the model follows, and you are trying to make your business behave in a particular way to fit that model before you really know what it is.
In my experience, only listening to your customer counts in the end. At Multiply.com we thought we were a social media company. It took us too long to understand that our users were using us as a craigslist with high res photos. Once we understood our users, we found a path forward.
2. We had to learn to ask the right questions. Our customers taught us.
3. Our customers made us successful.
A. The importance of good communication with potential and existing investors. Done effectively it significantly increases your chances of keeping the company funded, and therefore of success. Done terribly it makes you borderline un-fundable.
I learned it through being lashed by PG.
It helped by creating an open dialogue between our investors and us, and drove our focus and prioritization on the right things at the right time.
B. Investors never say no. They always say maybe. Everything is a no except a yes. And a yes is still about 50-50 to an actual term sheet. This is rational behavior by them.
We learned it through brutal experience! I remember clearly a large, famous fund saying “maybe we want to do the whole round” – I immediately emailed our YC partners and said “we can stop fundraising, we’ve found our lead!” They quickly reminded me that unless you have a termsheet, the deal isn’t remotely done.
It helps tremendously because you know where you are in the fundraising process. Fundraising is a pipeline, just like any sale. The best fundraisers are disciplined and honest about the state of their pipeline and what stage each funding opportunity is at.
C. (More for B2B) Marketing tends to be overrated compared to product-market fit in the early days by founders, especially within a batch / cohort of strong companies.
I learned this from watching our cohort evolve. Most of the really hyped companies that we felt sure to be successful no longer exist. Some of the least-known and most ‘under the radar’ companies (including Rainforest) are still thriving. While we mustn’t confuse correlation with causality, I do think that many founders that get into top-tier accelerators get distracted by building a personal or business brand, because so many new opportunities to do so arise as a side-benefit of being part of YC.
While distribution is important, building the right product and selling to the right users is more important. Luckily we were always terrible at marketing and so didn’t fall into this trap. I could have saved myself some hair loss if I hadn’t been judging myself for not knowing more reporters or speaking at more conferences.
Don’t undervalue experience. We made a lot of easily avoidable mistakes early on because we thought paying more to get experienced people wasn’t worth it. If you do need to hire (YC already gives enough advice on not over-hiring), then be sure to be honest about what you don’t know and bring on people that have that experience. Example: we thought because we knew how to code that we didn’t need senior engineers or anyone to manage engineering. Shouldn’t we just be able to teach ourselves? The answer was maybe, but with a lot of wasted time along the way.
1. Be ready for skepticism. Startups that survive take feedback well and adapt.
2. Had a bit of mentorship at uni..but really it’s just been the grind. Failing 3 startups (~1 to 1.5 years per) tends to build that in to you.
3. Humbles you. It gets rid of that “look I”m a CEO” cockiness young founders run in to when they are (in my case I was 19/20)
1. Don’t just write code and read PG blog posts. Sell and talk to users. Verify you’re solving a problem. A lot of people applying to YC think this is all it takes.
2. Reality taught me this. Failed YC applications, Failing to close customers,..
3. Helps you navigate the market
1. Do what you love or you’ll burn out I was the CEO 3 times, 4th time I’m the CTO and can’t be happier. A cofounder who compliments you was a saving grace for me.
2. Not sure someone can teach you this?
3. Skymind is the best success I’ve had so far. It’s allowed real growth, I’m not 3.5 years in to this and still loving getting up every day.
1. Employees rely on you for income. You take on responsibility when you pay for a salary. Salaries also contribute to burn. Spend wisely.
2. Missing employee deadlines on salaries when I was younger caused me to learn cash flow lessons and burn early.
3. Just like any startup you still make mistakes, but we weigh the real cost of a hire now.
1. Being remote first was one of the best things we ever did. You need to overcommunicate due to being distributed but that overhead pays off when it comes to scaling quickly and finding a different kind of hire (lots of senior folks can only work remotely)
2. We stumbled in to this by accident. We’re an open core company. We hired from our community and became distributed by default
3. It’s allowed us to scale, we’re not paying obscene amounts of money for real estate.
1. Understand your limitations. For example, I’m not a consumer guy. Enterprise is both what I like doing and what I find myself suited for. I don’t mind wearing a suit and doing sales. It’s better than trying to understand what the masses want at the hopes that they’ll pay you $5/month and then not leave you the next month because the button switched from green to blue.
2. Tried SMB at one of my previous startups, realized I just couldn’t handle the clientele
3. Successfully selling to fortune 2000. It’s a lot easier to understand their needs.
The single most important piece of advice: never undervalue the relationship you have with your cofounders, your significant other, or their significant others. You’ll ultimately spend more time with your cofounders on a daily basis. Knowing your cofounder plans and ambitions and life situation, as well as their significant other’s, and whether they align with yours over a long horizon, really matter. It’s impossible in many cases to overcome incompatibility. Talk about this early, often, and make time for regular updates. Some things to think about: can you survive 3 months at a time apart? Can you move if the business requires it? How will workloads impact family planning? What kind of outcome are we looking for from the business? How long can it take for us to get there? There’s no wrong answers to any of these questions, so long as everyone is on the same page.
A. As a founder, hiring and firing are the only two jobs you’ll have from founding to exit as a constant. Being bad at either leads to suboptimal outcomes. Embrace the process for both. When you end up a multiple founder, you’ll have done both hundreds of times. They’re both equally difficult to master (and both can save your business at the critical time).
B. Distraction comes in a million forms. If it isn’t going to add to your growth, it’s a distraction. Sometimes the line is murky — content is a great example of this. I’ve heard from numerous investors that a CEO that has time to blog doesn’t have time to do the rest of their job. Yet the companies with strong profiles often have tremendous amounts of content. When in doubt though, it’s a distraction.
Some things that feel like a lot of activity but (usually) aren’t without a well thought out plan: conferences, seeking press, forum participations, coffee with folks that aren’t your core customers, fundraising, micromanaging.
C. Conflicting advice exists for a reason. You’re going to get a ton of it. What works for one company, at one stage, won’t work for another company at the same stage. “Don’t overhire” is a great mantra, until you’re bottlenecking scale. Waiting for less dilution makes perfect sense until you’re out of money. Figuring out what’s right for your company (and not being paralyzed by fear of being wrong if it turns out that’s the case) is the knack.
D. Periods of growth are amazing; periods of contraction are disheartening. Moving from a large team to a small team sucks. Avoid it if you can! If you can’t, double down on communicating the plan on how you’ll recover from where you are. If you don’t, you’ll only end up with folks that are excited about a paycheck, not the mission (and understandably so).
E. Don’t enter into relationships adversarially. It’s really easy to think in us versus them terms of investors, partners, and even cofounders. One of the most sincerely toxic things I’ve seen in startup is ultimately shortsighted thinking: investor X is useless, I shouldn’t have taken their money, they’re not letting me do what I want to do. Even if all of those things are true, our careers are longer than our individual startups… and when you entered into the relationship, you gained something. Spend as much emotional time as you can thinking about the perspectives of everyone around you, plan for the outcomes and concerns they might have, and maintain good relationships. When you start thinking in terms of us – our investment team, etc. you’ve won.
One thing I haven’t seen: Hire people who have experience and that are better than you. There is so much romance in the startup world around hiring “ambitious, smart people who can get things done” without talking about the importance of building a team that has more experience than you in their fields around you. I was definitely guilty of looking for “diamonds in the rough” in the early days, rather than hiring true executives who could help us to grow and scale in roles ranging from BD to finance to engineering. You need to invest the time to understand what a great VP of X looks like and then go and sell someone with that skillset on joining you. Trying to hire bright people with no experience and hoping they will “figure it out” will almost certainly slow you down and cause you a lot of heartache when those people don’t scale.
Interviewing and hiring are skills that must be learned and practiced. Don’t wing it and then expect good results.
After a few bad hires, we realized we sucked at interviewing. This was an expensive way to learn. We solved it by bringing mentors and advisors into our interview process to teach us.
I suck at firing people that need to be fired.
The wrong way, which is what I’ve done a couple of times, is to fire someone and not properly gathering evidence as to why the person should be fired. To properly document performance, make sure to set expectations clear by give clear warnings and you and the employee should track progress through time task keeping and weekly (or maybe daily tasks, if you’re in a rush to fire) to do lists.
Already, I have had these people come back and threaten to sue me. Otherwise, it is will end up with endless arguing. Getting sued is ultimate leverage against a startup , especially if during fundraising.
The time and progress tracking really helped avoid these things. I wish I knew to do it from the beginning.
Adding to Doug Hoang’s comment.
If you are firing people correctly it will not be a surprise to them.
Setting clear expectations helps them see what they need to change and if they are making those changes or not.
If they are not rising to the challenge, they know it and are not surprised if it ends with them moving on.
Let go faster. It is very rare that an average employee will step up the game and become stellar. Meanwhile, a lot of the CEO’s and team’s time is spent trying to improve underperforming employee’s performance.
Hence, an average/underperforming employee not only costs money but also imposes a severe morale and time-spent tax on a young company. The faster you let go, the faster you will bring in a materially better person who will do the job well.
Understand how important it is to take care of myself physically and mentally: sleeping, exercising, eating well and having a social life.
As we know, startup success is largely a function of its founders’ ability to execute, so investing in founders’ wellbeing is some of the highest ROI things the company can do. Very few things allow me or you to be more effective than sleeping 8h a night.
I thought I should be like Elon Musk and tried working 100h a week and sleeping under my desk. I learned that in fact I’m not Elon Musk and found myself on the brink of a burnout a couple times.
We all know that startup is not a sprint. I don’t think it’s a marathon either, but rather a decade-long series of interval exercises (the ultimate Cross-Fit workout?). Instead of grinding away slowly at a steady pace (marathon) you’ll get the best results in the shortest time by working very intensely for a bit and then actively resting (sleep, family time, exercise, weekends) before the next interval.
It’s amazing to notice how much nicer person I am when I sleep enough and eat well. I thought I had ADD but realized that all the symptoms disappeared when I just slept more and exercise regularly. It’s stunning to realize that I’ll actually get the same amount of work done in 9.5h as I would in 14h previously (also: see https://en.wikipedia.org/wiki/Parkinson%27s_law)
1. Being a technical founder, I was told that I should do what I do best (tech) and bring in a business person as a CEO. I have listened to this advice and spent some time testing out two potential business people to join as co-founders. This was a mistake and I wish I knew that I have / can acquire the right skills to be a CEO. And the key skill here is “sales”.
2. In the end, a friend recommended that I do an enterprise sales course. I learned that sales is about listening, relationships, process and discipline. And that sales applies to many other tasks of a founder (hiring, fundraising etc.).
3. After a 2 day course, within 3 months I signed 3 significant first deals for our company. When focusing on growth during YC, as a 2-person team, we have 3x our MRR, signing up big brands without any existing personal connections. It also helped a lot with fundraising and hiring.
1. Aesthetics really matter in the early stage. Spend time and/or money early on nailing a cool logo and beautiful slide template. It really matters. Even copying other beautiful stuff is fine.
For getting our first 3/10/100 clients, the fact that we looked and sounded totally pro meant a lot. We seemed like a larger more innovative company because of it. Even for our Series A, the fact that our deck looked world-class helps build the belief. For hiring too it helps.
People’s visual senses are easy to recruit to your cause and are powerful influencers. Why not look like you’re already a billion dollar company?
I think this is under-optimized for in general even within the YC community. So many cool companies that scream SMALL TIME given their visual sense.
2. Learning how to create FOMO is the most important negotiating dynamic you can learn. FOMO = fear of missing out. Whether it’s with fundraising, hiring, even clients (i.e. limited promotions etc) it is so so so powerful to have FOMO working for you. There are ways to do this that you figure out through trial an error. Time-boxing things. Have multiple options that are openly competing. Spend time developing strong back-up plans. Defining unique/custom value props for individuals. The fact is that everyone in startups will SAY “creating FOMO is great” but very little is actually written about creating it in various environments. So try to deliberately get good at this and your life will be much easier.
3. Maintain optionality on most decisions. I’m notorious internally for wanting to keep my options open for things – i.e. avoiding prematurely locking into something or trying to avoid making a decision among only 1 or 2 options. Yes, this can be detrimental too. But early stage is all about being shrewd about your decisions, and in my experience, often the best move is to just wait a bit or pursue some other avenue. I’ve found that with individuals on our team, often they want to suggest a single course of action vs. really exploring the problem space.
Hiring a VP? Get 3 top candidates that you’d be happy to work with right on the finish line, and now you’re negotiating from a position of strength.
Making a big infrastructure choice? Try to see if there’s a way it can be less all-or-nothing. Is there a more incremental change we can do and then see what we learn over the next 90 days?
1. If you plan on having cofounders, you need to determine how decisions will be made before starting a company together. Titles and vague “roles/responsibilities” won’t be enough. Play out scenarios to hash out decisions and set the right expectations, ask tough questions, and don’t let ego get in the way.
2. As the company grew, there was internal conflict and push-back on decisions being made at the company. This caused us to make decisions slowly and not react to the market/competition as quickly as we could’ve.
3. My cofounders and I had several transparent discussions about this decision-making issue. We reflected and tried our best to come to a solution. Ultimately, we had clearer roles and decision-making structures so that we were able to make decisions much quicker.
Here are my top 5, based both on my own experience and the questions/trajectory I’ve seen other people go through over the years.
A. Nobody makes real progress on a startup until the startup is a full-time job.
B. Don’t worry much (early on) about competition.
C. Tech startup success depends surprising little on technology.
D. Fire faster.
E. At the beginning, almost all that matters is shipping quickly, then iterating.
Mostly I learned by failing at these things and trying to figure out, every week, what I could be doing better. In fact, I think that’s a really good meta-lesson: you have to focus on figuring out what you’re not doing well as a founder to get better at being a founder. That’s an every-day job, and it’s subtly different from figuring out what your company as a while needs to be doing better.
One of the most useful things I ever heard from an advisor was Alfred Lin’s description of what his job was when he was COO at Zappos. He said, “I came in every day and figured out what I could make 1% better.” This is both the best job definition I’ve ever heard for a growth-stage COO, but also a useful lens for approaching the job of founder.
I wrote a thing a while back about the above 5 things I didn’t know as a first-time founder. I just dug up the text and re-posted it. — https://medium.com/@kwindla/five-things-that-are-non-obvious-as-a-first-time-startup-founder-9dd5a5d8a758
1. Some investors have more time than money.
2. One investor in particular was just looking for a way out. So I did some research on him on angel.co, and crunchbase. He hasn’t invested in about 4 years.
3. Do research on the investors before accepting the meeting. Sometimes investors are trying to hide things from you.
A. If you want the folks at your company to know something (e.g. high-level company goals, product direction, etc) it’s not enough to just say it once. You have to repeat it many times and weave it into the operational rhythm of the company. At any given time, an employee at your company has so much on their plate in terms of their day-to-day job and their personal life that “that one slide in your all hands with the mission statement” isn’t going to leave much of an impression. This is something I’ve heard other founders say but I didn’t fully get it until we hit ~50 employees and observed how hard it was to keep everyone on the same page.
B. Many founders I know are “first-principles” thinkers. Elon Musk quote about what this means: “I do think there’s a good framework for thinking. It is physics. You know, the sort of first principles reasoning. Generally I think there are — what I mean by that is, boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.” I think this can be a positive trait, but I’ve definitely been guilty of using this approach to the exclusion of relying on experience / advice from others. For example, we designed an early sales compensation plan from scratch via first-principles thinking. It seemed logical and reasonable at the time but it caused unforeseen problems that would have been very easy to avoid by just asking around at other SaaS companies how their plans were designed, understanding the logic behind those plans, and making changes based on what we thought was specific to our business, rather than inventing something new from scratch.
A. Hire slowly and fire quickly.
B. Do not avoid the elephant in the room and though it’s hard, solve that issue first.
C. If you have more than one founder, let CEO focus outside and rest focus inside.
D. Always keep eyes on how your business will make money.
E. If current idea is not make sense from business don’t hesitate to pivot.
F. Always keep looking for options while you know all doors are closed for you either it’s a customer acquisition or fundraising.
G. Use your fund wisely, track your earnings and cost from day 1.
H. Hire the people you need most and play the role before you hire for the position.
A. Starting a company really is one of the hardest things you can choose to do to yourself. To add to the misery, the “hard part” of starting a company will last a lot longer than you might think. The Airbnb story of their first 1,000 days is incredible. I got lucky by having the best possible cofounder anyone could ever hope for and by having a supportive family who basically gave up 100% of their weekends for nearly a year so I could focus on launching the company.
B. About 99% of what you read around early-stage startups who are “crushing it” is actually false. Founders have a great reality distortion field. It’s practically a requirement to make it through the tough times. But, comparing yourself to what you read in the tech press is a losing battle against a fictional opponent. Save yourself the mental anguish – don’t create unrealistic comparisons for yourself.
C. Venture investors want to hear crazy ideas, not pragmatic plans. When I first pitched investors, I was talking about how we would add customers slowly at first, because that’s how enterprise SaaS works. Honesty is always a good policy. But those pitches did not go well.
D. As a company grows from one stage to the next, you have to throw out what worked and change your mindset to the next mode for success. For the early team, optimize for ability to get things done, not any specific experience. Very few people can actually push a task over the finish line. But, once you hit initial traction, you have to switch to optimizing for hiring people who can build systems. Through that transition, adding bodies without systems and process only creates more chaos.
E. The #1 requirement to be successful in your startup is to never stop. Just being sufficiently determined by itself is almost enough to make any decent idea work. Believing in that truth will make the tough days (and weeks and months) a little less painful.
1. Don’t fall in love with your technology. Fall in love with your customer. Many others posted something like this in the other thread already. Customers are the most important people to be talking to. Like most startups at the early stage, we underestimated how much we needed to spend time with customers and slightly overestimated how much we needed to talk to everyone else (e.g. investors, advisors, other founders, etc.). In the end, they are the only people that matter. As the startup community has become so big and connected, it is remarkably easy to be networking and taking advice every single day without talking to a single customer. As a university spinout, this can be particularly dangerous, as many of the prospective partners and advisors introduced to a startup by university tech transfer people (tech scouts at large companies, granting agencies, etc) do not have interests aligned with the startup’s success.
2. We learned this most by basically tuning out everyone except for customers for about a year post YC.
3. We were able to focus all in on an single customer base. We ended up with a fairly significant refinement of our solution that gives a much larger value to that customer-base, and we built close relationships with the most important decision makers and thought leaders in our industry, earning their trust while gaining their insights. These people became valuable promoters for us as well, both within their companies and across the industry. In one case, a key industry advisor ended up coming to join our team and has become a critical asset on BD. The traction followed.
1. Pay deep attention to your co-founder relationship, especially when you encounter failure you haven’t been through before. They must be able to communicate respectfully and be a team player. Everyone says startups are hard and stick through it, but there are some hardships that are just not worth to stick with.
2. The school of hard knocks. Spent some years in an unhealthy cofounder relationship.
3. Relationship broke up, cofounder left. We made a much more practical plan, which has been executed very well by the team.
1. Never underestimate others. Be good at firing people & don’t delay solving a problem. Take responsibility of failures and give credit to people who contribute. Inspire by doing rather than talking. Trust people and let them make mistakes.
2. Experiences and dealing with multiple people.
3. Better execution & planning. Improvement in relationships.
When starting out, I wish I learned as much about finances as I did about financing/fundraising. Tons of advice out there about how to raise a round but practically nothing on how to spend it!
That’s why I committed to a pay-it-forward policy of open finances. It also helps that we’re a benefit corp, but anyone can share: https://www.perlara.com/blog/perlara-open-finances-2017/
Our financial data is most relevant to biotech/biopharma startups and discovery/preclinical companies, but the more founders put company financial data out there the easier it will be for the next first-timer.
The relationship between co-founders matter much more than you think. And having co-founders who are as equally committed, share similar values, able to communicate openly & honestly with each other, and genuinely like each other, turned out to be a lot more important than the initial product idea or engineering chops.
I learnt this when we were stuck in the trough of sorrow, and going through a very rough patch. There was a point in time I wanted to just throw in the towel, and give up – but the determination of not wanting to let my co-founders down kept me going. We were struggling hard to find product-market fit – and it was the constant brutal, intellectually honest conversations, mutual encouragement and rapid iteration that allowed us to find our stride – we ended up finding happy customers and raising a $1.2mm seed round; instead of giving up / failing.
Knowing what I know now, I realise that I was incredibly lucky – and I’m not sure if I would start another startup again if I didn’t have co-founders (before the startup) whom I share this kind of relationship with. Doing a startup is brutally hard, and it’s even harder if your co-founders are not aligned, committed, or fond of each other.
The biggest responsibility of a founder is making the right decisions.
Not sleeping, not exercising, being unhealthy, stressing about paying bills, etc., will hurt your decisions – and your company. Take care of yourself.
Delegate and automate day to day operations as much as possible. As founders, we usually have a tendency to be hands on with everything and it’s easier to congratulate yourself on fixing some random bug than to spend 3 days deciding how to tackle the current elephant in the room. It also has the bad side effect of hurting your culture by teaching your employees that you are are not CXO, but the chief firefighter. Make sure you are not too busy that you don’t have time and energy to focus on what you really should be doing.
1. How much crucial time a founder can lose on the wrong events and meetings. Especially in France, startups are in a strong hype right now, and at the beginning I attended many such events.
2. A few deadlines taught me the hard way that most, if not all, of those events are non-essential. On the other hand, a few of the right events in the valley (from YC and others) showed me just how efficient a gathering event should be. Finally, our advisor at our VC firm showed us just how useful an investor can (and should) be, if that investor pretends to be helping you.
3. Now, me and my co-founder deny any event/meeting without a clear gain in knowledge (first or second order through the right connections) or investor money, that can be predicted beforehand. For example, we only meet with specialists or advisors with strong relevant connections.
Knowing this beforehand would probably have saved us several month’s worth of work in the early days.
1. I should have known not to hire expensive contractors, consultants, and advisors. As a startup you get bombarded by industry expert contractors and consultants who make big promises. It is easy to get caught up in the excitement. And it feels easy to hire someone to do a job or task (ex. PR, Business Development, Social Media, Customer Service) that is new to you. Unfortunately, these “expert” contractors and consultants always over promise and under deliver.
2. In our first couple years we hired a number of contractors, consultants, and advisors. Virtually all of them were fired for over charging and under delivering. We wasted quite a bit of money and a lot of time learning this lesson.
3. We no longer hire outside contractors, consultants, or advisors. We push ourselves to learn by doing instead. As a founder you can do everything and anything that might be promised to you by a consultant…. and you will learn a whole lot through the process.
Go to Innerspace and improve your communication style so that you have a positive and productive relationship with your cofounder. It’s the number one thing and makes the difference!
A. Define your customer/who you are selling too as early/precisely as you can. We ran into product-market-fit issues during YC and allowed anyone to sign-up + were unclear as to who was in our target market. Had we have done this; it would have saved us time later on, though at the expense of growth during the batch.
B. Have a super clear message as to what your value proposition is to your customer (once defined!).
C. Be ruthless when it comes to quality of service early on (we outsourced our operation and had no metrics/visibility over quality control). How did we learn this? Bucketing reasons for churn and looking into what patterns existed amongst our userbase by speaking with them on the phone and looking into their accounts. Michael Seibel, Lyle Fong, Gustaf Alstromer, and Walker Williams have also been incredibly helpful when it comes to surfacing areas where we can improve. Being in SF and doing office hours in person have accelerated our learning for sure.
A. Compromise. As kids, we’re taught to compromise with our friends and peers. As cofounders, compromise makes bad products, results in horrible hires and can kill companies. Compromise accommodates egos and feelings rather than reach best outcomes. Never compromise. Instead, disagree behind closed doors then commit to one clear idea/hire/strategy.
B. Fundraising. Fundraising as a founding team is an awful strategy. It prevents an individual (likely the CEO) from building important relationships and telling a coherent story. Team fundraising signals that there’s either not a lot of work to be done at the office or the team is insecure and doesn’t trust the CEO.
C. Cofounders. Define roles from the start and understand that in founding teams > 2, your leverage in major disagreements is effectively zero. Accordingly, soft skills like communication, empathy and the ability to convince others without playing politics or compromising are very important.
D. Venture Capital. Understanding the basics of venture capital may prevent raising too much/too little or taking institutional money at the wrong time. Raising the first priced round is hard and additional rounds are exponentially more difficult. If institutional investors from the first round do not invest a multiple of every $1 they invested in the previous round, you’re most likely default dead and everyone in the valley will know it. Of course there are exceptions, but in those cases knowledge of VC basics doesn’t matter much.
E. Hiring. In tech-enabled companies, non-technical hires will rapidly outpace technical headcount. Larger teams will quickly define company culture and begin to split founding teams. When non-tech headcount > tech, fact based experimentation may lose to less ideal values within a startup.
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