My last week in SF was a rollercoaster of emotions. From really feeling low about being away from home but not taking a big swing to feeling energized after conversations with my roommates Elliott and Matt. Here is what I learned this past week
The first piece of advice Matt had was “You don’t have a business until you have someone paying you”. This is obvious but it zooms you out of all the user research and makes you realize everything is ultimately for you to get paid for creating value. The fastest way to do that is to actually get just one person to pay you for solving a problem.
A big part of early stage fundraising and team building is for investors and co-founders and customers and team members to feel your energy and be energized by it. Elliott and Matt both pitched investors on their vision and on themselves. When the partner gets grilled by the investment committee on the deal they must be able to confidently say “He is a beast and I am really excited”. It’s the next big thing and they have a chance to get in early.
Approach fundraising as a partnership. Do you want to take money from this person and have them be on your cap table for the next decade? Matt sends his investors a google doc with ideas and asks them for thoughts. He loves to just get in a meeting room with his investor and whiteboard on what’s working and what’s not working.
“SaaS is simple and something I understand. You get one customer to pay you and then you find more people who look like the first one and repeat.” - Matt. This a simple model to approach a SaaS business with especially in the early days
When you’re a first time co-founder every punch comes as a shock. But when you have been through the first round you realize getting punched is part of the game and you get used to it. Some good words of advice from Elliott.
I met a YC cofounder who shared that 40% of his pod in YC actually dropped out because the co-founders fought with each other. This is the number 1 reason why startups fail. You have to a have a really strong relationship with your co-founder and protect that.
Matt didn’t get into YC the first time. Next year his company made the record for most money raised by a company coming out of YC. Now, Marc Andreessen sits on his board but in the early days he was by himself cranking away after he broke-up with his co-founder. If you fall down, get back up, get better and try again!
When Matt’s investor did a reference check with Matt’s first few customers, they said “We love him. Matt didn’t sleep until he made us happy” This is what the early days look like. You are a small startup and your customer probably has options. If you want to win, you gotta be obsessed.
Matt’s company is worth a billion dollars+ based on the last fundraise. He still leaves the house at 6:30 am and comes back at 10 pm. Why? Because it's HARDWORK. The earlier days are even more intense. You need to give up everything else in your life so that you can achieve your dream and solve the problem. It’s going to be HARDWORK, embrace it.
If there are competitors in a market you know that there is value. You want to compete with incumbents that are old, slow, and have laggy roadmaps. Google was the 10th Search Engine. NVIDIA was one of 80 funded chipmakers. What separates you from the competition?
Sales is a funnel. You can’t give up if you reached out to 25 people and nobody wanted to talk to you. To find early adopters you need to have a critical mass of outreach. Figure out what drop-off rates look like for your business and adjust your top funnel accordingly.