David Gu

Founder <> founder convos are the biggest unlock for company building. I spent the last 2+ weeks in SF. Besides meeting with customers, I spent a ton of time with founders / early stage builders that I deeply respect (shoutout to Abhinav Asthana, Christina Cacioppo, Kevin Van Gundy, Akshay Kothari, Yuhki Yamashita, Tara Viswanathan, Celine Halioua, & Michelle Valentine). I’m extremely grateful to have the chance to spend time with these folks. Some reflections from these brilliant people. 1/ People > everything. A company is a collection of people. Company success comes down to hiring the best people. 2/ Startup problems aren’t *that* unique. Startups are HARD and even if you think your challenges are specific to your company, they’re likely not. Someone else has faced the same thing, and you likely don’t need to reinvent the wheel. 3/ Let some fires burn. Focus > trying to do everything. As a startup, you can’t fix everything at once with limited resources (even if you want to). You need to focus on the stuff that will move the needle the most. Pick the top 1 or 2 problems, fix them, then move onto the next. It’s okay if some fires need to burn for a little in the meantime. 4/ Company operating cadences are key. We’re redoing our cadences now, so it was super interesting to learn how others run their board meetings, leadership meetings, all hands, etc. A consistent theme for board & leadership meetings is to have everyone complete a prompt in written doc, share with each other, then use the time to have meatier discussions. 5/ Be competitor aware, customer obsessed. Competitors cause unnecessary noise. Build products and make decisions based on customer / market need and founder intuition, never based on competition. Are these learnings helpful? If so, can share more founder learning posts in the future!

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TWO OR THREE-STEPPING TO SERIES A A lot of software founders are still trying to raise a $4-5M seed round from a pre-revenue standpoint to get to Series A. I get that we all want more buffer nowadays but it's also a harder calculus to go from pre-monetization, to early customers, to giving yourself enough sales cycle time in order to hit $1-2M ARR proxy for a strong A. Which is why inevitably, more founders end up having to raise messy extensions/bridges/Seed II or whatever you want to call them. So my advice is that IF you have the luxury of starting a company today, PLAN AHEAD. Even prior to even raising your first angel round. Break up your path to Series A into 2 or 3 tranches of mission-driven capital. Each tranche has a clear goal that you can rally your team and investors around. For example: First tranche to build the product and get early design partners. Second tranche to get to $300K of ARR. Third tranche to get to Series A. This will help support higher operating discipline and awareness. Incremental purchasing and hiring decisions will instantaneously shorten your runway in a way that a larger $5 million seed round obfuscates. And you'll be motivated to find GTM efficiency faster in the journey. Great habits for long term success. For context, Peter Walker of Carta recently sent an update on the arduous path from Seed to Series A. The survival rate is about 1/2 of what it used to be: "Something like 20-24% of startups that raised a seed round would graduate to their Series A in 24 months or less. For companies that raised their seeds in H1 2022, only 13% have made it to Series A across the 6 industries in the chart."

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How to pitch: The company has zero traction —> “We’re early” You only have 2 customers —> “We’re working with design partners” You currently have no revenue but hoping some pipeline finally closes —> “we’re on track to exit this year at $3M ARR” You’re in the natural kill zone of a FAANG —> “We view them as partners rather than competitors” There’s no way the tech can actually work —>“We’re manifesting the future” And of course: One of your developers uses Co-Pilot to write some front end code —> “We’re an AI company”

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Imagine you’re meeting a VC today and pitching your company. Now, also imagine the VC goes home tonight and tells his or her spouse about the meeting with you. How do you think the VC would (or should) describe your product to the spouse? Remember, this is for someone who doesn’t have any context, and probably doesn’t have time to listen the whole story. If you can think of a story version that's plain and simple -- how you want the VC to describe your product to the spouse -- perhaps that version should be your pitch in the first place?

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Bold prediction for 2025: Investors will pay founders to access their venture data. Founders own their data and grant access to investors for a fee. This shift promotes transparency, trust, and efficiency in fundraising, while giving startups a new revenue stream.

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Should you ask a VC to sign your NDA before sharing information about your startup? Check out my latest Youtube video to hear my perspective on this divisive topic. I cover: - the reasons a VC will not sign your NDA - why its a bad tactic to ask - when its appropriate to ask Many startups thrive on outcompeting their peers through innovation. Its understandable that many startup founders will want to jealously guard information about their innovation, product, and business. But its not a good strategy to ask for an NDA because it creates unnecessary barriers and has very little utility in the early stage of the fundraising process and very hard to enforce. Also, there are ways to mitigate the risks of sharing sensitive info. I am not a lawyer, and nothing I say in this video should be construed as legal advice. This is my personal opinion from ~10 years of experience as a VC investor. #venturecapital #startups #investing #NDAs https://lnkd.in/dxyRyrbG

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20 meetings w/ investors and startups in 3 days around SF/Bay Area. Here's what’s happening in hiring right now: 1) Elite engineers demand elite offers. Early-stage startups are winning top talent by paying up (sometimes as high as $250k-$300k + equity). 2) Startups are prioritizing candidates with brand names, interest in startups, history of solving complex problems, ambition, higher ego (not too high). 3) The best candidates have clarity on career direction. Some good questions I heard founders ask, “Where are you going?” and “How can we help you get there?” 4) Despite early funding surges in Q1/Q2, investors are becoming more selective - especially in AI.  This creates an opportunity for startups to hire from struggling shops with top talent. Invest now before the market shifts again.

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The state of venture capital is wild right now. We are witnessing a surge of innovation across the spectrum: - Funds merging - VC doing PE - PE doing VC - Secondary funds - Buyout funds - Spin-out funds - Debt funds - Continuation funds - Infrastructure funds - GP turnover - Hard Tech surging - Family Office uptick

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How does David beat Goliath aka early-stage startups close candidates also interviewing at FAANG / larger companies? Generally, they don’t, but here’s what @SingleSprout's data (80% offer close rate in last 6 months) says: 1) $30k: If the offer from a big company exceeds yours by over $30k, you're very likely not going to get that candidate. 2) # of Competitors: A candidate considering one large company might still be within reach. However, the more large companies they entertain, the less likely you'll get them. 3) Motivation: Understanding why a candidate genuinely prefers your company is crucial. Look for and test for interest in impact, equity, and the entrepreneurial journey. Unfortunately, most startups hiring on their own can't get this level of information from a candidate, and sadly waste a lot of precious time :(

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Organizing an intimate meetup for high-growth founders building dev tool / Infra / b2b SaaS, together with Bain Capital Ventures this Friday in SF. If you've either: - Raised at least $2M or achieved at least $250k ARR for your current company - Or, you’re a repeat founder who has raised at least $10M or achieved at least $1M ARR in a previous company - Or, had a previous exit for at least $5M Please comment/DM to get tickets - 5 more spots left

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I designed Peak OS for venture-backed companies after working with hundreds of them over the past 20 years. VC-backed teams are different, period. They need an operating system designed specifically for them. You can read about why (and get a step by step instruction manual to get started with Peak OS) in my bestselling book, Peak Teams. Check it out on Amazon and Audible. #venturebacked #vcbacked #venturecapital #leadership #ceo #founder #operatingsystem #peakOS

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Alternative Resources for founders, geared for startups with generous free tiers: 1) Papermark - Docsend alternative. 2) Tally - Typeform alternative. 3) Cal.com, Inc. - Calendly alternative. 4) Supabase - Firebase Alternative. 5) Sender.net - Mailchimp Alternative. What else are people using and loving in the founders stack?

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Insightful breakdown from my great Partner Omri Amirav-Drory on the simple factors that really separate the top 1% of investors from the rest, and how more operators should become investors! https://lnkd.in/gEiZdT2h

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We had Linear event for founders in SF last night, and as part of that I had a fireside chat with Patrick Collison from Stripe. We covered some topics like the importance of craft, product management, good leaders, etc. Some highlights: The importance of craft: At Linear we see the craft as the requirement for quality. People who care about their craft, almost automatically produce quality. Patrick: "We want to employ really good people. Really good people just don't like working on kind of sloppy things. There's just a deep spiritual aspect to that." Power of small teams: In my experience in companies, some of the best work was always done by a small, focused team, most features at Linear are built by 2-4 team members. Patrick: "The original iPhone software team was 20 people. The kernel, the apps, the browser, the touch interface, like the whole thing. So when people are telling you that they need 40 people for some project, you can explain to them how the iPhone was built with 20 people. So how big would you consider your project in multiples of the iPhone?" How Stripe still builds products in a startup way: Patrick: "There is an internal recipe for this which first guides you to figure out the right user for the product, then the team should go talk to some of those people. Then you should get some of these people into the Slack channel or some other channel where you can get them to try it, get more feedback or try the product. Once you have 5 excited users for something, you can scale it to 100. Then you can start looking at some metrics, but again you look at things like is it actually solving their problems etc."

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Read our team's thoughts on YC valuations!

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Let's finally get rid off the "VC alphabet song" and redo the system to become more founder friendly. "The benchmarks set by funding stages are often arbitrary and not necessarily aligned with the actual development needs of individual startups." #vc #venturecapital #founder #fundraising #startups #fundingstages #funding #fundingrounds #pitchbook

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I love YC. I think it's a great program for founders looking to get into the valley ecosystem. But if you think "indexing" YC is a good idea, think again. Let's take Garry's claim at face value (never mind that no YC batch has actually hit these metrics and we don't know what will happen to recent batches as they are ... recent). Anyway. Let's just say that 7% of YC companies will get to $1B in value. And let's just say that investors get to sell their stake at $1B (of course in reality some of them won't end up with any liquidity, but those who do likely will be at >$1B valuation). YC batches now tend to run roughly ~250 in size. YC invests $125k for 7% and then another $375k uncapped with MFN clause (which pretty much means they take the terms of the demo day round). And let's say that the typical YC company is raising $2M at $20M, as indicated in this post. Per batch, YC invests $500k * 250 = $125M. Per company, their $500k investment gets them ~9% ownership. Assuming that the returns from companies worth less than $1B is negligible (as is typically the case in venture), YC can expect to exit 17 unicorns at $1B valuation with 70% total dilution through future funding rounds, which pegs the value of the portfolio at 17 * 9% * 30% * $1,000,000,000 = $459M. YC gets almost 4x on their investment! Not bad, right? Good for YC, but bad for investors indexing the batch at demo day. Here's why: Let's say instead a fund invests $500k into every single company in the batch for a total of $125M at demo day. It buys them 2.5% ownership per company. Using the same assumptions as above, that fund's portfolio value will grow to 17 * 2.5% * 30% * $1,000,000,000 = $127.5M. The demo-day index fund would barely make 1x. After fees, the return would be significantly less than 1x. And put in the time cost of money of 10 years, and these returns are just absolutely dismal. Note that I'm basing my math off of Garry's post, which quotes metrics that don't actually matter for investor returns. In reality, 5% to 10% of companies becoming unicorns don't matter. It's the $5B or $10B or $100B company that goes public that really matters. In reality the math will be swung by the 1 - 2 BIG exits, not the "unicorns." In reality, each batch's performance will look *wildly* different 10 years from now. I guess what I'm trying to say is this: YC ain't magic. Even a 10% unicorn rate won't save demo day investors who don't pick wisely. #Startups #VC

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How can founders better prep themselves for early stage VC meetings? 🤔 Bill Georges partner at AlleyCorp tells me how founders need to PREP PREP PREP ✨ Address the top button early stage: 1️⃣ What's your founder story? 2️⃣ What's your go to market strategy? 3️⃣ What your product development strategy? 4️⃣ How big do you think this can get AND over what period of time? *Understand what your VC is looking for, and really try to understand their culture* ▶ https://lnkd.in/dZvciK2w Check out the entire episode of Digital Health Heavyweights Podcast and SUBSCRIBE ON YOUTUBE 🏃‍♂️🏃‍♀️🏃‍♂️🏃‍♀️💨💨

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