<human>: I also think spending time with your users is a cure for this. Because your users don't care about macro at all.
<bot>: No. If you're solving a problem for some industry, they probably don't care about the fundraising announcements in AI land. Again, let me, let me give a concrete example. There's lots of people applying to YC with Copilot for X ideas. We're gonna copilot for trucking.
<human>: Yeah.
<bot>: And then they'll be like, we did market analysis. AI is really big and it's growing really fast. Oh, gee. And trucking is really big and growing fast. And so what we're gonna do is build AI for trucking, fund us.
<human>: And.
<bot>: Then it's like, okay, well, what exactly, what is that? Be specific. What exactly are you going to build for AI? For trucking?
<human>: Yeah, well, we'll talk about that.
<bot>: Let me get back to you today.
<human>: We'll talk to the trucking companies and figure out what they need.
<bot>: Yeah. It's like asking the founder of the precise exact thing they're going to build. They hadn't thought that far ahead. It's combining AI and trucking seems like something that will raise money and seems like a big idea and seems on trend. And the details feel like irrelevant details. And sometimes people get frustrated when we ask these questions.
<human>: They feel irrelevant, like, why are you.
<bot>: Asking these stupid questions, Dalton, what precisely does our AI trucking startup do? Exactly? Yeah.
<human>: Shouldn't we go back to competitive analysis? It's a land graft.
<bot>: But basically, if you spend time, a ton of time with trucking companies, you are likely to have a whole different perspective here on how AI could solve problems in trucking. But you have to go really deep and spend time with them versus sitting in your apartment reading market analysis.
<human>: This is something I see with YC founders. I just talked to a former YC founder literally yesterday who he admitted his first two or three companies were kind of this, things he thought were good ideas. And during that whole time, one of the things he did was he owned a used auto dealer. And his latest idea has to do with giving people auto loans at used car lots. And hearing him talk about it, I'm like, you know this almost as well as if you've owned a used car lot for the last 15 years. And he could go point by point on why the people before didn't work, what the motivations. It turns out, like, for a lot of these financing companies, the car lot makes more money selling, getting a referral fee on financing. And so like a lot of the companies that direct to consumer, oh, I come in with my loan pre approved. The guy in the car lot is trying to convince you to take a different.
<bot>: Yeah, that's, that doesn't help.
</s>


<human>: Yep. So what are we talking about here?
<bot>: Yeah, I think there's three examples that we could think of that are folks that we, some of them we know decently well. So Sam Altman is one, our colleague of many years. Another one is Elon Musk. I think people have heard of him. Pretty famous guy. And then of course, Peter Thiel. And so those are the examples that we're going to kind of talk about today.
</s>


<human>: That's not fun. I love that. I love that because sometimes founders want to put other people on the front lines and it's like,  Like, no. Like, you are the front lines. But it's more scalable.
<bot>: Again, and again, we're not trying to be facetious. It is more scalable if the founders could spend their time on other tasks, right? That's more scalable. But if you're doing things that don't scale, you embrace the suck, right? You give it a hug. You're like, yes, I love doing this horrible work.
</s>


<human>: So, to wrap up, if you're a high schooler and you're thinking about this startup game, one, that's awesome, right? Like, we love that you're thinking about it.
<bot>: Hey, don't let it, never let anyone put you down. Like, have a dream. We're telling you, be cool, be yourself. Like, if that's your dream, we love it.
<human>: Yes.
<bot>: Live your dream.
<human>: Live your dream. The game will be here when you're ready to play. And, you know, we'll be here to help. All right, man. Great chat.
<bot>: Thanks.
</s>


<human>: I think the other thing that I'm seeing, and it's interesting because I've got a brother who's this age, a recent college grad,  I think what's so hard for a lot of people to see is that if you're a recent college grad, you don't wanna stay in the city you went to school in. You might be living with your parents. And like in comparison, moving to the Bay Area is way better of an option than kind of your current setup over the last couple of years. And so I think that a lot of that content marketing is unfortunately written by like,  People our age, people with kids, people living in San Francisco for like the last two years who were generally pissy about COVID. And it was like less responding to someone who might have spent a year and a half remote doing college or living in some small college town locked down.  and is like, I wanna get out of this. That kind of person is, San Francisco looks like a beacon.
<bot>: I think you wanna be where the action is, is I think how my summary is. Versus feeling like you're in a, not where the action is.
</s>


<human>: I also think there's a little bit of, I'll invent a term, Google Itis, like people looking at companies that they use today and not understanding what they looked like at the beginning.
<bot>: Yeah, they're a copying current product. You're like, oh, we're the next Amazon. So we're going to build everything Amazon has. And not hey, when Amazon started, it was like a really simple website that just sold books. It didn't do anything else. Like, I think it didn't even do that.
<human>: That well.
<bot>: Fair.
</s>


<human>: But let's just go with classic. In the classic variety, what goes wrong in cargo culting is because you don't understand, really deeply understand the product that you're copying. You miss some, like, obvious things.
<bot>: Yeah.
<human>: And I like your, like, you know, airport example, right, where it's kind of like, yeah, if you make a landing strip in the middle of the jungle, airplanes won't land there. You're missing the. There's a part of the kind of.
<bot>: Something larger going on soul system.
<human>: And I think founders did this. I think we have definitely of this. And so let's talk about kind of the companies that were classically cargo culting in our era.
<bot>: Well, the first and most obvious one was Google.
<human>: Yes.
<bot>: Everyone in the two thousands was obsessed with Google. It was the best startup.
<human>: Yes.
<bot>: And so everyone you talked to was like, well, Google did this, or are you the next Google or. Well, this is how Google did it.
<human>: Yes.
<bot>: And so all these ideas that may or may not have been good ideas, we were kind of trained.
<human>: We're obviously the right things to copy.
<bot>: So the most obvious one is just like the office culture of having an open office and like, bright colors and like, free snacks and like, all this, like super googly stuff.
<human>: Yep.
<bot>: That was considered like you, if you wanted to do a real startup, you had to be like Google. Right. Man.
<human>: Not only that, that's what made Google great, was the lack of offices.
<bot>: Yeah, you're right. No cube farms. That's why it was. Changed their culture. Like this is actually, there was arguments that copying down to the t, every aspect of the Google office culture was key to building a successful startup.
<human>: Exactly, exactly. I think the other thing was this kind of flat org, managers don't need management and da da da da. Another classic one that I love was just, they like, hire as many smart engineers as possible. If you ever come across a smart engineer, no matter what, give them a job offer, you'll find a way to use them. I think it's funny because this is what we came up like. Yeah. Like, this was conventional wisdom.
<bot>: There was other examples more silly than that. It was like the name of your startup needed to be cute.
<human>: Yes.
<bot>: Or like drop vowels. Remember Flickr started this where there was no e in it, and so it would be. You need a Google like logo.
<human>: Yes.
<bot>: That looked like primary colors and had like a shiny. Remember what was the term? Like, you would put like a lens flare on your logo. Everyone did this. Go look at logos back in like, 2006. And that was because Google and these other startups had lens flare on their logos and they had cute names.
<human>: Yes.
<bot>: So you had to do it well.
</s>


<human>: And they want the structure, they want the leveling, they want the status, they want the money that used to be associated with these finance or professional jobs. Bam, they're all now associated with big tech. And so what's interesting is that at first you see the explosion of CS majors in school. And I think you would think to yourself, oh man, that means that there are a lot more people who are interested in building.  But that's not actually the case. Like it's, it's, it's, uh, it's deceiving. The numbers are deceiving. I remember going to a class and talking to a bunch of kids who were kind of interested in tech and startups and so forth. And I remember saying to them, Hey, like how many of y'all are studying CS and write code?  And 90% of the people raised their hands. And then I remember asking, Oh, that's amazing. Like what percentage of you would want to be writing code as part of your job in a startup or at a company? And like 90% of those hands went down.  And, and, and it was so clear that like that CS job was like a, a label or a status thing to get the career they wanted. It wasn't, writing code wasn't something they enjoyed doing at all.
<bot>: I remember going to the MIT career fair, this was like years ago. And most of the people that talked to me wanted to ask me how to get a job in VC and what tips I had.  than how to start a startup. Like, that's what, like, that's actually, again, I know it's, well, that's why they were talking to me, but it was just, it was fascinating that they're like, yeah, yeah, yeah, you know, why comment, yeah, cool, whatever. But like, how do I become an investor? And these were, this was MIT, man.
<human>: Well, I think that you're setting up the next topic, right? Which is that, like, these conformists are also now invading the startup world. And I agree with you, right? The highest status job in the early stage startup world is  investor, right? It's the one everyone wants to meet, everyone wants to talk to, everyone seeks approval to. And so for sure, it makes sense, right? That, that, you know, the logic follows. But we also see a lot of these folks who are conformists who want to do startups, but they start almost, it feels like their motivation or starting point is very different than what we would expect. You know, one of the things that we say sometimes at YC is that don't make the investor your customer.  Um, but a lot of these conformists who are getting into startups, that's what they do. Like they want an idea an investor is going to like, they want to act the way an investor is going to like, they want to have their resume investors going to like.
<bot>: And their questions are usually something along the lines of they want us to tell them the secret to get investors to like them. Like that's actually, that's what they, that's what they hope that we will tell them is the secret, the secret words to whisper to an investor to get approval.
</s>


<human>: All right, here's the second type that's common in the investing world. The big company exec, the person who's seen companies at 1000 plus people and have a lot of experience and have done great work in those companies and now become investors.
<bot>: Folks with big tech experience are really great at taking a successful product and scaling it further or refining a product. Okay. It just is pretty different when you were employee number, you know, 100 or 200 at Airbnb or Google or Facebook than employee number five. And as we spoke about in a prior video, our friend and colleague Paul Buhit, you know, number 18 at Google was like the king of dirty hacks. And in a lot of ways, you know, when we would interview former googlers and he was in the room, he would, he wasn't on. He didn't love some of the instincts of folks that it was the same company that they worked at, but the, the tactics that they brought to bear when you were employee number 1000 to scale up one of these core products was pretty different than the folks in the first 20 employees. And so generally with these folks, it looks more like scaling up process, it looks more like scaling up hiring, and kind of sometimes taking for granted that getting any users at all is really hard. Like, I talk to folks a lot about this in the batch, man.
</s>


<human>: And then at that point, you have to learn. And one of the things that we've seen, and we'll give some examples today, is that  The fastest way to learn what you need to know, both about the problem and how to solve it, is to care about your customers, right? If you care about your customers and then as a result you spend time with your customers, you can really learn what their problems are and how to solve them so much faster. You know, one example, and we talk about Airbnb a lot, but one example that came up  when they most recently spoke to The Bash that really clicked in my mind was they retold a story about how they were emailing their hosts, and they saw their hosts had horrible photographs on Airbnb. And they knew their hosts were listing their properties on other sites, and they had horrible photos there too. And they said, OK, we're just going to help them get better photos.  We're just going to help them get better photos. We're going to email them. We're going to go to their homes. We're going to give them better photos. And I think what's interesting about that was that they knew that those hosts were going to use those photos in other places. They sure did. They knew that maybe their company was going to be dead in three months. And they knew they were kind of losing money on the deal.  Because they flew in. Yeah, yeah, exactly. They 100% losing money on the deal. Didn't pencil out. Yeah, didn't pencil out. But they did it anyways. And they had empathy for the users. And they're like, you know, those photos suck. This is something we can solve for them. And it's kind of human nature that if you do something nice for someone, they'll appreciate it. They remember it. They'll try to help you.
<bot>: They'll give you trust. Like you establish some trust when you break down the barriers between yourself and the folks you're trying to serve.  do something nice for them. Who knew? Something valuable. Who knew? And they weren't like, here's your invoice. Yeah, no, no. No, no.
</s>


<human>: This is Michael Seibel with Dalton Caldwell. And today we're going to talk about why investors, including YC, can't fix your company.
<bot>: For some folks, it's like telling them that Santa Claus isn't real. You know, like, they're like, hey, we finally get some time with you. You know, no one wants our product. What should we do? Here's some. Here's our designs. Can you help me design this? So growth takes off, and I have to tell them the unfortunate news, which is, I have no idea. And, like, I went through this through, too, when I was a founder, that I really believed that once I raised from the top investors, they would tell me whatever secrets they were holding out on the world.
<human>: What's unfortunate is that there are a lot of investors out there who aren't former founders, right? Who haven't really lived these mistakes themselves.
<bot>: If you haven't been humbled by having a crappy startup like we did, that failed a lot like we did. It's easy to sort of, like, think you're hot shit.
<human>: It's easy to think that your advice can make companies work that, like, you are the magician. And what's interesting is that over the years, a lot of YC founders will kind of start following the advice of these people, and they'll make very, very common errors. And you can almost track it back to, like, oh, I kind of understand the type of person who is giving you this advice, because I see what you're doing now, and, like, this matches one to one. So one of the most common types of investors is the investor with a finance background, someone who's like, never run a company, never operate in a company. And pure finance.
<bot>: When all you have is a hammer, everything's a nail. And so if what you know is money, the solutions usually involve money. So raising more money, spending more money, throwing money at the problem. Right.
<human>: Hey, Dalton, you're a pre product market fit. Do you have five year financial projections?
<bot>: That's a great example of that. Financial projections may be a good idea later stage, but to even ask me if I had financial projections, I was like, what's a financial projection like?
</s>


<human>: Not the best play. You know, the other common failure path that we see is  People putting the investor as the kind of center of this game, as opposed to the customer. People thinking the investor is almost the teacher and their job through a pitch or a deck is to get an A from the teacher. And the A is money.
<bot>: I think that looking for validation from authority figures is a lot of how we are constructed to look at the world. And if you've been an employee or you've gone to school your whole lives, a lot of the way you get ahead in life is to figure out who the authority figure is that you need to please.  And if you please that authority figure, it's the path to greatness. And so again, like if you're like a level, whatever, level three engineer at some big company and you're like, the way you get ahead is to impress the bosses. Why not kind of pattern match that onto startups?
<human>: Not true. If I could redirect that energy towards pleasing people's customers.
<bot>: Yeah. People call this customer obsession. Like it's a buzzword. We are customer obsessed, but take,  Let's take that literally. What does it literally mean to be customer obsessed? What it literally means is most of your waking hours, who are you thinking about pleasing? It's your customers and you're trying to solve problems for them.
</s>


<human>: What I love is that when the Stripe founders came to speak at YC, the other detail they added was it was the most expensive product in the market. Like to make sure people really wanted it, they didn't give it away for free, they didn't price it comparably, they made it more expensive and people were still desperate to use it. Like that's how you know you have an insight. Like when you're the most expensive thing, speaking of Apple, and people still are desperate for it. Now the shit takes, right? The shit takes were pretty clear. One, what are two teenagers doing in the banking space, the government regulation, it's the most regulated space in the fucking world, right?
<bot>: Isn't this like a suicide mission? You're like, hi, we're 19.  We wanna start basically a bank. Give us all your money. We're gonna handle hundreds of millions of dollars of everyone's money. So yeah, that's our plan. And there will be no fraud.
<human>: We're good. I think the second one is that even subtracting regulation, they needed a bank deal. They needed Wells Fargo to let them start using their rails. As an early stage startup, they need to get that, which at the time seemed impossible.  And then, of course, I think the last one is that PayPal existed. There was a really popular company where it felt like PayPal was a quarter step away from this, right? And it was like, oh, even if you start doing well, PayPal can go here instantly. They have all these users. They're the hot company.
<bot>: Yeah, it was seen as a crowded market with huge companies with hundreds of employees, thousands of employees. And it's the classic thing, again, the knock against YC companies at the time is YC would just fund crappy versions of existing company. Like the third rate knockoff version of something actually good was what YC companies were. Isn't that hilarious? I don't know if people remember that, but that was the reputation of YC companies is like, oh yeah, they'll take an existing idea that's good and they'll make like a less popular version of it.
</s>


<human>: The next one that I see that I love is, um, everyone has high expectations for what they're going to accomplish when they get into YC. And then inevitably and initially they don't meet those expectations. And it's so fun to work with the founders who are excited by that, who are like, I'm excited that this is harder than I thought it would be. Like I knew it was going to be hard. It's proving to be harder than I thought. This is going to make me better.  Like this is forcing me to raise my bar. I wanted to test how good I was. And like, this is bringing the best out of me.
<bot>: And you're, it's different. Cause you don't get to level up and get a gold star and oh, good job. You're, you're now founder. We're up, we're getting a promotion. You are now founder level three. You know, congratulations. You know, like when people are cool with it, it's not that way. Cause I think sometimes people really want it to be that way. And they're really freaked out that it's not.  Some people love it. They're like, yeah, this is great. Like there's no structure. Like the only way that you can keep score is like revenue for my startup. And if it gets big, there's no other way to keep score than that. Some people love that.
<human>: And then you should set up this last one because I always love this one.
<bot>: I think a good way to say it is folks that have a very high opinion of themselves. And when they see peers  They're like, yeah, I'm gonna try way harder and be way smarter and learn way faster than them. Basically, the non-conformists are willing to kind of like, they wanna be above the peer group, not in the peer group. Versus if you're a conformist, you kinda wanna be in the pack with everybody. A lot of the folks, the really hardcore non-conformists I've funded that have done great, they'll be like, yeah, you know, I don't get what all these other people are doing, but like,  This is what I'm doing. And like, it's going great. You know what I'm trying to say? So it's like a combination of optimism and confidence.
</s>


<human>: You often talk about this and it's something that I think is becoming part of the culture of YC where we want to talk up to our founders versus down to our founders. We want to talk to the smartest kid in the class, not the dumbest kid in the class.  And I think sometimes in the general public, that's not well understood. But I think within the YC community, it really is. The feedback that we got from alums was universally, this caused me to take a sober look at my situation. And if my situation was good, I'm staying on plan. If my situation wasn't, I'm making changes. And just to your point, it wasn't, I'm freaking out.  it was like, okay, I'm gonna take a second and do a sober analysis of my company. And I think what's unfortunate is that they had just gone through this two year cycle where investors were basically screaming at them to burn and raise, because investors were getting markups and they were raising new funds. And so I think that in many ways, this letter gave them a lot of people the opportunity to say, okay, wait a second, like, is that strategy actually good for my business?  And it's obviously good for my investor's business. Getting markups is obviously part of their business model, but is that strategy good for my business? So that's been really fun to see. It's been fun to see the founders taking it in the right way. Probably one of the last big trends is this new standard deal, right? That was big news over the past four months. And it's interesting, because I think that in some ways,  it was conceived of competitively. People were looking at the YC Standard Deal being like, oh, like YC is to compete. There's so many new seed funds out there. And I think what's interesting is if you would kind of take it inside baseball for a second, that's really not the reason we did it at all. Like take us inside baseball a little bit, Dalton. Like what was the strategy behind it? Yeah, I mean, the strategy was
<bot>: It's good for companies to get fully funded the moment we accept them. And frankly, we saw some stuff that looked a little toppy, to use the Wall Street Bets terminology.
<human>: Dalton, you're speaking in code. Be literal here. What did we see? It looks like
<bot>: We're not sure that things were sustainable that everything would keep going up forever. How about that? Stocks may not only go up. And so it seemed prudent to give the companies more money so that in the event of a market change,  we were confident that everyone would be fully funded. Again for context, I think people forget this because of all the crazy seed round warped perceptions. How much money did like  Airbnb and Dropbox and all those folks raised back in the day. How much money did Airbnb raise again?
<human>: Under a million. Under a million. These seed rounds are under a million. And diluting over 20%, over 25%.
<bot>: So we actually know that half a million dollars is slash was enough money to build one of the most successful companies ever.  And it made a ton of sense to have this budget, to raise this money. We could fund a lot of companies. It's all raised. We have it, dry powder. So that no matter what happens, if you get into YC, you're good.
<human>: There's this saying that I love, the best time to fix the roof is when the sun is shining.  And, you know, I look at our opportunity to create this new standard deal for YC founders, and the fact that we have budget to fund over 1400 companies with this standard deal. And I think to myself, like, you know, I'm so happy we did that when we could, because now we're going to be able to help so many teams that otherwise might not be able to do startups might not be able to raise money.
<bot>: And not be sure, oh, I don't know if I want to apply to YC, I don't know if I want to start a company because I'm afraid. I've read TechCrunch articles, the funding environment is rough. There's all these fears out there. Well, it's like, well, yeah, if you get into YC, you get half a million dollars. And the day we fund you, it's funny, sometimes people don't believe us. They're like, wait, this is contingent on something, right? It's like, no, we can't do that.
</s>


<human>: Let's talk about honesty. This is a big one. This is a big one that I think people, in fact, you know, we talk about a lot of people who maybe didn't learn this lesson, that honesty is important, and for a while, they do okay with it, but inevitably, they get caught.  How do you think about learning to be honest if you're a high schooler?
<bot>: The best skill is to learn to be honest to yourself. Like, if your own relationship with yourself is, you can't be honest about things. What do you really feel? What do you really think? Who are you really?  Yeah. It's going to be rough. Yeah. And then at your core, if you're not honest with yourself, your relationship with your parents, your relationship with your friends, with institutions, it's going to be tricky. We run across folks that seem like they've deferred a lot of this honesty.
<human>: Yeah. I think that the thing you should understand about the startup world is that  A lot of it works because of honesty. A lot of the reasons why early adopting customers will use you is because they think you're going to be honest. A lot of reasons why investors might give you money, why your co-founders might work with you, an employee might work with you. A lot of reasons why people make things happen in the startup world is because we're in a high trust environment.
<bot>: Yeah. And this is one of those like negative things that people say about nerds is, oh, this person has no manners. They just say whatever they think. Like, again, in polite society. Yeah. You're supposed to lie all the time. Something a nerd would do is be like, hey,  That product sucks. Why are we shipping this product that no one wants? It's like, hey, shut up, man. That's what a nerd would do. You're bad for telling the truth about something because it's impolite and you're hurting people's feelings. And so there is part of the nerd culture in this that I think is good, which is essential. The person who would stand up and raise their hand and point out that the emperor is wearing no clothes.
</s>


<human>: Now let's talk about this kind of – we keep on bringing Google. Let's go with this phenomenon. I see so many young founders basically saying like before I start a startup, I need to work at a big company. That's what I'm going to learn how to do it, do you think Google's gonna help? Or how do you think it helps and how do you think it hurts? Because I think it's more nuanced than just one or the other.
<bot>: To set the scene, if you've ever interviewed for like a programming position at Google or Facebook or Amazon, a lot of what they have you do is design algorithms that ideally are scalable algorithms, right? Like ideally you're not bubble sorting on the whiteboard during your interview at Google, right?  And so it gets ground into you during the selection process that your job is to design solutions that scale. And when you're inside of a big tech company, you're rolling things out to millions or tens of millions of people. And so you're  beat into your head that you only scalable solutions are good solutions, right? Like if Facebook had some new feature, but it required them to buy a hundred times more servers, which would bankrupt the company, guess what would happen to your bright idea?  Can't do it. It's got to be more scalable, right? So every single product idea or feature that you build inside these companies is viewed through the lens of scalability, and rightfully so. You still with me? Yes. Yes. Now, this is what's funny if you think of these jobs as training for startups, is that now you've had deeply ingrained into your brain what I would argue  is not helpful at the earliest stages. This is helpful when you make it to late stage, hallelujah, right? But the earliest stages, you just got immersed in a culture that is not helpful. Versus if you never worked at one of these companies and you just graduated college, no one ever told you to worry about scalability. You're like, yeah, cool, whatever. I wrote the algorithm with a bubble sword, that's okay, right? You've never been yelled at by your boss because you came up with unscalable ideas.
<human>: you want to be trained at doing just enough as opposed to doing perfect job. And like the startup needs to do just enough and Google needs to do way better than just enough. And I think that like what's hard for me is that sometimes you see those founders and they can't launch.  They're like, oh, something's broken, or oh, a customer didn't like this, and they just cannot bring themselves to launch because it's not perfect. Well, think about it.
<bot>: If you're at Google and you launch a new feature, or if you're at Facebook and you launch a new feature and it doesn't scale, like if it doesn't work, that's the fail. Like, congratulations, you suck, and your team sucks, right? And again, they're not wrong, but all the incentive structure is set up to not launch a feature  that is not scalable. This is where that scalable word comes in, right?
</s>


<human>: Yes.
<bot>: And remember, this is something that sometimes founders do is they're like, they'll put a slide in their slide deck of exit strategy. Like, basically, when they're trying to choose what idea to work on, they want.
<human>: To include what we know is going.
<bot>: To buy us, that they're going to sell the company and for how much into who, and of course, delete that slide. Like, oh, my God, are you kidding me?
<human>: Yes.
<bot>: And the point I'm trying to make here is if you think like an investment banker, you do need to think about an exit strategy. If you're a private equity company, you're buying a mattress company for hundreds of million dollars. You definitely want to have an exit strategy slide.
<human>: Yes.
<bot>: And to me, the evergreen lesson here is that you don't need all of the full plan today. And a lot of founders are worried. Well, what if I do? This idea, I'm really confident people want it, but I'm going to top out at $20 million of annual revenue. It's a bad idea then, right? And it's so rare. You can attest to this, Michael. It's so rare in this job where we see a company that gets to 20 million, 30 million, 40 million in annual revenue, and the founder has no idea on how to grow it.
<human>: Yeah, there's no, there's no move.
<bot>: They're out of ideas.
<human>: Yeah, this is.
<bot>: I'm not going to say that never happens, but it's extremely rare.
<human>: I think it's a problem you want to have amongst all the problems, if you could choose one.
<bot>: And so if you're filtering out ideas that you. That seem great and you have expertise in it, but you're worried it'll only get to 50 million or whatever. Yeah. You don't need the full plan today. It's okay to not worry about some of these problems until your later stage.
<human>: You know, personally linked in on this front. I remember I got the course book for university, and I remember reading it and thinking, okay, I know the 36 classes I'm gonna take, like, before going to school, I was like, well, I mean, the book's here. You read it, you pick the classes. And I remember, you know, halfway through the first semester being like, well, that was a bunch of wasted work.
<bot>: Yeah.
<human>: And I wish sometimes founders would embrace, it's gonna be a bit of an adventure.
<bot>: Yeah.
<human>: It's gonna be a bit of an adventure. Anyways, good chat, Dalton.
<bot>: Sounds good. Thanks.
</s>


<human>: So yeah, maybe that's the message that we want to leave, is that unfortunately, amongst these 1,400, they're not going to make it. Unfortunately, this unicorn label does not mean you're going to get in the money. Yep. And you've got to think critically. And isn't that life?
<bot>: Yeah, and a lot of life is you could be disappointed because other authority figures told you something is true. The authority figure said, this company raised a lot of money. It's a very good bet. It's the next whatever. But ultimately, those authority figures aren't going to be around if it doesn't work out. It's on you.
<human>: And if those authority figures are investors, they're hedged.
<bot>: Yeah.
<human>: They're hedged. So maybe do the math yourself.
<bot>: What's good is every YC unicorn is going to make it. Every one.
<human>: Every single one. You heard it here.  every single one. Dalton's personal guarantee. All right. Great chatting.
<bot>: Thanks.
</s>


<human>: I think the other thing that's kind of maybe a dirty kind of underbelly here is who is spurning this argument? Like who is incentivized for this to be a big issue?
<bot>: Yeah, I think that this has been just like a topic that gets a lot of engagement online. And so, you know, if you wanna get people agitated about something, this is a pretty good topic. And then you can use it to promote  Stuff and so yeah, I'm not gonna name any names, but I can think of folks over the years. Yeah that are like kind of built a Following around encouraging people to do this and to the extent it is helpful and more people are Improving their lives doing it. That's great. Yes, but there's a little bit of like  creating a fake controversy. And then monetizing it. A little bit.
</s>


<human>: A YC founder wrote in, a potential customer's opinion is not valuable unless they're willing to pay you.  or use the product regularly, or share the product with their friends. They call this financial capital, pay you, time capital, usage, or social capital, give it to their friends.
<bot>: I think people really struggle with this because I think it's getting at the core of like a human condition thing, which is we want to be loved and we don't want to be rejected. And so, you know, getting through all these layers of defense that you've created for yourself to protect yourself from rejection is really hard. And it's like,  Yeah, man, it's personal work. Like it's work you're doing in your head. It's not work you're doing in the external world. And so I just noticed a lot of these teams, the really core thing going on is ego protection and nothing else. And like, you can come up with all these intellectual arguments on why actually, you know, but when you really talk to someone and you get down to the core, it's being okay  with getting rejection.
</s>


<human>: Hello, this is Dalton plus Michael. And today we're going to talk about why are we optimistic about the future? So to be clear, at YC, we fund a lot of startups. And even though we try to do a very good job, most startups fail.
<bot>: Yeah, if you look at the numbers,  We know a lot more about failing and failed startups than successful ones. That's just how the numbers work, right? And so we see failed startups every day. We live it, we breathe it. This is the job that we have. We're experts on failure.
</s>


<human>: I think the next thing you should be thinking about is kind of effort level.  You know, are you working these crazy hours but everyone's on vacation in Aruba half the time, right? Are your counterparts who are doing fundraising and sales and HR and all the other tasks within the company, are they grinding or are they not?
<bot>: Yep, like this is a self-diagnosis thing, but it's really sad when you see someone in the role of technical co-founder, and they really have to work their butt off, and they're really showing up every day, and the idea guy or the salesperson or the business expert, the fundraising expert,  actually isn't doing much.
<human>: Sometimes they're part-time.
<bot>: Sometimes they're part-time. And man, that is such a vector for being exploited. And so you should really feel, from a self-diagnosis perspective, that yeah, your counterparts are just as into it and there's just as much heart that they're bringing to the table as you are. And if so, again, maybe it's a great deal for you.
</s>


<human>: Hello, this is Michael Seibel with Dalton Caldwell, and today we're going to talk about whether your startup is default alive or default debt. So this was a concept that was actually invented by one of the co founders of YC, Paul Graham. Dalton, do you just want to start by explaining what this means?
<bot>: Yeah, I mean, so to start with, you should read his blog post. It is excellent, it is short, it is easy to read, and so you should read it. But let me try to give you my crash course in it. Here's what he means by default alive, default dead. As founders, we like to ignore the truth a lot of the time. And one of those truths are, is my startup going to go out of business? Right. It's kind of an awkward thing to talk about. You know, you don't want to bring that up in polite company. And so the point of default alive, default dead is it forces you to be honest with yourself. If I don't raise any more money, am I going to die, am I out of business or am I going to make it? And default alive is different than profitable. Profitable means today I make enough money that I am profitable. My bank account grows every month. You still with me? Default alive means I may be burning money today, but my growth rate is high enough on revenue that I will become profitable before my bank account goes to zero. Does that make sense? And so if not a single other dollar of investor money comes into the business, my growth rate is high enough such that I don't have to lose sleep, that I'm going to have to raise around before I die. And his point is, this is a binary. Either you are default alive or you are not default alive. Thus defaulted. There's no third option here, friends. It forces you to pin yourself down in your own mind, right? Does that sound right to you, Michael? Did I get that right?
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<human>: I think that the last two are kind of connected. This kind of like, is it working slash opportunity cost, right? One would argue that you, because you're doing all this work, have an amazing ability to judge whether the company's working. Yep.  you should maybe trust your instincts there. And you know, is it working, right? Like you might be exploited if you're being asked to do all this stuff and like the evidence is painfully obvious it's not working.
<bot>: Well, and you're the technical person, so you notice the first. The funniest thing is this one of the technical person who does all the work is the one actually reading the analytics and like, hey, like this, our launch bombed. What's the plan in the business? Don't worry about it. This is like, you need to be quiet. This is my department. You know, stop asking questions.  And so if it just seems like you're bringing your A-game effort and doing all of the work, and it's definitely not working, probably it might be a sign you're being exploited.
<human>: Well, and this is even more of the case that the opportunity cost might not be worth it. Or you might be not leaving because you're afraid, but you know intellectually this thing isn't working.
<bot>: All right, so, and like, don't let them finesse you. Again, this is the same person that convinced you that you getting, you know, one 10th of their equity is a great deal for you is the ones like, hey, I know it looks like we're not growing and we have no revenue and we're about to run out of money.  Don't let that same suave person keep doing the same move on you over and over again.
<human>: It's weird because I never use the term gaslighting, but it's actually gaslighting. It's actually that. I don't want to paint too bad of a picture because on the flip side, we see situations that are  Great. Yeah, more often than not. Of the folks we fund. In YC, yeah. Yeah, the folks we fund.
<bot>: It's mostly a really awesome trade.
</s>


<human>: Hey, this is Michael Seibel with Dalton Caldwell and welcome to Rookie Mistakes.  We asked YC Founders for their rookie mistakes so we can share them with you and help you avoid them. YC Founder wrote in and said, we chose to create a company around a hot technology. We were really excited about the tech. We eventually raised funds because there were enough investors who were excited about it too. But now, looking back, I think we had it backwards. We were the classic Silicon Valley startup in search of a problem.
<bot>: Michael, let's start with the definition of solution in search of a problem. What do we mean by that? Solution in search of a problem is where you build a thing and you're like, we have this thing. We just need to find someone who wants it. We need to find a use for it. We have the solution and let's go out and find a problem for it. And, you know, as long as technology has existed, this has been an issue. Remember reading about the patent system? You know how there's millions of patents for,  products like better mouse traps or whatever that there's actually no market for whatsoever. And so this is, you know, as long as humans have been banging rocks together, there have been rocks that were not, that were solutions, but they weren't useful for anybody. And so look, this happens a lot with technologists, that happens a lot with Silicon Valley, where they start with the technology thing is cool, and they try to find a market for it second.  Now, the core thing that I want to talk about here that you sort of zeroed on is founders with no particular opinions about what the market should be and no ideas on who the customers are or anything. They're just sort of floating in space.
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<human>: So when we were pivoting from Justin.TV and Twitch, Emmett Shear and Kevin Lin were kind of leading the Twitch team. And they took this to heart. We had not done talk and news for years. They took this to heart and they basically just started interviewing video game streamers and asking what they wanted.  And the funniest thing is that at this point we had built every feature a live video social media site could have. We had chat, we had messaging, we had feed, we had social media stuff, we had embedding, we had every kind of sharing, we were on multiple platforms. And so they were really surprised when the first thing people said was, can I stream in higher quality?  And we were like, really? That's like, you don't want like some big, we'll build you anything. Like, yeah, can I, you know what they said? They're like, well, you know, my computer costs like four grand and I paid for like the best internet connection in my neighborhood and I'm streaming this HD game and it looks like crap. And we were like, huh?  Well, because we built our own media server and we were controlling our old streaming, that was like an integer. That was the easiest change you could ever make. And it would cost us incrementally more, but from a building product perspective, it was very anticlimactic. And so I think three days later, we introduced  you know, higher HD or something. And these people went crazy. They were like, I've never, first of all, they were like, I never imagined you could do this. Like I thought it was some massive technical issue that was like, where you were screwing us for like a year just because it was too hard. And like suddenly you fix it. And then two, I've never used the website where I talked to someone about it and then it got better.  And so this started a series of, in hindsight, what looked like extremely obvious things to build. One was, I want my stream to look better. Very quickly, two was, I'd like to make money, please. Can you help me make money?  Don't you want a social network? Dude, don't you want to customize your page more with different colors and themes? It's like, no, but like I'll run ads on my own stuff. He's like, what do you mean? It's like, oh, if you give me a button where I'll just run a video ad on my own users and I can make money, I'll click it. I'm like, but wouldn't that, what?  And then once again, we already had video ads. Like once again, it's like, fuck, like that's not even hard to build. Like the hardest thing was like, what should the button look like?
<bot>: And again, dude, you were experts. You were running just, how many years in were you at Just Indeed?
<human>: This was five years in. We were experts.
<bot>: So you were five years into your startup. You knew everything about everything, but then you were like, oh yeah, I guess we should talk to some of our users. And they said a bunch of stuff that blew your minds, that none of you would have thought.
</s>


<human>: So I think that there are some businesses where you actually need money up front.  Yes. And if you need money up front and you're building a software business, the venture capital industry can help you get money up front. If you don't need it.  Don't take it. Yes. I think that what's so interesting about this is that there aren't many other good mechanisms. If you need millions of dollars or $10 million to get your company to break even, there aren't other mechanisms in our economy to give that to you.
<bot>: Unless you use an example of Google, I don't know, just because it's famous, one of the most viable companies in the world.  I don't know how you could have bootstrapped that. And so again, maybe the audience is saying, well, I don't want to build Google. Great. No one is saying you have to build Google. But if Google wants to build Google, but if the founders of Google wanted to build Google, it doesn't seem mathematically possible. There's no route they could have done it without the crazy money. There's no loans they could have gotten to buy the servers and do the things they did.
</s>


<human>: So, anyways, I think that if you can resist this thinking, like a VC, I think what I've realized is you kind of have superpowers. I think this virus has invaded a fairly large percentage of founders.
<bot>: Yes.
<human>: And so you actually get to do things other founders would think would be silly.
<bot>: Yeah. It's like everyone has a filter for what seems like a good idea or not. And if your filter is exactly the same as everyone else's, you're all going to be screening out the same ideas. Right?
<human>: Yeah.
<bot>: But if your filter is calibrated differently, you will see things that other people have decided is bad. Right.
<human>: Well, I think that's what's so funny is because that's the every successful YC story. That's the story in hindsight, right. It's like everyone thought the idea sucked. It was off trend because it was off trend.
<bot>: It was a bad model, it was a bad space. The market wasn't big enough.
</s>


<human>: Now, let me play devil's advocate a little bit. Dalton, I have an expert advisor. I have an angel investor. I have a seed investor. I've got a series A investor. They're the experienced ones and they believe they're working with me. Like, isn't that validation enough? Don't they – didn't they do this research?
<bot>: Kind of. I mean, let's go to this two ways. One, it's best to do your own work on this because ultimately you're responsible for your company and it working or not. And this is what I tell people in the batch, you know, I'm like, well, just make sure  You have to live your life. So if your startup doesn't work, it's not really my problem. I'll be OK. And so feel like you've done all of the diligence and research, and you know the risks of what you're doing. But to the extent I have relevant advice, it could be helpful. I think the other thing is sometimes experts can be too biased positively or negatively based on a small data set. So if you're working on a startup idea that someone had either personally worked on before or lost lots of money investing in before,  they're going to have opinions. In my case, you know, media and entertainment startups are really hard. So I, you know, I know a lot about them. I can advise people on them, but I'm not usually the most optimistic on that startup idea. Um, and then, and so when you're talking to experts, just make sure you get a wide variety of them. I think would be my, my.  reaction to your pushback and synthesize them. Just in the same way I said earlier, it's good to listen to lots of different kinds of music to synthesize together. I would just be synthesizing a lot of different opinions or a lot of different pieces of history as you're forming an opinion. In the Brex example, they went and spoke to every person that ever tried to start a challenger bank before. And guess what they all told them? They told them two things. One, useful information that they wrote down in their notes, the founders of Brex did. And two, they told them, don't do this. Are you crazy?  So the break funders ignored that part, but this is similar. When you speak to experts, you just need to know what bits and pieces to draw from what they have to say, then to blindly accept what they say as facts. And that includes us, totally.
<human>: Right? You know, I think you brought up something so counterintuitive about investors. Like I get so many emails from people saying like, I'm doing social this or live video that,  Can you help me?" And I'm one of those people who's like, wow, I took a lot of hits during my social media live video days.  I think sometimes counterintuitively, investors who know slightly less about your space can be a little bit more grasses greener, like optimistic than folks who know more about your space. I think that's not something that I realize. I don't think that's something that's obvious to founders. I think that like people assume expertise equals optimism.  Yeah, right? Haven't we observed the opposite of that?
<bot>: Yeah. I mean, yeah, there's something nice about not knowing much about something. It's much easier to see it as a simple question or a simple problem. Like imagine asking the founders of DoorDash about food delivery and what they would have to say about it versus me. Versus a customer.
</s>


<human>: All right, this is Dalton Plus Michael, and today we're going to talk about why it's so hard to copy your heroes. Cut this off for us, Dalton.
<bot>: Yeah, there's a common dynamic that we see in our industry where a prominent person will give advice  that sounds reasonable, you know, like they're just saying, they're just giving people advice. But it is not at all what they did to become successful.  It's the classic, do as I say, not as I do, or in this case, past tense, do as I say, not as I did. And it always gets a little bit tricky for us when we witness this.
<human>: Well, it's super weird because we're just getting old enough where for a lot of these people, we saw what they did. Yeah, we know their story. Yeah, we know their story. And so we're just like, that's weird.  You didn't do that.
<bot>: Yeah, that wasn't at all your path. And so you're telling everyone to do something that wasn't the thing you did.
</s>


<human>: You're not helping the company. So one thing I think is helpful is like, how do we help founders prepare their minds for this zone? And we're telling you it's going to suck. We're telling you to do things that people are gonna make fun of you. We're telling you that you might have to live in this spot for a while before things start looking better. I think that the big challenge the founders make is screwed up expectations.  Like the big challenge is that founders think I launch it and then it's gonna work. And I really wish founders went in with the mindset like, I don't care if it takes two years to work. Like how do you set your mind up so that you're immediately not disappointed? Because I think that it's like, you know, we talk about this at YC all the time, maintaining motivation is like three quarters of this game.
<bot>: I think this is a great question. And it's funny how much the questions  Like if someone got to spend time with us, Michael, say someone went to dinner with us, what they want to ask us about is like fundraising, networking. I know exactly what people would want to talk to us about, but usually what you should be asking us to talk about is like,  emotional well-being and maintaining motivation and dealing with high stress situations and dealing with criticism, like a lot of people aren't prepared for people on the internet criticizing them. It's hard, right? And so it's funny how much what people think expertise, like what they think they want help with and what they actually need help with are not the same thing.
<human>: Yes.
<bot>: And think about how many startups that we fund die basically as the founders run out of gas and get sad and want to go back to their jobs at Google because this was not what this was not what they thought it was. Man motivation.
<human>: I don't think motivation is about how shitty something is. Right. Like I think it's about how shitty did you think it was going to be when you started.  I think that's what screws your motivation. It's like, how shitty did you think it was gonna be when it was started? That's why, I mean, honestly, when I do talks to college kids now, I'm just like, this life sucks. Like, this is the first thing out of my mind. It's like, this life sucks. It's like getting punched in the face every day. And like, real face punch. Like, not like fake. It's like, you're gonna get punched in the face. You remember that shit for like the rest of your life.
<bot>: I mean, to this day, I'm sure you do too. Man, I have like bad dreams about my startups. I still have like, it's not like we're insulated from this. This was hard. This was like the hardest shit we ever did. Yes, by far.
</s>


<human>: Next one, how to be excited about technology. We came up in this weird era, I guess, I didn't think it was weird, but looking back, I guess it was weird, where everyone thought technology was cool and making the world a better place.
<bot>: Yeah. A lot of the way we understand the world is framed via journalism. Yes. And one thing, again, for young people, they don't have context on this, but it used to be journalists were all emphatically excited with no,  downsides no reservations no reservations the internet is great yes it's and they would debate how great it was yeah the debate was like yeah yeah we know it's great but just how great yeah and who's making it the best who's making it the better the fastest you know and so it was this it was hard to like see any problems with it yes and um in this current universe we live in it's the opposite
<human>: Yeah, it's, this is bad. A lot of these people are bad. Every new technology, how is it going to try to screw us, exploit us? Yeah. You know, yada, yada, yada. And let's be clear, both extremes are incorrect.
<bot>: That's correct, yeah, there's fair points. It's 100% there are fair points. But sometimes when I talk to young folks, they internalize too much of the current thing. And I think, I don't see how that helps you when you're young. Like your job is to be an optimist. Your job is to believe amazing things about what can you do with your life and what can you do in the world when you're young.
</s>


<human>: So another thing that happened recently is we sent a letter to YC founders about the economic downturn, which was,  happened to maybe get a little bit of exposure to the general public. I'm not sure how that happened. But it was interesting because I've been really impressed with how the YC founders have responded. What have you seen? I think that if you're smart,
<bot>: You know how to look at things like that, as well as just general press or advice, and apply it to your specific situation correctly. Like, if you're a two-person startup with no burn, what's happening in the late-stage fundraising environment in IPOs? Like, if that's what you're worried about, man, you've got bigger problems, okay?  And so I think if you were able to say, well, what is my actual situation? Am I default alive? How much cash do I have? What's my runway? And then make the right moves. Because again, for some folks, the actual move is to go on offense.  Like we said a moment ago, where they're like, okay, I see. So this is the score, got it. Time to go hard against my competitors who have higher burn. This is a great time if you're the underdog and your large competitor is in trouble. And so I think that smart founders know  what applies to them and what doesn't versus overly freaking out about things that have nothing to do with them. What do you think?
</s>


<human>: I think that the, the challenge nowadays is where will non-conformists go to find their home? You know, it, it used to be as easy as going to tech and, and now, um, it's not as easy to go to tech. And, you know, you brought this up when we were discussing this before, but, you know, PG originally started YC to be a home for this type of people, right? To be a home for people who wanted.  to build, who didn't want to wait in line, who really didn't care about status in and of itself. They just wanted to go out there and like challenge themselves. And it's interesting because when we're talking to founders now.  um, who are in YC, there are all these things that we hear or conversations that we have that do motivate us, that do make us feel like, oh my God, like you, you actually want to be a builder. And I think it'd be helpful to kind of talk about some of those things, because they might be different than people would think. The first one that immediately comes to mind for me is, you know, now that YC gives $500,000,  I'll have conversations with founders all the time where they come to me and they, they're like quiet. They think I'm going to disapprove. Right. They're like, Michael, like, I know I'm not supposed to say this, but I think 500,000 might be all the money we need to like, I don't know, like hit 50K in MRR to like get profitable or like hit this mega milestone. Like, is it okay if we don't raise a bunch of money? You know, I think the other hint and you brought this up, you better describe it in more detail is.  They have no idea who the like tech Twitter celeb of the moment is, or the tech Twitter debate of the moment is, right? Like this is not, they don't live in that world. How have you seen that? It's just a sign of what you're focused on.
<bot>: And so when folks are really involved in the scene, in the drama, in the characters, um, and are obsessed with the startup scene, as opposed to their own thing and solving customer problems. Yeah. That's usually a sign of like conformity.
</s>


<human>: Hey, this is Michael Seibel with Dalton Caldwell. And welcome to Rookie mistakes. We asked YC founders for their rookie mistakes so we could share them with you and help you avoid them. Here's the first mistake that was written in. In my company, we tried to accommodate more than one use case in our product before nailing a single use case and proving out that there even exists a business serving that customer.
<bot>: Yeah, this is super common. It's definitely a problem. We call this boiling the ocean. It's, you're trying to do something that's basically impossible or intractable, and all of your instincts are to build a complete, fully formed product without getting a single user. In your mind, you have this elaborate plan, and so your plan to start the elaborate plan is to build it all at once before getting a single user.
</s>


<human>: This is Michael Seibel with Dalton Caldwell. And today we're going to talk about cargo culting. We encounter this way too much in our life. So there's classic variety and then there's new age, modern cargo culting. Let's start with classic. What's classic cargo cult?
<bot>: Well, let's start with what is cargo culting? What do we even. What are these guys talking about?
<human>: What are we talking about?
<bot>: All right, so the history of the term, as I understand it, is when you superficially copy something without understanding why you're copying it.
<human>: Yes.
<bot>: That is cargo culting. I think the history, if someone looks this up and Wikipedia is like, folks would create a fake airfield so that the planes came back. And so it was something that looks like a landing strip because they wanted the airplanes to come back. They didn't really understand why the planes were coming. So like, oh, if we make a fake landing strip, then the airplanes will come back. And so in this classic cargo culting mentality, it's just, I'm gonna copy something. I don't know why, I'm gonna copy It, and then I will be as successful as the thing I'm copying. Right?
<human>: Yes.
<bot>: Anything to add there?
<human>: Well, I think in the classic variety, what's essential is the thing that you're copying is good. Yeah. No one would debate whether it's good or not. Right. And so we're just debating how you copy it.
<bot>: Yeah.
<human>: I think what's funny about this modern new age that we'll get to later is that, like, we could even just debate whether the thing you're copying is worth copying at all.
<bot>: Fair.
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<human>: And that's probably the overarching theme. They had to be contrarian to walk down this path because if they had asked 10 startup experts, 10 investors, 10 fellow founders, eight of them would have told them that they were stupid.
<bot>: And they had to build good products. Like you can't take for granted, you can't, we can't, you know, talk on a whiteboard and plan our strategy and win. All of these founders had to actually do it. And the doing it part was the hard part. Yes.
<human>: Right.
<bot>: Like all, all these people had to execute and build a product that people loved and actually worked. And all these people built products that handled hundreds of millions of dollars and they couldn't lose the money. Right.  So the actual execution bits, talk is cheap, execution's hard. Execution's expensive, and they had all these folks how to execute.
</s>


<human>: Hello, this is Michael Seibel with Dalton Caldwell. And today we want to talk about our secret for learning as much as possible from your early stage customers. One of the things that we have to fight a lot for these founders, early stage founders, we had to fight is this idea that when we started the company,  We understand the problem really well that we're trying to solve. We understand the customer really well. We understand the solution really well.
<bot>: Yeah, we have it all figured out, right? Day one, we nailed it. We have our next 10-year plan all lined up. And why would you start a company if you didn't have the plan, like if you didn't know, right? It's true. Overconfident foolishness.  is a key part of doing anything ambitious in life. So I do, you're right, you gotta love that. You gotta start there and then immediately switch.
<human>: Wait, maybe we don't know anything. Is that possible? But you only switch after you burn the bridge behind you.
<bot>: Yeah, but you can't quit. You have to be apart enough long, quitting's not an option before you realize you don't actually know too much.
</s>


<human>: I think this is a neat trick for an early stage founder. Audit the amount of time you spent last week talking to your customers and building product. Right. If that amount of time in your waking day is like 80 to 90 percent, you're probably doing it right.  If that amount of time in your waking hours in the last week is more like 20%, you're probably doing something very, very wrong. All right, so here's the next note that a YC founder wrote in. You know, a lot of founders think money is like oxygen and you need it to survive.  One of the things that Brian Chesky at Airbnb told The Batch recently is maybe money is more like food. You definitely need food to survive, but in a lot of places in the world, including America, people are dying from too much food as opposed to too little food.
<bot>: If you're afraid that bad things are going to happen, the idea of stockpiling as much of whatever resources you can as much as possible is totally sane and reasonable. The issue is really successful companies, the oxygen they have is revenue from their customers and they're being pulled ahead by customer demand for their product. And that is providing the oxygen of growth is like the pull of customers.
</s>


<human>: So the next one is Coinbase. So set the scene for Coinbase. What do you think Brian saw when he was getting rolling?
<bot>: Yeah, so I was around back then and I was trying to buy Bitcoin back then too. And I remember the Coinbase YC application really well in the whole historical context. So to set this up for people, circa 2011, 2012, it was really hard to buy Bitcoin. Really hard.  I remember looking into it around 2011, and there was a step of sending money orders, like going to Western Union and sending a money order to some foreign country. And that's when I hopped out of it. I wish I would have done it, would have made a lot of money. But I didn't, because it just seemed too much like a total scam. Like if you're ever sending money orders to foreign countries, something is going wrong in your life, right? But anyway, I also was familiar with Mt. Gox. And Mt. Gox was the biggest and largest Bitcoin exchange back in the day.  It went down a lot and got hacked and everyone lost all their money. I actually lost some money in Mt. Gox personally. I think I had about one Bitcoin in Mt. Gox.
<human>: I'm not too worried about it. I feel like the reputation for Mt. Gox was like, you can get money in, but you can't ever get any money back out. That was the environment where Kugo Coinbase was coming in.
<bot>: What it's grown out of is that Mt. Gox was an acronym that was Magic the Gathering Online Exchange. It was originally a website to trade magic cards that they pivoted into Bitcoin. And so anyway, the historical insight was buying Bitcoin was something people wanted to do.  but all of the options were pretty bad. That's the historical context and Brian wanted to fix that.
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<human>: So, you know, I think it makes sense to split this up into mistakes that people make setting goals and then mistakes people make trying to accomplish these goals. So I would say like the first one, and maybe I'll start with the simplest, is when people set goals that are so aggressive, they aren't motivational.  And they're basically missing the understanding of what the purpose of setting a goal is, right? Like you want to motivate yourself to act smarter, faster, more intelligently than you would otherwise. And oftentimes people are setting goals that are too aggressive because they're motivated by fear. You know, in YC we see this all the time.
<bot>: And what's an example of a too aggressive goal? Like, what do you think? I can give you an example. What do you think?
<human>: Yeah, you know, I'll see a YC founder who comes in to YC just starting to build their product. And they tell me, by demo day, we want to have, you know, 30k in MRR. And we want to do that because some alum told us that like, that's how much MRR you need in order to raise money on demo day. And it's just like,  How many errors can be said in three sentences, you know, is my thought. What's an example that comes to your mind?
<bot>: My most common example is someone that believes once they launch a product, it will immediately succeed and take off. And so it's like, we're going to spend three months building this app. We're going to put it in the app store. We're going to launch.  and then we're going to get 100,000 DAU. Yeah, yeah.
<human>: Like two weeks later.
<bot>: Yeah, it's always the plan is they're going to put it out and then it's going to immediately take off. Those are always the goals that are rough. And what's funny is we're always like, why don't you launch sooner so you have more time to make it grow after it launches? I'm like, no, no, no, no. We're going to spend all the time making it good  And so then when it goes, it's gonna immediately take off top of the app store, 100%.
<human>: Dalton, why would we launch something bad?
<bot>: Then it won't take off, Dalton, Jesus. Yeah, we're gonna talk to some influencers. We're gonna do a social media launch. We've got it all lined up. We have a wait list. So yeah, top of the charts, definitely.
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<human>: Caring about your customer is a superpower. And I think what's funny, and you made this point, right, is that it's really, really hard to beat a competitor who cares about the customer more than you do. Yes. It's really hard. The customer knows in their bones that you don't give a shit.
<bot>: Yes.
<human>: And I think that if we bring this back down to startups, one of the things that's tricky is that, you know, you get into a startup for a lot of different reasons, right? And like, hey, Dalton, I'm building a B2B SaaS company for accountants. Like, I think it's really good. I have some experience doing accounting stuff at my previous company, but I don't love accountants.
<bot>: Yeah, I'm just kind of like going through the motions. I don't know. I'm looking forward, let me tell you about my next startup idea after this. Like, you know it's not great when they want to pitch you their next startup.
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<human>: And I think the smartest founders look past that. They look past all these like stupid debates. And one of the things I think they see about the Bay Area is the network effect. So why don't you go like what's going on here? Like why are billion dollar companies just seem to keep popping up after decade after decade here?
<bot>: Well, I think, look, network effects are powerful. We know this. This is the thing that makes things like Airbnb work, Uber work, all the startups. Network effects are really powerful. That's why Facebook has any value at all is network effects. And basically, what's weird about network effects is if you're not benefiting from them, you don't know what you are missing. And a lot of the times when people want to talk about, well, I don't need to live there, blah, blah, blah. OK, that's fair.  you won't know what you're missing. It's all the things that won't happen. It's all the people that you won't meet, all the chance encounters you won't have, all the employees you won't have. Like all these surface area for luck. I like to talk about how to maximize luck. Think about how many people, again, let's talk about non-tech. If you wanna make it as an actor, think about how many people their story of their big break is that something happened in like Los Angeles or New York or a band.  that moved to Los Angeles or New York. When the actual moment happens, when someone spots them or finds them or like that.
<human>: A lucky moment.
<bot>: Whatever that is, the work that they did before that was to put themselves in that position. And so no one is going to take someone that's outside of this area and tell you, this is what you're missing out on.
<human>: Can I say something that's even more? I think that people here sometimes don't understand the network effects they're consuming.  You and I both saw a lot of people leave the Bay Area during COVID. All of them came back. And they all said this. They don't say that as publicly. They don't say that as publicly. They all came back, yeah. And all of them said the same thing, which was basically like, I missed the community. But I never really understood that I was consuming the community. I thought I was working all the time and da-da-da-da. But I actually was consuming a community of people who are really into startups.  And when I moved to Seattle, or Austin, or New York, or da, da, da, da, that community wasn't as strong, and I missed it. But isn't it weird?
<bot>: And there is tech there.
<human>: Yeah, but there's tech there.
<bot>: And there is good lifestyle there, but that's not startups.
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<human>: Well, PB is the inventor of Gmail. And as kind of a side project at Google, he invented something that 1.5 billion people on earth actively use.  And he literally did it doing things that don't scale. So I'll start the story and then please take it over. So as I remember it, PB was pissed about the Gmail product, the Google product he was, sorry, the email product he was using. And so Google had this newsletter product. The first version of Gmail, he basically figured out how to put his email into this  Google Groups UI. And as he tells the story, his eureka moment was when he could start reading his own email in this UI. And then from that point on, he stopped using his old email client. And what I loved about this is that as he tells the story, every email feature that any human would want to use  he just started building from that point. And so, you know, he would talk to the YC batch and he's like, and then I wanted to write an email. And so I built writing emails. And if you know PB, like he could have got a couple of days reading emails without replying at all. So he didn't need writing emails to start. I remember him telling the first time he got his like coworker, like literally like his deskmate or something to try to use it.  And his destiny was like, this thing's pretty good. It loads really fast. It's really great. The only problem is, PB, it has your email in it. And I want it to have my email. And he was like, oh, shit. OK, well, I've got to build that. I'm like, I've got to build that. Perfect night-to-night solution. And so then it started spreading throughout Google. And do you remember when it broke?  No, what happened? Oh, so he told this story where like one day PB came in late to work, which is, you know, knowing PB every day, you know, and everyone was looking at him a really weird.  And they were all like a little pissed. And he got to his desk and someone came over to him and was like, don't you realize that Gmail's been down like all morning? And Peter was like, no, I just got to work. I didn't know. And so he's like trying to fix it, trying to fix it. And then his coworkers see him like grab a screwdriver and go to the server room.  And it was like, they were like, Oh God, why do we trust PB with our email? Like we're totally screwed. And I think he figured out like there was a corrupted hard drive. And I remember that point of story. He was like, he says, and that day I learned that people really think email is important and it's got to always work.
<bot>: And like, I think the reason, I think the reason he did it, man, is because he liked to run Linux on the desktop.  And he didn't want to run Outlook. The Google suits were trying to get him to run Outlook on Windows. And he was like, I don't really want to run Windows. But yeah, it was the dirtiest hack. And as I recall in this final part of the story, it was hard for him to get Google to release it because they were afraid it was going to take up too much hardware. And so there was all these issues where there was a decent chance I think it never would have been released.
<human>: Well, this part was that everyone thought Gmail's invite system  was like some cool like growth hack. Like virality hack. It's like, oh, you got access to Gmail. You got, I think, four invites to give someone else. And these are like precious commodities. And it was another product. It was just another version of things that don't scale. They didn't have enough server space for everyone.
<bot>: They physically did not have enough servers. So they had to build an invite system. Yes. There was not an option to not, but basically there was no option other than building an invite system. It was not like genius PM growth hacking.  It was like, yeah, well, we saturated the hard drives are full, so I guess we can't invite anyone else to Gmail today.
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<human>: Here was the next comment that was written.  YC founder wrote, we did not do enough research before deciding what to work on. We now realize the more research you do in your space before you write a line of code, the better.
<bot>: It seems like people go to the effort of starting a company, of trying to raise money for a company, of applying to YC with a company, of making it to YC interviews with a company, and we can tell you haven't Googled it.  You haven't typed in like the idea that you're working on into Google or read any articles about folks that have tried it before. And this is such a self-owned. It's free to do research on those that came before you and failed. Cost you nothing. Doesn't take very much time. And to spend years of your life or months of your life or any amount of your life on an idea that you've not done just basic cursory research on is really dumb.  Do you understand? Maybe you'll do it better or different, but to not even understand what came before you is kind of a willful ignorance. And I don't get that, right? It's almost like, Michael, do you think it's that they don't want to know or that they just don't think it applies to them or, oh, this time it's different? Why would you obstinately refuse to research related companies in the past?
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<human>: So I think that so much of this kind of pop entrepreneur  Shark tanky advice, right? I actually think comes from a different place. I think it actually comes from like weird branding.  And I think that in the branding world, being different, being unique, that is a very, very important thing. And a lot of the examples in the branding world are people who did things radically different and then became successful. What I find funny is that a lot of the examples in the technology world are people who did things 80% the same.  and 20% different. At least 80%. 80% was the minimum that they copied. And so I think one of the things that founders screw up is when they take advice that might work in fashion  and apply it to software, it might not work.
<bot>: Yeah, this reminds me of usability. If people can't use your thing, like I remember back in the day, people would try to innovate on the website design and how the cursor worked and how you would even click buttons, and that was an example of probably not helpful innovation. No. And so watch out for unintentionally creating risk that you don't need to create.
<human>: Yeah, and I think that if you  put your customer first, second, and third. You might look at some of these other things and say, do I really need to do them? Or better yet, let me do it on my second startup. Let's get one successful startup out of the way. And then I can make programming languages. I can hire people all around the world. I can do all kinds of crazy things. I can build rockets. I can do all kinds of cool things. Startup number two. All right, Dalton, good chat.
<bot>: Thanks.
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<human>: What we also need to attack is this idea that because smart investor invested, my company is doing well. Like I just don't,  I think that when you're the press or when you're on the outside having to judge, you have to use these kind of weird secondary, non-primary sources.
<bot>: Yeah, it's not revenue focused. Your only signal as an outsider is fundraising rounds. Yeah. And there can be companies that are still struggling and aren't going to make it. They're still somehow raising money. One trick, by the way, friends out there, that's very common, is a fundraising round may have happened a year ago, but they're choosing to announce it now. Yes. And it looks like they just raised, and that is not true.  So watch out for using the announcements of fundraising as a very reliable signal.
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<human>: So, let's talk about the fatal punches, right? At YC, we deal with a lot of failure. We deal with a lot of companies who fail. And you and I have to have a lot of conversations with founders who their company has failed, and their first thought is, I'm a failure. They personalize that failure. What are some of the things you tell those people when they're dealing with that fatal punch?
<bot>: Yeah, I think as per what we talked about here, a lot of the things that people think are game over aren't. And so our advice is don't give up. You actually have a bunch of customers, you have a bunch of money in the bank, let's look at the facts, you're good. And so a lot of our office hours are let's examine the facts. Fact, fact, fact, fact, great, you're fine.  However, sometimes we look at the facts and you're not fine. And it doesn't help you, like you don't need a pep talk to keep going. And it actually is probably the right thing for you to not keep going. Because at the end of the day, this is your life, you only have one of them. And messing up your life in a permanent way, your savings, your family, your friends, whatever it is,  you know, don't do that. And again, I know it can be confusing out there, because we get bombarded with messages. Oh, but you say you never give up, or you say, you know, like, yeah, it's confusing.
<human>: It's not that easy. Yeah, it's complicated.
<bot>: It's complicated. So I think you need to actually, with as clear objective ways as you can, be able to know when it's not working, and that it was a fatal punch, and that, yeah, you should not do this anymore. Like sometimes you see people get into like,  debt where they owe a bunch of people a lot of money and then they shut down and they ripped off all their suppliers again you know you know i'm trying to say like like you're good you fail in such a way that you hurt a bunch of people not just yourself not good don't do that what i think that this is what's tricky is that i think someone needs to be out there saying that these aren't the things you have to put on the table to win
<human>: Yes, when you're working hard, you're gonna probably have to spend less time with your family or friends. But you don't have to put those relationships, you don't have to sacrifice those relationships to win. In fact, they're a source of strength. You're working hard, you're probably not saving as much money as you would be if you're working another job, but you don't have to sacrifice all your savings. You don't have to go into extreme debt. Like, if you're working hard, like, you might not be able to get the salary that allows you to live in the apartment of your dreams.  But like if you have to crash on friends' couches, these things don't tend to have to be sacrificed to win. And so if you're taking these kind of one-way hard life hits, maybe the facts are set up.
<bot>: Yeah. And again, what's tough is when you're one of those folks, sometimes you can even be victimized by people that'll like keep  bleeding you because that's their racket. And we see this a lot with struggling startups. All sorts of people will come out of the woodwork to sell you services or promise they'll connect you with the investors or they'll help you fundraise or you name it. And it's like, it's kind of like moving to Hollywood to become an actor and it's not going well. All these people will, like there's a whole underbelly of folks who exist to kind of rip off the people who aren't doing well.
<human>: You know, to me, where I see this happen that's most tragic is with non-technical founders. Because it'll be some dev shop or some, you know, if you give me your last dollar, I promise that  I'll solve your problem. Yeah.
<bot>: And you see people writing checks for 20, 30, 40, whatever, 50 grand out of their personal checking account, their life savings to some dev shop. Yes. That's like their whole business model is to rip. I shouldn't say rip off, but like, they're like, yeah, cool. Like whatever. Like just as long as the check clears, we'll do it. You know? Yeah. It's pretty depressing.
<human>: It's really depressing. And, and I think that like those founders, when we have this conversation, the like, Hey,  your startup failed, that doesn't mean you failed. Sometimes they just need to hear someone say that. So often we'll talk about, look at this person, their startup failed and they have another one that does well. Look at this person, their startup failed and they're not working as an executive at this really cool company. These experiences you have,  are valuable to you, even if your company didn't work. You learned 10x more than you would have learned otherwise, even if your company didn't work. And sometimes when we explain that silver lining, people are like, oh, you're right. That's actually a fun part of the job. So there you go. Step one, how to try to avoid the punches. And step two, when they come, how to recover as fast as possible. Great chat today, Dalton.
<bot>: Thanks man.
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<human>: And I think the last point we'll give is that I think that until these big companies solve AGI, it's going to be their first, second, and third goal.  And so using the existing tools to make people's lives better, their businesses better, it's not on their list. Like getting AGI, one, two, and three most important goals. So that's a huge opportunity for everyone.
<bot>: So look, in conclusion, unless you actually believe in the short term,  AGI will be created by OpenAI that will do all the things that's possible for us to predict. Yes. OpenAI is not going to kill all the startups. No. And there's plenty of room to innovate.
<human>: And maybe we would say that the tools that exist now and the LLMs that are  being made available, this could be a explosion of new amazing startups. This could be the moment that we've been waiting for since mobile. Yep. Where people can actually do cool new things and there aren't just cog-a-cog culting. So, this should be a moment where everyone's excited. Except for the people on Twitter. They're never excited. Alright, thanks much Dalton.
<bot>: Thanks.
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<human>: Explosion.
<bot>: You've seen this, man.
<human>: What's going on here? Well, first things first, right? This is why we like teams who know each other for at least a little bit and have some kind of work or personal relationship. Because I always say that when you have some kind of non, if you have some kind of base relationship that you might want to maintain, even if this startup doesn't work, you won't say that thing.  Or you'll think really hard before saying that thing that will like shatter the relationship. But when you're like, oh, the only reason why I'm even talking to you is because of this startup and now I'm convinced that our startup's fucked, which by the way, you will be convinced your startup's fucked just continuously. That's like a normal feeling. And then you're like, well, fuck it. Man, you can't, you know, there are things you can't unsay. And, um,  Wow, sometimes the original sin was like, you shouldn't have started the company with this person. But like, let's say you are doing a company with your co-founder and it's just really frustrating. What's the advice to give the founders on how to kind of process them?
<bot>: I think it's like, you have to learn how to fight, and maybe fight's the wrong word, how to disagree. It's like,  You have to learn how to pull your punches and have a disagreement that's a real disagreement and actually release the pressure of the disagreement in a way that doesn't cross the line so that the relationship is irreparably harmed. And it's a skill you have to learn. And if you've never been through a major disagreement with someone or had the skills for both of you  to have a fundamental disagreement and talk it through yet not blow the relationship up.
<human>: Yeah.
<bot>: And again, this is a skill like any other skill, man.
<human>: It's a skill. You know, it's funny because the analogy that I'm thinking in my head is that like, you know, it's a pressure release valve and you don't want to just rip it open.
<bot>: Yeah.
<human>: But if you don't release any pressure, you also have a problem.
<bot>: It builds up and blows up. Either way it blows up.
<human>: Either way it blows up.
<bot>: If you let the pressure just build, build, build by only having superficial conversations for years, one day someone will snap.
<human>: Boom.
<bot>: And on the flip side, if you just leave it open all the time and you fight constantly, that ain't gonna work either. It's sort of like the happy medium thing.
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<human>: All right, here's the last comment that a YC founder wrote in. I chose a co-founder with whom I could not share my honest disagreement. We didn't know how to fight well or come out of those fights better and wiser. Some part of that was conflict avoidance on my part, and some part of that was him fighting dirty.
<bot>: It's crazy when you speak to founders where they'll spend eight hours a day with someone, 12 hours a day with someone, and they'll be like,  I haven't spoken to them in a week. And I'm like, what are you guys doing all day? You haven't talked to them in a week, or haven't talked to them in a month, or I haven't had a real conversation with them in a year.
<human>: And I think when things get that bad,  I would argue there's a point where breaking up becomes inevitable. And the CEO's job is now not how to repair the relationship. It's basically how to separate in like the most effective and least destructive way.
<bot>: When you talk to folks about this, they know in their hearts that that's what needs to happen, but they just can't bring themselves to actually do it because it feels bad.  And so that's what's, again, when you talk to these folks, they know, they know that it makes, the right thing for the company is to go their separate ways. But they, for whatever reason,  They're willing to go through years of pain or actually reduce the chance the startup's going to work than to face that head on. It's really rough.
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<human>: All right, let's move on to the next one. So the YC founder wrote in, take arguments with your co-founders seriously.  it's more likely to kill you than anything else.
<bot>: What I see with a lot of co-founder disputes is that the relationship has never been pressure tested. They've just been friends. They've been like, oh yeah, we chat all the time. And then the first time there's a disagreement, it's just a blow up and the relationship is broken and you'll never be able to put the pieces back together again. Versus if it's someone you've known a while, maybe it doesn't seem as shiny, but you've already had some disagreements. You've already had the relationship ebb and flow over years, right?
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<human>: I think what's tricky, though, is that there are people who don't think that this is a good time. The people who aren't really into CS aren't really excited by the power of LLMs. And people who don't have experience with ML at all  And those are the people who just want to make money. And I think what's interesting is in the last couple of cycles, those people have been very attracted to the startup world. How do I make money fast?  Those people are not being attracted to this. I think that's what makes our job so much fun, because working with people who want to make money fast in startups, it's not a great group of folks. Those are harder office hours. Harder, harder. When we're like, yeah, it'll just take a decade. They're like, no, no. Why don't I do my ICO or something? Whereas this group of people, it reminds me when people were nerding out about Ruby back in the day. Like, oh, wow, I'm just excited about what I can build.
<bot>: And when you think about it,  a perfect time where if you're a creative person and you're an ambitious person, you can do really cool stuff. And we saw this with the iPhone. Yes.
<human>: You can blow people's minds.
<bot>: Well, again, Uber would not have made sense without the iPhone. And so to me, it's less obvious that everyone's going to build open AI competitors. I am worried that all the low-hanging fruit ideas, open AI will just be able to do well enough. Yes. But if you go deeper to second-level insights, a la Uber after a consequence of the iPhone,  Second order effects like this from LLMs are going to be amazing. You get what I mean? It's like, it wasn't the obvious shit. I want to try an analogy on you, right? Like fart apps. Remember when I was making fart apps? That wasn't the big business.
<human>: I would argue, maybe the analogy here was that it was obvious that maps were going to come to the phone. Yeah. It wasn't obvious that Uber was going to come.
<bot>: I agree.
<human>: I never would have imagined. And so I definitely think that if you can think second order, and I'll even be charitable. I think sometimes to think second order, you think first order. It's okay if your thing starts as a toy. Like when people are like, oh, this is a thin wrapper on open AI.  I always laugh because I'm like, okay, is that the destination or the starting point? Yeah, it was a starting point. I remember as we had the old Dropbox as a thin wrapper on top of AWS, on top of S3, right?
<bot>: Oh, I can build this in a weekend.
<human>: I can build this in a weekend is a sure sign that the person doesn't know what the fuck they're talking about.  So I will say that if you are absorbing, if your thing is a thin wrapper on OpenAI to start, and you're absorbing hate, ignore those fuckers. That's silly.  Understand that many good things started like toys and make something that customers really love.
<bot>: Yeah. This is a time to be optimistic. This is a time to build cool stuff. And this is not a time to cargo colt, as I said earlier. So superficially copying AI stuff just because it's hot or raising money. Don't do that. But if you can really solve customer problems in an amazing way, this is the time.
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<human>: So next, what about employees?
<bot>: What do you think there? I think it's the same sort of situation. Again, the dynamic might be a little bit different, but if you're only ever having easy superficial conversations with people,  It's cool until it's not. And sometimes the best way to work with folks at your company, whether colleagues, employees, whatever we want to call them, is to find the right way to have some of these hard conversations. And you know what they are. You're probably, I'm sure someone watching this is like, yeah, I can think of a few hard, I can think of some things I would say if I weren't.  afraid of the consequences. You know, like there's a right way and a wrong way to do it. We're not saying go blow people up, but if you're just avoiding hard conversations, no one wins. No.
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<human>: and getting fired when it doesn't work out, right? Because it's their fault, it wasn't your fault.
<bot>: You have company all hands where you can, you know, like you have all these layers where you're, this is all the stuff that's filtered out from you, man. Like this is not your problem when you have a job. When you're a founder, there is no filter. And I think people freak out because they treat being a founder is on the same, like the same sort of thing as being an employee. They're like, oh, either I'm gonna work at Google or I'm gonna start a startup. It's like, well,  No, this is different, right? In one of those things, you're like a worker bee and you can just work on your thing and it's really low stress and you have to worry about your manager liking you and stuff like that. There's no managers, there's no filter. You're just out there dangling in the wind and every breeze that comes your way, you're gonna feel.  The inputs that you experience as a founder are like completely unfiltered. And you have to be the person that tells the people working with you that it's all gonna be okay. You're now in the role of the filter. Like you are the filter, not the person being filtered to. Yikes. I think a lot of folks aren't mentally prepared for this. Reality is tricky when it's not filtered.
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<human>: So Michael, in terms of market timing, one thing that might be interesting to think about if you're currently working at a unicorn, a very late stage company, is now might be a good time to consider going to an earlier stage company as an employee because it's less likely their equity is super overvalued and there's lots of room for advancement. So how would you think about this if you were an employee of one of these companies?
<human>: Well, one, I think that you've gathered a lot of experience, and so you might have an opportunity to have more responsibility to an early-stage company, which would also probably get you more equity. I would say, too, you could use many of the hints that we gave you to judge that early-stage company. And you can actually do a bit of a comparison to get a vibe for like, oh, this early-stage company seems like it's doing better than my late-stage company. And then the third thing is that,  What's funny is I think it's a little counterintuitive, right? It's the moment where your friends are gonna be like, that's stupid. Yeah, why would you go to a smaller company that's not a unicorn? Exactly, right? And it's so weird in my life how many times the dumb move at the moment was the smart move later and vice versa. It is just over and over again.
<bot>: Yeah, and so the dream setup is you go to an earlier stage company that has the same revenue as the unicorn you are leaving, and one-tenth the valuation, thus your option strike price is much better. And you have more responsibility. You have more responsibility. That's a pretty good trade.
</s>