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Dalton + MichaelDalton + Michael

The Secret Killer of Startups

In this episode of Dalton + Michael, the two discuss the secret killer of startups: low ambition. Founders must pull the world in a different direction, and an ambitious idea has the "horsepower" to do it. But many founders might not be dreaming big enough. Discussion includes: what type of companies should raise venture capital, why VCs won't give you feedback about having low ambition, why the world wants dreamers, why your product should be 100x better than the alternative, Dalton meeting Elon for the first time, why ambition needs to be combined with intuitive logic and credible leaps, why the most curious founders often disagree with authority figures, and why working at an ambitious startup might a good idea. Dalton + Michael is brought to you by @Standard_Cap Standard Capital is the AI-native Series A fund. Dalton Caldwell on X: https://x.com/daltonc Michael Seibel on X: https://x.com/mwseibel

Michael SeibelhostDalton Caldwellhost
Aug 5, 202621mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:57

    Low ambition as the hidden startup killer (especially in venture land)

    1. MS

      Most people who are watching have the ability to be curious about an area that seems perhaps far-fetched, but if it went the right way, could change the world. And you might be surprised because right now it might just not be sexy. It might not be in the zeitgeist, but that, that might actually be a good thing. Like, that might be your opportunity, whereas building the 17th AI SDR might raise you your $2 million seed round, but, like... [upbeat music] This is Dalton + Michael. Today we're gonna talk about the thing that I believe is the secret killer of startups, and it's not what you expect. It is low ambition. We work with a lot of startups. Let's talk about ambition, and let's talk about what happens when we work with a company that has low ambition.

  2. 0:57 – 2:44

    Why “aim lower to win” feels intuitive—and why the evidence contradicts it

    1. DC

      It is extremely counterintuitive because you're like, "Man, I've heard from the world and I've heard from these guys how hard startups are, and like-

    2. MS

      Yes

    3. DC

      ... only a tiny percentage of people succeed." Um-

    4. MS

      Therefore

    5. DC

      ... let me try to, like, increase my odds of success by aiming way lower.

    6. MS

      Yes.

    7. DC

      And if I try to just build, like, a small little startup, that's gonna be way easier than trying to build the next Google, which sounds very hard.

    8. MS

      Yes.

    9. DC

      Right?

    10. MS

      Yes. [laughs]

    11. DC

      That sounds intuitive, right?

    12. MS

      Yes.

    13. DC

      But our evidence, um, suggests that is not the case.

    14. MS

      Also, it's not creative. This is actually what pains me the most about this thought. It's not unique.

    15. DC

      Yeah.

    16. MS

      We're making a video about it. [laughs] Like-

    17. DC

      Yeah, you aren't the first person to come up with-

    18. MS

      No

    19. DC

      ... this insight.

    20. MS

      If this insight worked, you would see-

    21. DC

      Yeah

    22. MS

      ... so much success. [laughs] The fact that you don't see it, like, this is why I hate first principles thinking sometimes. It's like, the fact that there's no evidence to support this is damning evidence. [laughs]

    23. DC

      I think it would be like, well, Michael, there's lots of small businesses that aren't venture funded that are-

    24. MS

      That's great, yes. But there aren't a lot of venture-funded small businesses that make anyone any money.

    25. DC

      Correct.

    26. MS

      And we've had decades to, to experiment. [laughs] That's-

    27. DC

      Yeah. So I guess the, I guess to steel man the opposing point-

    28. MS

      Please

    29. DC

      ... it's that, okay, well then I guess I should not raise venture capital if I have low ambitions, and I think we would say yeah.

    30. MS

      Sure.

  3. 2:44 – 3:17

    The feedback problem: no one tells you your ambition is too low

    1. MS

      One, what's so weird about being low ambition is it goes in the category of things that you'll almost never get feedback on. So it's like when you go to a VC pitch, like, uh, th- no one's gonna be like, "You know, this, like, you're just not brave enough." Like-

    2. DC

      [laughs]

    3. MS

      ... it's just like, it's almost weirdly insulting to tell someone. And so, like, you might get weird feedback like, "Well, you're not, you don't have enough users-

    4. DC

      Yeah

    5. MS

      ... or this. Your TAM's too small." And, and the reality is the world doesn't change enough if you win to be interesting.

  4. 3:17 – 4:28

    Ambition recruits the “invisible hands” that make hard things possible

    1. DC

      Yeah. Almost like the way I would try to frame this for you all is if you're gonna do something hard, all the odds are stacked against you.

    2. MS

      Yes.

    3. DC

      And you, there needs to be a lot of invisible hands that lift you up-

    4. MS

      Yes

    5. DC

      ... and pull you forward-

    6. MS

      Yes

    7. DC

      ... of people that see what you're doing-

    8. MS

      Yes

    9. DC

      ... and try to help you perhaps irrationally.

    10. MS

      Yes.

    11. DC

      And there are way more invisible hands pulling you up if you're doing something really ambitious and exciting-

    12. MS

      Yes

    13. DC

      ... than if it's just like ho-hum, who cares?

    14. MS

      Yes.

    15. DC

      The faceless army is not going to help, help you.

    16. MS

      Well, and it's weird because it's almost like the world wants big, new things.

    17. DC

      Yeah.

    18. MS

      The world wants it. Like, it's like entropy is really working in your favor weirdly. [laughs]

    19. DC

      If you have a big dream, most people will respect you for having a dream.

    20. MS

      Yes.

    21. DC

      And if there's small ways they can help you on your personal journey-

    22. MS

      Yes

    23. DC

      ... they will do so.

    24. MS

      Especially if that dream clearly makes the world a better place.

    25. DC

      Yeah.

    26. MS

      This must be some weird aspect of just being human-

    27. DC

      Yeah

    28. MS

      ... where, like, you just kind of want the world to be a better place.

    29. DC

      Yeah, think about it.

    30. MS

      You wanna help people doing that.

  5. 4:28 – 5:31

    Mission examples: curing cancer vs. micro-optimizing ad click-throughs

    1. DC

      If you were to meet someone and they were like, "Michael, my goal is to eradicate cancer. M- I want there to never be cancer again. No one should ever get cancer," A, okay, great. Like, again, I would, I would be, like, really excited to-

    2. MS

      Exactly

    3. DC

      ... hear that.

    4. MS

      Yes.

    5. DC

      I would have questions. "Oh, well, how are you gonna do it?" You know.

    6. MS

      Sure.

    7. DC

      Um, but man, what a cool mission.

    8. MS

      Yes.

    9. DC

      But if I met someone, they're like, "Michael, my goal is to improve click-through rate of ads by .05% that are rendered on mobile through the use of novel AI," again, might be a, might be a business, but much harder for that to stick in my mind of, of, um, a mission or a vision that I'm super excited about.

    10. MS

      Well, and let's be clear. Yes, and there are many software examples for that too, right? In my mind, so let's not just use health- healthcare I think is easy, right?

    11. DC

      Yeah.

    12. MS

      Like cancer, but, like, hardware/software example, self-driving cars. Software example, like bot. [laughs]

    13. DC

      Yeah.

    14. MS

      Like AI products that are giving people-

    15. DC

      And, and-

    16. MS

      ... superpowers

  6. 5:31 – 6:00

    The 100x bar: why “slightly better” struggles to matter

    1. DC

      ... Gmail. So when Gmail came out-

    2. MS

      Gmail's a great one

    3. DC

      ... I believe Yahoo Mail gave you something like 10 megabytes of storage.

    4. MS

      I think you had to pay. I think default free was, like, three or something.

    5. DC

      Yeah.

    6. MS

      [laughs]

    7. DC

      And then Gmail was 1,000.

    8. MS

      Yes.

    9. DC

      And that was on purpose. It was, it was 100x better than the alternative.

    10. MS

      Yes.

    11. DC

      And so for a lot of products, we would always recommend, uh, to YC companies trying to be 100x better-

    12. MS

      Yes

    13. DC

      ... is, like, the bar you should be going for. If not, why bother?

    14. MS

      Why?

    15. DC

      Why bother making something that's 2% better than the alternatives?

  7. 6:00 – 7:47

    Caring is the scarce resource: ambition makes others invest emotionally

    1. MS

      It's really hard to convince founders that this secret hand is working in their favor. And like, it's something that we've seen in hindsight, right? Like the number of secret hams that were helping OpenAI

    2. DC

      Right?

    3. MS

      Many [laughs]

    4. DC

      Many

    5. MS

      And I think this is something that I personally learned from Sam, which is that basically it's like you can tell people these stories about how you're gonna do this thing that's gonna make a lot of money without having this little impact, and like they might actually believe you. They just don't care. [laughs]

    6. DC

      [laughs]

    7. MS

      And like what's weird is that like to win, you need a lot of people to care. You need customers to care, you need investors to care, you need employees to care, you need co-founders to not leave. Like you need care.

    8. DC

      Yeah.

    9. MS

      The more ambitious you are, the more you want to make, uh, your customer life a better place, the world a better place, the more people have reason to care. And that caring is a variable you get to control when you pick your idea.

    10. DC

      Yeah. I, I don't know if this will resonate for you, but I almost think of a startup or any organization as like a battery or a flywheel or an engine.

    11. MS

      Yes.

    12. DC

      And you want it to be so strong-

    13. MS

      Yes

    14. DC

      ... and have so much velocity and torque that it can pull forward all of these different people, all these different customers, all these stakeholders because of just like the strength of this thing.

    15. MS

      Yes.

    16. DC

      And if the, the core engine is weak and doesn't have much torque, nothing is gonna happen.

    17. MS

      Yes. [laughs]

    18. DC

      Because you're having to pull, you're having to pull the world a different direction.

    19. MS

      Yes.

    20. DC

      And so a very ambitious idea, a very ambitious approach-

    21. MS

      Yes

    22. DC

      ... into what you're doing has the shot, it has the horsepower and torque to, to pull something forward.

  8. 7:47 – 8:25

    Your pitch must travel: others sell your company when you’re not in the room

    1. MS

      I want to add to that. You don't know how many times other people pitch your company, right? So when you have that hero or that, uh, champion side of a company that you're selling to, they have to go pitch their boss and their coworkers when you're not in the room. When you're raising money, that partner you're talking to, they have to pitch their partners and their LPs, right? The employee, they often have to pitch their parents-

    2. DC

      Yep

    3. MS

      ... their spouse, their friends. When you're not in the room, how good of a pitch you giving them?

    4. DC

      Right.

    5. MS

      Are we changing the world or are we optimizing click-throughs by 1%? [laughs]

  9. 8:25 – 11:28

    Case study: Elon’s Mars line and the reality that big outcomes are team sports

    1. DC

      Yeah, I, um, I met Elon in like 2008.

    2. MS

      Yeah.

    3. DC

      And that's like the only time I ever talked to him.

    4. MS

      Yeah.

    5. DC

      And in the first 30 minutes of talking to him, he told me the following line. "My goal is to die on Mars, hopefully not on impact." [laughs]

    6. MS

      [laughs]

    7. DC

      Clearly he uses that line a lot.

    8. MS

      Yes.

    9. DC

      But it stuck in my mind when I met him as what an-

    10. MS

      Almost 20 years

    11. DC

      ... what an interesting, ambitious person, and he made a big impact. You know, again, like I, I certainly remember the time I met Elon Musk, and that was way before he was-

    12. MS

      Yeah, famous

    13. DC

      ... you know, famous as he is now.

    14. MS

      Yes.

    15. DC

      And that simple story that is that ambitious, and clearly he just told everyone that. Like it wasn't that I was special.

    16. MS

      No. [laughs]

    17. DC

      He just walked around life-

    18. MS

      [laughs]

    19. DC

      ... and would tell that to every person he would talk to. And I'm arguing that's how you manifest-

    20. MS

      Yes

    21. DC

      ... the kind of stuff that he manifested-

    22. MS

      Yes

    23. DC

      ... is he would say crazy, provocative things. He would back them up.

    24. MS

      Yes.

    25. DC

      And there were all these invisible hands of he, you know, he would just keep putting that story out there-

    26. MS

      Yes

    27. DC

      ... and got people to work for him. He got people to give him money.

    28. MS

      Yes.

    29. DC

      He got, people wanted him to win.

    30. MS

      And like I think that like what sucks is that sometimes the press and like history can turn all of these stories into like the big man. Like, "Oh," and then he hand-built the robot, he hand-built the rocket, and he welded it. And it's like all of these are team games.

  10. 11:28 – 12:50

    AI market cycles can distort ambition: funding ≠ greatness

    1. MS

      So let's put this in the context of AI because like hilariously I think I would have assumed with AI ambition would have gone way up, but this whole talk of like single person company, like I don't, s- just there's some stuff in the ether which in my mind is like making, sometimes I feel like ambition's going down. And I, what do you see there?

    2. DC

      I, I think it's because we're in a market cycle, if the way you're keeping score is what's raising money-

    3. MS

      Yeah. Yeah, that's a, that's a real-

    4. DC

      ... um, you're gonna get weird ideas. 'Cause remember in, in 2021 all sorts of stuff was raising money.

    5. MS

      Yeah.

    6. DC

      Think about all the unicorns. Every, every 24 hours there'd be a new unicorn minted.

    7. MS

      Yes. Yes.

    8. DC

      And you'd be like, "Wow, I can't believe," remember Cameo was a unicorn? Like, "Oh, I can get, you know, C-list celebrities to say stuff." That's the future. [laughs]

    9. MS

      [laughs]

    10. DC

      Again, actually, I like Cameo, but-

    11. MS

      Sure

    12. DC

      ... that's, it w- it was probably not the most ambitious idea in the world.

    13. MS

      No.

    14. DC

      Um, and so if you're keeping score on what's raising money, you can get really warped ideas-

    15. MS

      Yes

    16. DC

      ... about what good is.

    17. MS

      Yes.

    18. DC

      Um, and I-

    19. MS

      That's a really good point

    20. DC

      ... I'm just trying to argue this is going on in AI land, it's like, kinda like everything's getting funded.

    21. MS

      Yes.

    22. DC

      And so you're like, "Oh, yeah, I guess, I guess my like 15th version of the same thing that other people have done is a good idea." Tricky.

    23. MS

      Tricky.

    24. DC

      Tricky.

  11. 12:50 – 14:51

    Nuance: high ambition isn’t sci-fi posturing—credibility and simple leaps matter

    1. MS

      No, it's, it's definitely interesting as well because ambition, high ambition doesn't mean the road's gonna be easy. It doesn't mean that you're gonna be popular, especially early.

    2. DC

      That's a great segue. Let me give some specifics because I think you could be watching this video thus far and be like, "Man, I should just pitch some like really crazy sci-fi ambitious stuff," and like-

    3. MS

      Yes

    4. DC

      ... "these guys will think that's really smart."

    5. MS

      Yes.

    6. DC

      Um, not necessarily.

    7. MS

      Yes.

    8. DC

      So let me, let me give the nuance here.

    9. MS

      I'm gonna kill NVIDIA. [laughs]

    10. DC

      Yeah. The ambition has to be combined with a simple pitch-

    11. MS

      Mm-hmm

    12. DC

      ... and a pitch where the logical leaps you are making are intuitive and that you are credible at making those logical leaps.

    13. MS

      Yes.

    14. DC

      Okay? And so when Elon was talking to me about dying on Mars, [laughs] I, at that time he was running Tesla.

    15. MS

      Mm-hmm.

    16. DC

      He knew a lot about hardware.

    17. MS

      Mm-hmm.

    18. DC

      And in my conversation with him, he talked about all the ways that like NASA was underperforming.

    19. MS

      Mm-hmm.

    20. DC

      So actually there was quite a bit of substance in my conversation-

    21. MS

      Mm-hmm

    22. DC

      ... with him about how he was going to actually do it.

    23. MS

      Yes.

    24. DC

      And his argument that the thing that was holding back space colonization exploration was institutionalized slowness because it was run by the federal government.

    25. MS

      Yes.

    26. DC

      So he had a whole... There was a lot there, guys.

    27. MS

      Yes.

    28. DC

      Um, and that is how you make a credible pitch.

    29. MS

      Yes.

    30. DC

      When we heard Sam pitch OpenAI, he actually knew the researchers that were doing the work and were recruiting them to work on it.

  12. 14:51 – 21:17

    Curiosity, contrarianism, and avoiding “scenesters” + the meta tar pit warning

    1. MS

      I love that. But I want people to understand that that might not be as hard as you think.

    2. DC

      Oh.

    3. MS

      Right? Like AI wasn't the buzzword it was t- it is today 10 years ago.

    4. DC

      Yeah.

    5. MS

      Figuring out who the leading AI researchers was, was a, was a question of curiosity.

    6. DC

      Yeah.

    7. MS

      It wasn't a state secret. [laughs]

    8. DC

      Nope.

    9. MS

      Figuring out what the leading papers were was a question of curiosity. Like, I'm not saying that Sam isn't incredibly talented. I'm saying that like understanding how broken NASA was, was a question of curiosity.

    10. DC

      Yes.

    11. MS

      Like there are-

    12. DC

      Well, hilariously, SpaceX, the, the NASA people were always like, "This will never work."

    13. MS

      [laughs]

    14. DC

      Like they, like he had naysayers out of the gate-

    15. MS

      Yeah

    16. DC

      ... which was the actual experts being like-

    17. MS

      Yes

    18. DC

      ... "This is the stupidest thing ever"-

    19. MS

      Yes

    20. DC

      ... the whole time.

    21. MS

      So I think that like, you know, most people who are watching have the ability to be curious about an area, um, that seems perhaps far-fetched, but if it went the right way, could change the world. And you might be surprised because right now it might just not be sexy. It might not be in the zeitgeist, but that, that might actually be a good thing.

    22. DC

      Yep.

    23. MS

      Like that might be your opportunity, whereas building the 17th AI SDR-

    24. DC

      Yeah

    25. MS

      ... might raise you your $2 million seed round, but like...

    26. DC

      Well, and in both of these cases, maybe you can think of others, it involved disagreeing with authority figures and conventional wisdom.

    27. MS

      Yeah.

    28. DC

      Like it basically required looking dumb.

    29. MS

      Yeah.

    30. DC

      [laughs]

Episode duration: 21:17

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