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Dalton + MichaelDalton + Michael

What Should You Expect From Investors?

Dalton Caldwell and Michael Seibel discuss what founders should actually expect from their investors. Where can a good investor make a difference, and which parts of building a startup will always be the founder’s responsibility? They share examples from Justin.tv, YC, and their own experiences as founders and investors. Discussion includes: • What good investors actually do for founders • Why a fast check on good terms can be more valuable than promises of hands-on help • Giving honest feedback without demotivating founders • Learning from successful companies and getting useful introductions • Why young investors whose careers depend on your startup can add stress • Why funding doesn’t validate your idea or give you product-market fit • Tactical advice from Paul Buchheit that helped Justin.tv and Socialcam • The “kingmaking” myth, and why big funding rounds don’t guarantee winners • Treating fundraising as a means to serve customers and build a great business — Dalton + Michael is brought to you by @Standard_Cap. Standard Capital is the AI-native Series A fund. Learn more at https://standardcap.com — About Dalton: Dalton Caldwell is Co-Founder and Partner of Standard Capital. He spent 12 years at Y Combinator, where he served as Managing Partner, worked across 25 YC batches, and advised more than 1,000 startups. His investments include Whatnot, Brex, GitLab, PostHog, Stock Space, Rappi, Razorpay, and Oklo. Before becoming an investor, Dalton founded imeem and App.net. About Michael: Michael Seibel is a Partner Emeritus at Y Combinator, where he served as Managing Partner of the early stage accelerator from 2014 - 2024. Michael also serves on the board of three companies: Reddit, Dropbox, and Kalshi. He moved to the bay area in 2006, and was a co-founder and CEO of two Y Combinator startups Justin.tv/Twitch (2007 - 2011) and Socialcam (2011 - 2012). In 2012 Socialcam sold to Autodesk Inc. for $60m and in 2014, under the leadership of Emmett Shear, Twitch sold to Amazon for $970m. — Are you an AI builder? Check out StandardDB..com Discover offers, credits, tools, and partner programs from the StandardDB ecosystem.

Dalton CaldwellhostMichael Seibelhost
Nov 2, 202624mWatch on YouTube ↗

Summaries, chapters, transcripts, and FAQs on this page are made by uListen, not YouTube.

EVERY SPOKEN WORD

  1. 0:00 – 0:18

    Junior investors transmit anxiety instead of stability

    1. DC

      This is the issue with junior investors-

    2. MS

      Yes

    3. DC

      ... is that if their career is riding on you-

    4. MS

      Oof

    5. DC

      ... they are not gonna be a source of strength.

    6. MS

      Oof, oof.

    7. DC

      They are going to be freaking out-

    8. MS

      Yeah. [laughs]

    9. DC

      ... constantly. They're more worried than you are.

    10. MS

      Yeah. [laughs]

    11. DC

      [laughs]

    12. MS

      'Cause it's their job. [laughs]

    13. DC

      [laughs] Yeah.

    14. MS

      They could get fired way before you would get fired. [laughs]

    15. DC

      Yeah. [upbeat music]

  2. 0:18 – 1:50

    Setting the debate: do investors help, and what expectations are wrong

    1. MS

      This is Dalton + Michael, and today we're gonna talk about do investors help? Um, Dalton doesn't know this, but I'm gonna take the position that they don't help.

    2. DC

      Jesus. [laughs]

    3. MS

      So, so Dalton is forced. [laughs]

    4. DC

      And, and the irony is not lost on us, friends-

    5. MS

      [laughs]

    6. DC

      ... that we are investors, so it's a-

    7. MS

      [laughs]

    8. DC

      [laughs] So it's like-

    9. MS

      Maybe for, for more time than we were founders. [laughs]

    10. DC

      So does Michael help? Poll in. No.

    11. MS

      [laughs]

    12. DC

      Okay, Michael, I think, great video.

    13. MS

      I'm taking that position.

    14. DC

      [laughs]

    15. MS

      Let's say on average. I, I'm an exception. [laughs]

    16. DC

      Okay. Other investors are bad except for me. Oh, I've never heard that before, Michael.

    17. MS

      [laughs]

    18. DC

      I've heard that one.

    19. MS

      Uh, I'm a retired investor, so I can say it. [laughs]

    20. DC

      Okay.

    21. MS

      Um, but in all honesty, um, I think you and I have experience as founders and also advising founders that there may be some misconceptions about how investors can help you and how they can't. So let's talk about it honestly. And hey, like, as a plug for the investors, maybe we should start with how they do help.

    22. DC

      Yeah, let's start with positives.

    23. MS

      Great.

    24. DC

      And again, I guess to set this up, I remember very well being a first-time founder-

    25. MS

      Yes

    26. DC

      ... and having no context on this, and I don't know, just, like, we had to figure out by intuition. Like, we knew, I knew what an investor was, and I understood the benefits of someone that gives you money-

    27. MS

      Yep

    28. DC

      ... seems good for your business, right? Like [laughs]

    29. MS

      Yep, yep, yep.

    30. DC

      But the realities of what it means for someone to help you was very abstract, and all you get really exposed to is what other founders say or what you read online. Right, man?

  3. 1:50 – 3:12

    Myths about top VCs: the ‘Jordan’ and ‘Oracle’ fantasies

    1. MS

      Well, the, this I think is the interesting point, where it's, like, the amount of what I call pop knowledge or just, like, false information about this. You know, I remember thinking, "Well, Sequoia's the best VC, so every Sequoia company's going to win," and, like, that's how that kind of works. It's like being drafted on the Bulls in '96. Like, you're just gonna- [laughs]

    2. DC

      Well, that's a great example 'cause what percentage of draft picks work out?

    3. MS

      Yeah, exactly.

    4. DC

      We forget about-

    5. MS

      E- exactly. [laughs] Exactly.

    6. DC

      Even if you're the, even if you're the best-

    7. MS

      [laughs]

    8. DC

      ... team, do all their draft picks hit?

    9. MS

      No, no.

    10. DC

      I don't think they do.

    11. MS

      This is why I think the analogy is interesting. It's like they will pull you along. Like, they're Jordan, so they will, like, they will pull you into success I think was my extremely false understanding. But I think that was almost, like, in the air. The, the other analogy that I put up is, like, the Oracle. It's like whenever Neo needed help... Oh, God, I'm talking about Matrix now, which means half the people don't know what the fuck it is.

    12. DC

      Yeah, kids don't know what The Matrix is. I'm sorry, man.

    13. MS

      Kids, watch The Matrix.

    14. DC

      [laughs]

    15. MS

      But, um, whenever Neo needed help, like, this, like, almost religious figure was there to, like, guide him on the path, and I'm like, that hasn't been my experience exactly with investors. So if we can kinda, like, break down the they're gonna do it for you or they're gonna always have the right thing to say at the right time, let's talk about what they actually do.

    16. DC

      Yeah. Let's talk about positives.

    17. MS

      Yes.

    18. DC

      Again, I like starting with positives.

    19. MS

      Positives.

  4. 3:12 – 4:04

    Investor upside #1: motivation, confidence, and permission to try

    1. DC

      So I think the number one thing, um, that investors help with in my experience is inspiration [laughs] of making you feel like you can do it-

    2. MS

      Okay

    3. DC

      ... and making you believe in yourself more, and I did have good investors like that that-

    4. MS

      Good investors do that.

    5. DC

      Yeah.

    6. MS

      Yes.

    7. DC

      Like, where you just feel fired up.

    8. MS

      Yes.

    9. DC

      And that that's actually, like-

    10. MS

      Yes

    11. DC

      ... of all the things that how a person A can help person B-

    12. MS

      Yes

    13. DC

      ... making someone feel really fired up-

    14. MS

      Yes

    15. DC

      ... and like they belong there and that they have a right to try really hard-

    16. MS

      Yes

    17. DC

      ... and giving them permission to change the world.

    18. MS

      Yes.

    19. DC

      I think that's actually awesome. [laughs]

    20. MS

      Like a coach before a big game. Yes.

    21. DC

      Yeah.

    22. MS

      I love that you started there because, like, you started with, like, what the best investors are doing when they're at their best.

    23. DC

      Yeah.

    24. MS

      I'm gonna start with what even the worst investors do.

    25. DC

      Okay. All right. [laughs]

  5. 4:04 – 6:28

    The baseline benefit: money—and the ‘top 10% investor’ bar

    1. MS

      Even the worst investors give you money. [laughs]

    2. DC

      Okay. All right, Michael. That's a, that's a classic Dalton/Michael dichotomy there. Um, yes, they do give you money.

    3. MS

      Reliably.

    4. DC

      [laughs]

    5. MS

      Not always, though. [laughs] Sometimes.

    6. DC

      Okay.

    7. MS

      They sign the paperwork, and they don't wire the money, but we can't call them investors. So let's say the minimum bar for investor is they gave you money.

    8. DC

      It's true.

    9. MS

      And I might argue-

    10. DC

      Money's good

    11. MS

      ... let's, like, in term- if we're helping people set expectations, can we say that's a win?

    12. DC

      Yeah, okay.

    13. MS

      [laughs]

    14. DC

      Just as a quick aside, um, in some of our fundraising advice for YC companies-

    15. MS

      Yes

    16. DC

      ... um, one of the shocking things we would say, where again, I, I think founders would think we were lying to them-

    17. MS

      [laughs]

    18. DC

      ... but what, what we would say is, like, "Look, an investor with a really fast process that wires the money-

    19. MS

      On good terms

    20. DC

      ... on good terms-

    21. MS

      Yeah

    22. DC

      ... and then responds to an email if you ask them a question, and otherwise you never hear from them again, that's like a 90%... That's, like, a-

    23. MS

      Yeah

    24. DC

      ... fantastic top-

    25. MS

      That's a good score

    26. DC

      ... that's top 10% investor.

    27. MS

      That's a good score.

    28. DC

      And they're like, "Wait, what are you guys saying? You mean, you mean I'm talking to these other investors, and they say they wanna get on quarterly calls and, like, weekly meetings, and they're gonna do all this strategic stuff. Are- you're saying that that's not good?" And we're like, "Well, that is exactly what we're saying."

    29. MS

      [laughs]

    30. DC

      We're saying-

  6. 6:28 – 8:06

    Honest feedback without demotivating: saying the uncomfortable thing well

    1. MS

      Yes. So, um, I think another one that an investor can do, um, aspirationally is be honest with you while not demotivating you, right? 'Cause I think that balance is so helpful. I think that being able to make sure you're excited by your startup or, like, show their excitement about your startup and your potential is incredible, but also their ability to be honest with you. Because I think that as a founder, what's tricky is how many people are worried about hurting your feelings.

    2. DC

      Yep.

    3. MS

      And how many people, you know, your employees, your co-founders, maybe your customers, like, they don't wanna say the uncomfortable thing, and I think a great investor can actually say the uncomfortable thing. I remember somebody said to us in passing in the early days of Justin.tv, uh, "Consumer hardware companies just aren't gonna work." And this is back when we were hand-building cameras, and we were re-showing investors this, like, workbench that Kyle had where he's, like, hand-soldering cameras, and we were thinking this is something to be proud of, and this person in passing was like, "That's-

    4. DC

      That's not gonna work

    5. MS

      ... this whole thing [laughs] is an anti-good thing." [laughs]

    6. DC

      [laughs]

    7. MS

      And, like, thank God they said that. Like, you know, it's like I think there's a way they could have said it that would've been really demotivating, but they actually kind of said it in a just, like, straight talk, "Guys, like, this isn't the exciting part. Um, we're excited about the software." And man, that was, that was really, really huge. So being able to get that from an investor, amazing. What else would you give?

  7. 8:06 – 9:26

    Operational perspective: best practices and learning from real ‘good companies’

    1. DC

      I think, um, a lot of good investors are plugged in to how other good companies operate.

    2. MS

      Sure.

    3. DC

      And so they can kind of level set what best practices are. And so that, this is something that we were able to do, which is like, "Hey-

    4. MS

      Yes

    5. DC

      ... um, don't do that [laughs] thing. Like, this, this idea you have is probably not best practices. We've seen this before."

    6. MS

      Yes.

    7. DC

      Um-

    8. MS

      I'm laughing because the use of the word good is so key, right?

    9. DC

      It's like, yeah. [laughs]

    10. MS

      Like a good... An investor that has seen good companies-

    11. DC

      Yes

    12. MS

      ... can give you perspective on that.

    13. DC

      That's right.

    14. MS

      They're-

    15. DC

      Otherwise, they're just making stuff up.

    16. MS

      Well, I think an unsaid s- thing is that, like, a lot of investors don't see good companies, um, especially around the world.

    17. DC

      That's actually a great question to ask an investor, is what are the best companies they have personally funded.

    18. MS

      Yeah.

    19. DC

      And to, like, ask those founders if they know who the investor is.

    20. MS

      Yeah.

    21. DC

      That's really easy due diligence. Um-

    22. MS

      You can actually start by just asking AI that.

    23. DC

      Yeah.

    24. MS

      Yeah. But yeah, yeah.

    25. DC

      But it's tricky when you talk to someone that's act- yeah, never interacted with a good company before.

    26. MS

      Yes. Yes.

    27. DC

      That is tricky.

    28. MS

      But when you're talking to people who have interacted with good, good companies, I completely agree. That's, like, a huge value add. Even if they, even if you can't take the tactics that that good company did directly, I think, like, learning those stories and maybe them introducing you to those founders-

    29. DC

      Very helpful

  8. 9:26 – 10:42

    Introductions that matter: access to founders and credible ground truth

    1. MS

      ... very helpful. And maybe this leads into the next one, which is introductions. I remember, um, when Pedro from Brex came in to speak to YC, and he had this great story, which was, "I wanted to learn the best practices of great CEOs, and so being able to get introductions to those great CEOs so that I can actually learn from them directly was a huge unlock. Was a huge unlock." And so I think that this is another area where good investors, and also, to be clear, I'd argue maybe the quality of the introductions improve as your company gets better, but introductions can be valuable, especially when that person introducing you can give you some ground truth, some actual, like, first, like, their own experience versus a summary of other people's stuff.

    2. DC

      Yeah. The, I guess one funny anecdote for, for the audience here is, like, we originally met because an investor introduced us.

    3. MS

      Yeah.

    4. DC

      They're like, "Oh, you should talk to Dalton."

    5. MS

      Yeah. Well, and it was funny-

    6. DC

      [laughs]

    7. MS

      ... 'cause I think the first time I wanted to talk to you about, like, spinoffs-

    8. DC

      That's correct

    9. MS

      ... and it was like, instead of talking to an investor about spinoffs, let's talk to someone who had just-

    10. DC

      Yeah

    11. MS

      ... done a spinoff, and you gave me, like, really good advice. [laughs]

    12. DC

      [laughs] And so that's literally how-

    13. MS

      Yeah

    14. DC

      ... we first met. That's how I met a lot of people-

    15. MS

      Exactly

    16. DC

      ... is, like, some investor in- introduced us.

    17. MS

      Yeah.

    18. DC

      So.

    19. MS

      So what's next on the ticker board for...?

  9. 10:42 – 11:53

    Calmness and confidence—and why investors who ‘need’ you can be harmful

    1. DC

      I think a good investor can be a source of not just inspiration, but calmness and confidence where they don't care too much, but they're, you can just, like, count on them. Like, again, it's, like, pretty chaotic being a founder, and having someone in your life that's really stable-

    2. MS

      Yes

    3. DC

      ... and really confident and, like-

    4. MS

      Yes

    5. DC

      ... is always just a source of strength-

    6. MS

      Yes

    7. DC

      ... feels great.

    8. MS

      Here's something counterintuitive. The more an investor needs your company to win, especially early-

    9. DC

      Amen

    10. MS

      ... the more you're gonna encounter a lot of their, like, their angst-

    11. DC

      Yeah

    12. MS

      ... will be transmitted to you.

    13. DC

      This is the issue with junior investors-

    14. MS

      Yes

    15. DC

      ... is that if their career is riding on you-

    16. MS

      Oof

    17. DC

      ... they are not gonna be a source of strength.

    18. MS

      Oof. Oof.

    19. DC

      They are going to be freaking out-

    20. MS

      Yeah. [laughs]

    21. DC

      ... constantly. They're more worried than you are.

    22. MS

      Yeah. [laughs]

    23. DC

      [laughs]

    24. MS

      'Cause it's their job. [laughs]

    25. DC

      [laughs]

    26. MS

      Yeah. They could get fired way before you would get fired. [laughs]

    27. DC

      Yeah.

    28. MS

      Um, but on the other hand, when you work with folks who, um, have experience and aren't assholes, they know startups come with ups and downs. They're not worried about their career.

    29. DC

      No.

    30. MS

      It's so nice when you talk to someone who's not worried about their career. All right. Let's flip to the side that I love.

  10. 11:53 – 13:38

    What investors can’t do: they don’t give you product-market fit

    1. DC

      Okay. So let's start with what they can't do. And again, this is something we, we, we've given this advice a lot, never in a, on YouTube, but, um-

    2. MS

      Yes

    3. DC

      ... the shocking thing-

    4. MS

      Shocking. Shock us

    5. DC

      ... is- Raising money from an investor, uh, does not mean they can help you be successful. Like, it- taking money does not imbue you with product-market fit.

    6. MS

      No.

    7. DC

      Like, it's not... The dollars don't have product-market fit on them-

    8. MS

      No, no

    9. DC

      ... and it rubs off on you, and, oh, we have product-market fit because we raised money. Again, this was always something funny about funding people for YC is I think some folks get into YC as their dream and like, "Well, once I get into YC, then I've- we made it." Like-

    10. MS

      Game on

    11. DC

      ... and it was like, we'd have to tell people, "Bad news."

    12. MS

      Yeah. You didn't make it.

    13. DC

      Yeah. [laughs]

    14. MS

      [laughs]

    15. DC

      You still have to, like, do the thing now.

    16. MS

      Yes, yes, yes.

    17. DC

      We can't just tell you how to make something people want, unfortunately. We can give you tactics, but you're kinda on your own here.

    18. MS

      You know, it was funny 'cause, um, a famous VC, Doug Leone from Sequoia, I was randomly listening to a podcast where he literally just said like finding product-market fit is a dark art. That's not something we can help with. And I remember I was like, I need to re- to, like, clip this-

    19. DC

      Clip it

    20. MS

      ... put it into Bookface in the user manual, and just be like, if... Let's call... You know, uh, easily one of the top VCs from easily one of the top funds is telling you the tru- like, is like [laughs] a moment of vulnerability telling you the truth, that they can't help you with this, maybe don't trust anyone else-

    21. DC

      Yep

    22. MS

      ... who says they can. Like, and, and I, I really appreciate you just put it out there 'cause it's like it is your responsibility. Product-market fit is your responsibility.

    23. DC

      And, and if someone seems to either explicitly say or imply they can help you get product-market fit, they are liars.

    24. MS

      Yes.

    25. DC

      Like, they, like, they're-

    26. MS

      They're selling you

    27. DC

      ... they're totally lying.

    28. MS

      Yes. [laughs]

    29. DC

      [laughs]

  11. 13:38 – 14:55

    Investors don’t know your customers better than you (for long)

    1. MS

      Yes. Well, uh, by the way, I think this extends to the next thing, which is an investor's not gonna know your customers better than you, and we-

    2. DC

      Or if they do, you're gonna-

    3. MS

      Ugh. [laughs] Tricky

    4. DC

      ... that's such a bad sign.

    5. MS

      Well, and let's say, and, and I'll caveat this, right? If you're just starting, and this is like the first check, right, and maybe you're pre-launch, then maybe your investors will a little bit. Some of them might. But I would say that, like, that runs out really fast 'cause the amount of time you spend with customers versus the time they spend with customers, no dice. And I think a lot of the best investors are more compelled by your pitch if it's painfully obvious that you know more about your customers than they do pre-launch. I remember that was always exciting at a YC interview was that if I'm learning about a problem that a customer has that I didn't understand or I didn't know about, I'm like, there's new, there's new information entering [laughs] you know? Versus if I'm sitting here and you're saying all of the interesting things about customers, and I'm like, "I've heard all of those 100 times," it's like, "Er, is there new information?" So, to me, that's like a, a- an unfortunate big one, the idea that your investor knows about the problem, knows about the customers, can guide you to-

    6. DC

      And then if they're investing in you, it means you're making something people want. Again, this is the-

    7. MS

      Yeah, yeah

    8. DC

      ... the error.

    9. MS

      Yeah.

  12. 14:55 – 18:21

    Funding the founder, not the idea: exploration, tactics, and rare great advice

    1. DC

      Again, this would happen all the time at YC, where we would fund something-

    2. MS

      Yeah

    3. DC

      ... and it would be like, "Yeah, I don't think his idea's gonna work, but we're gonna fund him anyway."

    4. MS

      Yeah.

    5. DC

      And then, unfortunately, the founder's interpretation was like, "They funded me for this idea. This idea's totally gonna work." It'd be like, "No." [laughs] Right?

    6. MS

      I, we used to say... I shouldn't say we. I don't know that you endorsed this. I used to say, "Look, there's a battlefield out there, and we know there's, like, a lot of landmines, and there's a lot of ambushes, and there are a lot of guns, and there's a lot of death. And we're gonna send you out there if you seem reason- reasonably capable, and we're gonna discover the landscape of what works [laughs] and what doesn't based on who lives and who dies." [laughs] And like-

    7. DC

      Yeah, I don't know if I endorsed that, Michael, but-

    8. MS

      [laughs] But-

    9. DC

      That's a very Michael, uh... [laughs]

    10. MS

      But I think that's how we learned, like, what the market liked, what it didn't, what the problems were, what they weren't. It, it wasn't the knowledge we were bringing in. It was the startups going out there and exploring and figuring it out, and it was all those hypotheses being tested.

    11. DC

      Yeah. Maybe my, my version of that is just we believe in you, founder, and we believe that you can do something interesting.

    12. MS

      Yes.

    13. DC

      And you have my unequivocal support. The, I'm gonna stop there. Like, you know what I'm saying? Like, it doesn't mean we believe the ideal. Like, there's always other-

    14. MS

      That's a much nicer way of saying it. [laughs]

    15. DC

      But does that make sense? We're like, "Hey, you're the person."

    16. MS

      Yes.

    17. DC

      "Go do it."

    18. MS

      Go knock it out.

    19. DC

      Um, but man, we, we have no idea how that's gonna go for you.

    20. MS

      No.

    21. DC

      We-

    22. MS

      No, no, no

    23. DC

      ... and, and-

    24. MS

      And we know it's deadly

    25. DC

      ... and don't, don't expect me to actually tell you what to do.

    26. MS

      Yeah, no.

    27. DC

      Again, sometimes it's like the, the investor that told you about making hardware.

    28. MS

      Yeah.

    29. DC

      There might be cases, like recently where there's a founder, basically they were doing some stuff with ad networks.

    30. MS

      Yeah.

  13. 18:21 – 20:31

    The ‘kingmaking’ myth: big rounds don’t make you invincible

    1. DC

      I think the biggest fake idea is around kingmaking.

    2. MS

      Yeah.

    3. DC

      And let me explain what I mean by kingmaking. I think there is a belief that if you raise money, that you become invulnerable-

    4. MS

      Mm-hmm

    5. DC

      ... and impervious to competitors or the outside world beating you.

    6. MS

      Yes.

    7. DC

      And this is an interesting thing where I think founders wanna believe it. I know I did.

    8. MS

      Yeah.

    9. DC

      I would lo- I, when I was a founder, I really wanted to believe if I raised a certain amount of money, no one could ever beat me.

    10. MS

      Invincible. Yeah.

    11. DC

      Doesn't that sound great?

    12. MS

      Yeah.

    13. DC

      Again, it's, it's an appealing idea.

    14. MS

      Yeah.

    15. DC

      And investors are aligned where they want to believe that, too.

    16. MS

      Yeah. [laughs] They want you to believe that.

    17. DC

      So there's basically no one-

    18. MS

      Yeah. [laughs] Arguing against that

    19. DC

      ... th- it's like the emperor wearing no clothes. No one's gonna be like, "Hey, guys, like, kingmaking's a fake idea."

    20. MS

      Well, the only one arguing against that-

    21. DC

      I mean, we're doing that, right?

    22. MS

      ... is the world, right? It's, [laughs] is the facts on the ground, like.

    23. DC

      Yeah. But, like, neither party wants to admit that that's a fake idea.

    24. MS

      Yes.

    25. DC

      It's inconvenient to both parties.

    26. MS

      Yes.

    27. DC

      Um, and sadly, it's a fake idea. Like, it's-

    28. MS

      Well, I remember a great story on this one. I remember talking to Brian from Airbnb when, um, they were just having some drama with the city of New York. And I remember him saying, you know, "I don't think there's another company that has b- a better set of investors, a better set of funds, better set of people on their board than we do. But, like, this is still a problem punching me in the face. This is on me. I gotta solve this." And I think that, um, it's tricky 'cause, like, the biggest problems you face, you're on the front lines.

    29. DC

      Yeah.

    30. MS

      You gotta solve them. No- no one's gonna solve them for you, especially not your investors. Never gonna solve them for you.

  14. 20:31 – 24:24

    History check and the right order: capital supports execution, not the other way around

    1. MS

      Well, and by the way, this brings up this, like, really important point, which is that if you consume all of the fundraising news but you never actually explore what happens-

    2. DC

      Yes

    3. MS

      ... you have a false impression about the number of winners there are.

    4. DC

      How many kingmaking rounds happened in 2021 and 2022 in crypto and fintech and what have you?

    5. MS

      Yeah.

    6. DC

      Lots.

    7. MS

      Lots.

    8. DC

      Again, there were some successes.

    9. MS

      Sure.

    10. DC

      But it's very hard to argue that it wasn't that the businesses themselves succeeded on the merits of the business and their quality of PMF and not, "Well, we raised a big round, therefore we won."

    11. MS

      No. No. Well, and it's interesting 'cause, like, you know, the story of DoorDash versus Uber, right? Like, Uber had more resources-

    12. DC

      Way more money

    13. MS

      ... spending more money. They had in so many investors that DoorDash really couldn't raise money 'cause all of the investors had already invested in Uber. Why didn't DoorDash pass? That w- Uber was obviously the king. It, by a-

    14. DC

      Obviously. [laughs]

    15. MS

      ... by a wide margin.

    16. DC

      Obviously.

    17. MS

      By, like, a ridiculous margin.

    18. DC

      Yes. And, and what happened? And so again, maybe some percentage of people watching this are like, "Rah, rah, rah, rah," you know, basically rejecting. They're like, "Yeah, yeah, yeah, no." And I get it because it does feel like with AI right now that so much money is being raised, and there really are these hot companies that are raising tremendous amounts of money-

    19. MS

      Yes

    20. DC

      ... and that they're of course gonna win. I just would tell you to look to history. And even if you're the biggest believer in AI, which God knows I am and we are-

    21. MS

      Yeah, yeah, yeah

    22. DC

      ... that doesn't mean that everyone that raised a lot of money is gonna succeed. It just can't. That is not how reality works. There's still gonna be a power law. There's still-

    23. MS

      Yes

    24. DC

      ... gonna be a distribution of outcomes-

    25. MS

      Yes

    26. DC

      ... no matter what stage you get at.

    27. MS

      Well, and what's so funny is that, you know, I, I grew up in the '90s, and from that perspective, there were two companies that seemed like everything, right? There was the... Especially to, like, a, a teenager. There was Microsoft, and there was AOL.

    28. DC

      Yeah, AOL was the big dog.

    29. MS

      It, like-

    30. DC

      [laughs]

Episode duration: 24:24

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