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CHAPTERS
- 0:00 – 0:24
Why Founders Shouldn't Think Like VCs
The hosts open by joking about measuring 60 times and cutting once, then frame the episode's topic: why founders shouldn't think like VCs. This sets up the question of what VC-style thinking actually is.
- •Episode topic: why founders shouldn't think like VCs
- •The hosts expect their opinion to be unsurprising
- •Opening sets up the question of how VCs are trained to think
- 0:24 – 3:05
What Thinking Like a VC Means
Dalton Caldwell explains that "VC" covers consultants, investment bankers, hedge fund and private equity staff, who are trained in market sizing, decks and large-company metrics. These tools are good for those jobs, but founders carrying them into a first idea and first customer is the problem the hosts see repeatedly.
- •VC thinking includes consulting, banking, hedge funds and private equity
- •Training centers on market sizing, PowerPoints, expert networks and market multiples
- •The tools are great for people in those jobs
- •Founders who think this way sound contrived, like an investor rather than someone with opinions and passion
- •Founders present 15-slide market decks with no traction
- 3:05 – 4:56
What Matters at the Earliest Stage
Responding to whether YC partners are VCs, Dalton says that when they invest very early, what matters is basic: does the idea make sense, do you know the space, can you build it and get customers. Trying to be smarter about markets and comps leads to mistakes, since startups pivot and take about a decade to become big.
- •YC invests very early and looks for very basic things
- •Does the idea make sense, do you know it, can you build it, can you get customers
- •Market analysis for a company that won't be big for a decade is flawed
- •Frameworks are valid but not useful for a startup with no customers or product
- 4:56 – 6:44
Why VC Thinking Is So Common Now
Michael asks what has changed to make this thinking more common. Dalton points to investors' content marketing and startup classes taught by investors rather than founders, and both argue those teach investing skills rather than founding skills.
- •Investors used to be elusive; now there is a lot of investor content marketing
- •Startup classes are often taught by non-founders and investors
- •Teaching centers on pitching, market analysis and identifying ideas from trends
- •Ask whether instructors have done the zero-to-one themselves
- 6:44 – 8:41
Do Good VCs Really Predict the Future?
Michael challenges the first-principles belief that modeling a good VC helps you pick a good idea. Dalton says great later-stage investors find companies with traction and the skill is winning the deal, so there is little founders can learn from early-stage investing until they take off.
- •Some founders assume good VCs predict the future and try to model them
- •Great investors find companies already showing product-market fit and traction
- •The skill is often getting a taking-off company to accept your money
- •Once you have a hockey stick there is much to learn from investors
- •Choosing an idea is a step before where investors engage
- 8:41 – 10:07
Fear and the Venture-Scale Anxiety
Michael describes a fear-based motive: doing analysis first to avoid a bad idea. Dalton describes founders with real problems and expertise who are paralyzed by worry that it isn't venture scale, and Michael recommends focusing on problems you know and have observed.
- •Fear of wasting time drives heavy upfront analysis
- •Some founders won't start because the idea might top out at 50 million ARR
- •Startups are high-risk, low-information, high-commitment bets regardless
- •Better to focus on areas of strength and problems you've personally observed
- 10:07 – 11:18
Chasing Positive Feedback From Investors
Michael says VC-style language and trendy ideas earn easier meetings and positive feedback, but investors often respond to things that don't work. Dalton warns about cloning whatever is raising the most money, which they have seen go badly.
- •Hot ideas and market slides get more investor meetings
- •Investor enthusiasm can be misleading since most investors bet on things that don't work
- •Following fundraising trends and cloning funded companies is a common algorithm
- •The hosts have seen that approach not go well
- 11:18 – 13:32
The Shock of Getting the First Customer
When VC-minded founders hit the real world, they find getting the first customer is humbling and hard. Dalton says people gloss over zero-to-one, and Michael notes some skip it altogether and gear up for customer 100; this is why launching quickly is advised.
- •VC tools offer little for getting customer one
- •Founders hand-wave zero to one and focus on scaling and fundraising
- •They measure 60 times, cut once, and are shocked when it fails
- •Launching quickly delivers the hard medicine early
- •Some hire and get offices before having a first customer
- 13:32 – 15:54
The StarCraft Analogy and Macro vs. Micro
Dalton compares founders to players of real-time strategy games who think the task is just scaling up. Michael adds that investors love macro, but great micro wins, and getting something off the ground requires micro. Flexport's Ryan is given as someone who shifts between both.
- •Founders treat startups like a scale-up video game
- •Macro can be done on a spreadsheet, but better micro beats it
- •No amount of macro experience makes you good at micro
- •You earn the privilege of macro by being great at micro
- •Ryan at Flexport moves between macro and micro
- 15:54 – 17:22
The Cure: Unlearning and Turning Off the Noise
Asked for the cure, Dalton recommends unlearning skills that don't serve you at the earliest stage and embracing a beginner's mind, with those skills earned back later. Michael adds turning off sources of pollution such as certain Twitter accounts and publications.
- •Unlearn spreadsheet modeling and similar skills for the early stage
- •Embrace the beginner's mind
- •You earn the right to use these skills again if successful
- •Cut inputs like Twitter accounts or publications that shape this thinking
- 17:22 – 20:36
Spend Time With Users: AI for Trucking and the Used Car Lot
Michael says spending time with users cures VC thinking since users don't care about macro. Dalton gives the "co-pilot for trucking" example of founders with no specifics, and Michael contrasts a founder who ran a used auto dealer and understands the financing problem deeply.
- •Users don't care about macro or fundraising news
- •Founders pitching AI for trucking couldn't say what they'd build
- •Deep time with trucking companies gives a different perspective than market reports
- •A former YC founder who owned a used car lot knows why earlier auto-loan approaches failed
- •Investors might dismiss such a space while insiders see a good idea
- 20:36 – 21:41
Resisting VC Thinking Gives You Superpowers
Michael says founders who resist this thinking can do things others see as silly. Dalton explains that if your idea filter matches everyone else's, you screen out the same ideas, and Michael notes successful YC stories were widely seen as bad ideas at first.
- •VC thinking has spread to a large share of founders
- •A differently calibrated filter lets you see ideas others dismiss
- •Successful YC stories were often off-trend or thought to be bad in hindsight
- •The investment community's predictive powers aren't very good
- 21:41 – 23:57
No Exit Strategy Needed: You Don't Need the Full Plan
Dalton says founders sometimes include an exit strategy slide, which he says to delete, since that makes sense for private equity or banking but not a founder choosing an idea. He argues you don't need the full plan today because it's rare for a company at 20-40 million in revenue to have no way to grow, and Michael closes with a university course-book anecdote.
- •Exit strategy slides belong to investment banking and private equity thinking
- •You don't need the full plan today
- •Companies at 20-40 million revenue with no growth ideas are extremely rare
- •Not knowing how to grow later is a problem you'd want to have
- •Michael's course-planning story: the plan became wasted work, and he hopes founders embrace the adventure
