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EVERY SPOKEN WORD
25 min read · 4,829 words- 0:00 – 0:24
Coming Up
- MSMichael Seibel
They measured 60 times, cut once. The cut didn't go well.
- DCDalton Caldwell
Now what?
- MSMichael Seibel
And some people are like, "Oh, shit."
- DCDalton Caldwell
[laughs] Do I measure 60 more times? [laughs] Like, what do I-
- MSMichael Seibel
Yeah. [gentle music] All right. This is Dolphin Plus Michael, and today we're gonna talk about why founders shouldn't think like VCs.
- DCDalton Caldwell
[laughs] Shocking.
- MSMichael Seibel
I, I would have never imagined we had this opinion. [laughs]
- DCDalton Caldwell
[laughs]
- 0:24 – 3:05
How VCs Think
- MSMichael Seibel
So maybe we should start, what is thinking like a VC? What... How does a VC... How are they trained to think?
- DCDalton Caldwell
So let's break this down. And I think to start with, when we say VC, we don't literally just mean venture capitalist.
- MSMichael Seibel
Sure.
- DCDalton Caldwell
This should include management consultants-
- MSMichael Seibel
Yes. Investment banker
- DCDalton Caldwell
... um, investment banking-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... people that work in hedge funds, people that work in private equity. There's a whole-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... host of jobs. Um, and the people in these b- jobs, they train you to do a lot of market sizing-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... to build a bunch of PowerPoints.
- MSMichael Seibel
[laughs] Yes.
- DCDalton Caldwell
Right? I mean, that's a job.
- MSMichael Seibel
Yes, yes, yes.
- DCDalton Caldwell
Um, to analyze fundraising trends, to do-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... market analysis, to read surveys about the market.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Um, again, lots of-
- MSMichael Seibel
Speak to experts. You gotta talk to-
- DCDalton Caldwell
Speak... Expert networks
- MSMichael Seibel
... gotta talk to experts, yes.
- DCDalton Caldwell
Um, you pay a lot of attention to the stock market, uh, market multiples, other things happening in the M&A market. It's, it's an entire framework of thinking, um, of small companies as if they were big companies, and using-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... these large company metrics and analysis to apply to them.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And to be clear for this video, if you're in those industries, this is a great way to think. We in no way are suggesting-
- MSMichael Seibel
These are bad tools.
- DCDalton Caldwell
Yeah, these are great tools.
- 3:05 – 4:56
What Matters
- MSMichael Seibel
So everyone listening has gotta ask, well, aren't we VCs?
- DCDalton Caldwell
Yep.
- MSMichael Seibel
Right? Like, isn't this how a YC partner would think when reading applications, collecting interviews?
- DCDalton Caldwell
I think that's an excellent point. Here's the facts. When we are reading applications and doing interviews, we are investing very, very, very early.
- MSMichael Seibel
Yes. [laughs]
- DCDalton Caldwell
And we have been trained on what matters and what doesn't matter. And so let's be real. What matters is, does your idea make any sense?
- MSMichael Seibel
Yeah. [laughs] Any sense whatsoever.
- DCDalton Caldwell
Do you know anything about it?
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Do you have the tech skills to build the thing?
- MSMichael Seibel
Or anything. [laughs]
- DCDalton Caldwell
Anything, basically.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And can you get any customers?
- MSMichael Seibel
Yes.
- DCDalton Caldwell
It's almost... It's so basic, it shocks people.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
What we are looking for is very basic stuff.
- MSMichael Seibel
Well, and I think what's interesting is that when we try to be smarter, we make mistakes.
- DCDalton Caldwell
Correct.
- MSMichael Seibel
When we try to be smart about markets, or when we try to be smart about comps, we make mistakes, 'cause one, we haven't studied those markets closely.
- DCDalton Caldwell
Yes.
- MSMichael Seibel
And two, because startups change. They pivot. They find new opportunities. Technology changes. Time changes.
- DCDalton Caldwell
Well, think about it. When we make an investment, often it does, does not become a big company for at least 10 years.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And so if you're trying to-
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
... to do market analysis and market trends for an investment that won't become big for a decade later, it's kind of flawed analysis.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Versus if you're doing analysis of pu- you know, uh, new IPOs coming-
- 4:56 – 6:41
What's Changed
- MSMichael Seibel
So why do founders do this? Like, what's going on in a founder's head that gets them to think, "This is how I should assess an opportunity. This is how I should figure out whether I work on this idea or not"-
- DCDalton Caldwell
Yep
- MSMichael Seibel
... "is using these tools"? What's changed? Why is this far more common now?
- DCDalton Caldwell
Well, something I noticed, um, [clears throat] when we were founders is there wasn't access into the mind of investors very much.
- MSMichael Seibel
No. [laughs] A lot of their appeal was how elusive they were.
- DCDalton Caldwell
Right.
- MSMichael Seibel
Like, behind closed doors.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
You had to be special to even get access to them.
- DCDalton Caldwell
And, and so a funny thing that has happened is there's now so much content marketing from investors. Again, not necessarily bad, and again-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... we are acknowledging this is a form of marketing. [laughs]
- MSMichael Seibel
Of course, yeah, yeah.
- DCDalton Caldwell
Of course.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Um, but you now hear a lot more about, um, market analysis and market opportunities.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
In addition, there's all of these things for college students and post-college of programs-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... or-
- MSMichael Seibel
Startup classes
- DCDalton Caldwell
... startup classes, and they tend to be taught by non-founders. They tend to be taught by investors.
- MSMichael Seibel
Yep.
- DCDalton Caldwell
And a lot of what you learn is about how to pitch, how to do market analysis-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... how to identify ideas via market trends.
- MSMichael Seibel
What's a good idea?
- DCDalton Caldwell
Right. And so if you go to classes at your university or-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... you know, wherever you're encountering this stuff, if the folk- You should ask yourself, if the folks teaching this have not had much actual startup experience where they were the founder who had to do the zero to one-
- 6:41 – 8:41
First Principles
- MSMichael Seibel
I also think, though, that there's another way I see a lot of founders attacking this. A lot of founders just think this way from first principles, good VCs pick good companies and can predict the future.
- DCDalton Caldwell
Yep.
- MSMichael Seibel
If I can model a good VC in my head, I will pick a good idea and increase the likelihood of winning. And it's interesting to me 'cause I think that, like, this is sometimes what I hate about first principles arguments, is that like, sure, if you say it that way-
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
[laughs] It would make sense. H- do you think that's what good VCs really do? [laughs]
- DCDalton Caldwell
[laughs] Yeah. I mean, I, I think, look, to be really direct on that-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... what do I think great investors do, especially later stage than what Y Combinator is?
- MSMichael Seibel
Yes.
- DCDalton Caldwell
It's they find companies that have product market fit-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... that are taking off-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... that have incredible traction-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... and they try to find them and invest in them.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And that's the job.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Just like, in a lot of these other M&A-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... all these other types of finance jobs-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... it's usually you find the thing that's making lots of money, that's doing really well, and then you glom onto it [laughs]
- MSMichael Seibel
Whoa
- DCDalton Caldwell
... and attach yourself to it.
- MSMichael Seibel
And the skill is often getting the thing taking off to take your money versus someone else's money.
- DCDalton Caldwell
Yes.
- MSMichael Seibel
Not picking amongst things that haven't launched yet and having theses about why one's gonna do better than the other.
- DCDalton Caldwell
Exactly.
- 8:41 – 10:06
Fear
- MSMichael Seibel
there. I think there's another thing going on, too, which is fear-based, right? Like, I know that if I choose a bad idea, I'm gonna waste a lot of time.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
Shouldn't I do all of this analysis first to make sure I don't choo- to make sure-
- DCDalton Caldwell
Yeah
- MSMichael Seibel
... I don't choose a bad idea, right?
- DCDalton Caldwell
Yeah, we see this a lot, where there's companies that find real problems and something they're experts in, but they are facing crippling anxiety-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... that it's not venture scale.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And they might be right.
- MSMichael Seibel
It's, yeah.
- DCDalton Caldwell
But they're so obsessed with this way of thinking that, oh, what if this tops out at 50 million ARR? Gee.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Can't... I'm just not even gonna start a company. I'm gonna stay doing, you know, I'm gonna stay at my job because the idea I have will top out at 50 million in revenue.
- MSMichael Seibel
Yeah. Eh. [laughs] I, I think it's tricky 'cause I think that we have to admit in the startup game, you're going after, like, a high-risk, low-information, and high-commitment bet, and there aren't moves to change those core things, right? Like, yeah, you can invest on the margin, but it's still gonna be high risk, high commitment, and a long-term bet.
- DCDalton Caldwell
Yep.
- MSMichael Seibel
And so I think we would argue it's better to kind of focus on areas of your strength, areas that you know well. [laughs] Like, that's where you can-
- DCDalton Caldwell
Problems that you know a lot about, that you personally observed
- MSMichael Seibel
... observed. Maybe you've solved, even-
- DCDalton Caldwell
Yep
- MSMichael Seibel
... on a small scale.
- DCDalton Caldwell
As opposed to, like, let me get the VC toolbox out to try to judge which idea
- 10:06 – 11:18
Positive Feedback
- DCDalton Caldwell
is good.
- MSMichael Seibel
I think the last thing that I see a lot is that when you think like a VC, it is easier to get positive feedback from VCs. You know, when you talk, when you pick an idea because it's the hot thing on Twitter, it's easier to get meetings.
- DCDalton Caldwell
Yep.
- MSMichael Seibel
When you talk about companies using VC language, when you show some market slide that says this market is-
- DCDalton Caldwell
Yep
- MSMichael Seibel
... da, da, da, right? Like, investors are responding to that, and I think that's confusing to founders because, I mean, investors can respond to things that aren't good.
- DCDalton Caldwell
Yes.
- MSMichael Seibel
In fact, wouldn't we say that's most of what they're respon- Like, that's our job, is like most investors bet on things that don't work.
- DCDalton Caldwell
Yeah. I mean, that is the job.
- MSMichael Seibel
[laughs] Yeah.
- DCDalton Caldwell
And, and again, one way to detect this is that you spend all your time paying attention to fundraising trends.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And the way you come up with a startup idea is to read what is raising money and then clone the thing that is raising the most money.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And that's the algorithm. [laughs] And then-
- MSMichael Seibel
Maybe raise some money, and then, then what? [laughs]
- DCDalton Caldwell
Yeah. Like, that's, that is an algorithm we see a lot from this type of thinking-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... which is all of these companies raise money, I'm gonna do it, too. And we're just suggesting we've seen that not go well a lot of the time.
- 11:18 – 12:56
First Customers
- MSMichael Seibel
I think, uh, this brings up the next topic perfectly. So like, all right, I, uh, what happens when founders think like VCs and then encounter the real world?
- DCDalton Caldwell
Yep.
- MSMichael Seibel
So you did your analysis. You've done your validation. There's a big market opportunity. It's on trend. VCs are gonna like it. I'm all lined up, but now I gotta get my first customer.
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
Uh-oh. What's the, what's the VC investor toolbox for getting customer one?
- DCDalton Caldwell
Uh. [laughs]
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
This is, it's very humbling. And again, if we were to, if we were to start a startup-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... we know, like the first thing I would admit-
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
... is that no matter what I know from investing in startups, that does not mean getting first customers is gonna be easy for me or for Michael-
- MSMichael Seibel
Nope
- DCDalton Caldwell
... or for anyone.
- MSMichael Seibel
Nope.
- DCDalton Caldwell
It is freaking hard.
- MSMichael Seibel
Yep.
- DCDalton Caldwell
[laughs] And this zero to one ... is always the trap, it's the bear trap that people run into-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... that they're like, they're already focused on scaling the company and-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... raising money, um, and they're like kinda like glossing over or being hand-wavy on how hard it is to get first customers. Like, "Yeah, we're gonna build our first version. We're gonna launch it, and then we're gonna be growing, and then, you know."
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And then they launch it, and it doesn't go well.
- MSMichael Seibel
No.
- DCDalton Caldwell
And people are just-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... shocked.
- MSMichael Seibel
It's funny. It's like they measured 60 times, cut once. The cut didn't go well, and suddenly-
- DCDalton Caldwell
Now what?
- 12:56 – 14:19
Scaling
- MSMichael Seibel
I think we also see when founders have this mentality, some will kind of engage in the 0 to 1 and kinda fail and like kinda live in that zone. I see a lot not even engaging in the 0 to 1. Like, you know, they're hiring a bunch of people, getting an office. Like, they almost forget they have to get the first customer, and they start gearing up for customer 100.
- DCDalton Caldwell
Well, but it's because if your market analysis is perfect, it's impossible that the customers-
- MSMichael Seibel
Right
- DCDalton Caldwell
... won't want it, right?
- MSMichael Seibel
It's a foregone conclu-
- DCDalton Caldwell
Like, the first customer's [laughs] a foregone...
- MSMichael Seibel
What's, the real problem is how do we scale? [laughs]
- DCDalton Caldwell
Yeah. I'm much more worried about that.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
So I think it's funny, you described a, I, I, I like this analogy, like the, the StarCraft analogy. What, what's this analogy?
- DCDalton Caldwell
Yeah. It's kind of like we've all played real-time strategy games-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... like StarCraft or, or what have you. And when you're playing one of those games, you're just like, "Okay. Ooh, need more pylons. Okay, cool."
- MSMichael Seibel
Yes.
- DCDalton Caldwell
"Let's, let's build some siege tanks over here." You're basically-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... playing a video game. It's just a, you've gotta scale the thing up-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... as quickly as possible. There's not like a version of StarCraft where, you know, you try to build the base and it doesn't work. [laughs]
- MSMichael Seibel
[laughs] Yeah.
- DCDalton Caldwell
Or like your units all just, like, die or so- I don't know.
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
Like, it's, that, it's a different game.
- MSMichael Seibel
It's different.
- DCDalton Caldwell
And so I think people are playing this, like, ramp-up scale game-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... pr- and they feel like they're playing a video game.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And again, they're completely shocked how hard it is to get it off the ground. It is really different than what people expect.
- 14:19 – 15:54
Macro Vs. Micro
- MSMichael Seibel
Yeah, it's funny. When I was playing StarCraft way back in the day, like, people would always talk about macro versus micro.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
And I feel as though investors love macro.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
Macro you can do on an Excel spreadsheet.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
What's your build order? Like, what's your tech tree? Da da da da. And I remember, like, you can macro like a motherfucker, and then when you have three guys versus the other guy's three guys and they're better at micro than you-
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
... you just lose. Like, you just lose. [laughs] Just like, you just lose. And my, I would have friends who were so good at StarCraft, like, they would just play me crippled and still destroy me. [laughs]
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
And, uh, uh, it works the same way here, right? Like-
- DCDalton Caldwell
And I think that's a great point.
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
We're, if you engage with this metaphor, we're talking about micro.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
You've gotta be great at micro to get something off the ground.
- MSMichael Seibel
Right.
- DCDalton Caldwell
And-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... and no amount of macro experience helps-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... you be good at micro.
- MSMichael Seibel
I think you start being great at micro to earn the privilege of doing macro at all. And then how many CEOs do we find who still sermon on the road? They're like, "Oh, crap. I gotta get into that product 'cause it's something's broken. I gotta go six levels down and fix something 'cause like-"
- DCDalton Caldwell
Well, it, I, I would compare it to, you know, I think a lot of people would love to be Ryan from Flexport where-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... he was buying a 747.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
He's buying jets-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... and, like, moving stuff all over the world.
- 15:54 – 17:22
Unlearning
- MSMichael Seibel
So what's the cure, Dalton? I am a founder. I admit I'm thinking like a BC and I don't want to. What is the cure?
- DCDalton Caldwell
I think to start with, this is a case of being good at unlearning certain things that may not serve you at a, at a certain time. Again, let me give you an example.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Let's say that someone worked at a big company for a while and learned a lot about corporate politics.
- MSMichael Seibel
[laughs] So-
- DCDalton Caldwell
Okay. File that away in the memory bank.
- MSMichael Seibel
Sure.
- DCDalton Caldwell
Maybe someday that will be helpful.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
But like, forget it.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Part- like, whatever part of your brain was saving that, turn off those neurons-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... if you're trying to do a very early stage startup.
- MSMichael Seibel
Yep.
- DCDalton Caldwell
I would argue this is a similar thing, which is all, you know, all the Excel spreadsheet modeling you learned as an investment banker, that's great. Just turn that off, though. Like-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... unlearn that. Doesn't serve you now.
- MSMichael Seibel
Nope.
- DCDalton Caldwell
And then, and embrace the beginner's mind-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... um, to get your startup off the ground.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And then if you're very successful, you'll use these skills again. They just-
- MSMichael Seibel
Exactly
- DCDalton Caldwell
... aren't super relevant now.
- MSMichael Seibel
You'll earn the right. You'll earn the right to use them.
- DCDalton Caldwell
Exactly.
- MSMichael Seibel
Yeah. Now, I also think about this as like turn off the pollution. Like, whatever the sources of knowledge that, like, you know, diagnose why you started thinking this way, and if that means, like, unfollowing some people on Twitter or not reading certain publications, like, do it. We're susceptible to the inputs that come to our mind, and, like, the easiest way we do this is turn that media off.
- 17:22 – 20:36
Time With Users
- MSMichael Seibel
I also think spending time with your users is a cure for this because your users don't care about macro at all.
- DCDalton Caldwell
No.
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
If you're, if you're solving a problem for some industry, they probably don't care about the fundraising announcements-
- MSMichael Seibel
Nope
- DCDalton Caldwell
... in AI land. Again, let me, let me give a concrete example. There's lots of people applying to YC with co-pilot for X ideas. You know, co-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... we're gonna do co-pilot for trucking.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And they'll, and then the mar- they'll be like, "We did market analysis. AI is really big, and it's growing really fast. Oh, and gee-"
- MSMichael Seibel
And trucking's really big. [laughs]
- DCDalton Caldwell
"... and trucking's really big and growing fast. And so what we're gonna do is build AI for trucking."
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Fund us. [laughs]
- MSMichael Seibel
[laughs] Yes.
- DCDalton Caldwell
And then, and then it, it's like, okay, well, what exactly-
- MSMichael Seibel
What is that?
- DCDalton Caldwell
... w- be specific. What exactly are you gonna build for AI for trucking?
- MSMichael Seibel
Yeah. Well, we'll talk-
- DCDalton Caldwell
Let me get back to you today [laughs]
- MSMichael Seibel
Yeah, yeah.
- DCDalton Caldwell
Like-
- MSMichael Seibel
We'll talk to the trucking companies and figure out what they need.
- DCDalton Caldwell
Yeah. It's like the p-
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
Asking the founder of the precise, exact thing they're gonna build, they hadn't thought that far ahead. They, it's-
- MSMichael Seibel
No
- DCDalton Caldwell
... 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-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... when we ask these questions.
- 20:36 – 21:42
Superpowers
- MSMichael Seibel
So anyways, I think that, um, 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-
- DCDalton Caldwell
Yep
- MSMichael Seibel
... of founders.
- DCDalton Caldwell
Yes.
- MSMichael Seibel
And so you actually get to do things other founders would think would be silly.
- DCDalton Caldwell
Yeah. They're, it's like everyone has a filter for what seems like a good idea or not.
- MSMichael Seibel
Yeah. Yeah. [laughs]
- DCDalton Caldwell
And if your filter is exactly the same as everyone else's, you're all gonna be screening out the same ideas, right?
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
But if your filter is calibrated differently, you will see things-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... that other people have decided is bad.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
Right? [laughs]
- MSMichael Seibel
Well, I think that's what's so funny, is because that's the sh- 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, it was a bad model.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
It was a bad space. The market wasn't big enough, whatever. And lo and behold, 10 years later, our predictive powers [laughs] of, of the investment community aren't very good. So anyways, I think that if you don't fall for this trap, you get superpowers.
- DCDalton Caldwell
Yeah.
- MSMichael Seibel
But you fall.
- DCDalton Caldwell
And,
- 21:42 – 23:57
No Exit Strategy
- DCDalton Caldwell
and I think there's one more really important point I wanna make on this.
- MSMichael Seibel
Mm-hmm.
- DCDalton Caldwell
Which is, we're trained to wanna have the entire plan worked out.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And remember, this is something that-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... sometimes founders do, is they're like, they'll put a slide in their slide deck of exit strategy.
- MSMichael Seibel
Oh.
- DCDalton Caldwell
Like, basically-
- MSMichael Seibel
Oh
- DCDalton Caldwell
... when they're trying to choose what idea to work on-
- MSMichael Seibel
Yeah
- DCDalton Caldwell
... they're, they wanna include-
- MSMichael Seibel
Well, we know who's gonna buy us.
- DCDalton Caldwell
The, who-
- MSMichael Seibel
Yeah, yeah. [laughs]
- DCDalton Caldwell
What, [laughs] that they're gonna sell the company and for how much and to who.
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And of course, delete that slide.
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
Like, oh my God, like are you kidding me?
- MSMichael Seibel
Yes.
- DCDalton Caldwell
And, and the point I'm trying to make here is if you think like an investment banker, you do need to think about a-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... exit strategy. If you're a private equity company, you're buying a-
- MSMichael Seibel
You better
- DCDalton Caldwell
... mattress company.
- MSMichael Seibel
For hundreds of million dollars. [laughs]
- DCDalton Caldwell
You definitely wanna have an exit strategy slide.
- MSMichael Seibel
Yes. Yes.
Episode duration: 23:57
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Transcript of episode SMi3JO-hsyY
