Why Investors Can’t Fix Your Company – Dalton Caldwell and Michael Seibel

1. 0:00 – 1:56

   Why investors including YC can't fix their company?

   1. MSMichael Seibel0:00

      Hey, Dalton. You're pre-product market fit. Do you have five-year financial projections?

   2. DCDalton Caldwell0:04

      That's a great example of that.

   3. MSMichael Seibel0:05

      [laughs]

   4. DCDalton Caldwell0:06

      Financial projections may be a good idea later stage-

   5. MSMichael Seibel0:09

      Yes

   6. DCDalton Caldwell0:09

      ... but to even ask me if I had financial projections, I was like, "What's a financial project?" [laughs]

   7. MSMichael Seibel0:15

      This is Michael Seibel with Dalton Caldwell, and today we're gonna talk about why investors, including YC, can't fix your company.

   8. DCDalton Caldwell0:24

      For some folks, it's like telling them that Santa Claus isn't real, you know? And you're 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." [laughs]

   9. MSMichael Seibel0:45

      Yes. Yes.

   10. DCDalton Caldwell0:46

       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.

   11. MSMichael Seibel0:58

       What, what's unfortunate is that there are a lot of investors out there who aren't former founders, right? Who haven't really, um, lived these mistakes themselves. And so-

   12. DCDalton Caldwell1:09

       Yeah, if you haven't been humbled by having a crappy startup like we did, that failed a lot, like we did-

   13. MSMichael Seibel1:16

       Yes

   14. DCDalton Caldwell1:16

       ... um, [laughs] it's easy to sort of, like, think you're hot shit.

   15. MSMichael Seibel1:23

       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 was giving this advice because I see what you're doing now, and, like, this matches one to one. So one of the most common, um, types of investors is the

2. 1:56 – 2:33

   Investor with the finance background

   1. MSMichael Seibel1:56

      investor with a finance background, someone who's, like, never run a company, never operated a company, p- pure finance.

   2. DCDalton Caldwell2:01

      When all you have is a hammer, everything's a nail. And so if what you know is money, the solutions usually involve money.

   3. MSMichael Seibel2:08

      Yeah.

   4. DCDalton Caldwell2:08

      So raising more money, spending more money, throwing money at the problem, right?

   5. MSMichael Seibel2:13

      Hey, Dalton. You're pre-product market fit. Do you have five-year financial projections?

   6. DCDalton Caldwell2:18

      That's a great example of that.

   7. MSMichael Seibel2:19

      [laughs]

   8. DCDalton Caldwell2:20

      Financial projections may be a good idea later stage-

   9. MSMichael Seibel2:22

      Yes

   10. DCDalton Caldwell2:23

       ... but to even ask me if I had financial projections, I was like, "What's a financial project?" [laughs]

   11. MSMichael Seibel2:29

       Yeah.

   12. DCDalton Caldwell2:29

       Like, Michael, how, how many years into your startup did you learn

3. 2:33 – 4:14

   Balance Sheet

   1. DCDalton Caldwell2:33

      what a balance sheet and shit was?

   2. MSMichael Seibel2:36

      Long time. Actually-

   3. DCDalton Caldwell2:37

      [laughs]

   4. MSMichael Seibel2:37

      And I resisted it. I resisted it. Our COO, Kevin, was like, "This is important for you to learn." And I'm like, "You know what's important for us to learn? How not to lose money every month before we die." [laughs] Like-

   5. DCDalton Caldwell2:47

      Sure

   6. MSMichael Seibel2:47

      ... and the balance sheet is not really telling us that. It's, um, it's that we make no money, and we spend money, so that's what's... [laughs] That's what the problem is.

   7. DCDalton Caldwell2:55

      And, and so again-

   8. MSMichael Seibel2:55

      You know, I-

   9. DCDalton Caldwell2:55

      For these folks, I get it, right? You, you spend time in spreadsheets, especially if you're doing stock market investing or private equity investing.

   10. MSMichael Seibel3:03

       Yeah.

   11. DCDalton Caldwell3:03

       It makes sense that your weapon is money, and you move money around to... That's your leverage point. That's your point of leverage. What's the downside of, of internalizing that too much, man?

   12. MSMichael Seibel3:13

       I mean, we see this all the time, which is, like, scaling negative econo- economics or spending a ton of money on advertising with ever, ever worse, um, payback periods or no payback period ever. Um, it's really, like, getting people to work on things that are not making their product good.

   13. DCDalton Caldwell3:34

       Yeah.

   14. MSMichael Seibel3:34

       And I think what's-

   15. DCDalton Caldwell3:34

       Remember Patrick Collison was talking about this when he came to speak at a batch recently, where he's like, "Listen, let me be, let me be blunt. Too many founders treat product as an afterthought."

   16. MSMichael Seibel3:46

       Yeah.

   17. DCDalton Caldwell3:46

       They're basically trying to do financial engineering, and the product is, like, delegated.

   18. MSMichael Seibel3:52

       I think what's also tricky is that, like, this strategy a- isn't always wrong. Like-

   19. DCDalton Caldwell3:57

       True

   20. MSMichael Seibel3:57

       ... for successful companies, there is usually a point where throwing money at it is a good idea. It's just kind of knowing when to give that advice and when not to.

   21. DCDalton Caldwell4:06

       Yeah.

   22. MSMichael Seibel4:06

       It's when you always give that advice is when things get really tricky. All right. Here, here's the second type that's, that's common in the investing world, the

4. 4:14 – 5:37

   Big Company Exec

   1. MSMichael Seibel4:14

      Big Company Exec. Um, the person who's, you know, seen, seen companies at 1,000-plus people and have a lot of experience and have done, like, great work in those companies and now become investors.

   2. DCDalton Caldwell4:25

      Folks with Big Tech experience are really great at taking a successful product and scaling it further-

   3. MSMichael Seibel4:32

      Yeah

   4. DCDalton Caldwell4:32

      ... 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, our friend and colleague, Paul Buchheit, you know, number 18 at Google, had... was, like, the king of dirty hacks. [laughs]

   5. MSMichael Seibel4:55

      [laughs]

   6. DCDalton Caldwell4:56

      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-

   7. MSMichael Seibel5:09

      Yeah. Uh-huh

   8. DCDalton Caldwell5:09

      ... but the, the tactics that they brought to bear when you were employee number 1,000 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 a process. It looks more like scaling up hiring and-

   9. MSMichael Seibel5:26

      Yes

   10. DCDalton Caldwell5:26

       ... kind of sometimes taking for granted that getting any users at all is, um, really hard. [laughs]

   11. MSMichael Seibel5:33

       Yeah.

   12. DCDalton Caldwell5:33

       Like, I talked to, about folks a lot about this in the batch, man. Like,

5. 5:37 – 8:01

   What does failure look like for a lot of our companies?

   1. DCDalton Caldwell5:37

      what failure usually looks like for a lot of our companies is they get zero real customers.

   2. MSMichael Seibel5:42

      Yeah. Yes.

   3. DCDalton Caldwell5:43

      Zero. It's not that the failure was they couldn't get a series A, it's that they just, like, bombed, like complete disaster. And so if you have too much of this-

   4. MSMichael Seibel5:52

      Yes

   5. DCDalton Caldwell5:52

      ... mentality of, like, big company PM, it doesn't even occur to you that you can fail that badly. [laughs]

   6. MSMichael Seibel5:59

      Yeah.

   7. DCDalton Caldwell5:59

      What do you think?

   8. MSMichael Seibel5:59

      I think it's tricky because- All too often, this group of folks are giving founders the advice of hiring executives before product market fit. It's like, "You need to build up the company." It's like, "Marketing doesn't work. We need a marketing executive." Like, like, um, "The, the engineering team isn't productive enough. We need a VP of engineering." And, and more often than not in this pre-product market fit phase, the mistake is that there's the wrong person in the company, not there aren't enough people. The mistake is like, you've got an engineer that no one wants to work with, or no one's measuring any of the marketing results, right? It's like those are the mistakes, not like you don't have a department for it or an executive to run it.

   9. DCDalton Caldwell6:42

      Mm-hmm.

   10. MSMichael Seibel6:43

       Um, whereas, you know, we go right back to the first one, right? When a company is scaling and growing, post-product market fit, like hiring more people is essential. So like once again, we get this weird dichotomy where it's like-

   11. DCDalton Caldwell6:56

       Yeah, think, think about the zero to one... Think about the first five employees of Facebook and the first five employees of Instagram before, when it was a startup, before they got acquired, the first five employees of YouTube when it was a startup before it got acquired, versus the really awesome people post-acquisition who had to step in and scale that thing. Those people are awesome.

   12. MSMichael Seibel7:15

       Yeah.

   13. DCDalton Caldwell7:15

       Hallelujah.

   14. MSMichael Seibel7:16

       Yes, yes.

   15. DCDalton Caldwell7:16

       They're super valuable, and if they weren't around on the, in the zero to one stage, uh, watch out. You get what I'm saying?

   16. MSMichael Seibel7:26

       Yeah.

   17. DCDalton Caldwell7:26

       Like, like it's a very different muscle to build scaling Instagram post-acquisition if you were on that team than being-

   18. MSMichael Seibel7:34

       Yes

   19. DCDalton Caldwell7:34

       ... getting the first 100 users when you were the founder of Instagram, right?

   20. MSMichael Seibel7:39

       Very.

   21. DCDalton Caldwell7:39

       And there's a whole lot more... Actually, supply and demand, there's so many more people that helped scale Instagram than there are people that founded Instagram.

   22. MSMichael Seibel7:46

       Yep.

   23. DCDalton Caldwell7:47

       Right? There's just lots... So there's, uh, there's lots of folks that have lots of experience scaling products, and it's f- you just don't meet as many that are, that did the zero to one.

   24. MSMichael Seibel7:57

       Yeah. So the next category is the s- successful

6. 8:01 – 9:49

   Successful entrepreneur in non-tech

   1. MSMichael Seibel8:01

      entrepreneur in the non, in a non-tech industry. And, and this is really comm- this is really common internationally in like new founder ecosystems where like the people funding them maybe didn't make their money in tech. What's the common kind of advice given here?

   2. DCDalton Caldwell8:18

      Yeah, this one's tricky, um, where if someone made all their money investing in real estate or in strip malls or franchise- McDonald's franchises or something, like just something that is not remotely a tech startup, they will often ask for crazy terms that would make sense if they were investing in like a franchise store. Um, they may ask for more control, and they may be really stressed out all the time that you're going to lose their money. And so a lot of the trickiest investors, is a nice way to say it, that I've seen, um, the, the YC founders are like, "Oh, why did I take their money?" It'll just be someone who's totally well-meaning, but they treat this like an investment in a Subway franchise, and that you're the manager of the Subway franchise, and they're gonna call you and l- yell at you [laughs] or something-

   3. MSMichael Seibel9:03

      Yeah, yeah

   4. DCDalton Caldwell9:04

      ... that you're gonna lose their money as opposed to letting you do your tech startup.

   5. MSMichael Seibel9:08

      And, and that's really just like... They really g- these folks are like y- you can't be mad at them. They're just taking the principles that they learned to make their money and applying them to a different industry, right? And it's like-

   6. DCDalton Caldwell9:21

      Totally

   7. MSMichael Seibel9:22

      ... in some ways these are people you can be mad at the least because it's like at least they're, they were successful themselves, and they're like taking things that work for them, right? Like, they're not reading this shit on Twitter. Um, but it is tricky because like, I think what we've learned is that industries are just different, is like, you know, maybe there's some common principles, but like in general, software companies look really different than a lot of other companies out there. So, all right, here's the next investor type,

7. 9:49 – 12:25

   Junior investor

   1. MSMichael Seibel9:49

      the junior investor, the person who just got started, looking to make a name for themselves, still early in their career, oftentimes, um, having to really have a win pretty quickly to, to cement themselves in this career. Um, what's the most common type of advice these, these people give?

   2. DCDalton Caldwell10:07

      Yeah, I think this one is tricky. I think a good mental model is to put yourself in their shoes. I think when you're a new investor or you're newly hired at your job, you're not in a position of power inside of the place that you work, or you're not in a position of power with your investors 'cause they went and raised money from someone else. And so to show weakness or to like screw up their first few investments is very bad for their career, and we know lots of people that basically don't last in the industry because their first investments were bad. Like, it's kind of career suicide to become an investor, not have any other track record, and then make some bad investments.

   3. MSMichael Seibel10:46

      Yeah.

   4. DCDalton Caldwell10:46

      Like, you're not gonna make it, okay? And so basically, these folks are very optimistic [laughs] that it's gonna work, that you're gonna make it work.

   5. MSMichael Seibel10:55

      Yes.

   6. DCDalton Caldwell10:55

      That you should totally go raise more money-

   7. MSMichael Seibel10:57

      Yes

   8. DCDalton Caldwell10:58

      ... because their, their KPI is that if you raise money and they can mark up their investment, it makes them look good, so they can go tell their colleagues or their, their investors, "Hey, I invested in this company, and it went on to raise more money at a better valuation than I invested at. I'm really smart."

   9. MSMichael Seibel11:11

      Working, yeah.

   10. DCDalton Caldwell11:12

       Right?

   11. MSMichael Seibel11:13

       Yeah.

   12. DCDalton Caldwell11:13

       And so the thing to understand is that's their KPI, and so in your interactions with them, they will often just really encourage you to fundraise and to keep doing that a lot, and that everything's working great, and you do have product market fit, and you should scale faster.

   13. MSMichael Seibel11:28

       Yeah. Got it.

   14. DCDalton Caldwell11:29

       Right?

   15. MSMichael Seibel11:31

       And, and it's interesting 'cause another example of the like, they're not trying to hurt your company.

   16. DCDalton Caldwell11:39

       No, they're good.

   17. MSMichael Seibel11:39

       Like in many ways-

   18. DCDalton Caldwell11:40

       They're good people. They're nice people

   19. MSMichael Seibel11:41

       ... yeah, in many ways, they're like some amongst the biggest cheerleaders for your company. It's just that like your company at this stage probably has some really broken shit that has to be dealt with. And so unfortunately, it's harder for them to kind of go and spend the time in the dirt with you on that stuff 'cause it's gonna kind of break their illusion. And, um, hey, you know, it's, it's, it is what it is, like.

   20. DCDalton Caldwell12:04

       Well, and it's, it's rough. Like if you are a company where it doesn't make sense to raise for a very long amount of time- It may be the right thing that you wanna do, but may not be great for them if their whole thing is to prove that they're great investors really fast-

   21. MSMichael Seibel12:18

       Yeah

   22. DCDalton Caldwell12:18

       ... so that they can-

   23. MSMichael Seibel12:19

       Yeah

   24. DCDalton Caldwell12:19

       ... keep their jobs.

   25. MSMichael Seibel12:22

       So the next category investor we see a lot is

8. 12:25 – 12:58

   Influencer / Famous person

   1. MSMichael Seibel12:25

      the influencer/famous person. Um, what do you... When I think about this kind of person, this is the person that would come to a YC demo day, and everyone would freak out to get them on their cap table.

   2. DCDalton Caldwell12:37

      Yeah, celebrities.

   3. MSMichael Seibel12:37

      It's like they just... Yeah, they just get, you know, infinite access. Um, how do you think that they try to help founders who are, who are struggling?

   4. DCDalton Caldwell12:47

      Yeah, well-

   5. MSMichael Seibel12:47

      What's their-

   6. DCDalton Caldwell12:48

      I, I think that you really understand distribution if you're an influencer because that's your game, is building up your distribution network, which you can monetize

9. 12:58 – 14:25

   What is the advice that founders get from other entrepreneurs?

   1. DCDalton Caldwell12:58

      a bunch of different ways, right? If you have a million, you know, Instagram followers or a million TikTok followers, you can make money off that, and you get it. You're savvy. And so I think these people are very savvy, and realize they can kind of treat startups like other ad deals of being like, "Give me some stuff, and I'll promote you." And so a lot of times, these folks will, like, ask for advisor shares, or they'll ask... They'll just ask for things, and again, they've been... That's how they got big. They're g- You know, they know [laughs] They know what they're doing. Um, and it can be so tempting to do it, to think that, like, celebrities tweeting about your thing is gonna fix all your distribution problems, and, like, maybe in some cases they do, but most of my experience, both personally and with founders in YC, is that founders kind of feel like they got a raw deal on these, and that the, the clicks they get from the, from the posts or whatever were not as helpful as they had hoped. That is a nice way to say it.

   2. MSMichael Seibel13:57

      And you know what's weird about this, Dalton, is that the, the, the best, most reputable influencers and famous people in tech world, they don't promise distribution.

   3. DCDalton Caldwell14:06

      No.

   4. MSMichael Seibel14:06

      Like they say, "I'll try to help," but, like, I think the founders set expectations way too high. Like, it's the founder once again looking for the silver bullet, "Someone else solve the problem for me," and, um, man, silver bullets don't exist. All right, we got two more types here, so two more types. Type one is

10. 14:25 – 14:42

    Founders

    1. MSMichael Seibel14:25

       other founders. So this is becoming a lot more common nowadays, right, like founders investing in each other's companies. It's, you know, some people have seen success doing this, others not. But what's the advice that, you know, most often you're gonna get from another founder to help you when they're on your cap table?

    2. DCDalton Caldwell14:41

       U- usually when

11. 14:42 – 15:54

    founders

    1. DCDalton Caldwell14:42

       you get advice from other founders, it's heavily based on their personal experience. Duh. But, like, the downside of that is if they're really... if they really struggled to fundraise or with fundraising personally, all their advice is gonna be them basically telling you, "Don't do what I did." [laughs]

    2. MSMichael Seibel15:01

       Yep.

    3. DCDalton Caldwell15:02

       Or if they struggle with distribution, all their advice is gonna be around... You know? Like, they're almost like they have a lot of feelings about what happened to them. Again, this is... We were founders too, dude. Like, a lot of my advice was heavily based on my personal experience, and it only... It took years of me working at YC to sort of break out of that trap, which is to not be so autobiographical in the things that I'm telling people. You know what I mean?

    4. MSMichael Seibel15:28

       I think this is something that, like, people don't understand enough, is, like, how much we are learning from the founders that we're working with and how much we are condensing their learnings and delivering it to the next generation of YC founders versus how much we're condensing learnings personally that we got in our own companies. I think that's, like, very counterintuitive to, to most people. Um, the last one is

12. 15:54 – 17:17

    Extremely young investor (Scout)

    1. MSMichael Seibel15:54

       the extremely young investor, right? The, the just out of college, writing a check, sometimes this person's in college, writing a check, um, and, and kind of trying to, to build a, a career i- in our world. Different from the... This person often is different from the, like, junior investor 'cause this person's usually not working at a VC fund, or they're a big fund like that. They're usually kind of a scout or some kind of... in that kind of role. What's the, what's the advice they're often giving?

    2. DCDalton Caldwell16:24

       Yeah, I mean, look, these people are super sweet, and they're super exciting, you know, to talk to. I just think that, like, the same way that the founder realizes their job is to play the part of a founder, and so they, like, watch movies about how founders are supposed to act and, like, read books about it, and they sort of are being like, "Am I doing it right? Am I a founder now?" Like [laughs]

    3. MSMichael Seibel16:46

       Yeah. Yep.

    4. DCDalton Caldwell16:46

       Um, I think you kind of see this from these investors, where they just, they read what other investors say and do, and they sort of, like, say and do whatever it is they read. And so, like, whatever the hot new trend is, whatever people are tweeting about, whatever, like, latest essay they've read, they just sort of, like, repeat that-

    5. MSMichael Seibel17:05

       Yeah

    6. DCDalton Caldwell17:05

       ... and see if an... and hopefully no one notices that that's what's going on.

    7. MSMichael Seibel17:09

       Which is, which is how people learn in school, right?

    8. DCDalton Caldwell17:11

       Totally.

    9. MSMichael Seibel17:11

       So it kind of makes sense. Like, it's exactly the same. So, you know, one of the interesting things here

13. 17:17 – 17:22

    Wrap up

    1. MSMichael Seibel17:17

       to kind of wrap up is that we make mistakes. Like, we screw up. There

14. 17:22 – 19:44

    YC partner common bad advice

    1. MSMichael Seibel17:22

       is a YC partner common bad advice kind of mode, and, um, you know, we were talking about this before the show, and I think you said it right, which is, like, the kind of lean startup, "Don't hire, don't spend too much money, like, talk to your users, put a shitty MVP out in the world" path is the path that works for everyone in all cases.

    2. DCDalton Caldwell17:47

       Yeah.

    3. MSMichael Seibel17:47

       I think sometimes we can fall into that trap, but there are many examples where that doesn't apply, right? Like, w- what are your thoughts on, on, on where YC partners ourselves, we can get tripped up and, and give bad advice?

    4. DCDalton Caldwell18:01

       Yeah, I think that the biggest critique I would have of ourselves is that sometimes it works right out of the gate. [laughs] And sometimes you can spend two years building a product in a cave and never talk to a single user- And it's perfect, and you immediately get product/market fit. Sometimes that happens.

    5. MSMichael Seibel18:26

       Yep.

    6. DCDalton Caldwell18:27

       I think that we just... We have s- we have enough data points that it seems, like, insane of us to ever recommend that strategy statistically.

    7. MSMichael Seibel18:35

       [laughs] Yeah.

    8. DCDalton Caldwell18:36

       Like, it's like, it's like, "Hey, oh, you have cancer. Oh, well, you know, if you, you know, go on a water fast, that might fix it." Like, maybe. [laughs] Um, I think that it just feels a bit hard for us to recommend making a strategy to not do those things, but we have enough data points at YC companies, we see companies that can't bootstrap or can't launch an MVP, and have to-

    9. MSMichael Seibel19:01

       Yes

    10. DCDalton Caldwell19:01

        ... go build something in a vacuum for two or three years.

    11. MSMichael Seibel19:04

        Yes.

    12. DCDalton Caldwell19:04

        And sometimes it works.

    13. MSMichael Seibel19:06

        Yes. Yeah.

    14. DCDalton Caldwell19:07

        Right?

    15. MSMichael Seibel19:08

        The best YC partners are very careful with how forcefully we give the YC advice. Because, like, the longer you're here, the longer you have a kind of running record of the time I told someone to do it like this, and the opposite worked.

    16. DCDalton Caldwell19:23

        Yep.

    17. MSMichael Seibel19:24

        And s- so, you know, honestly, to, to-

    18. DCDalton Caldwell19:26

        But, but to me, you know what the lesson is there, Michael? The founders that made it work believed in themselves, and they knew that we couldn't fix it. Like, they actually internalized-

    19. MSMichael Seibel19:33

        Exactly

    20. DCDalton Caldwell19:33

        ... the whole meta point of, of this video, or at least what I'm-

    21. MSMichael Seibel19:35

        Yes

    22. DCDalton Caldwell19:35

        ... trying to get across with it, which is like, you know, they, they took bits and pieces, they, they, they, they took information from the outside world,

15. 19:44 – 19:57

    Personal accountability

    1. DCDalton Caldwell19:44

       but they took personal accountability that they're the ones who are gonna have to make it work.

    2. MSMichael Seibel19:48

       Yeah.

    3. DCDalton Caldwell19:48

       And they weren't counting on blindly following anyone as being the way.

    4. MSMichael Seibel19:52

       No.

    5. DCDalton Caldwell19:52

       It ain't.

    6. MSMichael Seibel19:53

       Nope.

    7. DCDalton Caldwell19:53

       Right?

    8. MSMichael Seibel19:54

       Nope. And, and especially and including us. Yeah,

16. 19:57 – 21:20

    Big takeaway

    1. MSMichael Seibel19:57

       I think that the big takeaway here is that as a founder, it's your job to figure out how to best use these people who are here to help you, all these investors who are here to help you, it's your job how to figure out how to best use them. They all have your interests in mind, but none of us can tell you exactly what to do to win. None of us. And, like, it's funny 'cause at the YC kickoff, the first thing we say is that, "You know, we're experts in failure. We know a lot of paths to not take. But if you want us to sit next to you at your desk and tell you everything to do to win, to become a billion-dollar company, we can't do it." And we actually ask them, we're like, "Hey, and if you wanna leave YC right now, we'll, we'll take, we'll give y'all shares back." Like, we don't want you to come in here with any false pretenses. Like, this is a hard problem, most people don't succeed, and, like, you're gonna be able to deserve 99.9% of the credit if you figure it out [laughs] 'cause you figured it out. [laughs] Like, all the rest of the people around who helped you, they didn't figure it out. Dalton, before we close, you know, we've talked about a number of examples of when investors give advice and it kinda pattern matches to where they come from, but might not apply to you at this time. What are some of the pieces of advice that you've gotten from investors that have really made a huge difference? Like, what, what, what is... What's been some examples

17. 21:20 – 24:13

    Great investor advice

    1. MSMichael Seibel21:20

       of great investor advice? Because, you know, I think you and I both have these.

    2. DCDalton Caldwell21:24

       I think the best investor advice I ever got as a founder is that I was swimming in my head with too many ideas at once, and I had too much data, and that someone from the outside could look at everything and be like, "Oh, this is working." [laughs]

    3. MSMichael Seibel21:41

       Yeah.

    4. DCDalton Caldwell21:41

       They could take, they could take all of this, like, consternation and, like, complicated stuff, and, like, I can think of a couple times in my life when someone was just like, "This is working. You should do more of this."

    5. MSMichael Seibel21:54

       Yeah.

    6. DCDalton Caldwell21:54

       And they were right, and it added a ton of value.

    7. MSMichael Seibel21:56

       Yeah.

    8. DCDalton Caldwell21:57

       Or conversely, "This is bad. You're failing."

    9. MSMichael Seibel22:02

       Yeah.

    10. DCDalton Caldwell22:03

        And again, I was full of excu- like, like, my brain was full of, like, 1,000 different threads going a different direction, but to have someone synthesize that into something very simple was super helpful, dude. I got great advice like that when I was a founder. How about you?

    11. MSMichael Seibel22:19

        The number one, number one piece of advice we ever got was from, you know, someone who had experienced big companies, a guy named Gideon Yu. And we had just gotten Justin.tv profitable, and we were very proud of ourselves. Um, and we, the first year, we really tried to monetize and made $8 million in annual revenue, which I think now would qualify us as, like, a decacorn or something.

    12. DCDalton Caldwell22:41

        [laughs]

    13. MSMichael Seibel22:41

        Um, and he came to talk to us, and he basically said, "Folks, look, you should be happy. Congratulations. But your company sucks. If you don't change stuff, it's all gonna die, and all the work you put in so far, no one's gonna remember what you did." And what was great is, like, there was no, like, "And so you should do this." It was just more like, [laughs] "And that's, that's my current status of your company in a nutshell." And it's exactly what we needed to hear. We just like... The best investors point out the problem. They don't give you a solution. They just point out the problem.

    14. DCDalton Caldwell23:14

        That's great.

    15. MSMichael Seibel23:14

        And they-

    16. DCDalton Caldwell23:14

        It's true

    17. MSMichael Seibel23:15

        ... and we knew it. We knew that was the problem too. [laughs] It's just when someone says it to you, you're like, "Oh, crap."

    18. DCDalton Caldwell23:21

        But isn't that funny?

    19. MSMichael Seibel23:21

        Okay.

    20. DCDalton Caldwell23:22

        'Cause again, like, so many incentives in life are set up to be nice or to tell people that they're great, and they should-

    21. MSMichael Seibel23:29

        Yep

    22. DCDalton Caldwell23:29

        ... stay great, and everything they're doing is great, and they're taking over the world. But weirdly, again, if I think back to my, the founder advice that I got, and same with you, it's actually when people were kinda hard on us.

    23. MSMichael Seibel23:39

        Yep.

    24. DCDalton Caldwell23:40

        That a- that was actually what was helpful. [laughs]

    25. MSMichael Seibel23:42

        Yep.

    26. DCDalton Caldwell23:42

        Right?

    27. MSMichael Seibel23:42

        Well, you know what's crazy? One of the reasons why I think Gideon felt so comfortable giving that advice is that he had no interest in investing in us at all.

    28. DCDalton Caldwell23:49

        Yeah.

    29. MSMichael Seibel23:49

        Like, [laughs] he literally had no interest. And, you know, th- that's a counterintuitive thing, right? Like, wow, it's like, really, you can get a lot more honesty out of somebody when they're not financially incentivized to kind of blow smoke up your ass to, you know-

    30. DCDalton Caldwell24:03

        Yeah

Episode duration: 24:13