Some wed night thoughts on investor “value add”:

1) At the end of the day, money is a commodity. That mere fact should make every vc shudder.

It is amazing how many ppl (incl myself) clamor to get into a commodity business!

Saturday thoughts on funding: Where it helps. Where it doesn't. And how it affects team, success, and PM fit.

This is just my $0.02 after looking reviewing 30k+ early stage startups personally and having led 350+ investments across 2 VC firms & as an angel.

Let's begin! >>

1) Money is great to have in building a startup (for the least dilution and pain possible) That's true and always will be true. 😆

But just like how money can't buy you happiness, it also can't buy you PM fit.

2) PM fit is the holy grail for software startups. (we're not talking biotech - if you have a cure to cancer, I guarantee you everyone wants it).

But for software startups, it's unclear if ppl want your product at your price pt.

3) If you don't find PM fit, in this day and age, you will be able to get some sales. Maybe even say $1m in sales (or more!) per year, and you can still make a living.

But having sales does not mean that you have a repeatable customer acquisition process that can be sustainable

4) As an aside, that is why we invest at pre-seed & don't care about startup traction, because I don't believe traction at the earliest stages suggest PM fit. Traction only shows that a founder can execute (& that's impt too) but there are other ways to assess execution earlier.

A thread on employee equity in early stage startups -- what are the compensation norms? What every early employee should ask? Some thoughts on whether the structure is fair.

Read on >>

1) First, there are NO NORMS! Hah. I have literally seen everything from giving early employees no equity to giving employee #1s near co-founder level of shares.

But what is more common than not?

2) In the Silicon Valley, if you're hiring your 1st employee, & you've raised NO $$ & are paying very little (e.g $0-$10k / yr or thereabouts), your first employee is basically a co-founder.

And the equity tranche for employee 1 should be closer to a co-founder level.

3) For ex, a friend of mine gave his employee #1 10% (vesting over 4 yrs of course) of the business. This employee was only getting his housing paid for. And this was 10 yrs ago, so it was during the bust.

4) On the flip side, if you have raised some $$ & are paying employee #1 near mkt rate, typically I see around here ppl get 1-5% (w/ vesting).

Caveat - near mkt rate doesn't mean compared to Google or FB salary rates. I mean compared to "normal big cos"

Today's thread is a continuation on *how* you generate momentum in fundraising.

Here's a rough conversation I had with a founder (called 'C') over the course of days a few months back.

Read on >>

1) C: I'm having trouble raising. VC A and VC B are taking so long to get back to me.

Me: Oh, when did you meet w/ them?

C: 3 weeks ago.

2) Me: Oh, are you mtg w/ anyone else?

C: No, I got busy working. I had all these sales calls to make.

Me: That's the problem - there isn't a reason for them to move quickly. There's no investor at the table.

3) C: But I have all these sales calls to make!

Me: I really don't have a great answer for you here. This is probably the hardest part about fundraising - juggling your actual job w/ your fundraising job, which is full-time too.

4) Me: You need to hand off your sales calls to your co-founder. And then you can do mtgs back to back.

C: Ok...

[some time passes]

C: Ok - I'm ready.

Me: How much do you want to raise and what are you using the money for?

Last week, I wrote a thread about generating momentum for startups.

Today's thread is on how emerging fund managers can generate momentum for their fund.

Whatever you do, momentum is so impt to get ppl onboard -- for hiring, for sales, for fundraising.

Read on >>

1) First, why does momentum matter?

Think about it from the "buyer's perspective" -- it is almost ALWAYS better to wait and get more information if you can get the same deal. Right?

More info on a potential investment. More info on a new product. Etc.

2) There are few situations where it's impt to be a first mover.

If you're a product buyer, it could be you have a dire situation at your company that alternatives can't handle.

But if you have a decent alternative (alternative product or alt investment), it's better to wait.

3) That means it's YOUR JOB to create momentum. Whether for fundraising, sales, or hiring.

So with that in mind, how do you generate momentum for fund fundraising?

4) In a prior tweet about generating momentum for startup fundraising, essentially I said to limit your supply (the amnt you are raising) in tranches AND to increase demand by packing in mtgs.

Unfort this doesn't quite work well for funds.

14 steps for acquiring your startup's first customers:

1. Pay to interview people who've successfully grown a startup like yours. You can find them via LinkedIn Sales Navigator.

2. Ask them which 3 channels (ads, SEO, etc.) you should prioritize for acquiring customers.

3. Ask for examples of companies who run these channels well.

Some channels to ask about:

• PR
• Ads
• SEO
• Influencers
• Sponsorships
• Organic social
• Word-of-mouth
• In-depth content
• Referral incentives
• Product-led invites (think Slack, Zoom, Dropbox)

4. Reverse-engineer how those companies run their channels well:

A. Map each step the customer takes between the channel and becoming a happy customer.

B. Study what makes each step great: its pitch, its design, and its user experience.

Here's an example of steps.

• Someone sees your Facebook ad ← Channel
• They visit your page
• Enter their email
• Trial the product
• Pay for the product
• Stay engaged
• Refer more users

(Tools like Ahrefs + FB Ad Library show you competitors' ads and landing pages!)

Starting a startup is hard. This thread will contain some key advice I think are particularly noteworthy:

1. “If you’re not embarrassed by the first version of your product, you’ve launched too late.” - @paulg The first version of my product was not great, but hey, it worked.

2. Don't build in a vacuum. You should build your product out in the open for the world to see. You will gain valuable feedback from users if you build publicly, and provide insights which ensure you are building a product users truly want. cc @rrhoover @sama

3. As a young founder, a massive weakness is age and the lack of credibility. Developing partnerships, trying to acquire customers. etc have all taken so much longer. In fact, when I mentioned my age, a few investors just walked away. cc @Jason

4. Work on what makes you feel excited. Working on something that you don't believe in will cause you to make rash product decisions, resulting in loss of user loyalty. @fredwilson

5. Take care of yourself. While doing the occasional code sprint can be incredibly useful, working 24/7 and disregarding your health just to build a great product is not a wise choice.

What I learned from raising my first seed round.

This isn’t a how-to guide, that may come later. This is just a story and observations from my own experience.

See, I didn’t know what I was doing at all...

We had a built a prototype, people seemed to like it. Investors seemed to like it. Not because I showed it to them, I wouldn’t know how to do that.

But I got a lot of inbound asking about the product and found myself stumbling into meetings with people with no real goal.

We decided it was time to raise and I had to figure out how to do that.

I’m not from SF. I’m from small town Missouri. I didn’t have connections.

But I did spend a lot of time making internet friends. It’s what I’ve done my whole life. In particular friends in @genzmafia

It was here I had some help from @nhuebecker on the first pitch deck I ever made. It went a long way btw - Thanks nick!

And met a lot of connected people thanks to @ItzSuds. He also got me on clubhouse.

In there I started talking to people and met @YousifAstar

Yousif taught me the game. I cannot stress this enough he taught me everything. Pitching, materials, intros, down to the verbiage of my emails.

He taught me how to be intentional with raising instead of stumbling into meetings.

I blocked off two weeks and got started.

My guide to startups:

I've lost millions, hired hundreds, raised millions and sold companies before the age of 30

Read this to become better:

Venture capital & PR are like drugs

Drugs can kill you or save your life

Use accordingly.

If you’re lucky: your startup will be copied. Don’t be mad

The best startup revenge is overwhelming product/market fit

Okinawa is an Island in Japan with the highest life expectancy. It's called "the land of immortals"

The secret: almost everybody gardens

Entrepreneurship is a marathon not a sprint. Be sustainable

Find your gardening.

A wonderful online course is so valuable its like you’re stealing from the teacher

A bad online course is a teacher stealing from you

Tip: scout out for wonderful online courses

A few dollar investment will completely change a life