Startups are most vulnerable when they seem to have everything figured out.

+ They’ve found product/market fit.
+ The team is scaling.
+ Customers are happy.

This is when a great many startups will encounter their first LEECH (Lethargic Economic Extractors Creating Harm).

/🐛 Having thousands of competitors as a Little Tech startup is frustrating. Having a few resource rich Big Tech competitors is daunting. But a single LEECH can destroy an otherwise well-functioning startup.

/2

😶‍🌫️ Angels despairing
🏦 Bankers brutally recouping loans
🧨 Crisis at some VC firms

A few chats this week provided a bracing overview of how the macro environment is impacting different funders.

Taken together, these learnings spell trouble for founders.

More detail:

/🧶 Angel despair: A host of angels entered the funding marketplace during the recent bull run. Some are post-economic entrepreneurs who sold startups. Others invest as a sideline to a well-compensated executive role. Both groups may change their behavior.

/1

We were fortunate that @fcollective was one of the first investors in @Coupang, the “Amazon of Korea”, now worth ~$30B.

I had few insights into the business (I didn't like daily deals) but was memorably, viscerally impressed by Bom Kim.

This reinforced a key learning

/🧶 The concept of a prepared mind is popular when talking about markets.

Sequoia backed Airbnb when most VCs didn't because the partner in charge had been looking at the vacation rental market just before meeting with the team.

Can one also have a “prepared mind” for people?

/1

Founders often don't get to deliver the most important pitch for their startup: the 2-3 line summary that a VC uses to socialize the opportunity with their partners.

Here's how to help them craft one that will resonate:

/1 Some context.

Partners at many firms can't make an investment decision independently.

Sometimes they're a junior partner that needs the ok from a senior partner or an investment committee.

Some firms still actually vote on whether to proceed with an investment.

/2

We recently held a roundtable discussion with founders of scaling startups in our portfolio on managing hybrid organizations in this third year of COVID.

Here are 13 tips that they shared based on learnings from managing thousands of employees working remotely.

/1 📅 More meetings are an unfortunate necessity: The common belief was that these needed to be more frequent for remote work to function: all-hands, team meetings, and 1:1’s need to be scheduled.

/2

As capital gets scarce, I want to relay a few thoughts on startup marketing that Kayak founder @shafner recently shared with the @fcollective portfolio:

First, order it well:

🗣️ Word of mouth - Free
🔍 SEO - Inexpensive
💵 Paid - Measurable/scalable
📣 Brand - Save for last

/1 This idea of starting with the least expensive channels and progressing into the more expensive ones sounds basic, but it's excellent advice that many founders choose not to hear. This list is worth internalizing in an environment where capital is a precious commodity.

/2

Four points B2B founders need to take to heart:

😍 At least one founder needs to love sales

👶 That founder doesn't need to have sales experience

❄️ Sales can take many forms

〽️ Avoid being seduced by sales alternatives

Let me explain…

/🧵 😍 A founder needs to love sales

The rise of Product-Led Growth (PLG) lead many founders to think they can scale a startup without ever talking to customers. This is a low-probability notion. Someone on the founding team needs to be an evangelist (with a quota).

/1

Does your startup have an impressive cash stockpile?

If so, the following will soon be plentiful:

⭐️ Talent
🥊 Competitors looking for soft landings
📣 Affordable customer acquisition

Are you ready to take advantage of this moment?

A few thoughts on how to prepare:

/🧵 This advice is primarily meant for companies who have a multi-year capital cushion and can make fairly reliable projections about future cash flows.

If you have <two years of reserves, there are probably better threads to help navigate the current market uncertainty.

/1

How long will you wait for your startup to succeed?

🗓️ A year? Easy.

⛳️ Five? Par for the course.

🧓 A decade? Requires dedication.

🪦 20?! This is your life's work now.

Startups are hard to schedule, but here's why you need to consider the question of time on day one.

/⏳ Patience is an easy virtue to claim, but it is much harder to practice in real life.

Think about the course of a typical founder. They graduate from college and decide to start a company.

In the early days, it can be intoxicating – you’re a newly minted CEO!

/1

Together with @josephflaherty, I recently had the pleasure to introduce famed restaurateur @dhmeyer to a group of our portfolio companies. While much of his advice was specific to those startups, there were three general lessons he shared that truly deserve a wider audience:

/🧵 Lesson 1: Cultivate Teams

Danny attributes much of his success to his team's quality and the system through which they're acculturated.

"We are winemakers, and our culture is the soil," he said, comparing leaders to vintners who had responsibility for the "terroir."

/1

Early in my career, a lawyer cost me millions of dollars.

Not in legal fees.

Not by doing a bad job

But by doing their job too well.

Here's a cautionary tale about why it's essential to manage your lawyers – closely.

/🧵 Shortly after selling my startup, I luckily had the capital and opportunity to invest in a company led by an old-school founder who had built a lucrative business over decades.

He liked me and asked only for a simple process.

/1

A few tips on building enterprise startups – healthcare, big co. tools, etc.

📈 The sales uptick won’t come until year six
🙄 Don’t be a subject matter snob
🤝 Everyone has to sell
📜 Pick VCs with long track records
🧑‍🎓 Prepare to teach
🐌 Move slowly and get buy-in

/🧵 One of my portfolio companies has recently hit its stride, and it reminded me of how counter-cultural enterprise sales are in the current tech market. NB: by “enterprise,” I mean high ACV, slow sales cycle, B2B-focused startups, no matter which vertical they serve.

/1

VCs evaluate startup pitches along four dimensions:

⚙️ Business/Team: Are the founders/model/metrics strong?
📣 Pitch: Is the story compelling?
💵 Deal: Are the terms attractive?
👂Audience: Does the VC know/like this space?

So, how can founders improve their odds?

/🧵 The best scenario is strength in all aspects.

VCs would love a steady stream of thriving businesses led by world-class teams, that slot into their understanding of the startup world, that are pitched impeccably with friendly deal terms.

These are few and far between.

/2

You Can’t build a $5B startup without a bias towards action.

&: Patience is a virtue but it’s one rarely associated with entrepreneurship.

@Olo CEO @nhglass recently shared some lessons about how *not* doing things, or sequencing them strategically, helped deliver success.

/🧵 ⚛️ “For the first eight years, there were 12 of us.”

In a world where startups try to ramp headcount as quickly as possible, Noah deliberately kept the team tight for nearly a decade. You need less (money/people/products) than you think to build a great business.

/1

I recently shared a thread urging founders to preserve their exit optionality by limiting the amount of capital they raise.

Read this next part … if only because you would prefer to own more of your startup.

Skip it if you want to help your VC to buy another yacht.

/🧵

https://twitter.com/dafrankel/status/1385647876706115591

🪙 Build on your own dime

The easiest way to maintain ownership is to put off the point at which you raise capital so you have more heft when you do. Bootstrapping in the early days will also train “resourcefulness muscles” and limit time spent on unproductive activities.

/1

Founder 1: Runs startup for five years. Sells for ~$100M. Makes $30M.

Founder 2: Running startup for ten years (and counting). Valued at ~$1B. Founder shares valued at $30M.

Which founder would you rather be?

/🧵 There is no easy – or correct – answer to this question. These founders have different life situations and ambitions. However, I don’t think VCs do enough to highlight the financial risks founders take by getting on the fundraising treadmill.

/2

Today @Olo becomes $OLO. I’ve had the honor and privilege of being alongside @nhglass from the get-go. Today’s IPO is a major milestone, and I want to share a couple of small reflections:

⏳ You can't be too early
👣 You have to prepare for a long journey

/🧵 ⏳ You can’t be too early

There’s a saying in VC that being too early as a startup is as bad as being wrong. I think this is incorrect. Noah started Olo in 2005 – two years before the iPhone kicked off the smartphone revolution. These were the early websites:

/2

Are you better off owning a gold mine ⛏️ or operating a toll road 🚦?

Both can be lucrative businesses.

Each has dramatic drawbacks.

Specific personalities are required to make either work.

A quick overview of the pros and cons for each model follow, but first a story:

/1 I invested in a company that developed SaaS tools for the mining industry. Monthly contracts ranged into the six figures, but the mining companies were happy to pay since improved productivity could create hundreds of millions of dollars in value.

/2

Imagine you are seated next to the CEO of your dream customer for dinner. Over the course of the evening, you’ll likely have 20 minutes to chat with this person about your startup. How do you make the most of this scenario (Or its socially-distanced simulation?)

/1 A perk of raising from VCs is that investors often host dinners, office hours, and convene groups of high-level decision-makers. You’ll likely have opportunities to meet C-level execs in your industry earlier than the state of your business might dictate.

/2

Working with a board of directors is one of the key challenges facing founders.

While tech has an egalitarian mien, there are material power imbalances and they can cause tremendous stress for founders.

Some thoughts on how to manage those concerns:

/1 👏 Your investors want you to succeed

There’s a belief that VCs are keen to replace founders at the first misstep. Nothing could be further from the truth.

The reality is that you are more likely to be replaced if your startup *succeeds* than if it struggles.

/2

The range of fundable startup ideas has expanded over the last decade to encompass everything from Slack to slacks.

Now, the challenge is separating interesting, but niche markets, from those that are weird and wonderfully profitable.

A few thoughts on an imperfect science:

/1 🔮 Odd ideas + simple business models

We’re open to entertaining the most fantastical sounding markets if the founders employ a vanilla commercial strategy. We’re not looking for conservative approaches, just paths to market that don’t require massive leaps of faith.

/2