Rahul Vohra

I wrote two term sheets this week into startups backed by amazing founding teams, and in both cases I recommended a pivot to the team’s initial GTM strategy.   Sometimes being well networked, or building in a white hot problem space can be a gift and a curse when it catches the attention of enterprise customers.   On paper, it is the exact type of validation a funding team is seeking as they work through an initial version of their product, but more often than not it has the potential to derail a startup’s potential for success.   The startups in question were both experiencing this exact dynamic.  In one case, the team had caught the eye of one of the largest robotics companies in the world and begun conversations around a potential partnership.   The second company is backed by a 20 year industry veteran with a deep rolodex of enterprise customers within his ICP.  Some of the largest retailers in the world were engaging in conversations around piloting his product.  As I explained to both of these founders, this was amazing validation, but should also not be the focal point of their initial GTM.   The reality is, in order to successfully deploy within either of these customers, they were looking at a long and arduous path, filled with security reviews and product feature sets that realistically an early stage pre-seed company with 2 founders could not deliver upon.   My advice to them, continue those conversations, with the realization that they could take 1 year+ before realistic deployments, but focus the lion’s share of their GTM energies toward customers with lower deployment hurdles, in this case Series A/B backed robotics companies and $50M-$250M retailers.    To be clear, the  genuine interest from these enterprises is a massively positive indicator on the problem/solution set they are building for, and it is part of the reason we are bullish on the market opportunity of each startup.  I’ve just seen so many startups fail to deploy an initial product and ultimately never raise a seed round because they get stuck in a seemingly never ending enterprise sales cycle.

102

24 Comments

Take it from me, there’s no better way to learn excellent and practical ways to overhaul your experimentation efficacy! Erin makes critical thinking fun and highly accessible in this workshop, June 11:

4

1 Comment

Three lessons from building and launching a P2P payments app without doing the proper customer validation first (despite knowing better): 1) Building something you need is a great starting point - but not enough to validate an idea. As someone drawn to building solutions, I’m an early tech adopter. This led me to overestimate consumers’ willingness to onboard, especially with a P2P payments app that requires KYC/KYB compliance and relies on a network effect to be useful. 2) Manual solutions are often best to start with It’s good business to be in business - transitioning from ideating to operating as early as possible is the BEST way to learn effectively. While the move fast and break things mindset has attracted well-deserved skepticism, getting stuck in a multi-year build trap distracted me from critical real-world validation. 3) Consumer appetite shifts quickly In my case, the proliferation of free and instant P2P payment options like Zelle added additional pricing pressure that I couldn’t compete with. This disincentivized the consumer event/payment collection market, turning my bottom-up go-to-market strategy upside down. Pitch (https://www.pitch.fun) is currently on the back burner as I’ve begun building custom solutions in various industries to sharpen my skills, solve specific problems, gain a hands-on understanding of operations, pain points, and workflows, and build a network of experts to lean on as I keep my eyes peeled for high-impact opportunities.

11

There is a tendency for many first time founders to overbuild an MVP. The reasons vary, but most often it stems from improper/lack of customer discovery and results in an improperly scoped build. The role of an MVP is not to capture the entire workflow of a potential user, rather it is to build a solution for a very specific white hot pain point that allows you to build trust with your customer and over time deploy more product and capture more wallet share. When a startup truly understands their target customer, and has isolated top priority problem areas, they are often able to zero in on a fairly narrow scope for an MVP. Oftentimes this solution can be fairly crude with a V1 UI/UX and not built to scale, but because it is meeting such a pressing need it generates robust usage from an initial cohort of users. On the other hand, when a startup fails to perform robust customer discovery, they almost always fall victim to the "feature fallacy" and overbuild initial products thinking that quantity of features will lead to adoption. It's the classic problem solving technique of throwing spaghetti at the wall until something sticks, but in early stage startups with very limited resources, this is often a path to failure. Founding teams need to balance the feature set of an MVP with their ability to ship product within the existing runway of the business - which in many cases is the sweat equity of the founding teams living off of savings or friends and family money they've raised. As such, the composition of an initial founding team is crucial, and having engineering talent on the founder team is most often necessary to bridge the gap. Founding teams lacking engineering talent and reliant on outside development contractors to stand up initial products put a startup in a suboptimal position to succeed. Investors are increasingly unwilling to fund first time founders to build out an initial product. As such, teams need to focus on a way to get a product in market and prove some degree of traction within their customer base before realistically targeting institutional capital. Raising money before deploying an initial product is possible, most notably by second time founders or early executives at high growth startups, but in many cases this subset already realizes the importance of customer discovery and getting an initial version of product in market, and optimizes for that before looking to capitalize the business. There are certain types of market opportunities where a narrow feature set is an unrealistic option for initial deployment - examples being an embedded payroll offering or a core infrastructure layer. In these cases, a founding team will need to raise capital to build an MVP. Second-time founders or founders with deep domain experience/networks who can demonstrate robust customer discovery proof points have a reasonable chance of raising capital, but most founders will struggle to launch these types of businesses.

103

40 Comments

🎙️ Exciting insights from SaaS Academy's CEO Johnny Page on the Expertise Economy podcast! Johnny breaks down their two-step approach to helping SaaS founders: 1️⃣ The Discovery Call: Uncovering the founder's "why" and long-term vision 2️⃣ The Strategic Game Plan Session: Creating a 90-day action plan to achieve 12-month goals 🔑 Key focus: Identifying and solving business constraints Want to dive deeper on the secrets of building a successful SaaS business? Check out the full episode here: https://lnkd.in/dju-Be2u #SaaS #BusinessStrategy #SaasAcademy #ExpertiseEconomy #Podcast

6

Paul Graham’s Founder Mode essay is a valid reaction to the zero interest rate phenomenon of average management and company bloat. The goat founders can operate well in this way and scale it pretty far. Unfortunately it’ll also probably inspire a bunch of mid founders not really get it — and to lean into their current erratic micromanagement ways. They’ll think they’re in Founder Mode, when they’re really in Flounder Mode 🐟 https://lnkd.in/gpjSV9Ea

12

2 Comments

Parker just posted Rippling's new fundraising memo. It's the manifesto for compound startups and one of our initial inspirations for building Atlas. Here's a nugget that I really liked that summarizes how we feel about the competitive advantage of all-in-one startups over vertical startups (in customer support especially): "When we build corporate cards, we're not innovating on the way we issue corporate cards (through Stripe issuing or Marqeta) or the way we scan and extract metadata from receipts (which is mostly a vendor relationship for us today). We're going to win on the capabilities we have that are common to all Rippling products—the integration with the rest of Rippling and with employee data, the platform capabilities, and the common UX described above." Here's the full doc: https://lnkd.in/gYH59HVZ

25

1 Comment

Many assumed that the industry would be well on its way to AGI or superintelligence before AI model builders’ efforts to take advantage of scaling laws might hit a wall. Recent headlines are chipping away at that assumption. One question I've been getting in my inbox: is this the era of diminishing returns for AI? We don't think so. Even if an avalanche of new clusters and synthetic data fail to deliver significantly better model performance, there are good reasons to believe that AI is still going to become orders of magnitude more powerful in the coming years — powering a new generation of startups and ultimately productivity growth and positive benefits for mankind. In fact, with agents and reasoning just beginning to scale and thousands of industry-specific models coming online, it's about to get really exciting. Read our latest blog post on the topic: https://lnkd.in/gFhniNX8

155

8 Comments

Very excited to introduce PMF Method Retreat, our new 4-day intensive experience for super early B2B founders. When we shared our framework for finding product-market fit and opened up applications for PMF Method this spring, we were blown away by the response. After getting thousands of applications for just a handful of spots and bringing together a spectacular group of technical founders (coming from companies like Stripe, Vanta and Retool), we started to think about how to make the next cohort even better. We heard from many founders who were eager to join but couldn't commit to a months-long experience — or make the temporary move out to San Francisco — so we’re experimenting with the format. Same tactical sessions. Same targeted, hands-on support from Todd Jackson and the entire team. Still doesn't cost you any equity. But you don’t have to be SF-based for this one, and it’s refactored into a 4-day retreat that accelerates your progress — while quickly getting you back to building. If you're just getting started exploring a B2B opportunity, please don't overthink it, just apply. Deadline is 9/23, but the earlier the better.

57

9 Comments

Venture Capital Contact Compilation. Explore a detailed list of 1,250+ VC firms, 7,400+ professionals in the VC space (including partners and principals), and 6,400 email contacts. https://payhip.com/b/cs7UQ #startup #startups #vc #venturecapital #investmentbanking #privateequity #managementconsulting #b2b #founders #entrepreneurs

1

1 Comment

Invariants are key to building great distributed systems. They keep the mental model simple. Over the last few weeks Mike Cugini has been building an “Eye of Sauron” to keep track of our invariants and any inconsistencies that occur in our state machine and data model. We’ll be blogging more on how this is built at a later date. The why is easy though - We did this because having seen complex billing, storage, and serving systems we know these will occur. We also know waiting till it’s too late means your customers suffer, tech debt increases and it’s hard to debug. Customers on Prodvana can be assure we do the work to ensure the system is #trustworthy. #distributedsystems #sre #devops #infrastructure #cicd

6

Excellent article for anyone interested in how disruption can be enabled by APIs to feed data from any data ecosystem into AI and lo-code tools.

13

Interesting conversation between Jason Calacanis and Tekedra N. Mawakana Mawakana, CEO of Waymo (Google's self-driving project).... (Paraphrased) Jason Calacanis: Why are you not testing your Waymo self-driving on highways? You seem focused primarily on city environments like San Francisco, yet in my experience being a tesla-owner from the very beginning (and using both auto-pilot and then full self driving) it is better on the highways. You seem to be taking the opposite approach. Is it because speed kills? Tekedra: Our mission is safety and to get to Level 4 driving (the highest level of autonomous driving, no driver behind the wheel, no drivers' license) and so we’ve made a deliberate decision to focus on crowded urban environments because that is the hardest problem. Anything that doesn’t contribute to our getting to Level 4 is not interesting to us (not intended, but could be back-handed compliment to Musk 🙂) You don’t learn anything new self-driving on the same boring monotonous highways. --- Great point! #waymo #allin #selfdriving #google

4

I'm seeing a lot of "VC vs Bootstrap" posts proliferate these days, and it's usually somebody trying to sell you some bullshit course or newsletter foaming at the mouth at how terrible VCs are or hard VC funding is. Here are the myths I'd like to dispel based on my 6+ years of experience as a venture-backed founder: 1. "Bootstrap to $5M ARR and you'll be financially free. I did it and so can you." They conveniently ignore the thousands upon thousands of founders who can't get past the MVP / idea stage because they can't build a commercially viable product without funding. Real talk - it is EXTREMELY hard to build a $5M ARR business in general, let alone with no capital. The seed to Series B (usually 7-12M ARR) graduation rate is about ~8%, and this is with 7-8 figures of raised capital. Now imagine what it would be with no funding. If you can build a $5M ARR business self-funded, you should absolutely do so, but just know that you're playing the game on ultra-hard mode. For every bootstrap success story you hear, there are 100 that have failed. ------- 2. "VCs are toxic and you'll lose control of your company" Bad investors make juicy stories, but there are a lot of good investors out there who will always act in the best interests of the company. VCs play the long game, and screwing over founders to create a bad reputation for themselves doesn't make them money. Also, unless you take a bad deal, you shouldn't lose control of your company until Series B. Also, "losing control" isn't the end of the world. Since the latest round I no longer have board control, and I even have a boss now - but it's the best decision I've ever made because I believe in the people we have around the table. ------- 3. "VCs fund 5 out of 1,000 deals. You'll never get funded" This is such a bullshit defeatist mentality. This is like saying "Deloitte only hires 4% of applicants. You'll never get a job there". Deloitte's offer rate is low because they receive a lot of low quality applications. Put together a high quality application and your chances go up exponentially. Same goes for VCs, put together a strong team, a venture-fundable business plan, and a strong deck, and somebody will bite (although I'd still expect to talk to 20-30+ funds before you see an offer) ------- 4. "Bootstrapping will impose fiscal discipline on your company" I don't have a huge issue with this because it is somewhat true, and we've all heard the stories of founders raising huge amounts of funding and squandering it. But what VC funding does for you is it gives you margin for error. Hires sometimes suck, tools sometimes don't work out, contractors sometimes underperform. Having funding allows you to make some of these mistakes and course correct without the company just outright dying because you ran out of cash. ----------------- Hope this is helpful - I don't have a newsletter and I have nothing to sell you so feel free to DM if you have any questions.

111

29 Comments

Pro-tip for anyone naming a new company, especially in an area as fraught as AI: do not settle on an obvious oxymoron. That's my note to the well-intentioned Ilya Sutskever, formerly OpenAI's Chief Scientist and cofounder and now launching his own artificial intelligence firm with an eponymous goal and name: Safe Superintelligence. While Sutskever isn't a household name like OpenAI co-founder Sam Altman, he is widely recognized as the guy who may have "solved" superintelligence late last year, a breakthrough that sparked a meltdown at the ChatGPT parent and led to the sudden – but not long-lived – ouster of Altman. After Altman returned, there were reports that the Super AI, or General AI intelligence breakthrough, something that could quickly lead to AI intelligence outstripping above-average human intelligence, had so freaked out the OpenAI board and Sutskever that they sought to put the brakes on the whole thing. Altman was likely not on board with that, so out he went until cooler heads prevailed... #ai #openAI #superintelligence #chatgpt #generalai #tech

3

2 Comments

Excerpt from my new piece that is dropping tomorrow on my recently launched substack. In my new weekly series "Noteworthy things for founders" I will recommend one tool, mention one startup to watch, and link one piece of content that I adore. The startup to watch this week is Synonym co-founded by the magnificient Edward Shenderovich. The series (and more) can be found here: mikemahlkow.com

48

4 Comments

I'm using my own product to scale intros in our community 🎉 When I created Britepeer, I was solving a problem for a community a few of us made called StartupNash. StartupNash is really good at getting everyone on a chat and talking about the everyday real-world challenges of being an entrepreneur in Nashville. But once everyone is in there, then what? It takes A LOT to make sure the right people are meeting each other. Britepeer does the job of connecting peers in the group. It scales the intros for me! Some recent asks in our group: 🤔 Someone is looking for a professional with experience dissolving a TN registered LLC. 🤔 Someone is looking for help with SEO/Analytics. 🤔 Someone wants to learn more about the VC community in Alabama. There are peers in StartupNash who can help these folks, but I'd love to add more. So I redid StartupNash's website and put Britepeer, front-and-center. I want more people to get in the group, use Britepeer, and meet founders, funders, peers, mentors, and services. Join our community and use Britepeer to help you get connected. And if you're a community manager who faces the same problem, come talk to me!

9

1 Comment

One of my favorite advantages of Y Combinator is that thousands of YC veterans have specific advice for you. Sometimes, that advice isn't public. But this essay is one of the best, and anyone can read it. Paul Graham's "Do Things That Don't Scale" describes a common thread between almost every successful company. Here are a few of his examples: Recruiting - "You can't wait for users to come to you. You have to go out and get them." He describes Stripe (one of the most successful YC companies ever) not waiting to onboard users who wanted to sign up in the early days. If they agreed, one of the Collison brothers (the founders) would simply use their laptop to sign them up on the spot. Instead of being shy and lazy about it, they were bold. Initial fragility - "Almost all startups are initially fragile. Founders ... unconsciously judge larval startups by the standards of established ones." It's fine if reporters and juggernauts dismiss your startup, but dangerous if you start to dismiss or doubt your own. Delight your users - "Your first users should feel that signing up with you was one of the best choices they ever made." Wufoo (one of the early YC startups) sent each new user a hand-written thank you note. This is one of many ways you can delight them - try to make them TOO happy. Experience - "The feedback you get from engaging directly with your earliest users will be the best you ever get." Laser focus on an "insanely great" attention to users. He explains that the product doesn't have to be insanely great at the beginning, but the user's experience does. That means over-engaging, which is fine. It promotes a tight feedback loop. Fire - A narrow focus is critical. "It's like keeping a fire contained at first to get it really hot before adding more logs." Startups who build things for themselves ("I was so sick of experiencing X, so I created Y solution") will do this without even thinking about it. Manual - "There's a more extreme variant where you don't just use your software, but are your software." Essentially, do things manually that you would automate later. A feature doesn't have to be code complete if you can get away with it at the beginning. There are more in the article - I highly recommend reading it. But my main takeaway is the most successful companies didn't automate and scale every single action from Day One. In PG's words, "startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going." That usually means manually doing things that don't scale.

6

1 Comment