Insight certainty 4/5 debate potential 2/5

Advice to avoid chasing peak valuations is rarely followed in Silicon Valley

Jeff Richards · 20VC: The Transition From Founder To CEO, How To Determine When To Stretch On Price in Venture & The Benefits of Attribution for Partnership Dynamics with Jeff Richards, Managing Partner @ GGV Capital · Mar 4, 2019 · at 19:48

Jeff Richards is Managing Partner at GGV Capital. He addresses why startup founders routinely ignore advice to avoid optimizing purely for highest valuation during funding rounds.

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“I would say this is one of the most frequently offered pieces of advice in Silicon Valley that is the least Frequently followed.”

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Assertion Not checkable as stated
Most startups that raised at peak 2014-2015 valuations missed growth targets
“But, you know, two or three years later, some of those companies, and by the way, probably the majority of those Didn't hit their plans that they had given to those investors, and then they're coming back out to the market to try and raise money, and they're s…”
Jeff Richards Mar 4, 2019 ▶ 20:48 20VC: The Transition From Founder To CEO, How To Determine When To Stretch On Price in Venture & The Benefits of Attribution for Partnership Dynamics with Jeff Richards, Managing Partner @ GGV Capital
What-if
A VP of People should be among a startup's first 10 hires
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Jeff Richards Mar 4, 2019 ▶ 15:48 20VC: The Transition From Founder To CEO, How To Determine When To Stretch On Price in Venture & The Benefits of Attribution for Partnership Dynamics with Jeff Richards, Managing Partner @ GGV Capital
Assertion Supported
The 2014-2015 VC boom generated 40x and 20x revenue valuation multiples
“And in particular today, I think we've got a little bit of a hangover from the funding cycle of 2014, 2015, where there was a huge boom in venture capital funding, and a lot of companies raised money at very high valuations. And, you know, these are ten millio…”
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Opinion
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Insight
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“What I've seen is it usually happens around 50 employees. When a company gets to about 50 employees, maybe 60 or 70, where the founder has to start transitioning into more of a professional manager type role.”
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Insight
Hiring senior executives is the biggest struggle for first-time founders
“I think being aggressive and hiring senior executives is probably the single biggest area where I see first-time founders struggle, and I would also add to that that it's the area where we see repeat founders really excel.”
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