The Ledger
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Elad Gil: Startups conducting layoffs should cut deeply in a single round
“And in general, when you do a layoff, you want to be able to do something significant all at once and So when cutting, you should cut more deeply than you think you should. And anyone who's marginal or you need to figure out, unfortunately, you should default …”
Elad Gil: Hire Hungry Senior Directors Instead of Established Enterprise SVPs
“Instead of hiring the SVP of engineering from an organization, you hire their Key senior director or their key VP who is really excited to take on an entire functional org.”
Elad Gil: Avoid Taking Seed Checks From Growth Funds to Preserve Capacity
“The other thing I would keep in mind is that people who tend to invest late may be good sources of capital later. And if they own a lot of the company early, they're just not going to participate later. So there may be some funds that you want to sort of keep …”
Gil: In a bad market, market dynamics beat a great team
“Many angels I know are very team driven, and I think the team is important, but I think a great team in a terrible market, the market tends to win.”
Gil: Expecting a 5-10x return on a $1B valuation is highly improbable
“And so if you're investing at a billion and you're hoping for a five or 10 X, that's actually an extremely improbable event on average.”
Gil: Winning Startups Recast Existing Behaviors Rather Than Creating New Ones
“So I just think, like often the most compelling things are capturing behavior that already exists, and then revamping it in a new way, or capturing it in a new medium, versus creating entirely new behaviors. I actually think there's very few things that exist …”
Gil: Traditional venture capital unnaturally bundles capital, governance, and advice
“The traditional BC model bundles capital, governance, and advice, and the people who are great investors aren't necessarily good at governance or advice, or vice versa. People who are great advisors may not be great investors. They may not be able to identify …”
Elad Gil: Selling to a 10x breakout acquirer yields optimal exit outcomes
“If you do sell, if you can sell to a company that's breaking out itself and has a clear 10 X on it, that may actually be the smartest way to exit all else being equal. A, because you're going to end up with a much bigger financial outcome because, you know, th…”
Elad Gil: Fast-Scaling Startups Must Sometimes Slow Growth to Protect Culture
“And so you sometimes actually have to slow down growth rather than accelerate it, not because of capital constraints. Usually you have the money to do it if things are really working well. But more because you're just going to kind of blow up the way that the …”
Elad Gil: Recent tech startups fail to leverage distribution moats
“And so I think the most recent wave of companies tend to be much less aggressive about reimagining themselves as a distribution centric company and not just a product centric company.”
Gil: Preemptive VC Capital Locks Founders In and Destroys Early Exit Options
“And so I think the downside of preemptive rounds and extra capital is it also locks in the entrepreneur to a longer story, and it removes the option value of actually exiting at a valuation where lots of people would have bought them.”
Gil: Extended Privatization Traps Capital and Talent in Undeserving Startups
“It's actually been positive for them to be private for longer, but it may be bad for the ecosystem overall because it's tying up a lot of capital and talent into pockets that may not deserve that capital and talent as much.”
Elad Gil: Amazon's Low-Margin Playbook Fails for Most Tech Companies
“I think that in Silicon Valley, too many people are stuck on Amazon as the primary model for what will succeed as a company, and Amazon is actually the exception versus the rule. In other words, Amazon is a company that went for very high market share with ver…”
Elad Gil: Capital acts as a moat when paired with high customer LTV
“Despite large amounts of capital in the system, there does become a point where It becomes reasonably uneconomical for other people to compete from a capital perspective. I don't think that there's ever been a business where the sole defensible point is capita…”
Gil: Multi-billion-dollar startups should aggressively pursue M&A for talent and product
“Any company that has a market cap of a few billion or more, in my opinion, if they're new, should actually be buying up other companies pretty rapidly, and I think in some cases, those teams just haven't hired a corp dev person, or they haven't professionalize…”
Gil: Best Companies Always Look Expensive Initially and Cheap in Hindsight
“I think the best companies always look expensive at the time and cheap in hindsight.”
Elad Gil: Startups need 2.5 to 3 years of cash runway
“In general, as a company, you want to have two and a half to three years of cash on hand, or the ability to get to that point, or to be profitable.”
Elad Gil: Marginal enterprise software products get decimated in recessions
“So anything that's marginal versus core, I think is really going to get hurt.”
Elad Gil: Early-Stage Startups Only Need to Solve Three Core Priorities
“There's only three things you need to do at an early company. Number one is find product market fit. Number two is don't run out of money, which is another way of saying find product market fit. And number three is don't fight and implode as a founding team.”
Elad Gil: Scaling CEO Responsibilities Consolidate Into Five Core Areas
“The role of the CEO kind of adapts to that complexity and really shifts, and really it consolidates down to four or five different areas. The first is hiring executives and talent. The second is really resource allocation, so determining where capital should g…”
Elad Gil: Hire Executives Tailored for Next 12 to 18 Months
“A key point, I think Ben Horowitz makes this in his book is, and I think it's a general truism is to really focus on hiring people who will be great for the next 12 to 18 months. Hiring somebody who's ran a multi-thousand person team, if you're only a 50 perso…”
Elad Gil: Interview Domain Experts Before Hiring Unfamiliar Executive Roles
“One of the best tactics is to really go almost on a tour of the experts in a specific functional area. So for example, if you've never hired a general counsel, or if you've never hired a CFO, really what you want to do is figure out what is great in that role.…”
Gil: Pre-PMF startups should hire generalists over functional specialists
“The type of team that you want very early on is the team that can be geared towards finding product market fit, which generally means either generalists or Are people who know the industry well enough, but who can do other functions or roles?”
Elad Gil: Structure reporting lines around decision-making tie-breakers
“The second thing that you want to think about from an org structure perspective is tie-breaking. Where do you want the decisions to be made? So for example, if you want decisions between product and engineering to be made by you, then both functions should rep…”
Gil: An Executive's Inability to Recruit Signals Lack of Competence
“So exceptional people want to work for people that they feel like they can learn from. And if that individual just can't attract great talent, that means that people of that function just don't view them as very competent.”
Gil: Executives Not Planning Six Months Ahead Aren't Ready for Role
“If basically they seem behind the ball versus six months ahead in terms of planning and thinking forward and what should be done next, then that's usually a sign that they just aren't really ready for that role.”
Elad Gil: Startups with product-market fit are anti-fragile
“And in general, startups with product market fit tend to have enormous momentum and actually be anti-fragile.”
Gil: Preemptive VC rounds favor large funds over individual investors
“Preemptive rounds are best suited for venture capitalists who have large funds, because I think it's much harder as an individual to manage capital relative to guessing whether something will work or not.”
Gil: Multiple Preemptive Rounds Give Single Investors Too Much Board Control
“The second point is if somebody preempts multiple rounds for you end up with perhaps too much concentration in the hands of a single investor where they can really end up controlling the board.”
Gil: Founders underestimate the upside of selling early to breakout acquirers
“On the financial side, I actually think people tend to undercount the value of exiting early to a breakout company, because if a company is truly breaking out and it still has a five or 10 or 20 X on top of it, then that magnifies the impact of the acquisition…”
Gil: Every manager should write a one-page guide on how to work with them
“And I think that every executive or potentially every manager Should basically write up the one page description of how to engage them, how to work with them. What are the things that work well or don't work with well with them?”
Gil: Career success relies on identifying and maximizing time with a core network
“I think when all is said and done, the key thing to navigating a career is to figure out who's the network or group of people that you kind of want to work with repeatedly, and how do you increase the amount of time spent with those individuals”
Gil: Institutional VC funds are forced into rigid stage strategies
“I think many of the best investors I know are actually stage agnostic, but I think once you become a professionalized fund or firm, you're very much forced in many cases to choose, you know, what your sweet spot is or what your strategy is.”
Gil: Career success requires shifting from saying yes to saying no
“Early in your career, the way to be successful in some sense is to say yes to everything, because a set of opportunities that you have are quite limited. And so any opportunity in some sense is an interesting opportunity. As you advance in your career, the fli…”