investor

“Investors sort of like write the check. And then despite a lot of big promises don't usually do that much, sometimes they do. But your employees are really the ones that build the company over years and years.”

“And this is one place that your investors will always give you bad advice. I think, not YC, but all other investors give bad advice here, most do.”

“Founders that were obsessed with their own personal liquidity when the company had nothing turned out to like fail most of the time. And so investors learned that if founders pushed on this in the seed round, It was a very, very bad sign.”

“And this is sort of advice I've always given people is, you want to find investors that really deeply understand what you're doing. And so, and you want to get rich people that deeply understand what you're doing.”

“There is a giant amount of arbitrage left, ah, because most investors in Silicon Valley will only fund you with an intro, or they'll only talk to you with an intro. And it is, honestly, I think, by and large, a fairly insular network.”

“You know, you, you've figured out an approach to this I like for investors, which is continue to be very involved with operating one company, and I think that's a model that is very underexplored, and we'll see more of.”

“Yeah, I think, ah, you know, the most interesting companies start with a TAM of nearly zero, and it's like, ah, very bad investors are the ones that are super focused on the TAM of today. Very good investors are focused on the TAM of 10 years from now.”

“The network has gotten big enough that the asymmetry that used to exist Where investors had a lot of leverage is gone, and I don't think it will come back anytime soon.”

“The first question that most people ask YC startups is who else is investing year round?”

“I would say 80% of investors outsource 80% of their decision making to what other people think about an investment opportunity, but the problem is everyone does that, and so there's this weird schooling effect where a company gets hot for no discernible reason…”

“It is way more important to your future success as an investor that founders like you and say, that investor did the right thing by me, than it is that you squeeze out, you know, a few drops of juice from a failing company.”

“That if you end up on the founder side more often than not, then your probability of getting in the one company that will make all those other investments irrelevant is much higher.”

“So I would say that it's extremely rare that an investor can have truly big impact.”

“One thing that, ah, for founders, it's easy to tell when an investor is not an A-plus investor is if they claim to be an A-plus investor.”

“Something that we see a lot as an anti-pattern in investor behavior is folks that just do meeting after meeting after meeting after meeting and don't ever make a decision. And that's actually worse for founders than just saying no.”

“A very common thing we hear a ton from founders is that investors that just look at their phone the entire meeting, or otherwise act super distracted. Not recommended. Very basic, but holy cow is that common. That happens in a double digit percentage of meetin…”

“So one thing that we hear a lot of, especially for folks that haven't done much of this, is they say, okay, I'm in, once you go find the rest of the round. And this is the cheapest of cheap shots that you can possibly do because what you're actually saying is,…”

“When I was doing my demo day pitches, all of these little things mattered because it was just a five minute pitch or no, I think it was a two minute or a five minute pitch for the, in the demo day. And every little thing matters a lot because when you're talki…”

“I was soft and sensitive at a time when investors tended to be hardened and aggressive, and I'll throw in ruthless too for a couple of them that I know.”

“Because YC didn't have any LPs at the time, we weren't even constrained by a vague fiduciary responsibility to anyone, and That allowed us to take more risks with who we chose to fund, and it also allowed us to be benevolent to failing startups and that often …”

“No investor wants to put money into a company with founders who may decide the next day that they're burned out, so they take their shares and they leave.”

“Most public companies are Delaware companies, so that saves you a little time if you're gonna go public. And some investors actually will require that you're in Delaware before they, before they'll fund you.”

“Also investors want to invest in things where they're like, this guy's going to do it with or without me. Like she's got this. I better invest now before she runs off and makes it, you know, and like leaves me behind.”

“Look, if no investors want to invest in your business, that's your fault. You should do a different business. Like, there's lots of businesses that don't need any investor money. Do that and then earn the credibility success compounds, like build up, you know,…”

“Investors do not care about getting their money back. That is not sexy to them. You shouldn't say that. Founders are kind of like hedging against themselves and saying, don't worry, I'll still protect your money. But You need to up level that when you go talk …”

“Every time there's new startups coming up, the grass is always greener, because the investors know all your problems, and they don't know any of the other problems.”

“Sometimes the right investors will be the investor With whom you resonate the best and who you think is going to be the best added value. Sometimes the right investor be the person who is willing to write you a check first.”

“The absolute ultimate best way to connect with an investor is via an investor who invested in your company who will connect you to another investor. That is the best possible introduction.”

“Also, a good sign that an investor meeting is going well is when they talk at least as much or more than you do.”

“If you run into an investor who is asking for five-year projections at seed, you've run into what we colloquially call a noob. They don't know what they're doing. Who has five year predictions at this point?”

“Honestly, the best investors will want to see a small market, because a small market at the beginning means you can identify who's in that market very cheaply, versus having to boil the ocean, saying, well, there's like, Two percent of all people in the world …”

“The top section should be what are your asks from your investors? Or investors and advisors, or whoever you're sending it to. So it's very clear immediately how they can help. So if they don't read anything else, if they just open the email, they'll see that, …”

“I think that, ah, the most successful companies in 95% of the cases are successful despite their investors. I shouldn't say despite. I should say irregardless.”

“In general, you'll find that most investors are fear driven versus ambition driven. They're kind of scared of missing something versus really excited and believe vigorously in something. And so high conviction investors are actually very valuable in my opinion…”

“So say that somebody exits their company for a billion dollars, and then they start another company, and in no rounds do they take their prior investors. That's usually a sign. And so I would call up that person.”

“You should diligence them and ask the founders where either things didn't go well or where there was some issue over time or whatever it is. And that's more likely to reveal the truth about an investor than asking in a situation where everything worked.”

“I think an investor is an employee who you can't fire. And that's how you should think about it. Otherwise, all the same principles apply.”

“I think, 90% of investors add no value. In my assessment, 70% of investors add negative value to a company.”

“My big beef with a lot of investors is they want revenue, They want to meet plan as opposed to collect assets for this larger ascent to Mount Everest.”

“Credit card transaction data is, it's a messy and, like, there, it's a messy data set with unstructured data problems baked into it. And the skill sets of investors, even the more technical ones those tend to lean more towards, like, time series analysis as op…”

“You have to have an unfair advantage that explains why you're gonna grow quickly. If it's not related to that, then it's not gonna be something that an investor is gonna find valuable.”

“Generating letters of intent or agreements to pilot shouldn't be very hard if there's a lot of demand for this sort of thing. So being able just to get your customer to sign anything, even if it doesn't have a price on it, is evidence that you can sell to an i…”

“So here's how I would probably structure the pitch. Step one, what you're working on now. Step two, the traction. Step three the business model, and then step four, the vision. It's a lot easier to sell me if I know what the hell's going on, and those first th…”

“It actually shows a level of sophistication to ask the question when you don't know, as opposed to just kind of, like, nod as if you do know and not, and then leave without any insights.”

“Here's actually a problem that a lot of founders run into, is they think that their one-liner or their short description has to encompass, like, everything that they'll ever do under the ends of the earth, because they think that, like, investors only will get…”

“I think sometimes counterintuitively investors who know slightly less about your space can be a little bit more grasses greener, like, optimistic than folks who know more about your space.”

“I think you kind of see this from these investors where they just, they read what other investors say and do, and they sort of like say and do whatever it is they read. And so like, whatever the hot new trend is, whatever people are tweeting about, whatever, l…”

“The best investors point out the problem. They don't give you a solution. They just point out the problem.”

“When all you have is a hammer, everything's a nail, and so if what you know is money, the solutions usually involve money. So raising more money, spending more money, throwing money at the problem, right?”

“You can get a lot more honesty out of somebody when they're not financially incentivized to kind of blow smoke up your ass to, you know, to say nice things.”

“And what's interesting is that over the years, a lot of YC founders will kind of start following the advice of these people. And they'll make very, very common errors, and you can almost track it back to, like, oh, I kind of understand the type of person who i…”

“But I think at some point, the more time you spend there, what was once a good positive signal could turn into a negative one. Again, I can't speak for all investors, but at some point you lose the shininess of getting that validation as well as what team you'…”

“They're pattern matching to previous successes and answering the question, like, do you pattern match to founders I've had success with in the past? And then they're stack ranking, like of all the founders I've worked with and are currently pitching me, like, …”

“I think we see this in practice, too, because we will see founders who will pitch to investors, get no's, apply to YC, get into YC, and those same investors will say, now I want to invest in your company, and nothing has changed. No fundamental thing has chang…”

“If you actually just change the facts of your business, right? Like make progress more often than not. The investor will look at that prognus as a much better signal than any modification you made to your deck or any modification you made to the words in your …”

“So if a founder actually, like, actions on your feedback in sort of like a material way, like, it makes you less than like, if you're a good investor, I think it makes you less than likely to want to invest. You don't want to invest in someone who is relying o…”

“It's like, I think investors end up knowing just enough to be dangerous. And it's a job where you're often selling, so you're very confident in sort of how you articulate your opinions. But like, yeah, you don't actually get the deep insights because you're no…”

“One of the pieces of advice I repeat after demo days over, over and over again, is keep a list of the investors that said no, like, who seemed reasonable about it, and like, just keep, like, keep sending them updates. Keep sending an update every month. And st…”

“If a founder can't come back, if I feel like I better understand the user than the founder does, that's a bad sign.”

“A good investor can always tell whether the company's pitching them is gonna die and about to die or not.”

“So at any given time in your startup, you're being judged on the last six to 18 months. And so if you take this hit, you cut your revenue in half, but you get to default alive. And the result of that is you get to spend the next six to 18 months Building a bet…”

“I think that's extremely rare for an investor to be demanding you to like burn like crazy. I think that the horrible truth is that founders don't need much of a push.”

“This is what's so weird about this business is like, who has to live with the rest of their lives that that was their startup. Or that they could have done something different. They weren't able to versus the investors like, yeah, whatever. Cool. And they go, …”

“I think that in general investors are allergic when we tell founders that there might be situations where their incentives and the founders incentives are not aligned perfectly.”

“And it's just funny how like doing that really seems to annoy investors that we're like, again, we're like giving away We're like on the wrong team a lot. They seem really mad at us.”

“Your friends are idiots and don't know anything, especially if they would never use your product. Investors are close seconds as idiots, especially if they would never use your product, don't invest in your space, aren't good investors, don't invest in a lot o…”

“What I've also seen for second time founders is that oftentimes for an investor, it's more of a catch. It like helps you build your reputation in your firm, or it helps you get the deal approved. And like, so oftentimes there's like internal political reasons …”

“And it's like when you're a second time founder, the investors know that you know more people. They don't want to give you bad feedback, right? Like they're incentivized to tell you nice things so that you'll continue being nice to them. Whereas when you're a …”

“And what they didn't tell that founder is that every subsequent investor would say to themselves, huh, this investor put in a relatively small amount of capital, bought so much of the company that the founders are going to get so diluted that they're not going…”

“It shouldn't cost 50,000 dollars to a price round. Like you're just ripping off founders, pure and simple ripping off founders.”

“If you ever see someone making an argument that's 100% ripping something else down and zero percent explaining why their thing is good, if all of your talking points is the alternative is bad, you know, maybe all you're selling is fear because that's all you h…”

“The way you build a company is not, you're not baking a cake where you sprinkle in three different investors and then a cake pops out. Like, that's like the stupidest thing I've ever heard. This is a really common misconception out there, which is like, I hate…”

“I think people don't realize that either some stage of investors or at some point in your company, someone's going to pull out your finances and do basic arithmetic and ask themselves, is this real? And like eventually you will be judged based on like, is this…”

“If investors aren't investing, it's not because you didn't say the magic words. It's because your startup isn't good enough and you need to make your startup better.”

“If you look at the history of really big companies, so many of them, most investors thought that the idea was horrible.”

“Investors sort of shift their view of what's gonna work every six to nine months. And I was like, geez, it takes It takes years to build a company in these spaces. And so there's no way, you know, the attention span that investors have on this stuff is always …”

“Dual class is defeated all the time. I give a bunch of examples in the book, like, you know, the stock price drops. Everyone panics. Founders forced out anyway, because at the end of the day, like having the votes is not the only thing that matters. There's a …”

“Founders either have to agree to or not this system. And so we actually are the ones propping it up. We're giving it the fresh meat it needs to survive because it's so value destroying.”