The Wisdom Wall

“what usually happens is they either are, either they joined your startup because they're, they weren't doing well. I'm trying to think of a nice way to say it. Either there's a reason they joined your startup and left Google, or they had expectations that you were farther along or more successful than you actually are.…”

“A lot of the folks who are most approachable when you are a first timer, or when you're just moving to the area, or you're trying to break into the industry, the friendly people that want to talk to you are often The most exploitative, and they're the people whose business model is just, just like, Squeeze you, and…”

“if your idea for how you start a startup is to first create a pitch deck and go pitch VCs, you're setting yourself up to get screwed. You're setting yourself up to get taken advantage of by people who are gonna have 20 different ways to rip you off, versus if you do something cool, you're gonna have a lot more…”

“We see this a lot with struggling startups. All sorts of people will come out of the woodwork to sell you services or promise they'll connect you with the investors or they'll help you fundraise or you name it. And it's like, it's kind of like moving to Hollywood to become an actor and it's not going well. All these…”

“No one gets acquired effectively. Like there's an asterisk next to no one. But the, the, the companies, of the companies that attempt, when they're lower on runway, they're, they're, they flew the plane into the side of the, of the mountain. There's no acquisition coming, man.”

“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, you know, they don't think about it at all, ever again.”

“And if he was an overthinker, he would do, he would rule all the stuff out. All the stuff is like, obviously a bad idea. And anyone in the Midwit territory would rule out all these ideas.”

“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, um, because what you're actually saying is, I would like an option that's guaranteed in your…”

“When we make an investment, often it does not become a big company for at least 10 years. And so, if you're trying to do market analysis and market trends for an investment that won't become big for a decade later, it's kind of flawed analysis versus if you're doing analysis of, you know, New IPOs coming.”

“Startup classes. And they tend to be taught by non-founders. They tend to be taught by investors. And a lot of what you learn is about how to pitch, how to do market analysis, how to identify ideas via market trends.”

“what do I think great investors do, especially later stage than what Y Combinator is, it's they find companies that have product market fit that are taking off, that have incredible traction, and they try to find them and invest in them, and that's the job.”

“I think that a lot of people are trained as PMs and they're trained to do user research. And being trained to do user research, I remember taking a user research course in college, is you're, you're trained to sort of like interview people rather than sell products to them. And if you can't even interview people,…”

“Eh, not the best programmer, not the best salesperson, not the best fundraiser, but very high conviction and able to focus their energy one direction in a superhuman way. Those people tend to succeed.”

“if all you do is read the news every day, You get bombarded with negativity, especially around technology. There's a lot of, the biggest technology stories right now are some version of, like, This is bad. These people are bad.”

“If you have equal equity with someone and you have a seat at the table in decision making, just because it's not working doesn't mean you get the right to blame other people.”

“And basically, what's weird about network effects is if you're not Benefiting from them. You don't know what you are missing.”

“to the extent you can learn to work, to understand the rules of the game, and play the game with credentials, and realize that leveling up on the credential game will help you with your long-term goals. I think that's much better than like, rejecting the system out of hand.”

“If you can't build a product and you don't have a tech co-founder or whatever, or you have never once built a product and given it to anyone and you think it's going well, you are too optimistic. Like it's not going well, like, sorry.”

“Cause again, for some folks, the actual move is to go on offense, right? Just like we said a moment ago where they're like, okay, I see. So this is the score. Got it. Time to go hard against my competitors who are have higher burn. Yeah. You know, like this is a great time if you're the underdog and your large…”

“It actually makes sense from a portfolio theory to advise people to do this because either way, either it works great or it dies and goes away and you get to spend your time on something else, but like either way it's explosive, right?”

“a lot of what you learn is how to use the tools of the FAANG, which you don't get to use when you don't work there anymore.”

“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, um, as well as what team you're on and all this other good stuff. And so, you know,…”

“I'm not saying like it's all bad, but it's, it's a bottomless pit of time suck. Like you could go so far deep in there. You could be in that bottomless pit for years and be a startup founder that's never built a product and has never gotten a single customer because you just cycled in and out of various forms of…”

“The beauty of not knowing anything is that you think everything is easy, and none of the innumerable reasons why something might be hard or your startup might fail even occurs to you.”

“Michael, should, should I file patents for all of my IP? Exactly. That's a classic overthinking thing. Probably not.”

“the beauty of the midwit meme is the, the genius and the idiot come to the same conclusion. So what is the idiot approach? Like, like that's actually how you can define the genius approach is you're like, what would an idiot do?”

“if someone made all their money investing in real estate or in strip malls or franchise McDonald's franchises or something like just something that is not remotely a tech startup, they will often ask for crazy terms that would make sense if they were investing in like a franchise store. Um, they may ask for more…”

“their KPI is that if you raise money and they can mark up their investment, it makes them look good. So they can go tell their colleagues or their, their investors, Hey, I invested in this company and it went on to raise more money at a better valuation than I invested at.”

“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, like, Latest essay they've read, they just sort of, like,…”

“Every idea that you see today has some analog from the nineties.”

“Excitement around the core product or, or feeling like other investors are excited about it and things like that definitely give a founder, like yourself, tons of leverage. Um, but that I actually have learned to not take that too seriously as an investor, as a signal for how the company will do. It's more of just…”

“the biggest problem that most startups have is they can't get users, and they're not making something people want. Not that their architecture is not scalable enough.”

“an example that I notice a lot in a YC interview is They want to present a PowerPoint deck or a slide deck. And the way they describe the company is the way you would describe a very large company. But then when you're like, well, do you have any customers? No. And so they have 15 slides and they want to spend a lot of…”

“We see this a lot where there's companies that find real problems and something they're experts in, but they are facing crippling anxiety that it's not venture scale. Again, they might be right, but they're so obsessed with this way of thinking that, oh, what if this tops out at fifty million ARR? Gee. Can't, I'm just…”

“no matter what I know from investing in startups, that does not mean getting first customers is going to be easy for me or for Michael or for anyone. It is freaking hard. And this zero to one is always the trap.”

“This is the, this is one of the reasons we usually advise to launch quickly. Is so you get this hard medicine quickly. That your first launch is probably not going to work and no one's going to want your thing.”

“You've got to be great at micro to get something off the ground. Great. And no amount of macro experience helps you be good at micro.”

“all, you know, all the Excel spreadsheet modeling you learn as an investment banker. That's great. Just turn that off though. Like unlearn that doesn't serve you now. And, and embrace the beginner's mind. Um, to get your startup off the ground.”

“basically if you spend time, a ton of time with trucking companies, you are likely to have a whole different perspective here on how AI could solve problems in trucking, but you have to go really deep and spend time with them versus sitting, you know, in your apartment reading market analysis.”

“It's so rare in this job where we see a company that gets to 20,000,030 1,000,040 million in annual revenue, and the founder has no idea on how to grow it. They're out of ideas. I'm not going to say that never happens, but it's extremely rare.”

“Trying to contact 25 people and be like, well, I guess, I guess we're done. I guess no one wants it. Is so low effort. As to be funny to us.”

“The, the metaphor I sometimes like to tell people when they're pivoting is the most important customer is yourself. And the founder psychology thing you want to do is build conviction in your own mind that this thing is worth working on. And so it's not to make investors happy or your YC partner happy or whatever. It's…”

“when you spend all your time trying to triangulate what other people say is good, and that's how you decide what startup idea to work on. You're gonna have a bad time.”

“when you're low conviction, money ain't gonna, no, money's not your problem.”

“you should at least be able to use your own tool. And be proud to use it or feel like it's providing some value, the V in the V, it's viable for you. And if you can't even get your, you can't bring yourself to use your own product. It's a little weird to be trying to sell it to people.”

“the reason to enumerate this stuff is that in the moment when all this stuff was happening, it wasn't immediately obvious that the world was changing. It was just kind of normal, like, oh, this new thing came out. Oh, that's cool. And even at the time, some of this stuff was, uh, people were against it, or they're…”

“I think when you're really caught up in the moment, everything gets polarized into political stuff or tribal warfare about who's on what team, and so if it's, if your team is the thing pushing for the thing, you celebrate it, but if the other team is, you know, screwing people.”

“if you want to tear down anything interesting that happens, By saying, well, X over here isn't solved yet, it's easy to just get trapped in the mud.”

“if you're actually building things and you want to be a part of creating it. It's much easier and more fruitful to be optimistic and think about all the things you can do and think about what you personally can do and what you can work on. Versus just being like, burn it all down because of X.”

“basically folks put up the barriers. To negotiate against themselves. Right out of the gate.”

“what often happens, again, to go deep on this, is that the way they'll pitch the person is they'll pitch them their idea. They'll be like, I'm an idea guy. I've got a great idea. Do you want to be my, like, worker bee to go do all my ideas? And of course the person that's the best person you've ever worked with does…”

“So this, this comes up a lot, um, for us at YC where we read a lot of applications and we interview a lot of companies and we see folks where it's pretty clear what's going on. We can see it a mile away in the application that someone is getting exploited or ripped off and it's usually the technical person.”

“Well, the early employee notoriously kind of gets hosed on this stuff, especially if they're providing the work of an equal technical co-founder, yet they get one percent or less of the company. Again, this is very common where you'll have two business founders, three business founders, you know, and then they'll have…”

“if you're trying to self-diagnose, am I being exploited, um, as an engineer, as a technical person, is the whole point that the business people have a lot of meetings that you're not invited to, and all decisions about everything are made by the business people, and you are basically used as a robot to write code.…”

“Well, and you're the technical person, so you notice the first. The funniest thing is this one of the technical person who does all the work is the one actually reading the analytics and like, hey, like, this, our launch bombed. What's the plan in the business? Don't worry about it. This is like, you need to be quiet.…”

“we see this with equity splits because often sometimes it'll just be, Hey, have you all thought about maybe like, or how did you come up with the equity splits? Like, well, it's, you know, 9010. Well, why? Well, it's my idea. Well, you know, most of the work is ahead of you, not behind you. What if you went like equal?…”

“And if you're a really nice person, those are the people that tend to get ripped off the most.”

“We get the benefits of living in the Bay Area and having the network effects of the city. Without all living in, like, the, like, our lives are not the Twitter thread. Showing photos of what's going on in downtown San Francisco.”

“If you look at the history of great YC companies that have gotten in, many of them pivoted after they got in, and so if that's not too early, I don't know what is. Many folks haven't quit their job. They get into YC. They haven't written any code. Um, there's, there's honestly no such thing as too early”

“if your business is not a technology startup, say it's more of a traditional, um, business where there's no technical component, there's no programming, there's no biotechnology. That's probably a good reason not to apply. That's not really, um, our sweet spot.”

“Probably the biggest mistake I see, um, in folks preparing for their YC interview is to treat it like an adversarial process.”

“Like one of the things I noticed at YC is a lot of the folks that later on become great founders. They worked on projects in high school that may not be commercially, like, venture-funded companies, but they were, like, pretty cool.”

“the key in this hard, hard conversation is not to debate someone that their plan is bad. Keep the optimism, you know, but isn't it better to sort of have a plan for the worst and not be surprised on the downside?”

“It's just a sign of what you're focused on. And so when folks are really involved in the scene, in the drama, in the characters, Um, and are obsessed with the startup scene as opposed to their own thing and solving customer problems. That's usually a sign of like conformity.”

“Like the only way that you can keep score is like revenue for my startup. And if it gets big, there's no other way to keep score than that.”

“The actual, um, meaning of the metric, which is to capture if it's working or not. You know, it's like every, every which way people are so creative in finding ways to like, not actually measure the thing that they know they're supposed to be measuring.”

“If you're used to doing that, and that's how you think all things should work, when you start working for yourself, when you are your own boss, you are screwing yourself.”

“If something doesn't work to accept it, to acknowledge it, to look at it, but realize you're the boss of yourself and you should just not feel a need to make a million excuses or have like, like create this long narrative where you're the victim and everyone else, it's not your fault and your heart was in the right…”

“so much of the, the VC content is aimed at late stage founders, which is pretty weird. Um, it's like putting out content that's like, you know, how to care for your, um, Your Ferrari or something like, like, again, I don't really know who a lot of this. The majority of the people that consume it are like two or three…”

“if you spend all day on Twitter and discord and everything's a game and everything to joke, everything's silly, you can kind of, I just have noticed some folks lose themselves and not realize that the numbers in the spreadsheet are real dollars”

“the way you build a company is not, you're not baking a cake where you, 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 to break it to you. You're doing all the work.”

“too many folks think fundraising is a market like the stock market. And that there's like graphs and charts you can have, and it all operates like an efficient market instead of what it actually is, which is like 10 different things, right, Michael? Like the YC funding ecosystem is like its own little universe.”

“I mean, the fact is you need to be both optimistic and pessimistic. Okay. And if you're too far on either extreme, you, Are gonna fail, right?”

“And so I think a lot of folks just, they don't realize that this stuff is hard and that even when it's working, you mostly get no's.”

“you can tell when something has jumped the shark, when it is a, one of the more common ideas people apply with. Like, remember chatbots? Everyone was building a chatbot for a couple of years there, and that's when you knew it was over, basically.”

“And I think, I think the best founders Have techniques and they can do it. I think, and they can like be really good at it. I think something to aspire for is a founder is someone who can know both. Oh no. Like my star employee just quit and says my startup is horrible. And, and now I don't know what I'm going to do,…”

“I think if you feel that you are smarter than other people, and this is something we encounter sometimes in our jobs, I think if you feel that you are more intelligent than others, perhaps you can end up on the slippery slope of moral arguments, that it's okay for you to make a living off of other people's work,…”

“no matter how crooked someone is being, they have a story that they cling to and they refuse to see it any other way than that.”

“at some point, no matter, it's almost like you're going into debt, like personal health debt or whatever you want to call it. And man, you can go pretty far into debt. You can go five years into debt. You can go 10 years into debt. I don't know. But at some point the debt comes due. Um, where you can't hold it all in…”

“And his point is, this is a binary. Either you are default alive or you are not default alive, thus defaulted. There's no third option here, friends.”

“And so what you'll see is whenever there's like choppy waters, the default dead people that were banking on the next round being easy. Die. Simple as that.”

“If you're a good programmer, if you're a good programmer and you leave and you leave in a nice way, no matter what happens to you, you can come back. There's actually not that much loss you have to take.”

“when you're programming, the more of the program you can keep in your head at any one time, The, the easier it is for you to know what's going on and have the context up here to make changes and fix bugs. And it takes like an hour or two cold of looking at a program and figuring stuff out for it to get loaded into RAM,…”

“The number one thing that I do that I realize that a lot of the other successful founders did too, um, Was I had my analytics dashboard or whatever was important KPIs on the business up on my screen, 24, seven, and I would stare at it all the time.”

“what I've learned that I did not appreciate when I was a founder is that the maker schedule vibe works for sales and talking to customers too. And it's scheduling, 20 minute blocks to talk to customers is not the same as an eight hour. Like, like even if it's not literally your programmer using the maker's concept to…”

“And the worst place to be is that you know just enough to know why the things you're trying are hard and the odds are stacked against you. And that freaks you out. And so you think about it a lot, right?”

“you're screwing yourself by overthinking all this stuff. Instead of just being like, hey, I need X dollars, I'm gonna raise it, and I'm gonna get back to work.”

“If you have time to wonder about it, if you're like, gee, do I have product market fit? Let me, let's pontificate on this. That probably means you don't.”

“I think if you haven't seen really successful startup companies, either personally, like where you were the founder of one, or you know people and you saw them go through it. It's hard to believe how silly these things are when they start. Like, I think unless you've literally witnessed it personally, and you've seen…”

“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?”

“what failure usually looks like for a lot of our companies is they get zero real customers. Zero. It's not that the failure was they couldn't get a Series A, it's that they just, like, bombed. Like, complete disaster.”

“most of my experience, both personally and with founders NYC, is the founders kind of feel like they got a raw deal on these and that the clicks they get from the, from the posts or whatever, Were not as helpful as they had hoped.”

“Usually when you get advice from other founders, it's heavily based on their personal experience. The, but like the downside of that is if they're really, if they really struggled fundraiser with fundraising personally, all their advice is going to be them basically telling you, don't do what I did. Or if they struggle…”

“The founders that made it work believed in themselves and they knew that we couldn't fix it. Like they actually internalized the whole meta point of this video, or at least what I'm trying to get across with it, which is like, you know, they, they took bits and pieces. They, they, they, they took information from the…”

“a product that doesn't work with lots of features is infinitely worse than a product with one feature that works.”

“I think best practices, if anyone here is doing a hardware startup, um, think best practices. Is you don't do it at the earliest stages and you do it later when you have like V two V three and you're ready to manufacture at scale.”

“this happens a lot with technologists. That happens a lot with Silicon Valley, where they start with the technology I think is cool, and they try to find a market for it second.”

“Again, that's a good tell. If you call it a project, um, it's a bad sign.”

“I think it's finding stuff that like you care about, even if there was no money in it and that you're doing it, even if there's no approval from it, from authority figures, it's a bit of an anti authoritarian deal”

“well I always encourage people if they're thinking about maybe pivoting, to go more towards something they're deep experts in, that they know more about and not less about.”

“And it is very hard to build a huge, huge, huge company doing that. But it certainly helps when people are doing communities or things around discovery. That's a pretty tried and true way to pay the bills.”

“I think the most important thing that I look at is how serious the founders are and if they really made something and showed it to people. And so it's almost like it doesn't matter if the product is good.”

“The face-to-face meeting is pretty much where everyone, um, that's done a lot of investing, that's, that's the meat and potatoes of how you tend to make investment decisions. Um, you do a bunch of qualification, and then the face-to-face meetings are where you decide whether you're actually going to invest or not.”

“if you don't know how much you want to invest and what your budget is, you're probably gonna be making suboptimal decisions. So it's good to think, here's how much I'm willing to invest across a bunch of startups beforehand versus being like, well, you know, I have some money saved away, and I was thinking about maybe…”

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

“a bunch of people with different criteria are much more likely to find Really interesting outlier companies and generate great returns versus if everyone has precisely the same criteria.”

“Really good investments are often contrarian or unfashionable, or somehow are deeply unappealing to everybody else, right? Those are the really good ones, is that you see something that other folks don't, and that, that, the fact that it's deeply unappealing is what creates such a great opportunity for you.”

“Cause it's not, maybe you already saw their deck, or maybe you already read about the company, it's not necessarily about learning what you didn't already know, it's about hearing the founder tell their own story and their own words. And that's such a good reason to start from these first principles, is you sort of…”

“And one thing to look for in your own gut is if you feel more or less convinced the more you talk to the founder. Because it could be you hear about an idea, you see their demo day pitch, and it seems great, and you're a yes, and the more you talk to them, the more you're getting lukewarm. That is not a good sign. That…”

“In terms of bad meetings, um, one thing to think about is pretend that the investor meeting is your job interview, where they're interviewing you for a job, and not the other way around. Um, there's often a lot of power dynamic things of making it feel like the founder is like, um, like an employee, I guess, and they…”

“If you write them a check, then your advice is a lot more valued, but if you're just meeting with someone, and it's a no, and all you're doing is telling them how everything they're doing is wrong, that is not value add.”

“Like, you know, you do one meeting, you don't invest in the company, and you introduce them to, like, 20 people to seem really value-add. Um, that is not value-add. That is wasting their time.”

“if it's a very small amount, and you're just part of a large syndicate, um, don't make it hard. Um, it's only going to foul up the process, and often the founders will just push back on all this stuff.”

“Usually if the founder is super defensive and flips out about it, that is a good red flag for you, right? That is a very good red flag if the person has a very hard time Speaking on an even tone about competition, or is unwilling to admit the competition either exists.”

“and I think that's how you build confidence in yourself as an investor, is you get enough times to iterate, um, and you, you actually, you know, have to lose money. You actually have to have some winners or losers to feel the pain.”

“And so sort of my takeaway during that era was that usability always trumped the elegance of peer to peer models.”

“the really important thing to tease apart is copying completely without thought or any original thinking or original work versus being influenced. Yes. And borrowing good ideas to integrate into your own thing.”

“Giving these kinds of people equity or whatever in your company does not help you get into YC.”

“you have to learn how to fight and maybe fights the wrong word, how to disagree. It's like, um, You have to learn how to pull your punches and have a disagreement that's a real disagreement and actually release the pressure of the disagreement in a way that doesn't cross the line so that the relationship is irreparably…”

“the people that tend to like working at the first 10 employees tend to be nonconformist. Right. Cause there's no structure. It's like chaos. So that's like a really good move versus going into like the, the big tech treadmill.”

“Default alive is different than profitable. Profitable means today I make enough money that I am profitable. My bank account grows every month. Are you so with me? Default alive means I may be burning money today, but my growth rate is high enough on revenue that I will become profitable before my bank account goes to…”

“The margin of error when you're default alive is huge. You can go out and try to raise around and fail and be fine. There's huge margin for error.”

“Well, for most folks, it's, it's, it's literally headcount. It's not office snacks. I'm sorry. That's probably not the thing that's, you know, perks are not bankrupting the company. It's that you hire too many folks. People are expensive.”

“trying to back out of the deal after committing is a huge faux pas and will, you know, have far-reaching negative, uh, reputational effects.”

“that is all the recipe for a failed fundraise, is a lot of people telling you how much they like your business and how, like, exciting it is to talk to you. If no one is writing checks, it means it's not going well.”

“Just scheduling meetings in a non-painful way will put you ahead of the pack from a lot of other angel investors. Um, being on time and picking a convenient location will put you ahead of the pack versus most angel investors.”

“the history of the term, as I understand it, is when you superficially copy something without understanding why you're copying it. That is cargo culting.”

“going through and answering the application questions, um, to organize and clarify your thinking, super helpful, right? Go look at the questions. Um, it'll help you think about your own business and maybe find some edge cases. And so I think that's worth doing for everybody.”

“A positive sum game is where something happens and is a consequence of it. Value is created that lasts for a while.”