TLDR Founders 2024-06-10

YC startups chart new funding path 💰, The Vibes in SF 🌉, Managing tactics from Nvidia’s CEO 👨‍💼

Headlines & Trends

The Vibes are Weird (10 minute read)

Silicon Valley's evolution from a nerdy rebel haven in the early years to a get-rich-quick ecosystem between 2015-2021 reflects the tech world's cyclical nature. Where are we now in the cycle? Everyone is talking about AI optimism, but under the hood, there's still caution in the air. Amidst this tumult, founders face the challenge of navigating a shifting landscape where traditional success markers dissolve. The key takeaway? In an era where AI redefines industry boundaries, adaptability, and a forward-looking mindset are crucial for survival and success, founders should continuously innovate or risk obsolescence.

Many Y Combinator Startups Only Want Tiny Rounds (2 minute read)

In 2024, many Y Combinator startups are opting for smaller seed rounds of $1.5 million to $2 million with higher valuations, often avoiding traditional institutional investors. This trend, driven by a desire to give up less equity, is challenging for VCs who typically seek a minimum 10% ownership, and it may lead to startups being undercapitalized for future growth stages.

Nvidia CEO doesn't do 1<>1s (2 minute read)

NVIDIA's CEO, Jensen Huang, challenges traditional management by shunning 1-on-1s, advocating for transparency and collective learning with his 60 direct reports, arguing it flattens corporate hierarchies and enhances team-wide growth. Can you imagine the ATRs?
Strategies & Tactics

Why AEs Need to Be Generating Their Own Pipeline (3 minute read)

As an early-stage founder hiring your first enterprise AE, you can't expect marketing or BDRs to magically fill their pipeline from day one. Help set them up for success by encouraging them to leverage internal networks for support, meticulously organize outreach efforts, and maintain consistent, personalized communication with prospects. Doing the hard prospecting yards matters.

Breaking Things Down (2 minute read)

Big goals are really just a collection of small goals. Break daunting tasks into smaller, manageable goals. Start small, like writing a single post or securing one customer, to gradually build momentum. This approach simplifies large projects, making ambitious goals more achievable without being overwhelmed.

How to Fund Growth & When Not To (8 minute read)

Smart capital allocation is crucial for growth. Capital allocation is a core responsibility, but too often decisions are based on overly certain projections. Companies have four levers to fund growth–growth capex, discretionary opex, working capital, and M&A. As you scale, adopt a structured capital allocation process to rigorously evaluate organic and inorganic growth investments. Push your team for realistic ranges and probabilities, not just point forecasts.
Tools & Resources

Beyond Benchmarks 2024 (40 minute read)

Emergence, an early-stage VC firm focused on B2B cloud companies, has released its first annual "Beyond Benchmarks" report. Drawing on proprietary data from 600+ software startups, the report provides founders with key insights on generative AI adoption, current fundraising dynamics, and 2023 company performance metrics to help guide strategic decisions in the evolving market landscape.

The Pre-Seed Round Defined: How to Succeed as an Early-Stage Startup (15 minute read)

Pre-seed has emerged as the gateway round for venture-backed startups, but expectations are evolving rapidly. DocSend's new Pre-Seed Startup Index provides benchmarks on what it takes to win pre-seed funding in today's environment.

How to Write High-quality Articles that Attract Search Engines (1 minute read)

A simple framework for positioning your written content in order to attract more interest to your startup.

Bifurcating Budgets (4 minute read)

Software budgets are splitting into two camps: AI-related spend, which is growing rapidly, and "legacy" spend, which is flat to shrinking. Buyers are scrutinizing every dollar to assess if it advances their AI agenda. Software companies are struggling as sales cycles lengthen from this budget bifurcation. To win, vendors must clearly articulate how they future-proof customers for an AI-centric world or risk being perceived as "legacy" and losing out on budget.

Building AI products (7 minute read)

Navigating the buggy terrain of an online visa application led to a deeper dive into the challenges and potentials of using Generative AI (like ChatGPT) for precise tasks. The key takeaway? While AI's error-prone nature today seems like a drawback, especially for tasks demanding precision, this inherent flaw actually opens up vast possibilities for innovative product design. Rather than expecting deterministic answers, we should explore using AI to enhance or create products that thrive on probabilistic outputs, focusing on user-friendly design and domain-specific tools.

Rule of 50 Weighted 2x for Growth (2 minute read)

In the evolving startup landscape, the old "Rule of 40" (growth + profitability = 40+) has been recalibrated to emphasize growth's higher value. Dubbed the "Rule of 50," it considers growth twice as valuable as profit, urging founders to aim higher for sustainable success. Prioritize growth but don't neglect profitability for a balanced, scalable approach.
Quick Links

Discovered, Not Decided (2 minute read)

Founders often fall into the trap of "spoiling the magic trick" by over-explaining product details instead of focusing on customer benefits.

Customers Don't Know What They Want (1 minute video)

How much of delivering great products is about listening to your users' requests, or using your own intuition and insight to deliver something beyond their imagination?

SaaS Growth Flattens, But Bright Spots Emerge (2 minute read)

ChartMogul's latest data shows SaaS growth continuing to slow in May, marking multi-year lows for many.
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