The Top 5 Pieces of Advice That Founders Don’t Want to Hear

I’ve had a few founders over the years think I was upset or frustrated with them. That’s on me — I can be direct at times. Maybe, often.

But no great investor wants anything other than for their founders to succeed. 

Wildly.

Every founder I’ve invested in, I want it far more for them than for me. I want them to not just win, but be truly great.

No, where I might seemed “upset”, it was more worried for them.

Worried about mistakes that can be averted now. Mistakes that are both clear and hard to see. Mistakes that are truly actionable, and important.

Mistakes that are hard to see for founders, but easier to see for investors, top mentors and advisors.

If you work on anything related to Artificial Intelligence, you know we’re in the age of language models. But when it comes to Enterprises specifically, language models can change the way we work, and they have very big issues.

At SaaStr AI Day, Contextual AI’s CEO, Douwe Kiela, deep dives into what it takes to build AI products for the Enterprise.

You might be familiar with some of the common language model issues. 

1. Hallucination with very high confidence — making up stuff that isn’t true but seems true. 
2. Attribution — knowing why these language models are saying what they’re saying. 
3. Data privacy — we send valuable data to someone else’s data center. 
4. Staleness and compliance — language models must be up-to-date, compliant with regulations, and able to be revised on the fly without having to retrain the entire thing every time.

This edition of the SaaStr Daily is sponsored in part by Stripe

Stripe Sessions brings together business leaders and builders to discuss the most important internet economy trends. In 2024, we’re focusing on what’s possible—and what’s inevitable—as technological advancements change the world and the global economy with it.

When you sell:

• it’s not yours anymore; and
• your upside is capped.

Start with Challenge #1. Ask yourself 4 “Are You OK With” questions:

• The name being changed?
• With the business being shut down in 2–5 years, if it isn’t strategic anymore — no matter how successful?
• With it being further sold to someone else?
• With it slowly declining over the coming years to irrelevance?

Make sure you are OK with these 4 outcomes.

If you are — and many are — then ask yourself Challenge #2: What if you could make 2x as much by holding on? Do you care? Will you care? Are you still OK selling?

Most founders I know end up looking back after selling, IF the acquisition was a success, and almost universally feel like they should have made 2x as much.

So this is a super simple post, but I think an important one.  VCs know sometimes, something changes. A new great VP. A change in the market.  An amazing feature.  Sometimes, it’s just timing. Sometimes, great startups are too early to a market. Procore didn’t really take off until the iPad did.  UiPath took 10 years to get to $1m ARR … and then it exploded to $1B in ARR.  It was early to automation.

3 months though, is the minimum. VCs really will fund someone with 12 months of low growth. But then you need proof it’s changed.  3 months — minimum. 4 is even better.

Get 3-4 great months of growth under your belt, then go raise that VC round.  

It’s generally fine to reschedule an interview set up with a recruiting manager or similar. They’ll figure it out. That’s their job.

But — be careful rescheduling a job interview with a founder CEO — especially at the last minute.

If it’s a great reason, so be it. If it’s a mediocre reason — they’ll probably move on from you, one way or another. You’ve potentially shown you aren’t reliable enough to report directly to the CEO.

Another insider tip — take the soonest time offered for the call. Folks that really want it take an early time, not a later time.

Founders are looking for folks they can trust to own stuff.

This edition of the SaaStr Daily is sponsored in part by Cisco

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Sam Parr was kind enough to bring me on to The First Million Podcast. He has a broader audience than just B2B so it we touched on more topics that usual, and it was a great convo:

• Pricing in the early days
• Why you have to get to $300k+ in revenue per employee
• When to go multi-product
• Why your second product has to be bigger than your first
• How to double your pricing over time
• The challenge in low NRR models
• The One-and-Done VC fundraising model

The full convo and pod here.

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