Why Founders Shouldn't Think Like Investors

It’s easy to analyze your way out of taking the first step. It’s something we see a lot, particularly when founders try to choose what to build based on what they think VCs and investors will like.
In this episode of Dalton & Michael, we’ll talk about the risks of “thinking like an investor”, how to know when you’re stuck in this mindset, and how to unlearn it. We’ll also cover a short list of things that we’ve found actually matter when starting a company - it’s simpler than a lot of people think.
Apply to Y Combinator: yc.link/DandM-apply
Work at a Startup: yc.link/DandM-jobs
Chapters (Powered by bit.ly/chapterme-yc) -
00:00 - Coming Up
00:24 - How VCs Think
03:05 - What Matters
04:56 - What's Changed
06:41 - First Principles
08:41 - Fear
10:06 - Positive Feedback
11:18 - First Customers
12:56 - Scaling
14:19 - Macro Vs. Micro
15:54 - Unlearning
17:22 - Time With Users
20:36 - Superpowers
21:42 - No Exit Strategy

[@chapterme]

Chapters (Powered by ChapterMe) - 00:00 - Coming Up 00:13 - Intro: Founders should not think like VCs 00:24 - What is thinking like a VC? 01:04 - Investing in small companies with expert networks 03:05 - How would a YC Partner think when reading applications? Early-stage Investor Priorities 04:56 - Why do founders do this? 06:41 - Thinking from first principles 08:41 - Fear based: Choosing a bad idea 10:06 - VCs give positive feedback to startups, but founders struggle 11:18 - First Customers struggle: Founders thinking like VCs encountering the real world 12:43 - Launch quickly: Avoiding zero-to-one mentality 12:56 - Scaling: Not a lot of founders engaging in zero-to-one 14:19 - Macro Vs. Micro 15:54 - What's the cure for founders? Turn off skills that don't serve startup 17:22 - Spending time with users is a cure 20:36 - Superpowers: Restrict thinking like a VC 21:42 - No Exit Strategy: Humans are trained to have the entire plan worked out 22:26 - You don't need a fool-proof plan today 23:48 - Outro

[@matthcw8745]

*Chapterme - Backed by Y Combinator*

[@AnthonySistilli]

as a starcraft grandmaster & startup founder this episode was everything I've ever wanted in life

[@gergelymarton]

P? T? Z?

[@jaroddgeorge]

As another starcraft gm and YC youtube addict I couldn't believe I was hearing a perfect starcraft analogy on the channel

[@AnthonySistilli]

a fellow harstem subscriber - a man of culture i see @@jaroddgeorge

[@JohnSmith-mu8fx]

hopefully not a trucking copilot right?

[@RIP212]

Same. Pleased by analogy a lot :D

[@jasoncheung8407]

On a related note, having lots of resources and doing a lot with them is not always how you create progress for your startup. Any founder with a ton of resources can make a lot of decisions like spend a lot on an office, spend a lot on ads, etc. But just because a lot is happening at a startup does not mean progress is actually being made. What separates progress from just a lot of effort and activity? What you choose to do should either help you help your user better by helping them solve the problem you’re trying to solve for them. For example, if you’re running ads to push a vanity metric like signups but don’t look into who is signing up or why they are, you’re technically doing the right thing but not making progress.

[@leadgenjay]

Great insights on the pitfalls of overthinking in the startup phase. Entrepreneurs should also remember that early customer feedback is gold; it's less about impressing investors and more about creating a product that solves real user problems. Quick iterations based on user experience can differentiate between success and stagnation.

[@juanantonioquiroz9570]

Founders create markets :) Investors speculate.

[@beepdotboop]

As an old school RTS player, I love the micro/macro analogy

[@Musa_Media_]

Jeff Bezos was a VP level investment banker before he started Amazon. Thinking like an investment banker is fine, you just have to understand how entrepreneurship works too. Building, getting the first customer, and scaling are 3 different tasks.

[@sammcalpine6851]

No, he worked at D.E. Shaw, a quant hedge fund, not an investment bank

[@techievena]

To all the founders crying in the corner after facing daily rejections... just confused where they are going wrong... Dalton and Michael - We're here for you 🤟

[@tigerrx7]

The dynamic duo dropping GEMS!!!!

[@Kingromstar]

Micro -> Macro. I love the analogy.

[@Geniusproduction]

It’s so good, really eye opening

[@solomonbush331]

If you want to be hired by a VC, then act like one. If you want to be funded by a VC, then act like a Founder.

[@turoczy_]

Always always always appreciate folks calling out the "exit" slide 😂 Such a good episode.

[@IsaiahNields]

You guys are great for making sure big tech companies stay in check and treat their employees more

[@joeingram1]

So helpful in mindset differences Founder v Investor - thanks!

[@user-oc1oe6rr1e]

the premise is: focus on building the shiny object & let the VCs auction it

[@JabariHolloway]

Thank you both for your help & guidance 🙏. In my own journey, I'm excited about reducing the "pollution"/noise and embracing being a beginner again 😎

[@LindleyWhite]

How would you go about widening your own personal filter for good ideas?

[@NilsWestgardh]

Love the StarCraft talk! Maybe Kerbal Space Program is more like launching? Quite literally.

[@derek-yap]

I like the part about unlearning. "Turn of the pollution" makes a lot of sense. I think folks are more influenced by what they hear/read than they realize.

[@sbamba3027]

This is your best video. Micro macro analogy so violent and on point.

[@perfectlycontent64]

The StarCraft metaphors are so perfect 😂 How do I get product market fit so I can focus on macro and just stay in my base and build pylons.

[@AbuChanChannel]

This video should be for consultants who trying to build startups.

[@maximlitvinov84]

So how do u bridge the gap? If a founder isnt thinking like a vc, how can a founder fundraise? Since a founder and VC speak two difrent languages?

[@danielr5343]

I love these two hackers and how they interact. Great episode, helped affirm that my startup mentality's on the right track.

[@honorquest]

Same here.

[@hsuyuting1993]

This channel is a goldmine

[@stephaneessomba9441]

It's always refreshing to listen you

[@jeroenjansen3835]

I would love a video about the laser focus on the relation between product and early customers

[@kelleyau9056]

I love the starcraft reference and micro / macro discussions!!

[@mrjohncrumpton]

Is micro / macro related to StarCraft? Could you explain this more simply?

[@sephypantsu]

​@@mrjohncrumpton micro is how well you control your units in battle, macro is the sequence you build your base in

[@SacredCASHcow]

I don't understand why micro is more important.. in the context of startups

[@sephypantsu]

@@SacredCASHcow micro wins you battles, macro wins the the game. But in startup, at least early stage, you have limited resources and you can't really effectively macro. Thus micro is more important. In StarCraft term is you start out with a group a marine but haven't found a mineral deposit yet

[@SacredCASHcow]

@@sephypantsu yeah I actually played starcraft III quite a bit and was a total noob who would cannon rush people into ...gold? I don't remember. How does this apply to startups? Is micro like coding ability and macro is market research? or?..

[@rishabhchopra6418]

Where’s the orange?

[@guiller2371]

I guess all points to what we founders actually have; an idea, a prototype, a product, an actual plan, or a real business. The earliest we seek fundings; the more we are giving away our future company; including the work on converting our company into an actual business. For instance; I am conscious of the fact that I don't really have a business yet. I have an idea? Absolutely! I had invested, and I even have access; but not enough to start the sales. Well; probably, I am still too early to start raising funds. On the other hand; my business could die for the lack of funds. How can you blame founders for trying everything to survive?

[@nexovec]

This is a VERY important video

[@StreamAgency]

I measured 0x and cut 100x!

[@Nepali-entrepreneur2024]

Interesting topic ❤ 😍

[@ageofjeremy]

Starcraft podcast on the horizon

[@ProcessAgilist]

It's amazing how many people start a business with the sole purpose of getting funding and getting bought out, rather than "solve a problem".

[@capaneo]

That's because they get their advise from reality TV and tiktok.

[@haimbender]

Would be great if you where more specific on what to focus on against what not to focus on, seems like don't think like a VC is super general

[@opioo.4998]

They're building on all their previous videos... details you're looking for are most likely in previous videos...me thinks

[@gabe-villasana]

Summary/Takeaways generated by Zenfetch: Summary The video discusses the risks of founders thinking like investors when starting a company, and instead emphasizes the importance of focusing on building something users want, getting early customer feedback, and understanding your own strengths and superpowers. Key Takeaways 1. It's easy to get stuck in an 'investor mindset' and overthink what to build based on what you think VCs will like, rather than focusing on what users actually want. 2. The most important things when starting a company are simpler than many founders think - things like getting early customer feedback, understanding your own strengths, and scaling gradually. 3. Unlearning the 'investor mindset' and instead focusing on first principles, positive feedback from users, and your own unique superpowers is key to building a successful company.

[@danielmarco7863]

I would like to think I have 300 APM, and right now those actions aren't amounting to THAT much, but when it's time, I'll be ready to act.

[@alfred8294]

Is it me, or is Michael skinnier? Way to go amigo!;

[@valentinn3507]

Exactly what I needed right now.

[@danielkaufmann2191]

Same

[@grammar_shark]

Same

[@jessenorthcutt9926]

. . . Hmm, why didn't they bring up the 'tar pit' analogy as they did in youtube episode about a year ago ? . . .

[@neugey]

I'm lousy at investment and finance and don't enjoy it either. Addition by subtraction!

[@SkySells]

So what I’m hearing is I should make a reasoning fighting robot?

[@tpwb5882]

Y combinator is like the large hydron collider of particles but just companies and people gets collided in YCs case. I am coming to get smashed good in there guys. Wait foe me.😅

[@noisycarlos]

So you're saying i should start a trucking AI app, thanks! /s

[@nickbryantfyi]

Guys you gotta micro your macro on startups

[@KevinFungEngineer]

My startup is Zerg phase gathering minerals. My strategy to dominate my market is to keep it simple and just build lots of hydralisks

[@mohanish007]

*Yess* love this

[@rowland5951]

11:01 Brett from figure AI in a nutshell.

[@user-po8dq7pq1k]

Investing to get exit, kills the product.

[@shrek22]

They act like micro takes a few months. It’s a way of life. Think user authentication, database back ups, schemas, queries. These things can cause some to crawl in a corner. I’ve seen it. Authors are over here laughing about it like it’s just another thing.

[@LumenCache]

We sold $2m of the crappy prototype and survived a 10 year on-ramp needed to transform a $200bTAM. I dare you to pass on the $600k SAFE. I even use your form 😊.

[@dennishestersphr5815]

Sales cures all. If you have sales and don't need funding, then you will get it. Don't have sales, then you're not getting funding.l

[@facundomrios]

I can;t understand what say this guys, I don't understand their references

[@nang88]

Ok

[@jelanimasego8656]

How are employees gonna teach founders how to be founders

[@adampaslawski8859]

🎉

[@larrychanhangpei9292]

To be honest I really hate the laughters as I want to hear it clearly word to word.

[@johnnovotny4286]

💯

[@AliEl]

One minute founders need to understand investors next minute founders shouldn’t think like an investor. What is it then? 🙃

[@hadithitv7517]

Any company that applied with x for y definitely didn't make it 😂😂😂

[@nexovec]

LOLOL How can you ask for money when you not only do not have a product but not even the idea. Like come on, how many afternoons does it take to think of 20 ideas and picking the best one? It's like these people are completely oblivious to the entire concept of the very business they are trying to build. I wonder how many successful founders like that are there, probably not very many.

[@facundomrios]

No se entienden nada estos videos

[@samedaycyborg]

takeaway: play more starcraft.

[@bluesque9687]

Why do you force yourself to laugh so much?

[@UdhayaPrakash]

It comes of as " I know everything. Look at these people who are funny know nothing"

[@anson_kao]

If you meet Michael Seibel in person or on a call, he ACTUALLY laughs like this all the time. He's not forcing it. He's just hilarious 🤣

[@bluesque9687]

@@anson_kao Well, if I get to meet him I would have so much on my mind that his laughter though awkward would be least of my concerns! But i dont think i can laugh with him everytime he does! That would be silly or even mad!

[@hoang-AI]

It's pretty annoying and distracting to the conversation tbh

[@dmystfy]

Killjoy

[@TheDjerq]

Love your podcasts but dude stop laughing all the time.

[@Miguel-zo1th]

Shiny happy people.

[@BizLytInteractive]