Y Combinator Startup Podcast - #156 - Amber Atherton and Iba Masood

Episode Date: December 18, 2019

Amber Atherton is the founder and CEO of Zyper (YC W18).Iba Masood is the cofounder and CEO of TARA (YC W15).The YC podcast is hosted by Craig Cannon.Y Combinator invests a small amount of money ($150k) in a large number of startups (recently 200), twice a year.Learn more about YC and apply for funding here: https://www.ycombinator.com/apply/  ***Topics00:00 - Intro1:16 - Seed fundraising for Zyper and Tara3:26 - Tara's pivot4:31 - Series A fundraising for Zyper and Tara18:11 - Evaluating investors23:46 - Meeting with associates and partners30:35 - Raising a Series A as a female founder39:31 - Fundraising psychology 41:46 - What not to do when fundraising 45:01 - Talking to portfolio companies about investors46:21 - What it's like to run a Series A stage company 1:00:41 - The most important piece of advice for fundraising

Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is with Amber Atherton and Iba Massoud. Amber is the founder and CEO of Zyper. Iba is the co-founder and CEO of Tara. You can find Amber on Twitter at Amber Atherton, and Iba is on Twitter at Iba Massoud. All right, here we go. So today we're going to talk about fundraising, but before that, let's talk about your companies. So, Iba, what do you do?

So, Craig, it's great to be here. I'm Iba Massoud. I'm the co-founder and CEO of Tara AI. So we're building an end-to-end solution for product management. So we help product managers, engineering managers, spec out their products, gain insight into their development life cycle and essentially monitor progress within software development. Hello. So great to be here. Ziper helps brands.

connect to their super fans to build community. So we work with a lot of the big Fortune 500s, like a Kellogg's or a Nike to help them really identify who their top 1% of fans are, and then bring them into a space to co-create product or to become brand ambassadors. Okay. And so both of you this year raised your series A, but I think it would be interesting to start from the beginning. So could you tell me your story of, did either of you raise pre-YC? Yes, I did. Okay, so yeah, this would be good. So one in one. Okay, so how did you do it? Okay, so I was 2017. I was in London, started a company in 2017, and I raised 1.2 seed in London from a VC in London and a lot of angels involved in that great angels involved in that round too.

And then I applied to YC and got in then. Okay, and then you did YC. Yeah. And you just applied to YC, but you applied a couple times. Yeah, I did. So, applied twice. And it was with a, at the time, it was a different idea, different company, different, even market segment, like we were focusing on the Middle East. So it was, it was basically like a careers platform for fresh grads. And so entirely different company. Okay. And what did you get in with? We got in with careers platform for grads in the US. So that was like the first, that was in 2015 when we first got in to YC. And post YC for that, we raised roughly around 200k or so. So it was...

For that product specifically. Yes, for that product specifically. And it was very difficult. Like the first 100K I remember was... It was a very difficult process to raise. Pre-YC, we had just gotten about 10K in a grant from MIT because we were doing research into GitHub repos. So we were looking into programmers and their work on GitHub

and just kind of analyzing the commits and how, you know, we could find patterns, essentially, and also try to identify the best programmers out there based on their work in Git. And so that early research actually formed the thesis and the infrastructure for Tara, as it stands today. Oh, interesting. Which we, so Tara, we officially launched in like, and not even like the website or the product, but just launched with the idea in 2017. Okay. And how did the pivot go with your investors?

How did you go about communicating that? So our investors were very supportive. So when they heard about the market that we were trying to tackle and the product that we were building, they were immediately like, oh, here's more money. So what happened was about a fourth of our investors doubled down. And so from that 200K, when we pivoted, we raised 2.8 million. And so we had a three million, called it a three million seed. Wow. Okay. So what would you attribute that upround to? I mean, it was just the opportunity, the market segment, the early, early team that we had assembled, and then also the early traction that we were seeing from the early, like, ML models that we had applied, as well as early customer traction. So the seed was in 2018, the 3 million seed. That's when we announced it.

But it had really been a work in progress for a while before that. So you lumped all that money together and called it 3 million seed. we did okay gotcha so now having raised both of you a series a can you walk me through uh the differences in the process related to it and how you communicated to your investors how long it took all that stuff yeah um so we did yc winter 18 and uh forerunner that just led our seed um pre demo day and that was exciting so we raised four million then and uh we were just charging forward with the product like timing first to market and we'd started having conversations at the end of last year around just raising an A like it was more rapid than I thought it was going to be. And then I had a conversation

with Aaron about the series A batch and thought this is probably a good idea. Aaron is a good good guideer so I should do that. So then we joined the series A batch in January this year. And that process was about I think it was like two months that we were in that batch. So yeah, two-month process, just like heads down, super focused on building out our pipeline and just aiming to close the round in a shorter time as possible. But walk me through the two months because, you know, a lot of people aren't fortunate enough to be a part of the Series A program. Yeah, yeah, I can't believe we got in. No, joking. So. We'll even get into IC.

Yes, yeah. What was the process like? I mean, it was informal, but intense. So as with YC or anybody who's going through the process of like getting, building something people want and getting to that product market fit, you have daily insane highs and lows. And I guess what was great was just going into it with a structure of, okay, let's fill out this Excel sheet. Let's know every single fund that we want to speak to. Let's work the process and get the timing right. I think that was super helpful in kind of catalyzing how quickly we could close something.

So it was, you know, the standard process of fundraising, of targeting the people that you know you want to work with that support like your vision. And then going through that cycle of having conversations, second conversations. I think something we did that was really good, though, was writing that investment memo. So what we did was kind of do the VC's jobs for them and write a memo as to why you should invest in us. And that sort of went out with the deck after the first meeting. So that's a very chaotic answer to your question. Yeah. So what was yours?

Let's get really specific. Okay. What was my investment memo? Rough, rough terms. Honestly, we looked at a lot of other memos that we could find out there. So like the YouTube memo picked that up and really kind of spoke to other VCs that I know about like the, you know, their favorite memos or like how they think about like putting a memo together. And then use that as a foundation to structure our own memo as to, you know, what is the point of Zyper? What problem are we solving?

Obviously, like how big can it get? and, you know, kind of unpacking what the risks might be and why they weren't really risks in our eyes. Okay. And how deep were you going into the financials in the beginning up there? I mean, not massively deep, to be honest. In the memo, we weren't. We were just giving high level, like, this is our revenue so far and this is the market we're going after and how much we expect to grow in the next kind of 12 months. But obviously we then had a model to back that up that was significantly more in depth around the financials. Okay. And so Ivo would you corroborate that?

You see it was basically the same? Yeah. I mean, I think for us, you remember, Amber, like what happened during that time, it was, so what happened with us was we spent about two weeks during the program just really trying to nail the pitch, make sure that we were talking about the product and the solution the right way, you know, just being able to really segment out the story and tell it in a very concise, but in a much more in-depth manner as well. And so what happened was we spent about two weeks pre, like during the program. And how I found out about the program was I contacted Aaron and I was like, Aaron, our seed

investors want to just pull in and do five million series A. And they're like, you don't have to go out. You don't have to raise. And it'll be done. And he's like, think about it. Like, you know, you shouldn't rush into these things. And those seed investors can come into your series A as well. And so what ended up happening was our total fundraise process to go from first coffee meeting to term sheet was nine days.

Which is insanely amazing. I mean, congratulations on that. Well, the thing is that our seed process was so incredibly painful that this was, it was obviously very surprising. And, you know, our closing process took longer. that took about 60 days or so in terms of like getting the legal process completed and and, you know, figuring out like who we're going to bring on board for that final one million in the overall round. But I think, you know, one of the things that I will say is it's, what we really tried to do was run a thoughtful process and really focus on the partner and people versus the fund.

And so we were. I totally agree with that, by the way. Like, it's really about doing your research and finding the partners who've, you know, rounds and other companies that you admire or that you know have the right profile for your company. Yeah. So what happened with us was we were under quite a lot of pressure during that time because we had offers on the table and there were people just kind of, you know, dining and dining us and really trying to get us to accept their offer. And it got to a point where, you know, it was like people were literally calling up folks in our ops team to like book meetings.

on my calendar. And it got fairly chaotic. I would say during that process of nine days. But my co-founder said it, one of the things, like, he's, I think he's someone who's really the yin to my yang. And for the most part, he was the one who was like, you know, let's really take our time and think through who do we want to work with. That are, you know, essentially just good people in terms of individuals, have a strong

understanding of our market and of our customer can speak with, can be thoughtful because the product is fairly technical and we're selling to a technical audience as well. And so having the ability to actually understand and, you know, from the engineer's point of view, that was something that we were really looking for. And I think what ended up happening in our case was we decided to work with a boutique fund, so Aspect Ventures, we're now a crew capital. And Teresa Go, Lauren Klaudey, Asad, Asad, Asad Khalik, for us, it was really about the team and very specifically the board member that would be coming on onto the team.

I also think you probably knew early on, like in other conversations you were having, whether that person or that partner really understood what you were doing. And I think looking back with hindsight, I wish I'd maybe kind of ended some of those conversations earlier, just with people that I was really trying to convince that this is why Zipa's amazing and this is why it's great. when they were so not experts in this space. And so you were just attracted to their brand or something like that? Yeah, it was attracted to their brand name.

And, you know, it's always very exciting when a great brand name like reaches out to you. And it is, especially if they're being aggressive about wanting to get a meeting. And then you take the meeting and then you realize actually you don't really understand this space. And I wish I'd kind of been more, you know, assertive with ending those conversations sooner and really like doubling down on like, do these people actually have a space? values you know what there's always somebody out there and I think this is there was I mean Eber's process is amazing ours personally took about 60 days to go through and I was flying also back to London to meet other funds there and we actually ended up raising from a London fund yeah so we're meeting people out here and so it was a yeah and then it was holidays and it just always

drags on longer than well for us than you think so it was that 60 day process and then longer to get the legal but I I'm glad that we went through that because we did find a great partner who and you when you know they you know they immediately get the space and that's just feels awesome god i have to say they uh so um i'll just give you one example right we were at the um so we did the we did three uh full partner meetings so that's when um all the partners at a fund ask you to come in and um the partner that's sponsoring the deal or sponsoring the you as a founder um is essentially the champion and um and they're really they're really they're want you to come in and really present the story, the solution, and the market and, you know,

why this is going to be the next big thing to the full partnership. And, you know, so we had done three of those meetings. And so we had offers on the table. And what happened with Aspect was they approached it from a very personal stance, which was to really get to know us as founders and really try to understand what makes us tick. And then also where this, you know, where this company could go. And so even during those nine days, I had the opportunity to speak with founders of portfolio. companies at those at those funds. But the other thing, I just remember this when we were at one of the final meetings and they found they found out that I love bubble tea. And so they had remember this. Yeah, they sent you all this bubble tea. Yeah, they had they had like an array of Boba just on the

table. And as soon as say then I walked into the final meeting where they had the term sheet. And I mean, but yeah, that's a fun. That's funny. So included in those nine days, are you meeting them the first time? Because oftentimes people start months and months and months before, like grabbing a coffee with someone. Yeah, first time. First time. So from the first, in terms of for those few funds very specifically that got to the final part of the process, we met them for the first.

So, I mean, I don't know when you can start the timer, but it's really like the day that we met them, from that date to term sheet closing. And by the way, that's a term sheet is not when you're round closes. A term sheet is actually, a lot of founders don't realize is that a term sheet can be considered an LOI. It's really a letter of intent.

It's like we're in. Exactly. It's kind of like that first part of the process. You can't even consider it an offer in some cases. So people renege on term sheets all the time. And so when we got the term sheet, I wasn't celebrating whatsoever. So I remember we got our first one.

Yeah, I agree. Cash and banks. That's right. Exactly. Exactly. Exactly. So getting the term sheet was just the first part of the process where, and, you know, for us, like, we're like, okay, we have a few offers on the table.

And actually, we ended up taking a lower offer only because one of the things I've always tell founders, and I just think, I personally believe that you shouldn't maximize for valuation. Because the thing is that if you maximize for valuation, then, you know, incentives aren't necessarily aligned. And so what you really want to maximize for is, are we getting to work with the right people? And also, it's a long-term partnership, right? Like, it really isn't just a quick thing. You are in it together. Exactly. And, you know, one of the investors that we had literally put a blank term sheet. So the idea was that we would put in the valuation. And, I mean, it's a tactic. right and so um and so you know it's uh like i immediately i saw that and it's like okay that's a tactic

like you know you don't want to play these games like at the end of the day you're building a long like exactly long-term relationship yeah and and so you know for us like we're we're just like okay we're just um you know we're just what we want to do is just work with human beings yeah and um that's what i loved about like talus who led our round it was from the get go i mean i was doing conversations of them at like midnight out here because they were based in London. But, you know, there you go, you persevere. You get that term sheet and the money. And you do realize, like when you do like click with someone and they have that great personality and that they are, they really aren't pushing like weird games with you on weird tactics. But I also,

I think this goes back to the founder pressure to build momentum and urgency in your process. How do you do that. So many founders asked me that as well as like, how do I create this optics, this sense of urgency? And it's dangerous, you know, because you can be tempted to say, oh, well, we have this other timesheet. We have this other offer. But blah, blah, blah. Just don't ever do that because it's so small as a community and just be honest. Exactly. I, I can't agree more on that point. I think one of the things that happens is, you know, founders tend to, like exactly like you said, right, like they have a lot of pressure. And one of the things people try to do is they try to be, you know, slick about it when you don't need to. Like at the end of the day, you're, whether, whether you're

around takes nine days or nine months. It's really about just finding the right person and the right partner. So that's what I want to jump in on. So, I mean, it's not that different from like just interviewing someone to work at your company, right? You kind of need a little bit of a culture fit. So what are the questions you're asking? What are the things you're looking for, whether it's like body language or vibe or whatever it might be? to signal to you that like, okay, this is working. Like, I think I want to be work with them. Yeah, I mean, I think for us it was really just how they handled some of the early customer

calls. So, you know, like were they even finding out things that we didn't know? Like, were they so insightful in their question and answer process that they were relaying back information to us that could potentially help in growing, you know, growing the team size at that company in terms of platform users. And so there was that piece. And then there was also what I was looking for in particular was, do they really understand how we're trying to build a data layer?

So one of the things with Tara is that we integrate with Jira, with GitHub. And so the idea is to go from spec to issue, so your issue tracking software, which resides in Jira, and then also go all the way to commit. So where your version control and source control in terms of the actual code commits. And one of the things we were really looking for was do they actually understand how important integrations are going to be in our play and also the value that we're providing. And one of the other pieces was everybody was saying this was category creation. But we really wanted to work with someone that had done category creation before in particular

and understood what it took to march forward and specifically really tried to own the category from the get-go. So there were certain things that, you know, we were looking for. And I think, you know, even if I look at it in hindsight, I think we were able to run a thoughtful process in those nine days. What I found really fascinating was post-term sheet as you go through the closing process and, you know, the level of documentation in your data room and what you need to have prepared and ready. And at that stage, it's really important to work with a good law firm. So one of the things that, I mean, I honestly discounted was I was like, okay, you know, I think the most important thing is to find the right partner. And then the legal stuff, you know, it's, it's basically something that a good reputable law firm will be able to figure out. Turns out the amount of follow-up that they required, that the legal firm required after. And I mean, it was just, it was really like, we didn't celebrate until the cash was in the bank. Yeah. And which was a good 60 days after signing the term sheet. I think also some good advice we got was. negotiate a cap with your law firm to do the legals because it will go over and it will end up being 30 days or maybe even 60 days. So I think that was a good bit of advice. I think some of the questions that I asked the fund in that process and it's really important that you do ask questions back because you are going into relationships so you don't just want to not ask anything about who they are and what they care. Some early indicators same as Iber is like,

okay, how do they handle their customer calls and how are they coming up with feature suggestions? for the product. Like, are they so, you can tell early on if they're obsessed with the products and what you're building because they will give you future suggestions. And I would then follow up with the customer calls and say, how did it go? Like, what did they think? And so often there would be this kind of joyous enthusiasm, like, oh, they were so excited about the space. And so I think that's a very, like, early indicator, like, do they really care about the product? And ask questions back. Like, what do you understand about it? What do you think we should be building in it? Because then they're building a vested interest in the company from a very early stage, which I think,

can help push the process along quicker. So definitely asking key questions like that. And related to that, what about the people that you kind of should have said no to and kept taking meetings with? Like what were the signals you saw there? You're like, they're probably going to say no anyway. I'm wasting my time. Or would you have still taken those meetings and gone all the way through with it?

It's tricky. You don't know, I think, a lot of the time. something is going to lead. And I think that is the classic, like the vagueness of VC, the sort of unwillingness to say yes or no and just you kind of can get lost in that like gray area for a while and you're all kind of hoping that something might happen. And I actually, that's probably a telling point is that funds can operate quickly. Like you can move fast with paperwork. Like it is a hot deal. It's very difficult to artificially create a hot deal. Like you, If you are a hot deal and you've got a great product, you've got great revenue and product

at this stage, funds will move quickly and they can give you a term sheet. However, I do think that one question I asked early on was, you know, what is your process? Like, tell me, like, how does this work for you? Because whilst they can move fast, they still, you know, they have to present the partner meeting and being mindful that they also almost are entrepreneurs themselves. They have to validate it to their LPs and they have to get buy-in. So working together, on how to move that forward and really understanding from their perspective what it's going to take to get this signed off, I think was helpful for me. Yeah. And I think just to kind of, if we look at it as a process and we want to present an overview, the first meeting is usually the single partner meeting, which is the coffee meeting. And at that stage, and for some founders, it may happen with an associate or a senior associate or a principal. What you want to do is make sure that you're meeting with an investing partner. And so they would usually have general partner in their job title. Yes.

What do you think about this whole question that gets asked so many times about whether you should take a meeting with, you know, a principal or associate? Because I think it's important because they can be great advocates for you. Yes. And so I don't have a black and white answer to that because the thing is that aspect we met with a senior associate. And that's how the, I mean, it was still a short process in terms of like getting the deal move forward.

So I think the most important thing is to meet with senior associates that have influence. And how you can figure that out is really just go on to their LinkedIn and see how long have they been at the firm. Are they someone who's really an analyst but has the associate title because sometimes you can have inflated titles at VC firms? And so if they've been there for a few years and even better they're sitting on a board, like let's say they're a board observer, then you know that this is someone who has influence at the firm. And so that was just my very quick vet in terms of deciding. I mean, for us, it was just such a short process, but that would be the advice I would give. Now, if you look at the actual process, so the first piece is the coffee meeting, right?

And that's when you meet with the, ideally the GP. And sometimes it's a senior associate and you get pushed forward to the GP. If the senior associate is serious enough, they will bring the GP into that coffee meeting. In our case, what happened was some of our early, from those three funds, one of them, in the first meeting itself, pretty much they had like four people there. And it ended up being a lunch meeting. So it can be a coffee meeting or a lunch meeting in terms of that first meeting. And then if that goes well enough, they'll pull you into a Monday or Tuesday full partner meeting. And so let's say if you have lunch or coffee on a Wednesday or a Thursday, by Monday.

Monday or Tuesday, you could be presenting to the full partnership. So what happened in our case was we had back-to-back full partner meetings. It was on Monday and Tuesday. And so that weekend was when we spent really prepping the pitch. And if the GP really wants you to present your best foot forward in in front of the full partner meeting, they will work through that weekend or whatever that day period is to make sure that your presentation is as good as it can be. I think it's so important just to focus on that, as you're left as an entrepreneur in this gray area, like not getting really direct clear signals as to whether a fund wants to do this or not.

It's being mindful that, yes, a fund, a partner will work on the Sunday or the Saturday to move this deal forward and they will do that. And they'll do the customer calls. They'll do the reference calls as well. They'll put the power of the partnership behind this so that they're able to do adequate and enough research on the company.

And I think for us, the other piece was YC and the Series A program, really, you know, honed in on the fact that you should have your data rooms ready and prepped. So we did. And I think that was, I think that was also what set us as series eight companies apart from even other people that were raising was we really had our documentation in order. That was, thank you so much, Aaron Harris. We definitely got the data room together and it was very organized, like week one. That was our goal. It still took us 60 days to close, even with the organized data room. So. But good point. Also, we just want to say on the like transparency. like being telling the funds that you're speaking to as you're managing this pipeline and you're

having multiple conversations it is really difficult to juggle all of these things and and kind of calibrate at what speed different people are moving at so something we would say a lot is just okay we just want to be mindful about other people who are in the in the process like you really you want a yes or a no and i think it's fine to push for that like you need to get an answer like do you want to do this or not and if you have multiple people saying yes then you're in the position of saying, okay, let me decide and what my values are and how I want to move this forward in this long-term partnership. But I think be assertive with asking for a yes or a no.

Right. Yeah, well, they're just trying to preserve optionality. And like you're trying to get some clarity here. And, you know, another signal, I think, you know, if we can boil it down to signals, is that the fund will work to, like, take like four or five hours of your day. Like they will literally, so in those nine days, I'd be. I'd be up by 4.15 a.m. I'd start, yeah, because like meeting sometimes would be an SF or they'd be in Menlo Park. And during, so the two weeks prior during Series A program, and then for those nine days, I was pretty much full time on fundraising.

That is so important to note as well, is that being able to be in a mindset where you are locked in on fundraising. And this is what's so great about when you're doing YC, it's like, what should I'm a goal? Does it fit your goal? Don't do it. And that is the process that you need to be thinking of when you're fundraising. It's full focus on that as much as you can because that's how you're going to get to close in nine days or in our case, 60 days. It's so pretty good. The thing that's not obvious in my experience, you know, interacting with founders is that it just takes up all the time anyway because it's in your head.

So all of a sudden, like the meeting, the coffee meetings maybe 20 minutes and say you spend an hour getting there and an hour getting home, whatever. but then you're reading blog posts, you're talking to other founders, you're doing all this other stuff. So that's why you really have to timebox it because it will just get into everything. Yeah. Like I will say we were grateful and lucky that even though the process, you know, it was nine days, but we did get to spend approximately, I want to say seven hours, approximately seven hours with each partner. That's great. So and, you know, and I think it's interesting.

Like I feel like that's also almost become a gauge for us even as we go through hiring and recruiting. process for candidates. We like to spend a good seven to eight hours. I feel like it's... Yeah, I think that's a good gauge. Great. I will say that we actually had conversations move pretty quickly to WhatsApp, like to chat. So I was already building like a lot of rapport, like back and forth on WhatsApp and like, you know, keeping it top of mind and just, you know, that helped definitely with the speed. And texting Aaron at like 1130 p.m. Oh, yes. Yeah, Aaron. It's so, you know, a friend of mine's going, rising his series A at the moment, and it's just so useful to have other founders around you who you can just rift with because there's this whole new lexas that you need to learn of how you are communicating, like what the process is, like, you know, what the optics are, everything and just being able to have a sounding board. Like I definitely text Iber like multiple times being like, oh my God, how do I do this?

And you need to have that space to just have a sounding board to talk things through. So I don't have a co-founder. So I think, you know, thanks for responding to my text. So one thing we wanted to talk about was what this was like being a female founder. So obviously, we've only done this one time. You haven't been a male in another life and reincarnated, but you know other founders who have raised series eight. So this is kind of interesting to talk about. In your experience, how do you feel like it differed for you personally?

Yeah, I think from my personal experience, I mean, we were so lucky to have a, you know, female founded VC to lead our seat. So I had the experience of what it was like to sit with, you know, partners like female partners and it be a very comfortable kind of open conversation. And I think what I hear from like other female peers and in my own experience is that often you're walking into, you know, a boardroom partner meeting. where there is not a lot of diverse representation, and you therefore feel pressured to take on maybe, you know, more male characteristics, like just being more aggressive or, you know, just... Did you feel pressure to wear a hoodie? Do you know what? Fake deep voice. I just had an outfit that I would wear, like,

and I did this in my C as well because I don't want to think about this. So I would wear, actually, I think I might have even worn this, like trouser suit, corporate street wear is my, is the look here, little trainer, little trouser suit on. And then I do think it is, you know, that is signaling in a way. So I didn't ever wear the hoodie because I was like, you know, it's just not my personal brand. I'm not. I did the hoodie during our seed.

So post-wise seed, I was just constantly trying to look like a programmer. It's just, yeah, I mean, it's sad, honestly. No, but it's also that that is what the valley has been conditioned to see and interact with. And I think that the style of communication that is familiar. and it has, you know, pervaded the space. But doesn't it feel so good to be able to wear whatever you want? Oh, absolutely. And that I think is freedom.

Like you should be able to be yourself. Like I think that was something that I had to learn and I had to grow up really. Yeah. To like to be able to just be myself. Like I think you know, you you face so much pressure to act a certain way, to be a certain way, to look at a certain way. And and I think, you know, but then one of the things, one of the things I've actually been doing is listening to analyst calls for public companies. Oh, I love listening to earnings calls.

This is my new favorite thing other than podcasts. It's just straight up earnings calls. Yeah, and especially if you listen to earnings calls by like minority CEOs or by female CEOs. And I think, you know, bottom line, like what I have, you know, had to kind of train myself to do is, bottom line is that it's really going to be about the traction and the team that, you put together to like to go after a problem and and and and so you know so I think um one of the things that I also think you know is even since we did YC uh things have changed since since that time massively drastically and I think it's you're seeing you're definitely like we at least I mean for our series A

we saw more representation um in terms of the team structure like so the the the senior partner principal and analyst um we definitely saw more representation um in the funds that we were talking to and And I think also people are more, I would say, they're more used to, like, listening to the fact that founders don't necessarily come from Ivy League backgrounds or are of a certain race. And I think, you know, or understand sports references. So I think for, you know, for me, I was like, okay, I don't need to learn the lexicon behind American football. Like, you know, I'm someone who understands soccer, as it's known here. Yeah, yeah, yeah, yeah. And so I think that was something that, you know, I had to learn.

But you had, you had way more to show too. And the confidence behind that. And that's what it is, right? Is that you can't, there's nothing to lean on. You can't, I don't think you can use, you know, being female or minority as like a crutch. Like, if you have great product and great traction, then you have a hot deal. And like, any other kind of justification as to why you're not getting term sheet is you can't really say that. like you'd have product market fit and a hot deal and that's in a, you know, my opinion.

But I do think it is a full circle. Like there are and there are great organizations like always like pushing to have more female like partners and also more female LPs. Like it's not just us going out there. It's like there's not a lot of like female entrepreneurs who are walking into these VC offices anyway. And that is a problem that we need to solve is that we need to bring that education and like positive role models earlier on into the education system. Remember, what do you think of this notion? So I've been hearing from a couple of female founders that one thing that, you know, that really that's been worrying them is that whenever they get introduced into a VC firm, the automatic assumption is that they would want to talk to a female partner. And so then they get introduced to the female partner who's actually only been at the firm or fund for, in some cases, lesser time and may not have as much influence as someone who's a much more senior partner.

Have you heard of this? Yes, I definitely. I experienced this actually, personally, myself. So, but I will say that I think that funds are grappling with how to deal with this in, you know, the most sensitive way. I think the way it needs to happen is that, you know, founders should be able to talk to the partner at the fund that understands their industry and their business. Definitely. That's really, it's that simple. It's, you know, they shouldn't automatically assume that because, you know, this person is a female founder or a minority founder that they should talk to the female or the minority founder that they should talk to the female or the,

minority partner. It should really just be fundamentally about activities in the sector. Exactly. Yes. Exactly. But, but okay, so were all of your, were they just warm intros for for both of the funds that led your series A? Yes. Yes. I was a quite cold intro. Really? Yeah. It was an intro. It was an intro, but it wasn't a warm one. So it took a lot of, I took a lot of time to get to know them. And I think I actually underestimated how awesome they are early on because we had so much interest when we started raising out here. Like, and it was just, it was overwhelming. And I kind of kept it more on the backburn also because we were out here and not in Europe. And then investing the time to, you know,

get to know there more and more was interesting. But yeah, it was more cold than war. Okay. So, yeah, you are in control of that to a certain extent. You're like, I'm trying to meet this person who knows them, right? You know, you would think so. But I feel like in some cases, you know, with some founders or some situations, it might be that, oh, you know, I'm finally getting to meet this firm.

Yeah. And so you just kind of take whatever meeting is, it comes your way and it may not be the right person. Actually, you know what, I think I made that mistake. I don't, I think I definitely did that. There was, there was funds that I was excited about and I didn't really, I was just like, oh, great, I'm getting in. And as opposed to being like, hold on, I really need to speak to this person because they understand community and SaaS companies.

So, yes, could have done a better job there. But I do think that, you know, there's a great like all-race statistic that 2009, 410 companies who had female founders got VC funding. Whereas last 2019, 2,700 companies got VC funding. So there is a massively positive increase that we should be talking about that there are more diverse founders and there are more diverse partners and therefore we're getting more funding. So I think in general, like we are moving to a much more positive, like balanced ecosystem. Yeah, absolutely. I mean, it's why I love being out here because the default mentality is optimism.

Oh, 100%. And an agency too. Yes. And you can meet anyone, you know, Twitter DM, sure. I think I had a couple of partner meetings actually just from a Twitter DM. Yeah, I mean, if you make great stuff, people recognize you. I think that's such a great point. And that really is what it comes back to.

It's like, if you make something great, make a great product, have great traction. Like you're going to get the meetings. And don't go into a fundraising process too early because it will just kill your soul. Just wait until you have really built the great company. And, you know, maybe you even want to be profitable. That's a daddy-y-word I know. I know. I know.

We're going to change the subject now. I do want to talk about kind of the psychology you have to get into to fundraise. Yes. So, yeah, one thing that we were talking about before the podcast was addressing, like, how big can it be type questions. So how do you go about getting in the mindset to answer that? I think having an executive coach, something I should have done, earlier. And, you know, in YC, there's actually a company in our batch, Torch, who do executive coaching. And I got on that and we started focusing my sessions on on that. It's just like getting powered up,

getting ready. And also, you probably have these traits innately as a founder anyway, if you're going out there and you're pitching your business to customers all day. So it's really like leaning into that and just having a coach, you can help bring that out in you and maybe listening to that Goggins book, like just getting like that mentality of like winning is, is great because I think that, you know, maybe this is controversial to say, but I feel like the appetite for risk for a lot of female founders to really answer that question, you know, how big can this be? Is it's more realistic perhaps of like, okay, well, we have product market fit.

The product's going to change a bit. So realistically, we're going to IPO here. There's more of a, like, there's a less aggressive approach, I think, to the answer of how big this can be, then I think I've definitely seen some of my, like, male peers take where they're like, well, it's going to be $20 billion next year. And I think it's balancing that, right? Like, you want to be completely convincing and have, of course, your own conviction and how big your company is going to be. You're not doing this for any other reason.

Right. And you're not also a sociopath who's just lying. to people. And you cannot be that either. You know, you don't have five terms sheets. Like, just be real. Yeah, that's a really bad thing to do. And it is, it's a, it's a balance of, yes, you're not a sociopath psycho, but you also need to just really believe in yourself. And that is so authentic when you see that in conversations when people like have true conviction in that. And you need to convince the person sitting on the other side of the table that they are like backing the right horse and you will win.

It's important. So in addition to, you know, listening to the David Gagin's book or whatever, what are the things to not do to negative, that might negatively affect your personal confidence? I think, let's see. So one, I mean, I think we even touched upon some of those things during this conversation, which was, you know, just be true to yourself. You don't have to make it seem like, you know, like it's a hot deal. Like I've seen some founders do that. And it's deceptive. And the thing is, is that deception only works to a certain extent. Like, like you said, right, it's, it's, the valley is a small place. And so what you want to do is be true to yourself because, and be true to the partner you're going to work with because you're, you're, that person is really

becoming a part of your team and a part of your company. And, and in some cases, really, I would say, even a part of your founding team. Because if you're under 20 people when you're raising your, your series A, then, um, this partner is going to become a key part of, um, of, um, of even day-to-day operations. And so I think the, you know, some, I would say probably some things that founders negatively optimized for, number one would be valuation. So I don't recommend optimizing for valuation. I think then you have to work up to that valuation.

And obviously, you know, we've seen the nowadays, right, the challenges that are happening in the IPO market. So I think, you know, it's very important to come together and like, and really come up with a valuation that is optimistic but realistically optimistic. And there's a lot of data out there that you can use to make this decision, right? Like it's a 3x multiple from your last round or whatever data points you're going to use. And so it's it is a conversation, right? Like you are, you know, you both have interests, but you need to align them and make it a

conversation and not a kind of aggressive territory marking situation. Second thing I would also say is that investors and partners have been doing this for a long time. They understand founder psychology, mentality. They really understand and know what pressure tactics could and should look like. And I think founders really need to like understand and be true to themselves in terms of building a company is a long-term game at the end of the day. And so what that means is you want to ensure that you're finding the best partner for your company or your business and really take the fund out of the equation. You know, we had instances where I remember one of the funds was introducing us to like celebrities where it's like, oh, you know, this person sits on this board.

They're so incredibly influential. Imagine what they can do for your business. You mean literal celebrities or Silicon Valley? Like, yeah. Like, I mean, not like, you know, not actual. Well, I mean, just to be clear, like that happens too. That happens to. Yeah, exactly.

I mean, but I think they really, you know, they read the room. So they're like, okay, that's what these founders would appreciate. And so that's what happened. And, and, you know, I'm just, we are, I'm so glad. We really didn't get pulled into the, you know, glitz and glam of the whole thing, if we can even call it that. But, but I think just being, staying true to yourself and really, you know, being heads down. And I think that's, that's what's really key here. What do you think is the, you know, you say look for partners who like share your long term view. It's long term building a company. But what, like, how are you getting the

evidence of that. Okay, so what I did was I asked pointed questions to the founders. And I honestly, I'm really grateful that those founders were truthful because I think some of their portfolio companies. Yes, exactly, of their portfolio companies. So I specifically asked pointed questions. I really tried to get to the bottom of things. And, and you know, what you can do is you can set up a question, like, it's, it's fascinating. It's fascinating. You can really set up a Q&A process where you're really getting to where the rubber meets the road. And so for me, like, that's what I wanted to do. And I think it's even made, I would probably even say made me a better interviewer.

Yeah. Even in our recruiting process and our candidate recruiting process. And so that, I think, and you could, like, I got to a point where I could really tell where founders were not being necessarily truthful. And we're just kind of, you know, really trying to get us to say yes to the deal. And so I think that is, that's. That's what's really key. Like, do your homework, but then come armed with very specific questions and really try to ask about what did that partner do when things went south. That's exactly what I was

about to say is that I liked speaking to founders who, you know, maybe, yeah, it went south. So you back channel, exactly. So you also need to back channel and talk to founders that they didn't recommend. And try you to you too. Exactly. Yeah. Yeah. So let's talk about what it's like to now run a series A company. So for both of you, what has been the biggest shift? I will say, so we moved our headquarters out here to San Francisco after our Series A. Okay. You were previously in. We were in London and we had a New York office and then I just decided let's consolidate this.

Like we need to all be under one roof early. That's, we'll get to the distributor team phase a little later. But one thing I started to prioritize was culture, really, was what are the values that this company is going to stand for? And prior to raising the Series A, I was just heads down on revenue. I was like, bottom market fit revenue, we've got to get these numbers. And I kind of didn't really put enough time into thinking, okay, you know, what is this culture? Who are the talent that we're attracting and what are the values that they care about? And I think spending the time to really come up with that.

So I spoke to some of my like early founding team. I was like, what are the values that we care about in each other? You know, why has this worked so well for the last couple of years? and we came up with those things. And then I was like a tech recruiting day. And it made me laugh at how many companies were coming up and having like acronyms for like what their values were. It's like our values are cake, community, assertion.

And it just made me laugh. And so I then challenged, could we come up with some, you know, could we make this an acronym? And we ended up making it the tricep flex, which is like an old school exercise poster. And it was, you know, it's kind of eccentric and definitely. brings out like attributes in our character and it's really helped with recruiting because it's given us a way to score people who we're bringing into the team. So I think that something I

focused on since raising is like really spending the time to think about like what is the culture that we're we're building. Yeah. I think for us really post fundraise, one of the things we really focused on was people and that was building the right founding and leadership team at the company. So, um, When we did our series A, we were about five people full time at the company. Everyone else was part-time. And so now by end of this year, we're going to be about 21 people full-time. And, you know, so growing 4X, I mean, we're still pretty small.

We're still early stage. But that being said, growing 4X is very difficult. And what we did was we really didn't want to compromise on the people that we're coming, we're joining the team because we know that they're going to be leading their own departments over time. So one of the things we did, say, you know, Say it was someone who really was like, we absolutely have to make sure that we're bringing on the best people possible. So now our founding team consists of early software engineers from Nest, Google, Apple, Atlassian, and we've really brought people together that have this common mission, common vision,

where everyone says, okay, we know software product management is broken. You know, the tooling you use today is fragmented. And at any point of time, whenever you're going through this development life cycle, you really can't understand what is really going on, whether you're starting from the initiative at the VP level, all the way down to the issues and then even tickets that are being generated in your existing project management software. So one of the things we really did was we tried to find our tribe.

And I think... Did you like write down? the companies that you wanted to recruit from. Interestingly enough, well, besides, you know, just the adjacent companies, 80% of the companies that we ended up, like, in terms of, like, from the founding team perspective, were not the companies that we had written down. And I think it's because you assume a certain, you know, like, for example, one of the things we knew was CICD, like, hiring from CICD tooling would be, would be interesting because the messaging

is very similar, where they're focusing on product delivery, because that's what our product does. And then we very quickly found out that hiring people that have been late stage at these companies is very different to really hiring people that were the first 20 in. Totally agree. And other founders in our batch who have closed the Series A and now building this team, it's funny how, you know, a few of us have made this textbook mistake of maybe bringing in, like, senior people just too early. And everyone makes it. Exactly.

Everyone makes it. It's so funny because you read about it in every single book, you're like, you know, don't bring in executives too early. And, you know, a lot of the time end up making those mistakes. I think the key is to bring in executives that have been early enough. So you really, so some people say they've been early. But then when you again go down the path of questioning and it's like, no, were you really there when it was a garage? Or were you really there when like a post? post series A and was even the post series A considered early enough at that time.

And why do you think it's important to like get those people who were so early? I think it's because they understand the level of hustle that's required. Very simply. That you know, there's processes that have not been put into place that they're going to have to come in and put in the processes. But then it's also by the way. But then it's about to have a pen wall. Oh, that would be fun.

But you know, the other thing is that it's, you know, it's only very few. founders that can also do this only because it means you have to be willing to give up ownership and control. Which is very hard to do. Yes. And so when you're bringing in people that are much smarter than you in that area or domain and are essentially, you know, just really understand that specific domain, you need to be willing to take a step back. Being like, let them own their domain, let them hire their people, let them run their department. Absolutely. And so we're at that stage where we don't, I mean, everybody's in engineering, right, at this stage. We haven't started building on a sales team as of yet. And so, but at least for these first 20 people in,

we knew that this was, this is going to be the founding team. And so each of these individuals will have their own departments over time. And how do you recruit from people who have offers at big companies? So it's easier said than done. So I remember, so, you know, like when, when we first brought David Keith on board, who is, our lead engineer, he was very intensely, like he was someone who felt very strongly about the mission and vision. And then as we started building out the early engineering team, what happened was people had offers from Google, Amazon, PayPal. And in some cases, especially when you're hiring early state, like people that have been there early stage, what usually ends up happening

is then those larger companies just give, you know, another like bonus package of, let's say, another 250 to 400K in stock. And so it's, you really have to find people that believe in the mission and the vision. And you as a founder have to be like able to actually paint that picture. That's what's most important. Yeah. And I think, and they really, like, it needs to fundamentally come from the fact that are you building a category creating product? And is, is this something, you know, are you really taking on a giant incumbent? And is this also a daily frustration that that person has faced? So one other piece is that we were lucky. as well that in the founding team that we've built, every single person has faced the frustrations

that we're trying to solve. So that did make it easier for us. I think also people need to be educated on what it actually means when you're a Series A company because I think that it possibly can look that you are further along than you are. Yes. Like Series A is still so early. And yeah, you have product market fit, but it's still a little chaotic and scrappy and things are going to change. And product market fit is a step ladder. So you're going to have it for a little bit and then you're going to suddenly lose it and then you have to change your product again. And so that's really how it is. And I think one of the, you know, one of the things it's, it's really important to understand. And even as a, so one of the things I had to grapple and come to terms with was,

like I had a lot of growing up to do personally as well. Like post post, and again, I know this is, we're still early stage. But even then as a founder, I think for me, like board meetings were just this giant thing that you know you see and you hear and you talk about but we had never I had never conducted a board meeting so conducting my first board meeting was was definitely a task and an experience on its own and I think you know I like I can't wait until YC is like a dedicated part of the series a program where you specifically teach because closing the A is just the first part of the ballgame and I think even learning how to run and conduct productive board meetings was something I only learned over time.

Like our first one was... We just had our first one. And I, you know, I did a bit of prep. I think I sent out a board memo before, you know. It should have been a week before. It was like midnight. I was like, enjoy reading this into us. And then, you know, I think it's so helpful for it to be a discussion.

And yes, we're giving an update on, you know, performance and where things are going. But it's equally an amazing opportunity for you to leverage the insight. of your board members to discuss what you should be focusing on. And, you know, it's, it doesn't, you don't have to be an expert in, in round one. And everybody knows that. So I actually didn't put a ton of time into learning about this. I was like, you know what? Learn from experience.

I'll like, ask if you found as how I should run my board meeting and like just dive in. And then I asked for feedback afterwards. I was like, how could have made this better? They're like, maybe could have sent a board member like a week before. I was like, good point. Two days is usually typical. Two days is a good amount of time. Yeah, you don't have to do it a week before.

Two days is usually good. So we do board meetings every eight weeks. And it's... Every eight weeks. Yes, every eight weeks. Wow. It's definitely, I would say, it's a significant undertaking, but that being said, it enables a forcing function.

Oh, it's so good. And also, I think going back to the whole earnings call thing was really... That was actually the only prep that I really focused in on was, okay, how are these people running their earnings calls because if I can take learnings from this and I can probably run a relatively successful first board meeting. But also I shared my board deck with the team. So they felt buy in or what we're doing and kind of in the loop just to build that again like transparent candid culture of this is what the feedback was. How did you how do you follow up with the So one of the things that now happens, at least for the last two board meetings that we've had,

our leadership team kind of comes together and they have their own domain areas. And so, for example, at our last board meeting, we had our team leads present as part of the board meeting as well. Oh, yes. I also did that. Yeah. And so they, you know, they kind of talked about what areas they were owning, but then also what are the OKRs that we're aiming for for the quarter. and then how those OKRs translate into monthly milestones. And we actually just,

so one of the things we did post-Series A was we instituted OKRs for the first time. And I think, you know, it's... We're the top three takeaways from that. Top three, okay. Number one is don't make your OKRs too vague. Number two, ensure they're measurable. It needs to be a certain number that you can hang your hat on and be like, okay, did we meet this?

Yes or no. And then, you know, that's a function of you can even put it as a person. And then you can also put it as a percentage in some cases, but I always like the yes or no. And then number three is ensure that there is team buy-in. So one of the most important things I believe is that the team needs to come up with the OKRs together. And so we as team leads, we get together and we really define what is what's important for us for the quarter and then what are the monthly milestones that we want to set. I think the other pieces, you know, I think one piece of advice I would also give to series A companies is initially, you know, I thought a lot about

how often we should have our board meetings. So the typical cadence is usually quarterly. But I think that, you know, if you want to continue being at the same pace that you've been working at in terms of from a workload standpoint, I think having them more often is better than having them less off. I actually disagree with this statement. Oh, there we go. I think that we have our case.

Our cadence currently is twice a year. But I'll probably raise another round before we continue with that. So we've had one and then we're having another one in March. However, I am in on our monthly updates. Like I'm like doing our monthly investor updates. Like I have calls. But I guess my concern with having them too often is I don't want to spend all of my time. And I'm sure you are not doing this and I need to quiz you on how you are being

optimized about it. I don't want to spend too much my time preparing a board deck. Do you know what you do? Take your all-hands updates and have them in your board. So that's the thing because we do weekly all-hands. And yes, we're also doing monthly investor updates as well in terms of calls. But the easiest way to do this is to literally take a lot of the components and pieces of the all-hands update and translate it into the board deck so that you're not spending a significant amount of time building the deck. And once you have, once you've done your first board meeting, you have the format and template down, then it just gets easier to build the next one anyway.

And I think, you know, for the most part, what we optimize our board meetings for, and I mean, you know, I think, and I think we'll only improve over time is to really enable decision making. And so if there's any kind of specific decision that we'd want to talk through or have working sessions on specific areas that we need to delve deeper into, that's really what. we're using the time for. Yeah, I think Sequoia has a great post on this as well, just how to effectively run of it. There's a lot online. Yeah, yeah, yeah, yeah. So, okay, so just to wrap this up, last question, for founders raising their seed or series A, what would be the single most important thing you would tell them?

Focus on the partner. So really focus on the person that you're going to be working with because, I mean, I used to laugh when people would tell me it's a marriage. And it's really, that is absolutely. true. So really focus on and finding out everything you possibly can about that individual. And, you know, don't just read press or read the Forbes Midas list, you know, to like figure out how many times they've been on the Midas list before. I think go a step further and really, really do your reference checking, your back channeling on the specific partner because, you know,

because at the end of the day, it may be that the fund is choosing you, but you're choosing the fund and you're choosing the partner. And it's, it's really not about the fund. It's about the person. So I think single-handedly, that's the most important thing you can do. I would say two things. One, have a process. Get an Excel. Get it color-coded. Know where everybody is in your funnel at any one time and just lock in on that process, funnel sheet, update it, get organized with it. And then two, I would say, is to do this executive coaching session or do whatever you need to do, to make you feel confident and invincible and have high conviction. Because it's not going to be nice, you know.

It's going to be hard. And you need to persevere and just remember there's always going to be a yes out there. And it may take you 30 days, 60 day, 90 days. Like there was, you know, there's definitely people on about so that took even longer than that. But they still got great deals at the end. And don't judge yourself by your peers. Just keep persevering with it because somebody will say yes and somebody will find the, resonance in what you're doing and just you want to keep that in a belief.

Awesome. All right. Thanks so much for coming in. Thank you. Thank you. All right. Thanks for listening. So as always, you can find the transcript and the video at blog.combinator.com.

And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.