A Product Market Fit Show | Startup Podcast for Founders
00:32:28 · Pablo Srugo, Peter Walker
But, like, it it'll take time for I'm sure some founders are doing that, but it's like, for that to show up in the data because it becomes a standard thing that people do, I could see how that would take time. But it seems like a natural endpoint. [00:32:40] S0: Yeah. I mean, I I agree that the logic seems to make perfect sense to me. And I don't know why we haven't seen it more, but maybe as you said, maybe it'll take time. The other point on teams that I think is interesting is that there was a little bit of a wave that went through private tech when the windsurf stuff happened and, like, what it means to be part of an early team. I mean, I just think that startup employees, at least the ones that are super in the know, are like, hey. What is the advantage of me not starting my own company? You know, I think the the best alternative used to be work at Google, whatever. And now it's start your own thing. And I think that, like I I think hiring the number one, number two, number three engineer in the business has almost never been harder. Because the alternatives are so obviously, like, hitting you over the head. If you can be a founding engineer at a at a startup, why couldn't you be a founder?
00:33:29 · Pablo Srugo, Peter Walker
[00:33:29] S1: Although why like, actually, walk me through that. Because my thinking has been AI has changed product. It hasn't really like, obviously, AI agents, you can use them for go to market and stuff. But, like, I would argue getting a customer is not easier because competitively, everybody's doing it. So, like, getting customers no easier today than it was five years ago. It's still just as hard. What's gone easier is building the product. If you're a technical engineer, you're a technical founder, building a product's even easier than it used to be, let's say, because it helps you. But, like, getting customers, you know, I don't see how that's changed. [00:34:00] S0: I think that they kind of underrate how hard it is to get customers overall. [00:34:03] S1: Yeah. That's a different thing. [00:34:04] S0: That's probably one thing, which is a good point. The other part is just that it's not so much the equation has changed on how hard it is to be a founder or build a good business. The equation has changed on how valuable it is to be in the early team. You know, if if we get acquired, and for some reason, I'm not a part of the golden circle that gets taken to the next place, then I've accepted a lot of risk. Even if my equity grant is high, it's not it's kinda like a different sort of another variable on the equation. And I think it's there's a lot of acquisitions happening right now, mostly for AI talent. So I think there's candidly, I think there's a lot of companies quietly not saying it that are quietly being built to get acquired earlier.
00:34:04 · Peter Walker, Pablo Srugo
[00:34:04] S0: That's probably one thing, which is a good point. The other part is just that it's not so much the equation has changed on how hard it is to be a founder or build a good business. The equation has changed on how valuable it is to be in the early team. You know, if if we get acquired, and for some reason, I'm not a part of the golden circle that gets taken to the next place, then I've accepted a lot of risk. Even if my equity grant is high, it's not it's kinda like a different sort of another variable on the equation. And I think it's there's a lot of acquisitions happening right now, mostly for AI talent. So I think there's candidly, I think there's a lot of companies quietly not saying it that are quietly being built to get acquired earlier. [00:34:44] S1: I think that's a good point. I mean, frankly, the the monetary advantage of being an early employee has always been questionable. Like, that's just the reality of it. And then when you see acquisitions, kinda like side acquisitions that happen in a way where not everybody's compensated the same way, it just adds like fuel to a fire that's already it was not like a crystal like, I would say it's way more fun to work at a startup. I'm like all about small teams. You have more agency. There's a lot of upside, but like money is not one one of the will make more money at Google, more easily doing less. You just will. [00:35:16] S0: Expected value is much higher at Google than Google. Way higher.
00:35:16 · Peter Walker, Pablo Srugo
[00:35:16] S0: Expected value is much higher at Google than Google. Way higher. [00:35:19] S1: Yeah. Awesome, man. Anything else that we didn't touch on? Anything else? Any other trends you're seeing that you're that you're digging into? [00:35:24] S0: I think there's a there's a lot of conversation right now about what happens to the traditional 200 to $400,000,000 series a fund, and whether or not those fund managers need to go down earlier, whether they can compete with the rounds from the mega funds. Everyone seems to have assumed that mega funds will continue to attract the most money, and that super early funds have an advantage. And so, like, what happens in the middle is one of the bigger conversations around venture managers that I'm listening to right now. [00:35:52] S1: Well, actually, on that, was gonna ask, like, we're seeing you're seeing more companies created than you mentioned, but not necessarily more companies being backed. What are you seeing in terms of fund formation, like number of funds and total dollars raised? What does that look like? [00:36:04] S0: I mean, it's okay. It's definitely down from prior years. There's a there's a group of funds that are being started that are under 50,000,000 that are you know, probably is gonna come into about equal to last year, maybe slightly down from last year, at least in our data. But in general, you know, I think one of the stories of the last couple years has been a lot of VCs who got started in 2020 and 2021, they're on their last funds, and they're they're not gonna be able to raise again.
00:36:04 · Peter Walker, Pablo Srugo
[00:36:04] S0: I mean, it's okay. It's definitely down from prior years. There's a there's a group of funds that are being started that are under 50,000,000 that are you know, probably is gonna come into about equal to last year, maybe slightly down from last year, at least in our data. But in general, you know, I think one of the stories of the last couple years has been a lot of VCs who got started in 2020 and 2021, they're on their last funds, and they're they're not gonna be able to raise again. [00:36:29] S1: So, I mean, in a sense, you've got way more founders chasing the same or maybe smaller number of VCs. Sure. Some of those VCs have massive AUM, which maybe makes your total dollars available be high, but they're not gonna they're not gonna spread them probably. You know, if you have one mega fund, it's just not gonna be able to spread it as as far as a 100 or a thousand little funds, which each one's gonna do 30 deals. [00:36:53] S0: Yeah. Exactly right. Is that good or bad for the ecosystem? I don't know. But it's definitely on the mind of a lot of emerging managers who are finding this market pretty frigid.
00:36:53 · Peter Walker, Pablo Srugo
[00:36:53] S0: Yeah. Exactly right. Is that good or bad for the ecosystem? I don't know. But it's definitely on the mind of a lot of emerging managers who are finding this market pretty frigid. [00:37:02] S1: Well, I I think it's just for me, like, again, I go back to the founder mindset. Like, it just this is the bar. Like, you see the headlines. You see the medians. You're like, wow. Like, 15,000,000 a at 80 post money. Like, the world couldn't be any better. I just gotta get there. But getting there, like, just understand what that means because of all these dynamics. The bar is just it's just very high. ARR is one of those things. Growth is another. Competitive dynamics is another one. The size of your potential exit, like, all these things really have to align for you to be the one that gets counted in that meeting. Because by the way, everybody that didn't raise an a is not part of that dataset. So [00:37:36] S0: Bingo. It's a rough, rough world out there. [00:37:38] S1: Listen, Peter, it's been great having you on the show. I'll let you rest your voice a little bit, man, and appreciate you sharing the the insights with us today. [00:37:46] S0: Yeah, dude. Always good to see you.