The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:47:11 · Harry Stebbings, Matteo Franceschetti
[00:47:11] S1: You know, I had this brilliant statement the other day, and it's vulnerability is sharing something that you're scared to admit in spite of the consequences, in spite of them. What do you think you're kind of scared to admit in spite of the consequences today? [00:47:24] S0: Well, I think for me, a lot of things were also like, I moved to The US, coming from Italy. I graduated in law. I didn't know anything about Silicon Valley. I didn't go to Stanford. I didn't go to Harvard. We are three immigrants founding AIDS Sleep. So in the early days, it was very challenging, right, because I didn't know anything about that work. I didn't know anything about how The US was working. So thinking of creating a product that consumers would buy and they would also love to scale, I had a lot of question marks if I could really do that. And I think it was also in the early days, this fear of, can I really scale the thing? Okay, you can build a product and hundreds of your friends might buy it because they are just nice to you. Or maybe you sell a thousand because it's a crowdfunding campaign, but can you really build a true business that people buy the product because they want that product? [00:48:15] S1: I love it, but what are you scared of today? [00:48:17] S0: Today? Yeah. Do you know the story of when I had to move to China in the early days for manufacturing, or I didn't tell you? [00:48:24] S1: No, I didn't, you told me.
00:48:24 · Harry Stebbings, Matteo Franceschetti
[00:48:24] S1: No, I didn't, you told me. [00:48:25] S0: So it was after the OIC demo day, right? We just raised $56,000,000, whatever. But manufacturing was not happening, so we had all these beautiful prototypes. None of us had any experience about manufacturing, so we thought, Oh, you have a prototype, and now you build it at scale, and we're done. But things were not happening. And so, I go to Alex, and I say, I have to go to China. And she says, Why? And I say, Because manufacturing is not happening. And she says, When do you go? I'm gonna go tomorrow. And she says, When do you come back? And I say, Once I fix manufacturing. I came back three, four months later. And now, still today, the longest tenured employee in the company is a Chinese person that I hired during those months while I was living in China. [00:49:06] S1: And she just put up with that? Three to four months away. Yep. How did you do that? Like, how did you make that work as a couple? [00:49:13] S0: Well, when the relationship started, she was living in Mexico, I was living in Italy for our first year, but that was, by then, probably five, six years before. I don't know. It's just for us, the business requires that, you do what you have to do. [00:49:26] S1: But one thing that I'd be nervous of, slash scared of if I was you is, like, the ways in which you work may not be transferable to having a child. Going to China for three to four months, you can do it. You're a lovely human, and I really appreciate our friendship. I don't think that's the type of dad you wanna be.
00:49:26 · Harry Stebbings, Matteo Franceschetti
[00:49:26] S1: But one thing that I'd be nervous of, slash scared of if I was you is, like, the ways in which you work may not be transferable to having a child. Going to China for three to four months, you can do it. You're a lovely human, and I really appreciate our friendship. I don't think that's the type of dad you wanna be. [00:49:41] S0: I think we would figure it out. I think we would brainstorm. That is how it works at our house, right? We would brainstorm, and if I have to come back for a weekend and go back, I do whatever it takes. I go hardcore, whatever it takes. And then I try to do it in a smart way for whatever is possible. [00:49:57] S1: We said before about the travels. You can travel anywhere to any hotel. What is the favorite hotel in the best place, and why? [00:50:06] S0: I love Maldives. [00:50:07] S1: Do you not find it boring? [00:50:09] S0: So here, problem, which we call Alexander and I, we call it the scene. And we say we have the scene. And so, I never took a vacation since when Aeslip started. We didn't even have an honeymoon because we set the date of our wedding to be exactly one week after the end of the crowdfunding campaign. And so I get bored in any place for longer than we calculate that longer than two nights in a place, I start feeling like I'm bored. Let's move to the next big thing. [00:50:39] S1: So what'd you do in The Maldives? [00:50:40] S0: I was literally there for a weekend because I had to be in The Middle East for work, so we just [00:50:44] S1: filled To do a weekend in The Maldives?
00:50:44 · Harry Stebbings, Matteo Franceschetti
[00:50:44] S1: filled To do a weekend in The Maldives? [00:50:46] S0: Mhmm. Yeah, because we had to go to Middle East for work, Friday night. But then what happened, actually, is that the guy who was leaving hardware, he calls me that Friday night at two a. And he's saying he's leaving. And so I spent the whole weekend trying to save him because we want to save him, and I saved him, but I spent not the whole time, I had dinner, and I went snorkeling once during the weekend, but dealing with the guy, but then we retained him, so... How did you save him? Because of our culture. The company was paying him way more, giving him RSUs, so liquid stocks, plus paying him probably 3x more. But he loves so much what we do, how we work, and what we want to build that, at the end, decided to stay. But he literally decide five minutes before going in the conference room to tell his team. So it was out, out, out, out, out, and then comes to me five minutes, I was in San Francisco, he's busy in San Francisco, five minutes before going into the conference room to tell his team he's leaving. He says, I thought about that. Can you do this for me in terms of offer? And we say, Yeah, I'll do it. And then he stayed. [00:51:52] S1: Can you advise me? I'm a founder of an early ish stage companies' day. My talent is getting poached by hot companies, top labs. Should I pay the same as what they're paying to keep them if they're great? Or do you just have to accept that it's out of our league?
00:52:06 · Matteo Franceschetti
[00:52:06] S0: Well, I'll tell you something slightly different. I think you cannot even compare, meaning if the people are really comparing the options between a company at a total different scale to you, they're probably the wrong people. Or it's not that they are wrong fundamentally, like in our case is, this person was tired of, no, there is pressure at his sleep, and he does artwork, so he needs to go to China, Vietnam, travel all the time. And so it was becoming a personal choice. But he's a hardcore guy, and at the end of the day, he realized that this is what gives him energy, and so he didn't even want that life. And so, sometimes it's still happening today. Sometimes people say, Oh, I'm at the final stage with Anthropic and Eight Sleep. And to me, that is a really bad red flag. Not even for the salary, but it means you are confused. There is no way that these two jobs are any way similar. And I'm not talking because we are hardware versus software, it's just, man, get your shit together. Do you want to work at a very large company that has no certain standards and probably a certain profile, or you want to work at Eight Sleep? But here, tell you another thing that we are seeing, actually. You will love this. There is another trend in Silicon Valley where there are people that have been laid off. Obviously, I don't want to generalize, but we have seen this in the data. And so what they do is they start talking to a lot of companies. And sometimes, some of these, at least with us, they took one of our job offers, and then two weeks later, they switched to another company. And the reason is because they didn't have probably income or salary for every few months, they want to try to get a salary or income, and then they keep certain conversation open, and then they might take another job. Does that not look terrible, switching so quickly? Yeah. But then they don't even disclose.
00:53:50 · Harry Stebbings, Matteo Franceschetti
[00:53:50] S1: Do you think the value is too money oriented? Chamath said on X recently that it's become too transactional, it's too financial. From Chamath, that really is something. Do you agree with that? [00:54:01] S0: Yes, but with the caveat. I think people that join a startup, they should be driven, and it's important that they are motivated by potential financial success, and I agree. But that success will come by increasing the equity value from X to 10X. That is also why, to me, it's so important, right? You cannot really compare us to one of these big companies that are already so big, where they are way more stable, and maybe you do two, three x. At this leap, you should come to try to do 100 or 1000x. But the team size, there are so many details that are totally different, and so we actually want people that are very driven and ambitious, but they need to be driven and ambition because of the right things. [00:54:41] S1: Do you think people care to say more about upside in terms of 10, 100x, or actually just certainty of cash? Yes, it may be more capped, but you will get a tender next year, and that will be done as they are every year.