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Geoff Ralston

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2019-05-27
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2019-05-27
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  1. “Used to give this great analogy a lot of times doing a startup is kind of like skiing. You're going down a hill when you're skiing. And I don't know, do you ski, Harry? I do. Well, here's one of the things that not very expert skiers are told and they don't, like it's hard for them to get, which is if you're going facing down the hill, you need to lean forward. And if you lean back, what you want to do because you want to lean away back towards, away from that downhill, things go very badly. You need to lean forward and get on your edges. And it's just maybe it's because so much of what it is to do a startup is hard along so many dimensions that all those things interact in ways that fundamentally challenge our basic intuitions and therefore it's really surprising. Like let me give you an example. One of the things that's so tempting to startups is to do the great deal with a big company that wants to make your company. And it just seems so obvious, you know, Facebook comes along and says, let's do a deal. I had this happen to the music company I was running. Facebook wanted to anoint on Facebook.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Know, I'll go back to that conversation we had in the very beginning about whether what Frederick said about market versus team. And I wish I knew how much I should pay attention to team versus anything else than as I do now. It took me a while to really get that.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “You know, one of the, I'm sorry to keep one of the great things, one of the things I love more than anything else at YC, like real highlight is when a company that in the end, after working with him, like you kind of get a little down on. And then they surprise you and they come back and they do amazing things. I won't say any names here because that's maybe not such a positive way to start off, but there's these companies that you really believe in the founders, but they just kind of like whatever things happen. And then all of a sudden, you look up and they're doing millions of dollars of revenue and they're on a growth path and they raise a series A and they're off and running and you're just astounded and so happy for the founders.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I guess it is the people I've gotten to know extraordinary, amazing, incredible people from Paul and Trevor and Robert and Jessica, the founders, to Sam, the Collisons, the incredible founders of Incredible YC companies, Drew Houston, Brian Chesky's incredible founders of newer companies like Brex, which is one of our fastest billion dollars, the guys from RAPI. Just amazing, amazing people all the way, the people who have a passion to change the world. And again, that's what I think all of us at YC are there because we want to change the world in a positive way. And we think that entrepreneurship innovation is a great way, a really powerful way to do that. So, yeah, I guess I'll lean on the people.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “If you want nonfiction, I'm still saying if you haven't read sapiens or Homo deus by Yuval Harari, read it. I'm also reading Titan by Ron Chernoll right now, which is awesome. And I will say, by the way, if you like science fiction, and this is kind of an old book, but it's still like, I think it's one of the best written, most exciting books. They just made it a miniseries. Read the Altered Carbon series by Richard K. Morgan. Or if you're really interested in AI, the future of humanity, there's a really cool book, which is a weird name called We Are Legion, We Are Bob by Dennis Taylor. I love that book too.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “From buying this promise of future equity was hard to define. So it was hard for founders to understand their cap table and it was hard for investors to understand exactly what they were getting for their money. And that's why I created Angel Calc, which helped, but it was still complicated and not completely transparent. And that's again why we went to a post-money safe in our latest iteration, which is much clearer, much more obvious for both founders and investors, but still has all the great qualities of a convertible that I talked about earlier. It's fast, it's cheap, and now it's actually really simple.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “They get it closed fast, they get the money in the bank, they get back to work, and they improve their probability of success. They're good for investors because of all those same reasons, because you'd rather your companies have a better chance of success than otherwise. What other problems with convertibles? The case is not that they're perfect, especially when it was debt. Debt was not a great model for this. It was sort of an accidental thing that was used for bridge rounds, and it wasn't really meant for equity investing. And that's why we moved from convertible notes to safes. Carolyn Levy hit Y Combinator invented the safe or simple agreement for future equity, which is not debt. It's not a note. If you ever hear safe note, it drives Carolyn crazy because it's just a safe. A note is by definition debt. But it was a pre-money instrument. There's a cap on it because it was pre-money, it turned out, and because of the way the safety was defined, the amount of equity that you were actually likely to get.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Of pages of documents which seem to need to be rewritten every time, and it would take weeks or months to get this thing done. That was certainly not optimal for anyone except for maybe the legal industry. The great thing about convertibles is it said, you know, forget all that. We're just going to do something super simple. It'll be a three-page document. You won't really need a lawyer at all because we're going to standardize in the document. It doesn't need to get rewritten every time. There's just a couple of variables that you can choose. And you can close the whole thing on a rolling basis. There's no clothes. You can close each convertible stand by itself and you can do that deal in as quick as a day. And the total fees will be minimal and the total time to get the money in the bank and get back to work, which is, by the way, our mantra for early stage financing, get the money in the bank and get back to work in an incredibly short period of time. So from that perspective, convertibles are great for everybody. They're great for founders because”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Ultimately, good and bad for. I can talk to you for an entire podcast on. In fact, you might know that I created a tool called Angel Calc that actually a fair number of people use to model how convertibles actually work. So if you read Paul's original essay about the founding of Y Combinator, which you can Google and find, talked about this, which was, how can we fund a whole bunch of companies at the same time with standard documents? Because before YC, every time you raised money, you had to do a few things. First of all, you had to collect all of these investors all at once because you closed all at once. You had to find a lead investor to set the terms that everyone else would agree to. So you had to have everyone agree that there was this lead. You had to get a lawyer and have them have a lawyer. You have to pay thousands, sometimes as much as $50,000 in legal fees in order to write hundreds.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Because that gives them the buffer they need to take chances to have multiple bites at whatever Apple they need to bite at. The question again was for the first round.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “This is a hard question to answer, Harry, because I don't know what the first raise necessarily means. So there's a generic answer that I give as to when you should raise, and that answer is when you can. Now, I know that almost sounds tautological or unhelpful, but it's actually meant to focus entrepreneurs' minds as they're moving along through their company's life cycle and they're looking at their capital needs, which, by the way, sounds like obvious as a task for the, say, the CEO of a company to do, but the problem with a startup is you always have a million things to do and you're trying to build product and sell. And paying attention to your cash flow and then modeling it out and mapping it out is not always the first thing on their mind. So sometimes entrepreneurs will wake up in the middle of the night and think to themselves, wait, I have six months of casks. Damn, am I going to reach a milestone where I can raise? So raising money when you can raise money and you see that often in our space, right? You hear about a company raising and then raising again because they can because they can raise a higher value.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “And it spread like wildfire. You don't actually think about that in elementary schools. We used to put up a map of the United States where I'll pinpoint of light would shine every time over the course of a year that class dojo started to be used in a school. And it was like the whole country lit up. So cool, right? I'll just say one more thing. I think that during our last startup school last year, which I ran, we invited Ushlagarg, the founder of Gobel, YC company. Great YC company, to come and talk. And she gave, I think maybe the best definition of product market fit that I've ever heard. She said it comes at the intersection of retention and growth. So I'll just leave you there.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “We have all these cliches now in our industry that, like any clich ⁇, start to lose their meaning, right? Do you have your MVP, your minimum viable product? Do you have product market fit? For me, actually, there is a strikingly simple test for whether you have product market fit, and that is, are you growing? Are you growing with no effort at all? Does it just grow because the product solves such an obvious key need that it happens with no effort at all? This is a little naive because across industries, there's different dynamics. I understand that. But it is almost never the case, especially in today's world where information travels at such low cost, that if you've done something amazing, you won't grow. And it doesn't matter, you know, one of my favorite examples of this is Class Dojo, which was not actually a YC company, it was an Imagine K-12 company from our very first batch the summer of 2011. And it was a product for elementary school teachers.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I think that my superpower is that I help founders by asking the right questions or asking them to ask the right questions. Here's one thing that's incredibly important for advisors to understand and that most don't. In almost every case, you will know far less about whatever business you're talking about than the founders who's in it every day and fighting the fight every day. You're not going to help them by knowing more about their business than they do. But what you can help them do is get a different perspective on it. And by the way, one of the most important perspectives you can give to a founder is why they can dream big, why there's an incredible opportunity in front of them. It's sometimes hard for founders to see that or to continuously see that because their head down trying to survive. But in the end, if you're going to survive as a founder, especially of an early stage company, you have to be able to dream. And helping founders dream, well, that”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Was God, no, never. They would have had to prime my companies with my cold dead fingers or something to that effect. I guess what I'm saying is it's less of an external forces decision than an internal forces because there's always a pivot. There's always a way if you have the belief, the passion, the obsession, the energy to do what you need to do.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “I think you pivot or change when you're all out of hope and ideas and you don't have the energy to come up with new ones. Paul Graham used to say this in a really blunt way, which is, as a founder, you have two choices. Quit or get rich. And I don't think he was being harsh in the way that sounds or even Pollyannish about that. He just meant that if you keep on going and you keep on going and you keep on going, eventually you will find it. But at some point, if you have to quit, then that might be the only choice you have. That might be binary. You might not have that second one. You might have to quit. And that's a very internal choice. I remember hearing Elon Musk talk about what it was like for him when Tesla was something like $445 million in debt. And the first three launches of SpaceX had blown up. And someone asked him, so did you think about quitting and his reaction?”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Danny Gross is great. And I was a personal investor in what was originally Grepplin and then Q. And the idea sounded kind of cool, a meta search engine, but I invested because I thought he was awesome.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “This isn't a top secret or anything. We sometimes interview people twice because we can't quite get it in 10 minutes. It's not always, again, this is way more art than science. And sometimes we want another group of people to talk to them. Mostly we do it in 10 minutes, but not always.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Human beings are pattern matching machines. It's what we do. And the fact is, our brains are so tuned for this that we do it almost instantly, unconsciously. And it turns out 10 minutes is usually not that we don't get it wrong. We're not perfect, but 10 minutes is usually more than enough time. Usually we know our guts tell us more quickly than even 10 minutes. You can get a read on people and on teams and how the teams interact really quickly. Now, this is why we do our interviews the way we do them. They have to be in person. I don't know that we have ever accepted anyone to Y Comedy without an in-person interview. So we got a feel for that person and for their team and how the team interacts. We look hard how they describe themselves, their business. We look hard at how they react to difficult, quick questions. We get a sense for how smart they are, how insightful they are, how resourceful they are. And yeah, 10 minutes, plenty of time for that. Usually, by the way.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Has written more and thought more clearly and brilliantly about startups than anyone else in the world. He wrote an essay called Relentlessly Resourceful. I like to think of the founders that I want to fund as resourceful and determined. I want founders who I can look at and imagine in my mind at the helm of a billion dollar company in the future. And I don't know how to profile that. I just have to believe that they're going to solve all the hard problems. Maybe they've solved hard problems in the past. Maybe that's what I'll look for in the profile. Have they overcome difficulties? Have they created unique interesting things? This is not a formula, Harry, but it is, I think, one of the things we do best at YC is work hard to figure out who are the potential real leaders of industry in the future.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “I don't tend to think in terms of profiles. I think you lose as an investor if you fall back on stereotypes, which is different, I think, from falling back on intuitions. I like to look back to what I call Paul Graham's original epiphany when he started Y Combinator in 2005. After interestingly, he gave a talk to the Harvard Computing Society, a bunch of geeks, right? A bunch of nerds, a bunch of hackers, a bunch of software people, a bunch of technologists on how to start a startup. His epiphany in his terms was, oh, I'm going to fund a whole bunch of companies at the same time. No one does that. And I'm going to do it with standard docs. But it wasn't just a bunch of company. It was founders who knew technology, which was going to be at the center of value creation henceforth. So why wouldn't you put the people who know it best, the people who can build? So yeah, I look for people who can build. I don't know if that's a profile. I just think that I have to believe that they're going to be able to create things. I think Paul.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “We always give, which is Airbnb. Look at that idea in the beginning. Who is going to invest in a company that says, well, we're going to have airbeds that will handle overflows from hotels, like conferences and things like that? If you have an awesome team that gives you that idea, you might say, well, gosh, you know, maybe there's some adjacent market that might be fantastic. And Paul Graham had the genius to see that and the genius to see that the Bryan team were awesome. He believed that they were going to find a way, and they did, clearly.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Well, I guess we'll have to agree to disagree because my waiting is far more on the team at the stage in which I choose companies for angel investments and which YC chooses companies to fund. I will always pick a great team. Assume they'll figure it out or they know something I don't know rather than a slamdunk idea. Because at the earliest stages, there's no such thing as an idea that in of itself will build a great company. I shouldn't say there's no such thing, but it's always ambiguous. You know, today's a good day to talk about that, right? Because Uber went public this morning. Not doing great. But the interesting story about Uber is in retrospect, slam dunk, obvious, right? But many people passed on Uber because it was about black cars and there weren't enough black cars and these taxis seemed to work just fine and how big a market was that really and how disruptible. There was a market need there that just wasn't so obvious. I'll give another example.”

    2019-05-27 · The Twenty Minute VC · 20VC: Y Combinator's New President, Geoff Ralston on The Single Most Important Perspective An Investor Can Provide A Founder, The Biggest Lessons From Working Alongside Paul Graham & Why You Will Lose As An Investor If You "Profile Invest" · IDENTIFIED FROM THE TRANSCRIPT · source