#1251 Avlok Kohli | AngelList CEO on How To Build A Startup

I would say a zero-to-one product—and this is the case for any startup that's just launching a product—what you're really looking for is product-market fit. And typically, product-market fit, the best way to measure it is 'Do people love it?' Honestly, does even one person love your product? Do two people love it? Do five people love it? Most of the time, no one loves it. You know, you're essentially fighting apathy.

We don't want to build a better version of the past. Most products are just building a better version of the past. And the reason that's a problem is when you're building a better version of the past, you're building a commodity product. When you build a commodity product, it goes back to you fighting apathy. No one cares ... Focus on building something that's insanely great that is just so much better than the past.

If there's one thing I could somehow.... explain to founders what product-market fit feels like ... Product-market fit just feels like the product's getting pulled out of you. You can't hang on. There's just so many things that are breaking because customers are banging down the door.

You're just able to communicate a lot more when you're in-person. When you're in the early stages of building a product and you're pre product-market fit, there's just a lot of information. You're not optimizing for efficiency; you're actually optimizing for creativity. And when you optimize for creativity, you have to be in-person.

I would say the culture of shipping just comes from a pure founder mentality. I mean the entire existence of AngelList is to make sure that we're here to serve the founder, and that bleeds into everything we do, all the products we pursue, the way we build teams.

The default for any group of humans is slowness. It's 'Yeah, let's take another few weeks to get it right, get it perfect.' But, in reality, you just have to push hard, and you have to treat the urgency as a core principle in the company.

If you're going to serve founders... and you're going to build products very quickly, you need founders who understand that you can move quickly. Because if you've worked at a larger organization where there's a bunch of process flow and it takes longer to get something out the door, and you only hire from there, then you bring people in the organization that think that's how products get built. But that's not how products get built; that's actually how products go to die.

For example, AngelList, we have three offices: San Francisco, New York and Seattle ... I just say, look, we're going to solve some hard problem, fuck it. Fly out here later this week or next week, and we're all meeting in person. We're not leaving the room until we solve this problem and build this thing ... You can't solve hard problems, in my view, remotely.

Ultimately, any company you build or any product you build, you're printing some view you have of the world, some opinion of how the world should exist, and that's what you're doing. And you're building a product around that.

When we think about resourcing projects/products, it's typically a very small team with a single leader that's typically an engineer or a designer ... Then it's just an insane sense of urgency just to push, push, push.

For most companies, they'll build one product, but then they have to be a multi-product company. And the thing about being a multi-product company is you can't skip steps. Just because one product reaches scale, doesn't mean that the second product or the third product that you build is going to naturally reach scale.

I think it's really hard to do this remote. You have to have folks coming in person. I don't know if five days a week is gonna be the new norm, or two days a week. It really depends on the company. But, for AngelList, we are coming back into the office. And we are there because you have to build that in-person collaboration.

If you are already remote, one of the things that could be useful is just fly somewhere, just jam on a product launch, and just don't fucking leave the place until it's out there.

The second you start looking at what others are saying about you, you're not building what customers actually want from you. And the only thing that matters is what customers want from you, not what others are saying about you, because who cares?

Startups are a step function change. It will never ever, ever, ever feel linear, ever. It's always a step function change. You start off building a product, you're crafting in the lab, and then you put it out in the world, and then people swat it most of the time ... You feel like you're back to zero, because you are, in a way. But in some ways, you've already learned something, and now you can iterate to the next thing, so it's not linear.

The way to think about startups is it's all about the step function change, and the ambition is what gives you the motivation to keep going.

Honestly, it just starts top-down in terms of applying a strong sense of urgency and making sure that folks understand that. Look, if you're going to naturally default to next week, two weeks from now, why not tomorrow? Why not, you know, the day after that?

You need founder energy and founder mentality to break through the process, break through any other drag, so that you can just focus on shipping great product and focus on what matters.

This what I recommend for all startups is you typically want to take the cash you have and you want to make sure that you're putting it in a place where it either is in US treasury bills or you actually have it across multiple banks or you have it at one of the big, big, big banks. The problem with one of the big, big, big banks is they just don't want to work with you.

My advice for pre-seed and seed founders is take as little as you need because you actually want the company to have as little burn as possible because you need to make progress to get to the next stage and the next stage after that.

When you think about a technology company, the entire purpose of it is to grow and to serve your mission.

The root of the problem is that the cap table is just hard to use. You talk to any founder today, none of them use it ... I have a close friend who's, I think, a third-time founder; pretty sophisticated. Just like, 'I literally can't touch capital software, because I'm worried I'm going to mess something up.'

I think if you're hiring a very senior engineer, I think it can work remotely—but I'm talking a senior engineer or designer who's like a savant.

For most people, and especially someone just coming out of school, they crave being in-person; they have to learn from others ... People who are just coming out of school, and especially the ambitious ones, the ones who want to become founders, are saying, 'I'm actually rejecting offers where the company's remote; I want to be in person.'

I think one of the biggest decisions is actually the distribution of equity amongst the founders. So, I would really ask if you need equal co-founders or do you need a late co-founder?

Decisions don't get made by consensus in startups at all; it has to be authoritative, and it has to be a singular person that's accountable to it. And if you have an equal co-founder relationship, it can cause a lot of tension.

You have to set the tempo, and then you have to expect folks are going to rise to that tempo. And then you have to have other folks in the company that are going to be the culture carriers. They're going to call out when we're not being as fast as we could be.

When you actually just have amnesia for the past couple of years, and you just go back on 2019 and 2020, what you'll see is that... pre-seed medium valuation today, so 2019 to today, actually is up. Same thing with seed—it's up. Series A is, like, slightly up, and series B is flat, and series C is flat.

From a fundraising perspective... when you anchor it back on 2019/2020, it's fairly healthy. Yes, deal count is down. It is harder. But again, humans just anchor on like the highest possible thing. And now we're like, 'Oh, no, fundraising is down completely.' It's actually a pretty healthy market out there.

For anyone who's post product-market fit, and they end up raising a small fund and deploying it, it's actually similar to them investing their personal capital anyways. They typically do pretty well, mainly because when you're post product-market fit as a founder, you also just have deal flow that comes in naturally.

So, again, if you want to hire the best young talent, you have to be in person. It's just very, very hard to pretend to learn by osmosis.

The survival rate of venture-backed companies is like 2.5% or 2%. And of those, the ones that actually become... large sustainable companies is, like, 0.1%.