Carta is the backbone of most venture-backed startups. They have access to specific information about every single round, not just what's reported in TechCrunch. 

Today, Peter Walker, Carta's Head of Insights joins us to share the findings from Carta's Q2 reports. We go deep into data from pre-seed, seed and Series A rounds. We cover median valuations, time between rounds, graduation rates between rounds, the AI and repeat-founder premiums, and much more.

VCs know most of this data. Founders need to be equally well-informed. You won't want to miss this episode.

Why you should listen:

• What are the typical pre-seed, seed and Series A rounds.
• Why stacking SAFEs is very dangerous.
• How to minimize dilution in the early-stages
• What is standard founder ownership, founder equity splits and ESOP sizes.
• Why the graduation from Seed to Series A is so low and the bar for Series A so high.
• Many more data points for pre-seed to Series A Venture Capital and Startup data.

Keywords

startup ecosystem, fundraising trends, total fundraising, down rounds, bridge rounds, company shutdowns, pre-seed funding, seed funding, series A funding, valuations, round sizes, dilution, founder equity, early employees, equity compensation, seed round size, series A

Timestamps:
(00:00:00) Intro
(00:01:35)Findings from the Q2 Report
(00:06:12)Typical Pre-Seed Round
(00:07:29) Post Money Safe vs Pre-Money Safe
(00:11:54) AI and Repeat Founder Premiums
(00:15:03) Typical Seed Round
(00:17:07) Time & Graduation Rates Between Rounds
(00:22:08) Typical Series A
(00:28:14) Equity Splits
(00:35:02) Founder Ownership

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Last quarter, Sanish raised a $50M Series D. His company has raised over $130M. They have enterprise customers across 14 countries including Dollar General, Aldo, and CircleK. 

It all started because Sanish was working out of coffee shops. He wasn't looking for a startup idea. But after a few casual conversations with employees, he noticed several problems retail workers and managers faced. He decided to build Legion to solve them.

He partnered with one local coffee chain, worked as a barista for a week, and developed the product with them for a year. He didn't sell to other customers, he stayed heads down until the local chain adopted the product across their entire organization. By the time they went to sell to other enterprises, they knew the product worked.

Why you should listen

• Why listening with an open mind is a common way to identify customer problems.
• Why providing clear and immediate ROI is a must-have for enterprise customers
• How to perfect your product with design partners that are heavily invested 
• How to raise a Series A without meaningful revenue.

Keywords

Legion, workforce management, enterprise software, problem validation, value proposition, scaling, pricing model, ROI

Timestamps:
(00:00:00) Intro
(00:01:35) The Origin Story of Legion
(00:04:53) The Mindset of Most Frontline Workers
(00:11:05) Gathering Data
(00:20:00) Building an MVP
(00:24:30) Insights from Customers Using V1 Products
(00:30:15) Series A
(00:32:13) Legions Core ROI
(00:36:15) Scaling Legion
(00:39:47) Finding Product Market Fit
(00:41:19) One Piece of Advice

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Sean Ellis created THE test for PMF. He led growth teams at Dropbox, Eventbrite and LogMeIn, which sold for $4.3B. He coined the term Growth Hacking and wrote the best-selling book Hacking Growth. 

Today we go deep and tactical with him. He takes us through how to use the Sean Ellis test to perfectly measure and understand product market fit.

He takes us to case studies of things that he did at LogMeIn and Dropbox to dramatically increase growth. And he shares exactly what you can do to drive more referrals for your startup. 

Why you should listen:

• Why the Sean Ellis test is THE product-market fit test every founder should use. How to implement it today and use it to get closer to PMF.
• Why a great first-time user experience is the key for growth and referrals.
• How to optimize each growth levers, such as acquisition, activation, engagement, retention, and referrals.
• How to build a data-driven culture that is focused on measuring and improving PMF.

Keywords
product-market fit, Sean Ellis test, growth hacking, referrals, first-time user experience, optimization

Timestamps:
(00:00:00) Intro
(00:1:55) The Origin of the Sean Ellis Test
(00:13:13) Finding Product Market Fit Using the Test
(00:18:21) Focus on "Must Have" Users
(00:21:38) Growth Vs Marketing
(00:25:38) Old School vs New School Marketing
(00:30:17) 4 steps to growth
(00:36:24) Improving Sign ups to Usage
(00:41:37) The impact of Referrals
(0045:31) One Piece of Advice

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Daniel's been building robots for 20 years. He's sold 100s of AI robots-as-a-service to Walmart, FedEx, & DHL amongst others. Last month, he raised a $40M round.

6 years ago, he realized  why robots weren't getting massively adopted. Builders like him were trying to build perfect robots that always worked. But every situation has edge cases. What if you designed robots to work only 80% of the time and use humans for the other 20%?

That one unique insight changed everything and was the reason he started Vecna. His robots can tell when they need help and ask humans to assist in real-time. 

Like most capital-intensive startups, Daniel played on hard-mode. Here's how he built hardware, robotics and AI, sold enterprise contracts, and grew to $10s of millions in revenue.

Takeaways

• Why as a founder you need to trust your gut and stick to your convictions.
• How to be objective and create an accurate model of the world to predict the future and make informed decisions.
• How to bootstrap even a capital intensive company in robotics

Keywords

Vecna Robotics, robotics, warehouse industry, automated forklifts, reliability, safety, customer adoption

(00:00:00) Intro
(00:02:05) The Beginning of Early Robotics
(00:06:00) Edge Cases in Robotics
(00:08:15) Robots Shouldn't be Perfect and AI Isn't Intelligent
(00:14:05) Technology Empowers Humans
(00:18:19) When Robots Need Help
(00:21:29) The First Pilot and Customers
(00:29:49) Covid Slowed Everything
(00:33:52) Finding Product Market Fit
(00:34:45)One Piece of Advice

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Advice is free—actioning bad advice isn't. Early-stage founders are bombarded with advice. A lot of it from investors who have never operated a business, never ran marketing, never led sales.

And yet, many founders take VCs' advice as sacrosanct. And many VCs feel like they can and should opine on everything. If many people treat you like an expert, you must be one... right?

VCs have a lot to offer founders. But, like everyone, they have circles of competence. 

Be careful who you listen to.

Why you should listen

• Why power dynamics between VCs and founders can distort decision-making and advice-seeking.
• Why you should be skeptical of advice that is outside of a VC's circle of competence.

Keywords
customer needs, business problems, power dynamics, VCs, founders, advice

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Alex got the co-founder of a public company to join him and raised $6M out of the gate—but it took him 3 years to make his first sale. 

But after he shifted from selling to SMBs to selling to MSPs (Managed Service Providers i.e., outsourced IT), things took off:

April 2015 - $1K MRR
August 2015 - $10K MRR
June 2016 - $100K MRR
Nov 2018 - $1M MRR ($12M ARR)

And growth never stopped—soon, he'll cross $100M ARR.

Alex and his co-founder did many things differently. They came up with an idea by starting with markets, not customer problems. They raised a lot of money upfront and built a sophisticated product instead of an MVP. And they deliberated cultural values before making their first hire.

Clearly—it worked.

Why you should listen

• Learn why you should define culture before making your first hire.
• How to find market trends and customer problems top-down instead of bottoms-up.
• Why keeping your product unchanged but targeting a different market can have a massive impact and lead to product-market fit. 
• Why you should be willing to be bold and not hedge.
• Why you should only focus on one thing at a time.
• How to use constraints to do more things faster.

Keywords

Auvik, software company, networking, SMBs, mid-market, decoupling, control plane, hardware, software solution, automate, configuration, user research, product design, team, company values, SaaS, IT management, product-market fit, pivot, managed service provider, MSP, boldness, discipline, advice

Timestamps
(00:00:00) Intro
(00:01:47) The Origin of Auvik
(00:07:20) Finding a co-founder
(00:12:35)  It's People Who Build Companies
(00:14:10)  Finding the Concept for Auvik
(00:20:07)  Buikding the Product
(00:30:30)  First Customer Experiences
(00:34:40)  Feedback Loops
(00:39:08)  Getting to a Million
(00:41:33)  Finding Product Market Fit
(00:42:54) One Piece of Advice

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When an employee unexpectedly quits, an investor backs out, or a big customer churns— fear of failure takes over. When you close a new round, land a big customer, or make a big hire— you feel pure excitement. 

Every founder is on a fear-excitement spectrum. There's no way to prevent yourself from feeling the two extremes. But I've seen great founders use several tactics to help themselves operate out of excitement more often than out of fear. 

Those founders also feel fear— but they use these tactics to spend more time closer to excitement. Because operating out of failure is playing not to lose—whereas operating out of excitement is playing to win. 

Here are 3 ways to do just that.

Why you should listen

• How to use multiple plans to operate more freely and objectively
• Why runway and low burn are the keys to lower founder stress
• Why working with the right investors is more important than raising big rounds
• What Tobi Lutke (founder of Shopify) did to change his employees' mindsets 

Keywords
founders, fear, fear of failure, excitement, validation, runway, partners, mindset, expectations

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Pierce launched a consulting business that grew to millions in revenue and dozens of employees. But he noticed his customers kept asking for the same solution. 

So he launched Knak, an email marketing and landing page builder that integrates to Marketo. Unlike most founders, he didn’t go all-in. He kept working on his consulting business full-time until Knak hit $1M in ARR. 

After he transitioned over to Knak, he bootstrapped it to $5M ARR and then raised a $25M Series A. Here’s the story of how Knak found product-market fit. 

Why you should listen

• How to transition from a consulting/services business to a scalable tech startup-- and why it might be more painful than you think. 
• What you need to do to shift from SMB to midmarket and from midmarket to enterprise. 
• How to use enterprise customers to scale to $10M+ without needing thousands of customers
• How to balance urgency and patience to build a successful startup 

Keywords
patience, learning, building a company, failures, product-market fit, consulting business, marketing automation platforms, template product, creation platform, raising funding, urgency

Time Stamps:
(00:00:00) Intro
(00:08:50) The Story of Knak
(00:11:04) Going from Zero to a Million
(00:16:16) Pivoting from SMB to midmarket
(00:19:42) Adding "obvious" features to get closer to PMF
(00:24:07) How to position against incumbents
(00:27:35) Turning Into a Enterprise  Platform
(00:30:30) Finding True Product Market Fit
(00:33:34) Bootstrapping to Series A
(00:40:02) One Piece of Advice

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There is no better storyteller in the world than Matthew Dicks. He tells stories for a living. He gets paid by the world's biggest brands to create stories for them. He's won Moth StorySLAM (a storytelling competition in NYC) a record 59 times. 

Every founder knows storytelling is a critical skill. But 99% of founders I meet are terrible storytellers. They overcomplicate, they include too much information, they try to convince with data. 

Like Matthew says, "Most of what people say in business is forgettable". 

Whether you want to close customers, investors or employees, you need to stand out and be remembered. And the best way to do that is to tell compelling stories that resonate.

Here's how to do it.

Why you should listen

• Why the key being remembered is being different
• How to use stories to stand out and resonate with customers, investors and employees 
• Learn how to tell an effective story that is relatable, creates suspense, and includes personal connections.
• How to use personal stories to sell more product. 
• Why you often shouldn't start a story at the beginning.

Keywords

storytelling, business, relatability, suspense, personal connection, Slack, Salesforce, communication, connection, simplicity, contrast, value proposition, trust

Timestamps
(00:00:00) Intro
(00:02:52) A Story About Why Storytelling is Important
(00:11:18) Deconstructing the Story
(00:15:07) Keeping a Story in Present Tense
(00:16:58) Start With Location and Action
(00:20:41) When to Tell a Story Chronologically
(00:28:13) The Story for Slack
(00:35:33) Making a Pitch with No Data
(00:41:51) It's not B2B or B2C-- it's H2H
(00:47:57) The Goal is to be Remembered
(00:52:23) Use Truth in Your Story for Relatability
(00:55:11) Making up stories on the fly for portfolio companies

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5 years ago, Shubham had just graduated college and had no network. He bootstrapped to $3M in ARR, then raised $200M & grew to $85M ARR.

But he started trying to sell AI for marketing to enterprises with no network.

So for 2 months, he'd go to the lobby of a bank and sit there for an hour. He'd wait for the CMO to walk by, just so he could say hi. He'd tell receptionists he was waiting for an interview.

Finally, one day the CMO had enough and asked him who he was. Shubham got his 15-minute moment. That turned into a free pilot.

That free pilot turned to $1.2M ARR.

2 years after he'd started the company, he bootstrapped to $3M ARR and was profitable— since then, the growth never stopped.

Why you should listen

• How to start a startup top-down from a market vs bottoms-up from customer problems.
• Why doing insane things in the early days can lead to insane results.
• How Founder-led sales and tight feedback loops are the key for product development and customer success.

Keywords
AI startup, product market fit, challenges, marketing, scaling, fundraising

Timestamps
(00:00:00) Intro
(00:01:52) Origin Story of Pixis
(00:07:05) Getting the First Customers
(00:09:14) What is Pixis
(00:11:26) Video Generation
(00:14:54) Finding the Problem Going Top-Down
(00:19:55) The Pitch
(00:24:30) The First Pilot
(00:27:08) Scaling the Team
(00:31:57) Raising the First Round
(00:33:59) The AI Market
(00:35:54) Finding True PMF
(00:37:13) One Piece of Advice

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