Founder Fridays No. 134
Cash(Flow) Is King -- How VCs See You -- Inventor of the SAFE
Happy Friday.
Hola from Oaxaca! I’m just wrapping up an amazing week in one of my new favorite cities.
Cash(Flow) Is King
Revenue is deceptive. Most founders proudly showcase seven-figure revenues and "best month ever" screenshots while their bank accounts tell a different story of struggle and impending collapse. Behind impressive topline numbers, countless businesses with millions in revenue go bankrupt because they never grasped that cash flow — not revenue or even profit — is what keeps a business alive. Cash flow management isn't just about survival; it's about freedom to reinvest without debt, weather economic downturns, seizing opportunities, paying yourself consistently and making decisions based on long-term vision rather than short-term necessity. 10 Minute MBA (11 minutes)
How VCs See You
Investors buy into people, not just ideas. When you finish pitching investors, they experience either unbridled enthusiasm or awkward silence — and that initial gut reaction rarely changes. While most venture capitalists (VCs) won't tell you the hard truth, many investment decisions come down to intangible qualities they perceive in you: demonstrating genuine grit to suffer stoically through startup hardships, having a compulsive need (not just desire) to build your company, authentically caring about your market beyond superficial interest, and showcasing quarterback-like leadership combining strategic vision with execution competence. Remember that you're selling yourself as much as your company —- be the compelling founder VCs feel they must back. NFX (8 minutes)
Inventor of the SAFE
Sometimes legal documents need entrepreneurs. In 2013, Carolynn Levy at Y Combinator tackled a fundamental problem with early-stage startup financing: Convertible notes were debt instruments that were forcing founders to track maturity dates and negotiate interest rates, which were misaligned with venture capital's equity-based philosophy. Levy created the five-page Simple Agreement for Future Equity (SAFE) to serve founders better — maintaining the speed and flexibility of convertible notes while eliminating debt components and dramatically simplifying paperwork. What started as a modest solution for YC companies quickly became the standard foundation for early-stage venture capital across Silicon Valley, eventually evolving with market feedback to the current post-money SAFE format that provides greater ownership clarity. Carolynn's elegant legal innovation has saved founders billions in legal fees while democratizing access to early capital, fundamentally reshaping how startups get off the ground. Meridian (6 minutes)
Founder FAQ: What Are the Most Common Risks for Startup Employees?
Your dream job could become your nightmare. The employee experience at startups is perilous terrain requiring careful navigation. Beyond the obvious threat of company failure lurks a minefield of challenges: The expectation to wear multiple hats without adequate training, persistent pressure to deliver results regardless of hours worked, compensation packages heavy on illiquid equity and light on immediate benefits, undefined intellectual property boundaries, communication opacity that breeds uncertainty, and potential assignment to projects that conflict with personal values. Smart founders don't just manage financial runway — they create transparent cultures with realistic expectations, clear role boundaries and genuine concern for employee well-being to prevent the burnout that regularly decimates startup teams. Westaway (7 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term by term and give you negotiation tips so that you can speak to investors with confidence.
Convertible Note: Guide / Video
Saving Time and Money on Legal
When we met this Series B startup, they were frustrated with their law firm's slow turnaround and high fees. Contract reviews took four to six weeks, and they charged $250,000 annually for basic work. The startup wanted to reduce sales cycle times and legal spend. They switched to General Counsel at Westaway. In year one, we 1) saved them about $200,000 in legal fees; 2) shortened their sales cycle by about four weeks; and 3) our streamlined processes saved their ops team eight to 10 hours per month previously spent managing legal. By switching to Westaway, they expedited deal closures, saved hundreds of thousands in legal bills and regained one day per month in productivity. If you’re curious if we could save you time and money, let’s talk.
Post of the Week
Why Startup Funding is About More Than Just Cash
