Founder Fridays No. 143
9 Rules For Technology -- ICP: Find Your Tribe -- 2024 VC Funding Report
Happy Friday.
9 Rules For Technology
In 1987, Wendell Berry outlined nine thoughtful standards for adopting new technology that remain remarkably relevant in today's digital age. 1) The new tool should be cheaper than the one it replaces. 2) It should be at least as small in scale as the one it replaces. 3) It should do work that is clearly and demonstrably better than the one it replaces. 4) It should use less energy than the one it replaces. 5) If possible, it should use some form of solar energy, such as that of the body. 6) It should be repairable by a person of ordinary intelligence, provided that he or she has the necessary tools. 7) It should be purchasable and repairable as near to home as possible. 8) It should come from a small, privately owned shop or store that will take it back for maintenance and repair. 9) It should not replace or disrupt anything good that already exists, and this includes family and community relationships. Berry's criteria invite us to evaluate innovations not merely by their capabilities, but by their costs — financial, environmental, social and human. The Honest Broker (6 minutes)
ICP: Find Your Tribe
Radical specificity drives hypergrowth. Counterintuitively, the most successful founders obsessively narrow their ideal customer profile rather than trying to please everyone. Vanta discovered startups needing SOC 2 certification to close enterprise deals, Clay escaped feature bloat by focusing exclusively on outbound sales teams, and Retool abandoned their incorrect assumptions about FileMaker developers to target Fortune 250 companies spending millions on internal tools. The visceral difference between prospects who desperately need your product versus those who merely find it "interesting" becomes apparent after hundreds of customer conversations — your ICP isn't anyone with a budget, it's people who see your product and think, "This was made for me." First Round Review (14 minutes)
2024 VC Funding Report
The 2024 Venture Capital Report by Gunderson Dettmer highlights a dynamic market characterized by selectivity, sector-specific enthusiasm and strategic adaptation. At the pre-seed and seed stages, deal volume decreased, yet valuations reached record highs, reflecting a preference for top-tier startups. Early-stage venture deals surged by 27% in count, though growth remained uneven and heavily skewed toward artificial intelligence-driven companies. In later-stage financings, a divided landscape emerged, with AI-focused firms landing massive rounds while others faced challenges. Across all stages, AI dominated, accounting for nearly one-third of deals and a significant portion of investment capital. In the life sciences sector, seed deal valuations climbed sharply despite a tough fundraising climate, driving strategic pivots to high-demand fields. Collectively, these trends illustrate a venture capital ecosystem responding to challenges with focused investment and innovation. Gunderson Dettmer (12 minutes)
Founder FAQ: What Do I Need To Do When an Employee Quits?
Your response to resignations sets the cultural tone for your entire company. Before trying to convince valued team members to stay, objectively assess if addressing their specific concerns (work-life balance, growth opportunities, compensation) would truly resolve the underlying issue, or if their departure might ultimately benefit both parties. Once an exit is confirmed, move methodically through the critical checklist: Review non-compete clauses and confidentiality agreements, secure proper documentation in either a simple Separation Acknowledgment or a more comprehensive Separation Agreement with severance, repurchase unvested shares via the stock power, ensure final paychecks include all accrued wages, recover company property (including intellectual assets), and revoke system access. Knowledge transfer sessions are your last chance to capture institutional wisdom before conducting an honest exit interview that could reveal invaluable insights for improvement. Westaway (8 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 ten 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.
Those videos you have of the investment videos are well done!