First Principles

When a company takes VC money, the potential exit outcome can be significantly larger, but it comes with a big risk of failure and expectations of driving large returns. OCV founders sign up for a big vision for their company when taking on venture investment.

Growth solves most problems

Growth and speed are what define a startup, not simply founding a company. Startups are designed to gain momentum, grow fast, and use that growth to overcome obstacles. Don’t lose momentum.

Cultivating a sense of urgency for yourself and the company at large is one of the most important culture-defining elements you can impose as a founder. Having a sense of urgency means you don’t wait to do things. It’s a proactive, action-oriented mindset versus a reactionary mindset. Set the expectation that your company addresses situations as soon as possible and doesn’t wait to take action. There will be problems that arise that you are tempted to slow down to resolve, but mostly, you will need to find short-term, quick fixes and come back to the problem later because you need to get to scale to solve the problem.

The only way to overcome a problem later is to grow fast now. If you grow as a startup, you can hire and fundraise to solve the problem. If you stay the same size, the company isn’t able to hire and fundraise, and the company will ultimately no longer be a startup and likely fail. Whatever you are facing now, if you grow, you can attract more money, automate more, hire better people, and overcome it later.

Unscalable behaviors drive traction

“Do things that don’t scale” is the opposite mentality of “build it and they will come.” It means that in the early stages of building a company, you will need to do a lot of manual work to build momentum that will make your start-up take off. It’s the most common advice given at Y Combinator and can be the difference between success and failure.

Examples of high-impact, unscalable behaviors:

1. Solve problems manually until you can automate them. For example, recruiting users manually. You can’t wait for users to come to you; you have to go find them. The same is true for early marketing.

2. Growing 20% WoW. Lean into the power of compound growth. Rapidly compounding growth from a lower initial customer base can drive large numbers of users and revenue.

3. Delight your customers. Go out of your way to make the customer experience exceptional. Writing handwritten notes may not scale, but adopt the mantra that “if you go out of your way to make existing users super happy, you'll one day have too many to do so much for.”

4. Exceptional attention to users. Over-engage with your early users and aim to get something in front of users early. Feed the feedback loop. “It's not the product that should be insanely great, but the experience of being your user.”

5. Focus on a deliberately narrow market to start. Get really good a serving a specific market to start and then expand. If you try to solve everyone's problems, you end up solving no one’s problems.

Founders own outcomes

Founders are accountable for the decisions and outcomes of their company. All decisions and outcomes stop with you. Set goals that you believe in, and be fully invested in accomplishing the goal rather than routinely going after what OCV suggests. We have a good idea of what you should go after, but you can disagree and strive for whatever you believe will drive long-term success. You will need to rally teams around the goal, and people will be able to tell if you aren’t personally invested in achieving it. If goals aren’t being met, values are being ignored, or progress isn’t being made, you are accountable for fixing it.

When the suggestions made by OCV are not aligned with the direction of the decisions made by the highest C-level person at the company, any resulting consequences should be resolved by the company. OCV does not override the decisions of the highest C-level person at the company. The CEO makes final decisions and can never point up. You don’t want to be in the position where you are explaining to your reports that the reason you did something is “someone higher up said to do it.” For example, a company has layoffs, and the CEO says, “The board made us do it.” That would be a very weak stance to take. Either you own the decision or don’t do it. Founders are the final decision-makers.