Consumer software can be good, but it's often also optimized for max engagement, not for the actual value or functionality.
Enterprise software can be because there isn't an incentive mismatch, good solution is more valuable for the customers, it will sell better and they're willing to pay for it.
But like you say, lot of enterprise software is bad because it's optimized for the payer, not the user, and it's often shoehorned to weird workflows of the particular enterprise.
I tried to ask examples of this yesterday[1], but afaik the patterns seems to be think throwing money at the problems works in undifferentiated, maybe transactional categories like food delivery, ride share, e-commerce etc where the software is not the product, it's just the payment method or the market place. The market places are also localized so you have these countless local turf wars, until you regain some kind of dominance or balance. Then deep tech, hardware etc is harder where you need large initial investment. Social networks because they need the critical mass, and usually there isn't a direct business model available.
I'd argue most b2b/enterprise software is a new version of something that already exists or addressing a need that already has a market. Business model is also very clear, there is very little network effects usually other than reputation and customer proof. Yet most the startups not even close being profitable.
In my mind most software products are differentiated so in the end the main success comes from getting the differentiation right for the market, not outspending the competition.
"Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face" - PG
Part of being a startup is still that there is not a lot of historical precedent and uncertainty how well your business will do in the future. The problem with any fundraise is that it's always future looking (perhaps maybe you create some kind of option structure to call on it if needed).
VCs, especially Tier 1, can be still helpful in different ways, and them owning equity aligns the incentives more than debt.
Correct. Those raises were made when there was some uncertainty about how the business would grow, and the opportunity and timing seemed right. For example, in 2022, it was difficult to predict how deep the market downturn would be. We saw several customers churn because their companies folded. In the end, the market didn't tank as bad than some expected, and we executed better than anticipated. In hindsight, we might not have needed that funding, but at the time, the outlook wasn’t as clear.
Part of this post is to debunk the myth that can be VC backed startup, be profitable and grow fast at the same time. VCs are quite keen in this approach too.
I wrote this to challenge the common dichotomy that startups are either VC-backed money-burning machines or anti-VC/profitably bootstrapped. It doesn’t have to be that binary. There’s a spectrum, a middle ground. You can retain control by being profitable while still using funding as leverage or as a safety net if things don’t go as planned.
One of the paradoxes of fundraising is that it’s easiest when you don’t need the money—and almost impossible when you do. By keeping the company mostly profitable, you never have to need it, giving you full control over timing and the ability to choose the right deal. But having that funding can enable you some more leverage or add more risk business you could afford while being bootstrapped. In our case we raised the funding for the conservative case, but the reality turned much better than expected.
Another misconception is that sustainable growth comes from spending or hiring. In reality, many great products take off first and because they take off, any amount of hiring becomes justified. Some of these companies are even profitable before they go on a hiring spree. The problem is that the typical approach isn’t nuanced or intentional enough. You might decide to hire 100 engineers before knowing how the next 10 engineers impact your trajectory. If you cut the hiring plan in half—or even to a quarter—it might not affect growth at all. But there’s often an assumption that growing the team is also good, and maybe it comes from a time in the 90s or something when you had hire people to man the phones to take orders.
What I believe is that startup’s growth is primarily driven by product superiority and market fit, not just by headcount or marketing spend. Those things can amplify success, and in some cases, they can even mask a bad market fit through sheer force of sales and marketing.
A less cynical take on VCs is that they’re not necessarily pushing companies to burn cash they just want founders to double down when they see a company working. But whether you can truly scale depends on your market dynamics. Sometimes, you need time to learn or to land the right deals in a segment before pouring money into growth.
The problem is that the current thinking is often too simplistic. Since you're startup and have cash, the spending more is always the right move. Going all the way 100 when you could dial it down to 50 or 30 and regain control and de-risk the changes of complete flare out.
Soviets attacked Finland, and brought it in to the war. Finland didn't want to become a part of Soviet Union (btw no-one did willingly) and Axis was fighting against Soviet Union.
Pouring one out. I remember using Pivotal Tracker back when working in a Ruby on Rails shop and enjoying directness and how optioned it was of it.
Then several years later, after working in large Silicon Valley tech companies, and seeing how they run with Jira, I decided to start https://linear.app
So much team's time and effort went in to configuring their tools instead of actually working on things. We do more than PT did, but aim to keep the experience straightforward and focused, regardless of the size of your team or company.
We look at AI as capability similar to any other technology. Instead of jumping on the AI bandwagon or thinking AI is a feature, we look if there is opportunity to reduce friction or help the user well in the workflow they are doing. Today like the AI can inform if there is duplicate issues being reported or improve the titles you submit from Slack conversion.
We aim to build the product in a way that it works well for smaller/early stage teams as well as all the way to the enterprise. So I think lot of the “enterprise” stuff will be optional.
As long as I been around startups, about 15 years, the advice always have been had more success getting warm intro. Even more back in the day than now. I think PGs essays lays out the fundraising process this way too.
The advice is never just send deck to a VC. Same as just applying to a company. Private organizations have no need for any kind controlled process, you're always better having or building of personal relationships and convincing people directly first. It's often even about the pitch or pitching skills. It's more like relationship or case you build, then the pitching is just formal step to close the deal.
I think the cold approach only works start the relationship if you have proven business, great potential and can tell that story well. But also by then VCs might already know about you and come to you.
Otherwise it's always about building some level of personal connection first. Essentially you're asking to someone personally believe and bet their internal and external reputation on. They are not going to hand you the money after one hasty email and deck.
The anti-VC crowd often try paint this as some kind of exclusive country club, but it's not true. So many new founders raise capital all the time. VCs are always looking for new founders and companies.
But it's also true that if you just crawl out of the woods one day and go meet a VC and ask them for $2M is likely not going to happen. If you don't get a single person in the world with some kind of VC connection to make a warm introduction to you, it often considered as a filter that you're not serious enough about your business.
Great on work creating an alternative to Linear which is a carbon copy of Linear [1].
Linear also been powered by local first sync since 2019, we have AI features shipped and in the pipeline.
As YC alumni/design founder of Linear disappointed to see that design/ui/product is treated this way and something to completely rip off from other products.
Last 5 years we’ve been iterating on the Linear design and product. We are still a small team. We also like to share how we build and design to improve inspire others.
But this is no inspiration or inspiring.
Just some days ago Garry Tan was talking about how to get founders learn and value design and this is the opposite of that.
Finland’s largest land border by far is with Russia which is not generally viewed as that of a friendly neighbor.
The border between Finland and Russia is 1,340 kilometers (832 miles). The border between South Korea and North Korea about 250 kilometers (155 miles). Also 5.5M people vs 55M people.
Linear has not been breached, customer data remains secure, and Linear is not hosted on Vercel.