thoughts on pre-founders (for founders)
last week i collected some thoughts about pre-founders but realized a lot of the content there was geared towards investors. this week i'm exploring more thoughts here relevant for founders.
if you haven't read the last piece, here's what i think defines a “pre-founder:” someone who might eventually become a founder, that has entrepreneurial instincts + a solid base of skills useful for starting a company
- entrepreneurial instincts: oftentimes these are people that are full-time at a fast-growing company that are hacking on stuff on the side / tinkering on ideas. some key traits are that they’re naturally curious, are not satisfied with being an employee [or student] somewhere (want to start something), and have a lot of ambition (a key ingredient for founders seeking large outcomes)
- solid base of skills: from what i’ve seen, it’s rarely the case that the first idea you have ends up becoming a unicorn startup (though there are exceptions). what’s more common is people build up expertise in engineering, product, design, etc; then you spend time talking with potential customers / doing deep diligence on an industry; then you leverage your superpower and your unique insights into a semi-risky bet that you’re distinctly qualified to win at
there are a few common questions that pre-founders might be asking themselves. the answers might seem self-evident for some, but for others i hope some inspiration can be drawn from my thoughts below (work in progress):
common pre-founder questions
- at what point do i leave my company to start something?
- how do i go about the co-founder matching process?
- how do i validate if an idea is a good problem to work on or not?
- how and when should i think about fundraising?
let's dive into each one:
going full-time on an idea
this is a very personal choice and varies person-to-person. you have two main choices:
- if the company you're at has good work-life balance / you have extra time to work on stuff, that could be a great time to spend extra hours tinkering on side projects
- if you're fully committed to leaving and building a company, why wait to make the jump? working nights and weekends will be tough, and sometimes the push you need involves committing to exploration of a problem / idea full-time
the most common approach i've seen is: stay at your full-time job and hack part-time. so how do you know when to leave? here are a few common ones:
- build a bunch of stuff and see what takes off traction-wise. you can launch a bunch of products on product hunt / hacker news if it's consumer-facing, or build prototypes and share with potential buyers if it's b2b saas an gauge the reception. if something shows promise, you can take that as the signal you were looking for to go full-time
- tinker on stuff and use this as an excuse to meet other fellow tinkerers. here, you could leave once you find a really solid co-founder that's equally committed to building something with you
- put some feelers out and see if you can attract funding. maybe this means applying to accelerators or reaching out to pre-seed vc firms - in this case, you'd obviously leave when you get monetary commitments
co-founder matching
picking a co-founder is one of the most important decisions you can make, but can be daunting if you're not sure how to go about it. here are a few suggestions:
- ask your founder / operator friends if they know of anyone who's tinkering on stuff on the side and might be down to chat
- yc co-founder matching: i've met a lot of high-quality teams who met through this platform, it seems to work pretty well
- ask your friends who are vc's to connect you with other people ideating / in the "-1 to 0" stage. chances are the vc is tracking a few people at this stage already and would be happy to make some introductions
- go to events where there will be a bunch of pre-founders in attendance. this can be very hit-or-miss - lots of happy hours involve having 2-minute conversations with 30 people and you might get a few solid leads out of it; this can be worth it but also depending on the event can be a waste of time. so vet carefully!
- post publicly - you can try and find potential co-founders through twitter, hacker news, slack groups, or other communities you're involved iwth
idea validation
how do you figure out what is a "good idea" to work on? the best way to go about this is to first find a space you're interested in (it'll be hard to build a company in a space which you don't feel very passionate about), and then do a deep dive into the current problems people face.
at this point you're trying to do "customer discovery calls" (not customer calls - that comes later when you have a product). say you're a software engineer and your mom is a dentist and you've seen first-hand that the software she uses is pretty bad, and feel like you could build in this space. before trying to come up with a solution, try and call as many of your mom's dentist friends as you can and figure out what their biggest pain points are. you might find that your first instincts about what you should build are a bit off - for example, the biggest pain point for dentists isn't the scheduling software they use, but that they have lumpy cash flow and need working capital / loans to smooth out the periods where they're waiting on payments from people.
how do you go about finding people for customer discovery calls? i've seen a lot of successful founders do outbound here (finding people on linkedin, maybe even scraping their emails, and saying whatever they need to to get on a call). you can also ask investor friends for intros to customers in a space you're diving into - they'll likely be pretty connected and willing to help you validate ideas.
pre-seed fundraising
say you've found a co-founder, quit your job, and validated an idea to the point where you're ready to think about fundraising. how do you decide how much to raise, and when? the answer to this question varies depending on a few factors. here are some tips:
- there are now lots of great programs focused on the "-1 to 0" or generally earlier stages including afore's founders-in-residence program, south park commons, sequoia arc, a16z start, greylock edge, hf0, soma fellows, etc. if you're looking for a bit more structure (space to work out of, tailored support from experienced investors and customer intros from them, a small amount of funding to get started, etc), these are the way to go
- when it comes to how much you should raise / what valuation you should raise at, it's probably a good idea to crowdsource this question to founders and investors in your close network. people will probably give you wildly different answers here which is why i think it's important to get a bunch of perspectives and then see where you gravitate towards
- there are some funds that are more opportunistic and founder-driven in the way that they invest, other funds that are more thesis-driven, and many firms that are traction-driven. if you're early, getting larger traction-driven funds interested can be a bit tough, so you can target pre-seed software generalists like afore or industry-specific vc's who might see something they like in what you're building and take an early bet on you
- you can choose to bootstrap to a certain amount in revenue and then raise. this might take a bit longer so depends on your general timeline
- there may be some bias here given i work for a pre-seed fund, but i think raising a pre-seed instead of a seed is a great choice for most founders. if you keep your raise to <$2m or so, you give yourself optionality. if you grow like a rocketship to $1m+ arr in the next year or two, you can call your first round a seed and then raise a series a because you have the metrics to do so. if you grow a little slower to a couple hundred thousand in arr, you can call your first round a pre-seed and then raise a seed as your next round. so raising <$2m preserves optionality. if you raise a larger round that you have to call a seed, you should be confident that you can get to series a metrics / $1m arr pretty quickly - the amount you raise determines the trajectory that you expect your company to follow
once again, i'm still developing my thinking here and will refine this over time - please contact me at jack@afore.vc / (650) 863-8151 if you have any thoughts here / anything to add!