Sam Altman's advice on the importance of a margin of safety when raising venture capital

I think when people get into trouble is when they overextend themselves somehow. So they take the absolute highest price they can get, forgetting they have to be able to beat that in the next round, or they ramp burn up to the maximum possible number they could to sort of keep 9 or 12 months of Runway. And I think the margin of safety is this well understood investment concept and everyone understands that except startup CEOs when they're raising venture rounds, where people are inclined to really push it to the limit one way or the other. And our general advice is don't push it to the limit. Don't take an investor that is going to be difficult to work with, that beats your Highest offer by 3% or 10% or whatever from somebody else. Don't have a plan where you're going to run out of money three months before you start your next fundraising process. And this sounds like a simple thing, but in practice, again and again, we see our founders just care about the headline number and nothing else. And I think if you have very competitive people that have been competing their whole life and they had a quantitative metric to compete on and they get one again, they're going to compete again. It's very hard to compare terms or quality of investor, but it's quite simple to compare top line pre money valuation. And so people like to optimize for that. But I think fundraising does not have to be hard. If you build a company that is really great and if you build it in such a way that you are not dependent on gigantic amounts of outside capital to survive, and if you don't push the limits of every round, I don't think it has to be that hard.