AI built the product. Investors still said no 💸 Vinnie Lauria

A lot of founders tell me their mission is to build a billion-dollar company, and they think as an investor, I want to hear that. And I'm immediately walking away because you have just failed. Because as a leader, you need to get a whole bunch of people running the same direction as you. Your goal is to build a billion-dollar business and you hire really smart people. They all have very different ideas of how to achieve that, and they're all very capable of achieving that. But nobody's working together in the same direction. It took me over a decade of investing and 6, 7 years of building and pitching VCs to I realized it actually is not as important as you think. I used to be fanatical about my decks, which page, which charts, cutting it down, showing it to different people, getting feedback. And now I realize the deck will get you in the door and it just makes sure it's a fit for the thesis. But I've seen 10,000 decks as an investor. It's not the polished deck that gets you the investment. If anything, I have spider senses going off when a deck is way too polished. That something's not right here. Here's a big mistake. Every founder puts the team at the end because they think, I'm a first-time founder. I'm not Elon Musk. I don't have experience. What do I need to talk about? But I, as an early-stage venture capital investor, I invest in people. I don't invest in ideas. I invest in people. So who are you? What is your background? How long have you known each other? Why are you working together? Do you have any failures behind you together and you want to still work with each other? That's an amazing sign. That's usually what I'm searching for. It is buried at the end.

This week's Millennial Master is Vinny Loria, founding partner of Golden Gate Ventures and one of Southeast Asia's best-known venture capital investors. Vinny spent the last 15 years backing founders across the region, and before becoming an investor, he built startups himself, giving him experience on both sides of the table. In this episode, we talk about what investors actually look for today, how AI has changed the standard founders are judged against, and why getting funded has less to do with a polished pitch than most people think. You've been on both sides of the table now. Before Golden Gate Ventures, what did you learn as a founder that still shapes how you judge other founders today? Your experience has been crucial to The business you built afterwards?

I would say as a 2-time founder who's raised money from VCs, I think what I learned the most is empathy, like how it feels to be on the other side, what stresses they're going through, because it's very easy as the investor just to ask a question, expect the answer, uh, and trying to make a judgment call there, but to actually understand where the entrepreneur might be in their journey, what sort of challenges they have, and be able to connect with them where they feel comfortable to share that. It is a pretty amazing, a pretty powerful investor tool.

And when you're talking about the part of the journey, even if there's— it's the first raise or the second one, for example, it can be very different. The first, your first raise might be with friends and family, as they call it, while it could be your first institutional raise with full-on VCs, or it could be with angels. There's some clear differences between that.

So the reality is when you're building something, You need somebody to trust to give you money. And any VC today is going to say, I need to see traction. And especially if you're building an AI company, I need to see revenue because people are paying for services. How do you actually get there where you can be showing traction and revenue to a VC? You're going to need to do a seed round, which is generally a friends and family round. So for my first startup, that included a former manager of mine at IBM, somebody that, you know, I worked with that knew me, that trusted me. didn't really understand the area we're going after, but said, all right, if he's building it, I will give some capital. Even to launch Golden Gate Ventures 16 years ago, our first close as a fund was basically an angel friends and family round, people that knew me, people that trusted me, people that were, you know, made their own success in San Francisco alongside me. And it said, yeah, if you're going to be doing something in Asia, I'm interested in backing that. But as you mature and get to, you know, the VC stage, that's where the questions start becoming, user behavior, traction, numbers, revenue. And if you don't have that, you can't get very far in the conversation.

Let's go back to Southeast Asia because you started Golden Gate Ventures, you said 16 years ago, 2011, focused on that region because it was an obvious startup region. What did you see other investors were missing, especially compared to, say, San Francisco?

I feel really fortunate with my timing to the region. I think if I was a few years earlier, it would have been too early and a few years later, and I would not have had the enough experience to even start a fund. I would have been behind the times. So for me, it was fortunate timing. My wife and I had just gotten married. So we took off from the Valley, just said, let's take a break, backpack, backpacking. And the whole plan wasn't Asia, but we ended up spending a full year in Asia because it was our first time. China was amazing. There were huge companies like Alibaba, Baidu, Tencent that were already public in China. VCs like Sequoia from the US had already set up in India. But in Southeast Asia, there was no VC money yet. I saw all the same infrastructure growth, cranes going 24/7 in Bangkok, Jakarta, Singapore, entrepreneurs I met that wanted to raise money that were building services that had gone successfully public IPO in the US. And what was really an aha moment for me was an angel investment and then put it into the fund. MoneySmart, a financial comparison website similar to LendingTree in the US, pitched me. I was like, I'm interested. Let me hit up a few friends, angels and VCs in the US. And before any of them even properly looked at the deal to say yay or nay, they just responded, I don't do anything outside the US. And that was like my light bulb kind of idea. Like, oh, there's huge opportunity here. Nobody in the Valley is paying attention. I think I could plug in. So as a former computer engineer, 2-time founder, it wasn't that I was looking to do VC. To me, it was just like, oh, that's an opportunity. I have experience. And then this is the crazy thing is once I started pitching people in Asia that I want to set up a fund in Asia. They thought I was crazy. Why would you invest here? Why is this Silicon Valley kid interested in investing here? You should be investing in San Francisco. You need to be a little crazy. When I back entrepreneurs, they tend to be seeing things differently than other people. If it wasn't a crazy idea, then a lot of people see it and the opportunity, the risk, the reward isn't as big. On the flip side, if you're the only person who sees an idea, you might be too early. You need to have a few kind of crazy people seeing this as an opportunity for something like venture capital and ecosystem, there were other VCs starting to percolate and start around the same time that Golden Gate Ventures was.

So you had your fundraising experience with your 2 previous startups that you've done. You said you went for what we would call here in the UK, a gap year, traveling in Vietnam and Asia. But what happened to your first 2 startups?

So first startup, Mitro, location-based chat, 2004, 4 years before the iPhone. We raised a Series A, but could not get any sort of momentum or traction to take us to the next stage. And so ended up shutting that down. So that is a failure. We lost capital that was invested in us. We could not take the company to the next stage. In Silicon Valley, that's a badge of honor.

I feel you. I've been there too. Yeah. Yeah.

And so went through that process, learned a lot, and as many great entrepreneurs do, and second company, Lafora. Was an online communities platform. And this is the amazing thing about living in Silicon Valley. So for my first startup, we were 7 guys living in a 3-bedroom house in Palo Alto, right above a bunch of early Facebook employees. This is when Facebook was just opening up in Palo Alto in 2004 and got to know them well. And for our second startup, when we launched it, we were one of the first platforms to integrate with the Facebook login. This is like 2007 or '08 when they had just launched it. And that allowed us to grow very rapidly, being one of the few on the platform that they were promoting. And we were essentially building Facebook groups, you know, 8 years, 10 years before Facebook had an offering like that. And so it grew very, very quickly and we were acquired by a media company out of Los Angeles.

Not many founders experience an acquisition and sometimes it comes with a few strings attached. So I wonder what yours were in the case of the acquisition.

You're right. There are always strings attached. So we had an earnout, which means depending on the performance of the company over 12 months after acquisition, would depend on how much cash and equity. So we were not hired full-time, but we were basically hired as advisors to work and make sure the product and the service continued to grow. And this is where we were incentivized and we worked. And so we weren't selling a lemon, we were selling something that actually had some legs and traction. And so the whole team was very involved. And I can say, thankfully, we hit all of our milestones so that we Received our full earnout.

I've spoken to at least maybe 4 other founders now from over 70 Millennial Masters episodes who have been in this position. Most of them seem to have an earnout, but being on the investing side, that also seems to be quite normal, right?

It is. I mean, it's about aligning interests. And so at the end of the day, if you're saying, hey, what I'm selling is, you know, of good quality and there's growth ahead, you know, you should feel comfortable putting that on the line. And think about it as now as a VC, when I invest in a startup, it's really about that long-term partnership. If the company does well, we both do well. And if the company doesn't, then we both don't. And so it's really aligning that longer term.

A lot of the times you hear like big headline numbers about acquisitions or, and those only materialize after a certain number of years. It's not that somebody got the cash in their account next week. And that's it. They're out of the company. That's where the earnout comes. That's where these targets come in. And that's where these valuations get put on, right?

Yeah. And there's been, I mean, we've had a dozen companies in the portfolio acquired now. And sometimes it's not even an earnout. The companies acquired, the CEO continues to stay CEO of the service. They leave the product and the service with its own brand. Now it just has more capital behind it and a platform to plug into. But yeah, sometimes that earnout is actually much longer in that the founders continue to stay on and run the company.

Vinny, something that I've been writing about on Millennial Masters, and it was inspired by the discussions that I've had with people on the podcast, was that now it's way, way cheaper to build with AI product. And the moat is becoming the distribution, getting the word out there. There's no— it's not a case of build it and they will come. You can have the best product, and if people don't hear about it, there's no way to get it on the market. And I'm assuming a lot of the founders you work with at Golden Gate Ventures have something along those lines in their long list of things to tackle.

Yeah.

What's your take on it?

So you're right in that AI, like people can build anything and just because you build a great product doesn't mean it's going to take off. So that might be more true with AI, but with my VC hat on, it doesn't feel different than anything we've been looking at for the past 15 years, which is basically those are the questions we're going to ask. Like, how are you getting to market? Do you understand the costs, organic versus paid? What sort of partnerships are you going to, if it's a B2B company? So a lot of the time when we're interviewing founders, we're specifically asking those sorts of questions to understand their understanding of the difficulty. And I can tell you, like, there's a wide spectrum. There are founders that have no idea. They just think they raise capital and then, you know, they, they're not even sure what they buy ads or something like that. But the reality is for any startup you're familiar with, it is pretty much hacked its way to something where it gets a little money. It's doing this and there's always something clever happening behind the scenes. In order to get some market share. So we do spend a lot of time asking those sort of questions. And again, that's why by the time you come to a VC, we need to see that performance data. You know, what channels are people coming in from? How are they finding out about it? How sticky is it? Are they coming back? Are they just checking it out once? If you look under the hood and see all that data, that's something in revenue, you can get a really good idea of has this company, has this founding team really figured out what they need to do?

And what would be the priority when they work on that. The other premise that I've been covering is that a lot of founders can stay stuck on building mode because it's so much easier than moving on to sales, which makes it uncomfortable, marketing, where you might not get the validation for your product. And those I know are steps before they reach out to a VC and at your stage. I'm wondering whether anything has changed. You obviously lived through that in the much easier social media era, but now it's a bit different because you don't really have organic reach anymore?

I don't know if I would classify it as being easier before and more difficult now. I think it's always been difficult. I think there are maybe the competition's a bit higher now, so then you have to be a bit savvier. That might be a way of putting it. But at the end of the day, that's where I haven't really felt like an inflection point in terms of that get-to-market strategy. key talent you need. That has actually been a huge part of my investment decisions. And it really never— I do not invest in ideas. Ideas are worthless. Everybody can— every idea has already been thought of. I've never heard a new idea, but how do you actually execute on it? And like you were saying, like they could be very focused on developing it. There's also that trade-off of how polished it is. At the end of the day, you need to get something out the door. Maybe you can market it really well, but I have also met founders that like, want something to be very polished before it goes out the door. So it's never ready. And in software, the web world, if you're waiting for something to be polished, it never will be there. And I've had founders point to Apple, Steve Jobs, and they're like, look at his religiousness on the original iPhone. It's like, yeah, that was after 40 years. His first product was a computer attached to a piece of plywood. It was ugly, but he got it out the door. He sold it. And so, yeah, if you're going to point to Steve Jobs, don't point to Steve Jobs after a few decades. point to him in the early years, and that's exactly what you need to be doing.

And the iPhone didn't have an App Store until 3 years later anyway, which was now one of the biggest parts in terms of Apple's revenue with the services side, let alone iCloud and Apple Music and everything else they developed afterwards too. So yeah, you are right. They can be reading the Steve Jobs biography and thinking, I need to do that, and I need to be a perfectionist. I typically fall in that trap as well a lot of the time, but let's talk about pitch decks. Vinny, because a lot of founders also obsessive of pitch decks when once they start looking at raising investment, how much does the deck actually matter? I've seen, say, the original pitch decks from Uber, they were like super simple, like 3 words on a slide. And then I've seen some other ones which looked like more like an Excel file, like loads of words on a slide.

So this is a great question. It took me over a decade of investing and 6, 7 years of building and pitching VCs to realize, yeah, it actually is not as important as you think. I used to be fanatical about my decks, which page, which charts, cutting it down, showing it to different people, getting feedback. And then even as a fund, we'd spend so much time. And now I realize that the deck will get you in the door and just make sure it's a fit for the thesis. But I've seen 10,000 decks as an investor. It's not the polished deck that gets you the investment. If anything, I have spider senses going off when a deck is way too polished, that something's not right here. This doesn't look like what we normally invest in. So I think it is important to understand some of the key things inside of a deck, like how do you get to market, about the founding team, what makes you unique, how you explain your problem, your ideal customer. If you can communicate that information, not in pretty slides, but just clearly communicate it, you're going to have good meetings with investors.

So what's the most common thing founders get wrong before they even send a deck? to an investor, you would say?

Great question. I was guilty of this. Founders think investors invest in great ideas. I have a great idea, therefore this investor wants to invest in me. And that is not the case. Investors have really specific themes and theses that they invest in, things they like and they don't like, verticals, geographies, stages, founder profiles. And we do not invest in ideas. So just because ABC says no doesn't mean it's a bad idea. It just doesn't fit that investor's theme. Or thesis. So spending more time qualifying which VCs to speak to and why is where a lot of founders make mistakes. They kind of skip over that. And this is the ironic thing. You actually want to pitch to VCs that have invested heavily in your space. As a founder, I used to think they've already invested in this space. They don't, you know, they have exposure. They don't need more. I'll go talk to somebody else, but it's the flip side. If an investor has invested heavily in your space, it means they understand it. If those companies are doing well, it means they like it and they want to do more exposure and they don't want to invest in a direct competitor, but something similar or might be disruptive over the next few years. So you want to actually look for investors that have similar investments to what you're building.

So when a founder says investors just don't get it, because as you explained, there's the thesis and a fit in their worldview. How often is that true?

So as a 2-time entrepreneur and an investor, and I I do hear that. I have also thought that. I now see the world through the perspective of if you're a CEO of building something and saying investors don't get it, what is it that they don't get? Do you have customer traction? If you do, they should be able to understand that. If you don't, you could say that they don't get the idea, but what they're looking for is, have you been able to execute? Have you been able to get to market? Have you been able to build the right team around you? So it's not about an investor getting the idea. It's this magical coalition of everything that needs to happen and build a really big company that investors are looking for.

And what would you say makes a pitch feel investable early before the business has those perfect numbers?

I think a founder that is mature, or is either because they've second time, third time, or they've been part of a startup that goes and says, this is what I know, this is what I don't know, this is My competition, and this is who really scares me and why. These are the big question marks I have. So showing some of those real questions, and it's not a vulnerability, it's more being like honest and realizing some of the challenges that will be ahead. That's going to resonate more. That's going to stand out with an investor.

So watching things through rose-tinted glasses and thinking I have no competition, nobody's doing exactly what I do, is actually not really true. And the investor will see that from a mile.

Correct. Correct. Like, here's a great example. If a payment company's pitching me, I'll ask who's their competition. And if they don't say cash, it means they don't have this whole view. Just an example of being a payments company. So if they don't realize that they're also competing with non-tech, it's a good sign that they really don't understand what the ecosystem looks like and who they're going to be against. So that's why I spend a lot of time asking about the competition to understand, do they know who they're competing with? And here's another example. If you're making, let's say, a consumer app in the travel space, I get pitched these a lot. I'll ask who's the competition and they'll never mention Expedia or Booking or Kayak. And then I'll bring that up and they'll say, you know, well, we're not that, we're X. And my response is, yeah, you might not be that product, but they spend so much money being top of mind for travel experience. You're competing for attention. You're literally, you know, your cost of acquiring users, you're going to bid against them for attention. So you have to realize how they can actually compete for that attention and that you need to really understand how you're going to win there.

And I think you nailed here the difference between what used to be happening before, when in a way startups and brands were doing more traditional marketing, positioning the brand, making sure that it's memorable. You would see an ad for say Expedia and travel and you would have like a scenario with somebody booking a holiday. It would actually be linked to that. Now, when you're competing for attention, you need to grab that attention in the first like half a second and people don't spend time creating a story behind the brand. Is that my correct interpretation?

100%. And I would say it not only is it creating the story behind the brand, but a lot of times they're missing what is the mission of the company? What is your vision as a founder? What is the purpose of why you're doing it? All of this connects to while you as a CEO are driving stakeholders forward, how the team views it, And then ultimately how your customers, your consumers, partners actually see it. So I do see a lot of people can miss that. Yeah, you can go to ask a, you know, ChatGPT prompt and it's going to miss that fidelity if you don't have that experience of how do you build this out and how important it is.

So are there any slides that you found that founders spend too much time on? We know fidelity, sometimes they miss it out.

But so I think when they spend a lot of time on total addressable market and size of market. The investors, we're going to have our own thesis there. And we might agree with you. I spoke to a CEO about this recently. I'd rather you spend more time showing me the handful of customers you have and the tens of thousands of dollars of revenue you might have annually from these handful of customers versus the billion dollars you're painting, because anybody can say anything's really big, but I really want to get into the details and understand again, that customer, what pain point are you actually solving? Because sometimes people can put logos, but I really want to understand. What is it you're actually selling them? What are they paying for? How do they view this? And there can be a huge disconnect from what the founder is envisioning versus what the customer's actually paying for.

So which slide usually tells you the most about whether a business understands their own business, as in they have an idea and a product, but the business idea and the way of making money behind it, like you just mentioned.

It's gonna be the title slide or the slide right after that, which basically explains what you're building and can you boil it down into really simple? And so if there's a lot of buzzwords and all the, you know, the best and the greatest, I'm not going to keep looking through the deck. I'm going to stop after page 2. My perspective on the world is I want to hear your startup the way you would explain it to your mom. And if a basic person can understand it, I understand, you know, the pain point you're solving and you know how to communicate to many different types of stakeholders. And I look at it, I've been in meetings where founders get really almost offended. What do you mean to my mom? This is to customers. They need to know this. And I keep thinking like, if you're going to build a gigantic company, you're going to have hundreds of employees. You're going to have tens of investors. You're going to have thousands, tens of thousands of customers. You have so many different sort of stakeholders. You need to be able to boil down your messaging really simply for all of these different groups. And if you can't do that from the start, You're gonna have trouble later on.

So what does a good market slide actually show then? That's, that's, that's one of your go-tos, right?

Yeah. Do you— the pages I search for are the team and founders. Here's a big mistake. Every founder puts the team at the end because they think, I'm a first-time founder. I'm not Elon Musk. I don't have experience. What do I need to talk about? But I, as an early-stage venture capital investor, I invest in people. I don't invest in ideas. I invest in people. So who are you? What is your background? How long have you known each other? Why are you working together? Do you have any failures behind you together and you can, you want to still work with each other? That's an amazing sign. So that's the information I know. That's usually what I'm searching for. It is buried at the end.

And sometimes not all of it mentioned. So the team slide should be way further. Shall we say what, the first half or the first third of the pitch deck?

Uh, it should be page 3. Title, Your solution and then the team.

As a first-time founder, and especially as a second-time founder, in order to show your credentials and what you've built before.

Yes.

So you also mentioned traction. What would you say is the biggest mistake people make when they talk about traction? Because I had a very interesting guest article recently, where motion can be disguised as traction. And you can convince yourself that just because you have like the likes or the followers doesn't equate to actually money, demand, and people changing their behavior to use your business instead.

There are many different ways to kind of report on this momentum. And as a savvy investor who's been doing it for 15 years, I'm trying to cut through that and ask questions 6 different ways to see if it all adds up. And a lot of times I'm looking at ratios, you know, down to how many views, likes, and comments do you have? And depending on what platform, YouTube or Instagram, I can get an idea, is that organic or did you pay for that? So that would just be that, that I'm not going to judge a company for investment, but I will, I want to know, I don't mind if you're paying for likes or whatever, because you have a plan about that. But what I'd be looking for is retention. How many people see your product and then come back? And then how do they come back? Is it an app notification? Is there something else in their workflow that forces them in there? So these are those sorts of things that I'm looking for that if you get right from the beginning, you can build some virality into your product. So there are so many different user behaviors. Again, daily active users divided by monthly active users. I can look at that ratio and know, are you on a healthy trend or you're not? If I look at your web traffic, I can instantly tell, are you getting only new users or are you retaining users? And to know the difference, if you're only getting new users, it actually looks like the hospital heartbeat because what ends up happening is you get some users and there's like a news story or there's a social media post for them and that's a spike. And then all of those people drop off and that flatline is actually random new users through your email campaigns, email that it's just kind of flat. The only way you actually get a curve is with retention. And I'm talking at least 1 in 5, you're going to need a higher than that of people that find out about it. They keep coming back.

That's good to put a number on it. And with that in mind, I'm wondering, Vinny, what would be the difference between a deck that gets a meeting with you and a deck that gets That's serious interest. This is like high up there. I want to invest in them, but I won't give my game away.

Honestly, for me, I mean, it's gonna be different for every investor. For me, I don't even need a deck. Just send me a link to the website and I can let you know very quickly if this is something that fits my thesis or not. And the reason why I prefer a website over a deck is you can write whatever you want in a deck, but the website is how you communicate to your customers, to your users. And I can instantly know, do you understand the pain point? And are you pitching what you're actually selling? And I see huge differences between what a deck will sell and what the website sells. And that, that'll be a big red flag for me. And maybe you'll get there, but I don't want to take that risk right now. I'd rather, and I understand people might evolve and there could be a pivot. We'll definitely talk if, hey, we've learned and we're doing this, but if there's a huge gap between what the website is offering and what the deck is talking about, that's going to get a reply from me.

Do you tend to stick very closely to your thesis or is there something that can sway you out of it?

That's a great question. So our Golden Gate Ventures, we have a pretty broad thesis. We've invested in 150 companies across consumer, B2B, enterprise, deep tech, AI. We've invested across 3 different continents. We're very broad. Sequoia, Andreessen Horowitz, very broad. So when I say thesis, it isn't necessarily like this is the vertical investing in now. It is that a company within this space, a company that's going to start as a new juice company, what is its revenue model? What geography is it going after? So when I say, is it within its thesis? What I'll say is for this type of business, I've the fortune I've learned so much over 15, 16 years. Does this business model and this approach and this competitive landscape make sense that this company can do well? So at the end of the day, you know, that thesis isn't just, is it solving X? It's more, is it solving A, B, and C within the domain of X?

Is there a question that a founder can put to the investor that will make them, make the investor realize that they know this stuff?

Yes, that's a great question. So, you know, there's a difference between first-time founders and third-time founders. And yep, a first-time founder is going to think they just walk in the room, the VC asked a bunch of questions, they must like me. Third-time founder realizes, okay, I'm interviewing the VC. You know, you're not leaving the room until you say, who from your portfolio should I be speaking to? Like, I'm going to choose what investor I want to take onto my cap table. So who's going to be a good reference check for you and why? This third-time founder, they're going to ask the fund, where are you in your vintage? Because funds, we have to raise every few years. And so how much capital do you have to deploy? What sort of check sizes do you write? What does success look for you? How are you as a board member? What sort of information you have? The first, the third-time founder is going to put the investor on their back heel and make them be responsive. And honestly, we're going to respect that. Now, there's a, there's, you could be disrespectful about it and that's not going to build a partnership. But if you're showing that, like, I'm mature, I know what I'm doing, I'm confident, I'm assertive, and I'm asking these questions because I genuinely want to understand, I'm genuinely comparing, we're going to highly respect that.

So where would you say the Founders mistake confidence for clarity. You can make assertions that are clearly not true, and an investor in the room might see that because they operated and/or invested in your space, or sometimes they haven't, so they don't know that area. What goes on there? What, what's your BS detector? What lights up the signals?

Okay. That's a good question. So I understand as an entrepreneur, there's always a little fake it to make it, and there's a spectrum there. And we all know Theranos, you know, too much fake it till you make it, not really, really bad. So, so we are looking for that. And again, where I mentioned, I'll ask the same question about data 6 different ways. I'm trying to catch you in a little bit of a lie or a bluff. And I'm not going to make a yes or no call purely off of that, but that's going to give me confidence the numbers you're saying are what they're saying, or give me some questions that I need to look into something more. That's number one.

Did you do that when you fundraised? Was there anything where you bluffed? Yeah.

Like, yeah, for instance, you're doing your angel round. You need to raise a syndicate from like 10 to 15 angels. You know, some angels may be interested, some may not like it. And so you're saying, oh, this person's committed and they haven't, but you're getting a feeling that they are. So sometimes you're bluffing on the syndicate, but investors can ask investors very quickly and we're going to know after the meeting if that's a lie. Maybe it's around a contract. value, what is actually signed, what is being talked about. So again, I understand there's a little bit of that that happens. And I tell the juniors on my investment team, like, just because a founder's saying something, don't take that for truth. And it's not a bad thing. They are out there selling. And I was on the other side. I respect that. So let's really try to find out what the actual truth is. Here's another thing that I've learned from 2 decades of pitching now, like always have an answer. Never say, I don't know.

Okay.

What's your contract pipeline for 2026? If you don't know that offhand, say, we're finalizing the numbers for Q1. I'll have my CFO, or I'll send that to you after, but never say, I don't know. It shows weakness. We're looking for leaders, for CEOs. So there's always a way to answer something. I'm not saying lie, don't give a number that's wrong because then we're going to ask for follow-up when that doesn't add up. That's a red flag. But always give an assertive answer. Don't say, I don't know.

That's in a way contrary to some of the PR advice that you get given as a founder, where you try to defer to that. But I've seen Mark Zuckerberg do that in the past where, oh no, it was in the Senate hearings in the US where he didn't have the information. He was doing that trick that just came to mind as you were mentioning it.

Yeah, you're right. That is very common. And then also with PR and marketing, Yeah, there might be messaging you do or don't want to put out to market, but if you're in a closed-door room talking, and again, not on stage, but closed-door room talking to a VC, need that assertive answer because we're, again, we don't have a lot of data points with you and we're trying to build that up. Can you be the CEO or the founding team of a billion-dollar company? And you're going to need to demonstrate that early on.

That's also something interesting that I've heard from several founders and a couple of book authors. You might not be the first or the CEO and the founder might not be the best person to lead the company in the second or the third stage of the growth, or they might not have all the skills and the quality. They could develop them, and ideally you would want that, but it's not always the case. How do you judge that when you invest in the company? And can that really become a problem that ends a company because the founder doesn't have the right amount of, I don't know, typically sales skills or Public communication skills. What are the key ones you look to move into the next stage of growth, the business?

Yeah. So if I have any question that a founder cannot grow into that, whether that's sales, managerial, executive sort of skills, we're just not going to make the investment. We're not going to take the risk of maybe this happens. And we would never take the risk of we'll bring in a new CEO because while that does happen, If we're making the, at the start of the investment, like there needs to be a different CEO here, don't even, don't even invest that for an early stage VC. It just doesn't make sense because 9.9 times out of 10, that's going to fail when you change a CEO. If you look at companies that are really successful at scale, they have so much of the DNA of the founder inside of them. And yes, there are times where a founder is asked to leave and new CEOs come in and build something successful, but 99% of the time that, that is not the case.

So.

If I have any question about that from the beginning, then it's just, sorry, this is not a good fit for us at this time. Uh, at the end of the day, we might be backing a 23-year-old sort of founder that, yeah, they haven't been managing a team of hundreds of people. They haven't run a marketing budget. They haven't done P&L. Do they show that potential? And, you know, this, this is where it's not purely a numbers game. And this is where a lot of intuition, gut feeling comes down to what is the capabilities of this individual? Do they remind me of some of my friends that became very successful?

Mm-hmm.

Do they remind me of some of my friends that didn't become become successful and why. So this is where I'm relying much more on gut feeling with some of the questions I'm asking. And at the end of the day, if there's a spectrum of somebody who's like super hardheaded versus, you know, just listens to anything we say, I actually don't want people taking notes and doing everything we say. We're not running the company. I also don't want somebody who can't strike a balance of partnership across the table. They're going to lean more towards that assertive side. But they're going to need to show the elements of listening, compromise, how they work with their co-founders. And this is where I'm going to be asking different questions, or maybe I'm even purposely kind of poking them and seeing how they react to me and how they can handle their emotions and their communication when it gets a little difficult. Again, these aren't all perfect. Just because they can't handle it doesn't mean they won't be successful, but the chances are higher if they can't handle those sorts of situations. So that is where I am trying to poke around.

So is there a fundraising habit that makes founders look less credible than, um, they—

Yeah. One, kind of this like spray and pitch, just like emailing everybody cold. That makes you look less credible.

People still get that advice. People still get that advice.

Well, the thing is for sales, sales works, you know, going wide. If you're selling a B2B SaaS startup, it works. They're selling to customers and they try to apply that to VCs. And so We can tell or we hear VCs talk to each other. So that's number one. Number 2, going far outside your geography. That just doesn't make sense. I didn't realize this. Again, going back to me backpacking Asia, it wasn't until I pinged investors in the US and they're like, we don't invest outside the US. I realized, oh, it's very local. And now what I realize is Golden Gate Ventures, we have a footprint across Asia Pacific and across the MENA region. But if a startup's pitching us from Latin America or Europe, It's way outside of our geography. So that's, that's a big red flag immediately. Like, why are they coming to us? There's so many local investors they could be knocking on the doors of. So these are the sort of things that I think early on would create a pretty big gap between investor and entrepreneur.

And then is there a line that you try to figure out both as a founder in your experience selling hard, but also not sounding too desperate? And how do you see that on the other side of the table where the founder can say something, you're like, actually, he's like, no, they're selling too hard, or what makes you sound desperate?

Okay, I might break this down to it. Desperate would be one thing different than selling too hard. If somebody sounds desperate, again, I'll go back to one of the things I said earlier. I have a lot of empathy for founders. I've been on the other side of the table. So sometimes they sound desperate because they're hitting the pavement, they're building a company, Fundraising is the most difficult thing to do as a, as a founder. And that desperation may be, I have employees that depend on me and we have, you know, 45 days of runway left. So if, if I feel that desperation, I understand where it comes from and I'm empathetic. I'm not going to judge them for that. I'm going to understand that and we'll really be able to talk through the business and let's not make a decision there. Somebody that's selling too hard. Again, this comes back to feeling intuition. Gut feeling. When that deck is way too polished or they know everything I'm going to answer and just answer it perfectly, my spider senses are going off. Something is too polished here. This doesn't make sense. If they are this polished, they should have people throwing money at them. I should, you know, sometimes I am knocking on the door trying to give capital to companies, yet they're asking me. So there's a difference there. So that would be too polished.

While we're on the too polished one, Yeah. Can I quickly bring AI? Because that's also something I've been writing about. Putting something polished out is way more accessible. Do you find, you know, certain keywords that give away AI use in presentations? I'm assuming you get to see quite a few already.

Yeah, but actually none of that's a problem for me. I am happy that they're using AI and that kind of polish is different where it looks pretty and pretty graphs. But again, I don't mind you use AI and you're able to say, this is my ideal customer. This is how I've gotten the ones I've gotten so far. And this is how I'm going to get the next ones. Like at the end of the day, the whole magic of your ability to sell that message, present that message along with all the data you have and the historical data you have, like AI can't do that. AI at some point may be running your business and then maybe it can actually get those numbers and data. But right now, at the end of the day, you can have great marketing copy. You can have great ways of positioning yourself with the website aligned with the deck. But if you don't have the existing, if you haven't landed the users, then that's a big, all right, no for me. But if you're using AI and it helps you land the users, that's, that's a good thing. So the idea of using AI and leaning into it more, that's great. I have not felt that when I'm saying the word polish, it's not because they have a beautiful deck. It is everything answered questions I have. All of it makes sense, but something is missing. The data is missing. The revenue is missing. The demand of investors knocking at the door is missing. That's when it's an issue.

So when you spot this sort of stuff, have you seen founders talking themselves out of a deal?

I've seen founders pass on investor money from a valuation standpoint. Um, so that's a bit of talking out of a deal. Like the investor only values me here. I view here, the world is not flat when it comes to startup ecosystems and VCs. And so if you compare yourself, it's like, you know, I'm not going to claim I'm making a Hollywood movie from Ho Chi Minh That's just, it's just not the case. We don't have the same producers and directors and film and actors and all of that. And so yeah, I've seen founders talk themselves out of a term sheet purely from a valuation standpoint.

What's a good follow-up after a meeting with a VC and what's a bad follow-up after?

The bad follow-up is thank you for the meeting. Here's my data room. That's 99% of follow-ups. The good follow-up is, I just landed this customer, or, you know, we spoke about XYZ in the meeting and that got me thinking and I'm already building out ABC around it. So the good follow-up, there's some momentum that happened from the meeting, or, or maybe not from the meeting, or there's momentum happening in the company, or there's momentum happening around the round.

Yeah.

Hey, you know, I met with you and I met with these 3 other VCs while I was in Singapore last week, and this is the stage I'm at. So something around momentum is where a good follow-up email happens. The thank you for meeting, here's the data room is a bad one. Okay.

Those are very practical. You mentioned also in this conversation being too early and in a colder fundraising market, because I understand right now things are not as big and fast as they used to be. What changes for founders? What do they have to do differently to get your attention and I know you said the TAM slide, the team slide, but what, what changed since 2020?

So there is less capital.

Yep.

Or capital is concentrated into a few gigantic US AI companies, and then there's less capital for everyone else. That is what has changed. I grew up in the first dot-com era, like to build a company, you needed to buy servers. There was a high cost to start a company. And then everything was like, oh, now it's in the cloud. You can start a company for free. But it still takes time and resources. But now you really can start a company with very, very little, uh, thanks to some of the AI tools where you have teammates, you have a developer, you have a marketer, a content creator, you have these automated workflow tools. So what's going to get you to stand out? Again, it comes down to traction. And if you have revenue, that is number one. And if you don't have revenue but you have people that really love and use it and keep coming back to the product, That's a good sign. But these days a VC is going to expect revenue because if they really love it and keep coming back, why aren't they paying? Yeah. And I even had VCs tell me that when I was pitching for my community, uh, Lafora Communities. And because the VC would, back then before there was even unicorns, would be like, how's this get to be a billion-dollar business? Which means minimum $100 million of revenue.

Yep.

So yeah, I get a lot of pitches that way and I try to be empathetic. And I say like, you know, is VC the path for you? Like, do you literally see getting to $100 million of revenue? Do you see doing 6 rounds of financing every 2 years? Are there alternate sources of capital that you could be going for? I'm not talking about a bank loan, but we could like think about it out loud. So I do pose those questions. I, VCs, we're not a judge to say your idea is good or bad, but if you pitch a dozen VCs that are all independent and they have concerns on the similar concern, you know, the business model or the competition, you keep hearing the same thing over and over again from different VCs, I would take that to heart. So I'm not saying any one VC knows, but if it's independent people that are coming to the same conclusion, should be sophisticated understanding the space. I would take some of that to heart and then maybe it's, maybe it is a lifestyle business or maybe there's like something that needs to change with a business model or a competitor relationship. In order to open up scale that has concerned a lot of VCs.

So from your reading of what other VCs and investors say, what's your, the consensus at the moment on AI startups? Because they are harder to judge right now because there's so much noise, right?

Yes, I know, but this data doesn't lie. I keep coming back to this concept of retention. Like, yeah, you could spend a lot of money to get new users. But do they come back? Are you actually scratching an itch for them? Are they leaving their credit card information because this is so painful, they want to pay for it? So at the end of the day, data doesn't lie. And that's, I don't invest in ideas. Like anybody could put together a pitch deck and I have no idea why so many founders think I have this pitch deck and a VC invests. Like this was never the case. This wasn't the case when I was building 2 startups. This wasn't the case, you know, years before that. Investors are always looking for that data and that traction. There are extreme cases, and sometimes it might be a repeat founder and they literally, this is my idea. That does exist, but that is the edge case. For 90% of companies, they have underlying data to say, with more capital, I can really grow this big. And here's the thing, 2 different companies, sometimes you have 3 or 4 different companies all pitching very similar services, solving the same pain points with customers. And now what the VC is really looking at is, Which team can really take this big? And again, how, what potential does the CEO show to be a great leader? What is the makeup of the technical team, the marketing team, the product team? Where are they based? What sort of relationships do they have? Like, these are the questions that we're asking. So all things considered, the product might be slightly different. We're not saying which is a better product. We're saying all things considered, which is the team that can make a huge company?

So that takes me to my question of what would founders need to prove now that AI makes building easier? You said rightfully so, you can have a sales agent, which is AI, and it can help you in that. PR and content, I think that's much more likely. I haven't really seen or heard from anybody who said, you know, successfully using these sales agents than anything that actually closes a sale. So back to the question then, what do they need to prove now that AI is making building and certain roles easier for them? You don't need to have the right people because you can have an AI employee.

I keep going back to though, this founding team, like the leaders of the company, they need to demonstrate at the end of the day, if you're building a really big company, like there's going to be people behind it. And so can you demonstrate that you could be a great leader, that you can grow people behind you and you know how to use tools and you know how to bring stakeholders and you have a unified vision?

Mm-hmm.

I still don't think, you know, to build a successful company or build a breakthrough company that takes away market share from someone else, I still think these are the hard qualities that will be needed. At the end of the day, I'm an optimist. I don't think there's too many founders. I encourage more people to build things. You learn a lot. And in the best case, you build something of value. So to me, yeah, if you're backing a really good team, they're going to navigate those. They're not stuck to an idea. They're able to build a great business. A lot of founders that tell me their mission is to build a billion-dollar company. And they think as an investor, I want to hear that. And I'm immediately walking away because I was like, you have just failed because as a leader, you need to get a whole bunch of people running the same direction as you. And if your goal is to build a billion-dollar business and you hire really smart people, they all have very different ideas of how to achieve that. And they're all very capable of achieving that, but nobody's working together in the same direction. But if your goal is to be the best note-taking app and have a billion users, You hire smart people, they're all going to be working in that direction. And if you need to change that direction at some point in the future, being really focused on that. Honestly, once, if not twice a week, I am passing on a startup here because they are pitching me on building a billion-dollar company. That's my mission. That's their mission.

Then is there a point where it's too early to speak to investors if you're planning on building a billion-dollar company or too late?

I look at it, don't plan on building a billion-dollar company. You know, Sergey didn't plan on that. Apple didn't plan on that. You know, Airbnb didn't plan, like they're solving something. They're building something else, maybe in the back of their— all founders, why we do this, capitalism. We're really excited about the future that I understand that success will come later. Finance will come later, but they're really hyper-focused on a vision and solving a pain point. Google to organize the world's information and look how far that's carried them over how many decades. So to me, if you build something of value, commercial success will follow, but you need to figure out with what that value is that you're offering and how you're gonna get it out there rather than anyone else.

And what would you say is the most efficient way of getting the message out there and distributing? Something that I was reading recently was that a lot of the VC money is going on Meta ads who have had record revenue recently.

I think social media as a platform can be very helpful for B2B tools for, and so yeah, people that understand that or understand how to use AI tools to optimize that and And again, this is where, you know, we're not just looking at revenue, we're looking at unit economics. How much do you spend to get a user and how, what is the lifetime value of that user? These are the questions that we're looking at. So yeah, you could spend a lot of money and get a lot of traffic, but again, the data is not going to lie. We're going to understand that this is not a business that scales. The unit economics don't scale. But, uh, yeah, if I was building a company now, I think like SEO still is important. What applied to Google, a search engine, applies to ChatGPT when it goes ask a question. So So the types of tricks you would do to generally fare well in Google generally, and there's some new hacks to fare well on some of the LLMs. So that's important. Social media, doing that right. Only 1% of startups really know how to do that. That's also important. But again, you could have social media all vaporware and like nothing behind it. So that's where you need the amazing CEO and tech guy and marketer and the 3 or tech gal. The 3 of them coming together is really, really powerful.

So what would you then tell a founder who has a good business, but a weak story? They're not really good at promoting themselves or marketing themselves.

Find a co-founder that is, because if they're going to build a big company, it's not just promoting yourself to a VC. It's promoting yourself to key hires that are going to leave a job to get behind you. It's promoting yourself to key partners. Again, if it, if that doesn't exist in the leadership team, I think you have a really difficult time of getting big. So I would say find something that would add that value.

I'm just gonna have— I have a couple more reflective questions now, Vinny.

Okay.

What's a belief you've changed your mind on since becoming an investor? Because you have certain convictions as a founder and entrepreneur, and I know that, but when you crossed on the other side, something changed. I think on the founder side, everybody's Everybody thinks their idea will work and that should be invested in, but when you're on the other side—

Okay. Yeah, I would— what I've learned being an investor and boil it down probably to 3 things. Number one, ideas have no value, so investors don't back ideas. Number 2, investors have unique themes and theses that they look for, and the more time you spend understanding that and separating investors that The better conversation you'll have.

And AI can help with that, right?

Yeah. AI can definitely help with that. And then you can query it, you know, show me what have people invested. And then number 3 would be investing is very local. You know, you, while you can pitch a Silicon Valley VC anywhere in the world, they're not going to invest in you. They need to touch and see and feel and catch up with you or know who your competitor is down the road. At the end of the day, You can have the call, but again, everybody has the same idea. There's another company in Silicon Valley. If you're outside of Silicon Valley, there's another company in Silicon Valley with that same idea. And it's going to be much easier for the investor to back the one that they can see and touch and meet with, or has a network there to hire the right sort of people. So investing is very local.

And what still frustrates you when you see founders raising? Is there a mistake that a lot of people still make and it niggles you and annoys you all the time?

Starting off with your valuation. Like if I get a pitch and it's like, this is our valuation, I'm passing. Like you're starting, you know, the cart before the horse sort of thing. And so, yeah, it just tells me you don't know how this works or what's going to happen. And it's not to say you won't raise, there are people that raise, but I haven't seen those turn into billion-dollar companies.

I see. If you would have the unlikely opportunity to give advice to your younger founder self, as knowing what you know as an investor now, what would that be?

That's a good question. A younger Vinny, I would say, trust your gut. Like, my intuition has taken me to some really great places in life. And so trust your intuition.

I agree with that, but I'm going to press a little bit on it because I want to know, how do you know when it's your gut talking to you, not your heart or your ego or your fear?

So for me, yeah, Yeah, all of those voices exist. And clearly over time I've learned to listen to the right one and drown out the other ones.

Yep.

At the end of the day, this is what I could also say to a next generation of founders, like take really big risks when you're young, things that feel scary, jump for it. You can do that when you're young, you take the biggest risk when you're young. So not just listen to your gut, but also, yeah, if that voice is saying don't do this, You know, that's too risky. All of this can go wrong. That— go for it. Take the big risks. Move yourself to a different part of the world. Quit that job. Start this company. Take that risk. I've done all of these things and I've been successful because of it.

But that's not because you believe in, say, manifestation. It's not a state of mind, what you do in business.

I believe in manifestation. And if you are determined and persistent, this idea of manifestation, yeah, I mean, you can't manifest everything, but I I've seen, my wife will tell you, I can be very persistent. I've seen founders that are very persistent that manifest what they want. So to some sense, I do believe in that. I don't think it means affirmations, looking in the mirror and just saying something over and over again. But if you're really determined, hyper-focused, I keep coming back to this idea of like singular focus, larger sort of vision. Like if you can drive there and you can get stakeholders behind you, again, it's not investors, it's a co-founder, it's an intern, it's a key, you can get other people You can accomplish amazing things.

So I would sum this up then, Vinnie, and let me know if you agree with it or not. Want it hard enough and you will find a way to make it happen. Somewhere in between the manifestation and the affirmation and the business acumen, somewhere in between all that, it happens.

Somewhere between all of that, it happens. But I'll say this, as somebody who has a failure on, you also know that sometimes it doesn't. And that is okay. And this is why I like repeat founders that have some failures. Imagine a rubber band, you know, you keep stretching it, keep stretching it. At some point it snaps and it hurts. You now know not to stretch it as far or as many times the next time. So this is where I love entrepreneur, again, repeat entrepreneurs with a failure behind them. They know when something snaps. So they are keenly aware of how not to do that again. It was an amazing lesson learned. You can determine and manifest, you will have. That doesn't always work out. And to me, that is a great life lesson.

I'm just going to come back with one more question, Vinay, because it came to mind. What did you snap in your previous experiences that you are not pulling the elastic band too hard now?

So many, so many things. So my first startup, which did fail, you know, just had this idea of like, yeah, if we build it, Users will come. That was wrong. How to communicate what we were actually building and boil it down into something very simple that everybody could understand. I didn't do that. I've now learned to do that. This idea of being very overly confident in yourself, of your team, you know, best engineers, designers, we're in San Francisco, we can tackle any problem. So yeah, there was many different dimensions that were quite humbling. Doesn't feel good to shut down a startup. Doesn't feel good to have that written on TechCrunch. So those were, those were life lessons that needed to be learned. And I tell every new hire on the team, are you pushing boundaries? I want you doing new things. I want you taking risks within the firm, working on projects that you might not know about, and you're going to make mistakes. And I'm not going to yell at you because you made a mistake. If you make the same mistake over and over and over again, you're not learning. And that's, you're not a fit, you know, at Golden Gate Ventures. But if you are making mistakes, it tells me you're taking risks. You're putting yourself out there. You're actually growing yourself. You're doing something new and unknown. I love that.

So you brought it full circle on, on Taking the risk early, as early as possible when you have fewer responsibilities. And I'm assuming we're talking here about children, partners, and so many other things in life. And also empowering your staff to take bigger risks within a framework, of course, to be able to move the needle further. I love that. Thank you so much, Vinnie, for sharing so many useful ideas. And I'm now thinking what will be my next big risk.

I love it, Daniel. Thank you.

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