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This page collects links to blog posts, articles and books about product management. Companion pages listed to the right and also in the nav bar above cover resources and insights related to lean startup logic/methods ; UX design ; business development ; marketing ; and sales , among other topics. Educators designing courses to train product managers may wish to review the syllabus for the Harvard Business School MBA elective, Product Management 101, in which students learn the basics of the tech PM role by designing and supervising development of a software app. Product Management: Overview Product Managers: Role and Required Skills/Mindset Product Management Processes: Overview Specifying Product Requirements
  • Cagan on
Feature Prioritization Design Critiques/Product Demos Product Evolution Product Management: Relationship with Project Management Product Management: Relationship with Sales/Marketing/Growth Teams Product Management: Relationship With Engineering
Agile Software Development Agile vs. Waterfall Methods Outsourced/Offshore Product Development Refactoring/Rewriting Code/Technical Debt Mobile Development
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This page collects links to blog posts, articles and books about product management. Companion pages listed to the right and also in the n...

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All successful product managers have one thing in common — they keep learning and absorbing new knowledge to stay up to date with the newest trends in product management.

With that in mind, we recently published a comprehensive Product Management Framework based on our own experience and practices — but also backed up by dozens of knowledge sources we’ve used over the years.

Now, we wanted to share those resources that we’ve used and that have helped us in creating our framework. We’ve sorted through some of the most popular product management resources and compiled a list of books, courses, podcasts, tools and templates that will help busy product managers stay at the top of the game.


The framework covers the whole product creation process — from strategy to execution

We want to create a living, ever-growing list of resources that we’ll update regularly.

For that, we’ll need your help.

If you want to contribute to this list and add your favorite product management resources, check out our public spreadsheet here:


Product Management Resources Spreadsheet

We hope you find this list of resources helpful. If you did, make sure to bookmark, highlight and share it with your colleagues and friends.

All successful product managers have one thing in common — they keep learning and absorbing new knowledge to stay up to date with the newest trends in product management. With that in mind, we…

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A living list of product management resources

This is a list of product management blog posts, podcasts, and other resources that I’ve found useful in learning and growing as a product manager.

Shoot me a note if you have resources you love and don’t see here.

Sorting through books, blogs, tweets & videos so you don’t have to.. “A living list of product management resources” is published by Alex Haar in ART + marketing.

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I’m regularly asked for product manager book recommendations. There are lots of excellent books about product management , but these are the ones I'd consider essential to any PM’s bookshelf.

Getting Things Done by David Allen cover image

Getting Things Done

By David Allen

Soon after this book was published Allen attracted an almost cult-like following. Product managers juggle hundreds of priorities, and this book will help you balance your time.

Predictably Irrational by Dan Ariely cover image

Predictably Irrational

By Dan Ariely

One of the best books on human nature, Ariely’s enjoyable book helps us understand why people behave irrationally.

Work Rules! by Laszlo Bock cover image

Work Rules!

By Laszlo Bock

Laszlo and his team at Google have reinvented the role of human resources. This book is a terrific overview of what makes Google Google, from culture, to hiring, to making decisions.

The Mythical Man-Month by Frederick Brooks cover image

The Mythical Man-Month

By Frederick Brooks

If you could only read one computer science book, this would be it. More than forty years old, it’s as relevant as ever. I promise you’ll nod your head as Brooks skewers mistakes that engineering leaders continue to make to this day.

Empowered by Marty Cagan and Chris Jones cover image


By Marty Cagan and Chris Jones

The sequel to Inspired, this book explores what the best product companies have in common. “Most people think it’s because these companies are somehow able to find and attract a level of talent that makes this innovation possible. But the real advantage these companies have is not so much who they hire, but rather how they enable their people to work together to solve hard problems and create extraordinary products.”

Inspired by Marty Cagan cover image


By Marty Cagan

If you could only read one book on product management, this would be it. Marty has had a long and storied product management career, and is the founder of Silicon Valley Product Group.

Quiet: The Power of Introverts by Susan Cain cover image

Quiet: The Power of Introverts

By Susan Cain

I’m an introvert and I spent years treating it as a weakness. Susan’s book opened my eyes to the unique contributions introverts make. Even if you’re not an introvert yourself, I guarantee you work with lots of them.

Creativity, Inc by Ed Catmull cover image

Creativity, Inc

By Ed Catmull

If you appreciated my essay 10x Not 10% , you’ll enjoy Catmull’s book about putting 10x into practice. He draws from the success – and failures – of Pixar to teach us how to lead creative teams.

Competing Against Luck by Clayton Christensen cover image

Competing Against Luck

By Clayton Christensen

Christensen is back with a new book which explores one of his approaches to combating the Innovator’s Dilemma: Jobs-To-Be-Done.

The Innovator's Dilemma by Clayton Christensen cover image

The Innovator's Dilemma

By Clayton Christensen

The most important business and product management book of the past fifty years. If you’re a technology PM and you haven’t read Christensen, do so right now.

The Innovator's Solution by Clayton Christensen cover image

The Innovator's Solution

By Clayton Christensen

The Innovator’s Dilemma’s equally essential follow-up. How product managers can fight the innovator’s dilemma.

Brave New Work by Aaron Dignan cover image

Brave New Work

By Aaron Dignan

A good general overview of several of the concepts on the future of work that I’ve covered in my essays and talks.

Getting To Yes by Roger Fisher and William Ury cover image

Getting To Yes

By Roger Fisher and William Ury

Product managers need to be master negotiators and there’s no better guide to negotiation than this classic.

Team of Rivals by Doris Kearns Goodwin cover image

Team of Rivals

By Doris Kearns Goodwin

Abraham Lincoln surrounded himself with his opponents, gradually turning them into admirers and influential advisors. Lincoln’s approach to leadership offers lessons for anyone looking to tap into the wisdom of others, with or without formal authority.

High Output Management by Andy Grove cover image

High Output Management

By Andy Grove

This one only gets better with age. Although it’s only mentioned briefly, this is where Andy Grove first introduced OKRs to the world. His practical advice about meetings, especially the importance of 1-on-1s, inspired my own writing .

The Hard Thing About Hard Things by Ben Horowitz cover image

The Hard Thing About Hard Things

By Ben Horowitz

The most truly practical startup management book. Ben cuts through the B.S. and addresses the messy ambiguity of the real world in entertaining fashion.

How to Lie with Statistics by Darrell Huff cover image

How to Lie with Statistics

By Darrell Huff

Product managers need a solid foundation in statistics to be metrics-driven. This classic book is a lively and fun book will leave you smarter and more skeptical.

Steve Jobs by Walter Isaacson cover image

Steve Jobs

By Walter Isaacson

One of the best biographies of all time, of the greatest product manager of all time.

Thinking, Fast and Slow by Daniel Kahneman cover image

Thinking, Fast and Slow

By Daniel Kahneman

When does our animal brain make decisions for us before our more analytical brain has a chance to think through the consequences? From Nobel laureate Kahneman, this is one of the most important psychology books ever written.

On Writing by Stephen King cover image

On Writing

By Stephen King

Product managers need to be good writers, and this is how you learn from one of the masters of the craft.

Sprint by Jake Knapp cover image


By Jake Knapp

From my former partners in GV Design—how to cut through the crap, identify a problem, and test it in only one week.

Don't Make Me Think by Steve Krug cover image

Don't Make Me Think

By Steve Krug

This lighthearted book about user interface design is fun to read, and chock full of lessons for PMs.

Crossing the Chasm by Geoffrey Moore cover image

Crossing the Chasm

By Geoffrey Moore

The classic technology marketing book. Moore was the first to evaluate the role of early adopters.

Inside the Tornado by Geoffrey Moore cover image

Inside the Tornado

By Geoffrey Moore

Moore’s follow-up tells you what to do after you’ve crossed the chasm, when it’s make-or-break around your ability to reach mainstream customers.

The Lean Product Playbook by Dan Olsen cover image

The Lean Product Playbook

By Dan Olsen

Dan’s book is a perfect companion to Lean Startup , with lots of tactical advice and techniques for putting lean methodologies into practice.

Escaping the Build Trap by Melissa Perri cover image

Escaping the Build Trap

By Melissa Perri

Melissa Perri explains how laying the foundation for great product management can help companies solve real customer problems while achieving business goals. By understanding how to communicate and collaborate within a company structure, you can create a product culture that benefits both the business and the customer.

Positioning by Al Ries and Jack Trout cover image


By Al Ries and Jack Trout

The classic marketing book, one of the first to specifically address positioning your product in a consumer’s mind.

The Lean Startup by Eric Ries cover image

The Lean Startup

By Eric Ries

This book started a revolution in product development, and introduced us to the now-ubiquitous concepts of the MVP and the pivot. Essential book for startup product managers.

The Halo Effect by Phil Rosenzweig cover image

The Halo Effect

By Phil Rosenzweig

A blistering takedown of pop management books. It will sharpen your skepticism about the management advice anyone gives you (including me).

Radical Candor by Kim Scott cover image

Radical Candor

By Kim Scott

Kim built Google’s AdSense business and then went on to to create Apple’s highly regarded manager training program. Her book shows you how to be forthright and honest, without being a jerk.

Nudge by Richard Thaler and Cass Sunstein cover image


By Richard Thaler and Cass Sunstein

In product development, defaults matter. Thaler’s is the best book on why that is, and how to steer your users in the right direction.


Can't find the time to read? Learn how I am able to read more than a book a week . It's easier than you think.

The titles of these product manager books link to Amazon.com through their affiliate program. I donate all proceeds to charity and also match the donation on a two-for-one basis.

Photo of Ken Norton's product management bookshelf

Product Management Coach

If you're interested in growing as a product manager or product leader, I offer product leadership coaching . I've worked with everyone from new grads just starting their PM careers to experienced executive-level product leaders. Visit my product management coaching page if you'd like to more and to schedule a free discovery session.


How to Hire a Product Manager

The classic essay that defined the product manager role

What makes a great product manager, and how do you become one? This is Ken Norton's classic essay on the role of product management that launched thousands of PM careers.

10x Not 10%

Product management by orders of magnitude

In this ambitious essay, Ken Norton looks at the history of innovation and challenges product managers and product leaders to think bigger, to aim for 10x, not 10%.

Please Make Yourself Uncomfortable

What product managers can learn from jazz musicians

What can product managers and product leaders learn from jazz, an art form that is all about improvisation, collaboration, and being willing to take risks?

What to Do in Your First 30 Days in a New Role

Tips for how product managers should approach their first month

Congratulations, a product has found its product manager. How you approach your first 30 days will make a tremendous difference, setting you up for success or struggle.

Ants and Aliens: Long-term Product Planning

Why you need a thirty-year product vision (yes, thirty)

How do you plan for the future and deliver an innovative and compelling product vision that will inspire your team to deliver winning products?

Meetings That Don’t Suck

Break free from the tyranny of the conference room

Most meetings suck, but it doesn't have to be that way. Ken Norton shows us how to break free and unsuck our meetings.

Ken Norton

Ken Norton spent more than fourteen years at Google where he led product initiatives for Docs, Calendar, Google Mobile Maps, and GV (formerly Google Ventures).

Ken Norton shares his recommended books for product managers. The best books on product leadership, innovation, management, shipping winning products, and design thinking.

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This list is far from all-inclusive. I’ve left out entire categories and capabilities that are critical to being a great PM (e.g. measurement, analytics). But some essentials are here. It’s a list I maintain for myself as a reminder to go back and re-read some of these things from time to time. Hopefully you find some of these writings as useful as I do.

Program Management


Miscellaneous Marketing/Business/Leadership

This list is far from all-inclusive. I’ve left out entire categories and capabilities that are critical to being a great PM (e.g. measurement, analytics). But some essentials are here. It’s a list I…

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25 Resources that helped me get up to speed as (digital) Product Manager

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As Product Manager in a large (consumer electronics) company, you often forget to read-up on the experiences shared and lessons learned elsewhere in the tech industry. Time to get up-to-speed…

There are of course some fundamental resources, by influential thought leaders of the industry, on the role of Product Manager itself (eg. Good Product Manager/Bad Product Manager — Ben Horowitz or A Product Manager’s Job — Josh Elman). However, below resources focus more on the specifics; the stories, tools and frameworks useful solving the day-to-day challenges.

The list is a irst shot, I compiled it from a few months of reading…feel free to comment and share your favorite resources!

Product Development

Product Strategy in a Growing Company(Video, 0h19min) — Great talk by Des Traynor on aspects of product development, eg. Feature creep and products vision.

Dropbox’s Head of Design on the Dawn of Personalized Products(Article) — Head of Dropbox design explains the 4 key ways to create personalized products.

Enchanted Objects: The next wave of the web (Presentation) — Inspirational examples of how product tap into underlying “magic”

Guide to Product Planning: Three Feature Buckets (Article) — Easy to use framework on clustering features, make sure you know WHY you are creating a feature.

Lean Product Management (Video, 1h21min) — Very thorough description of steps taken in product management, including numerous frameworks on devising and testing consumer concepts.

Problem Discovery

The GV research sprint: a 4-day process for answering important startup questions (Article) — In-depth look into how Google Ventures helps new startups research and discovery user problems. It links to 4 detailed articles, describing each of the 4 day-sprint. There is also a video (1h38min) available of Michael Margolis explaining the process.

Start Up Ideas(Article) — Very nice essay from Paul Graham, founder of Y-Combinator, on changing your frame-of-mind when thinking up new start-up ideas. Key advice to “Live in the future and build what seems interesting”!

Lean Startup & Experimentation

Google I/O 2014 The design sprint: from Google Ventures to Google (Video, 0h45min) —Similar to the Research Sprint, this video share how GV takes the next step to help their ventures brainstorm/create ideas in their 5-day Design Sprint.

Why You Only Need to Test with 5 Users (Article) — Simple evidence that testing ideas with 5-users is sufficient

The Case for Talking to Users in the Age of Big Data (Article) — Short case sharing the importance of Data next-to qualitative consumer research

Design for Continuous Experimentations (Presentation) — Nice presentation on how Etsy.com does their testing and how to avoid creating features people don’t use.

Habits and Behaviors

The 7 Habits of Breakthrough Innovators (Presentation) — Amy Jo Kim, co-creator of The Sims, presented her ideas on testing and co-creating (gamified) products at the Next Web Conference in Amsterdam.

Hooked: How to Build Habit-Forming Products (Book) — Fundamental book on product creation (mainly Apps). This book, like ‘The Lean Start-up’ is starting to lead a new movement in product management.

The Power of Habit: Why We Do What We Do in Life and Business (Book) — great book on basic construction of habits, Cue…Routine….Reward. Including ways to change/create habits.

Business Models

Disrupting beliefs: A new approach to business-model innovation (Article)McKinsey look at how new technologies and connectivity are changing business-models.

How Design Thinking Transformed Airbnb from a Failing Startup to a Billion Dollar Business (Article) — Inspirational article on how Airbnb kicked-off and overcame the first key barriers

The Business Model Navigator: 55 Models That Will Revolutionise Your Business (book) — This book describes the “55 business models that are responsible for 90% of the world’s most successful companies”. Very useful clustering of some well-known models (eg “Razor and Blade”) and lesser known models (eg. “Robin Hood”, “Ingredient Branding”).


Experiments at Airbnb (Article) — In-depth article on how Airbnb performs feature testing. Quite detailed, but good to get a flavor of the level of detail covered by the data teams at Airbnb.

Babe Ruth and feature lists: why prioritized feature lists can be poisonous (Article) — Very nice insight on how feature prioritization can go wrong.

How to choose the right UX metrics for your product (Article) — Framework, created by Google analytics team, to identify clear, goal-oriented metrics for your product/feature testing.

Technology (IoT)

11 Ways to Design ‘Smart’ Products That Will Live Beyond Tomorrow (Article) — Compelling article, capturing the aspects of the connected/smart products of the future.

How Smart, Connected Products Are Transforming Competition (Article) — Fundamental article from HBR on how to develop IOT related products and platforms.

Organizational Change

Getting to yes for corporate innovation (Article) — Interesting Article by-the great- Steve Blank on processes in corporate innovation, including how to overcome the roadblocks.

A former Google exec on how to make tough decisions quickly (Article) — Great article on decision making, including some nice practical tips.

Speed as Habit (Article) — Similar to the article above, Dave Girouard, CEO of Upstart, shares his experience and viewpoint on how to speed up decision making in organizations. “I believe that speed, like exercise and eating healthy, can be habitual”.

As Product Manager in a large (consumer electronics) company, you often forget to read-up on the experiences shared and lessons learned elsewhere in the tech industry. Time to get up-to-speed… There…

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You’ve likely heard that working at a startup is like building a plane while flying it. But Laura Behrens Wu , co-founder and CEO of Shippo , adds another layer that brings the metaphor to life more vividly: “ Working at a startup is like building the jet engine while you're flying the plane. And likely there's also a fire on the plane .”

And while there are all sorts of success stories to serve as inspiration on the bumpy path ( especially given the slew of IPOs recently ), Plaid ’s Head of People McKenna Quint points out that even headline-grabbing companies faced a road full of potholes. “Nowadays, people often equate startups with bell-ringing success, but seeing so many private companies go public at such high valuations is really a new phenomenon. It’s also not the typical experience, and certainly not what you should join a startup expecting,” she says. “Even in the best of times, startups are hard. They’re designed specifically for growth — and this comes with a set of unique challenges, risks and demands that you need to be ready for. Being motivated by the mission, customer delight and driving impact — those things will keep you going. Being motivated by structure and following traditional career growth paths will not keep you in the game.”

Quint's counsel is aimed at an important, yet often overlooked audience. Startup advice is often geared towards founders and leaders shaping new companies and functions from scratch. There's so much attention paid to the building blocks of getting a company off the ground — finding product/market fit , getting customer feedback, and raising that next round .

But what about the folks signing on to join those fledgling companies, buying into the founder's vision and boarding that still-in-progress plane as a crew member? There are fewer playbooks for those just getting into the game, whether they're shifting from a big co environment to a small startup setting , or starting out as a new grad . And when advice is imparted, it tends to be on the generic side — shared over and over again in those vaguely inspirational Twitter posts (think "Don't worry about titles").

Here on the Review, we've shared advice on how founders can fine-tune their hiring and onboarding process to set these new hires up for success. We've also previously written about the implications of joining an early-stage company — outlining hurdles such as the tough growth spurt from 30-50 people and the emotional side of scaling . But we've never put together a comprehensive manual for joining a startup for the very first time.

Whether you're making the leap from big to small or just starting off in your career, it's a huge change to navigate. As startup hiring ramps up and operators consider new opportunities, we spotted a chance to return to the starting line and pay close attention to those formative months in a new startup employee’s tenure.

To that end, we’ve spent the past few weeks reaching out to some of the sharpest startup leaders and operators we know for their take on this important question:

What’s your favorite unexpected tip for someone who’s joining a startup for the first time?

What we got in return was a fountain of advice that breaks the mold. What follows is an exclusive list of 30 can’t-miss frameworks and tactics that dives beyond the surface. These folks reflect on what they wish they had known in their early startup days and hail from First Round backed-startups like Labelbox, UserLeap, and Upstart as well as other top tech companies that are taking on the hard work of scaling like Plaid, Netflix, and Shopify. Whether you’re joining a startup for the first time, or you’re struggling in the “ messy middle ,” there are plenty of tips to pull from to give yourself a boost and clear the hurdles that stand in your way.

Broken down by topic, they tackle everything step-by-step from how to approach your first 90 days and prioritizing a mile-long to-do list, to developing an owner’s mentality, and growing your career — with a particular focus on more tactical day-to-day actions you can lean on. Use the outline on the left to navigate the mega-list by each section (you’ll notice that we took the plane metaphor to new heights — apologies for all the flight-related puns coming your way.)

We hope it provides a detailed playbook for keeping your wits about you and a clear head when you climb aboard as an early employee. Let’s dive in.


You stuck through the interview process, did a happy dance when the offer came through and marked your calendar for your new job's start date. But for new employees used to architected onboarding processes at previous companies, startups may leave something to be desired on your Day One. Use these tips to direct your own onboarding to fill in any gaps.

1. Have a mind like water.

First, leave your preconceived ideas of how things ought to be at the door. “Notion’s Camille Ricketts says it best: ‘You have to have a ‘mind like water,’ which is a beautiful metaphor for communicating just how valuable adaptability and agility is in a startup environment,” says Claire Spangenberg , VP of Brand and Marketing at Alma . “If you come in with fixed ideas about what the business is, how the company should execute against its goals, and your place in all of that, you’ll waste precious time being stuck in old ways of thinking and constantly needing to play catch up — which is bad for you and the business.”

2. Cozy up to the customer.

Anne Raimondi, Board Member, Asana, Guru, Gusto & Patreon

“It doesn't matter what job you have — at a startup, every member of the team should develop deep empathy and understanding of the customer,” says seasoned tech exec and board member Anne Raimondi ( check out her Review story and podcast appearance for her tales from the frontlines of the startup C-Suite). “Jump on a customer call, shadow a support team member, read customer reviews and NPS feedback, or join customer interviews. The closer you are to your customer, the more motivated you'll be, especially when you make a difference in their life. That customer love also makes the messiness and ups-and-downs (and there will be plenty of messes and loads of ups-and-downs!) worthwhile.”

3. Deeply understand the business model.

As you fill up your customer empathy reserves, start piecing together the bigger picture. “As consumers, we tend to focus on how the product or service impacts our lives. But as an employee, you need to understand how your company actually makes money (which is often not nearly as transparent as it would seem). You want to be able to say ‘We make money every time our customer Xs and it costs us money when they Y,’" says Matt Wallaert , author and former Chief Behavioral Scientist for Clover Health. ( Read up on his Review story on keeping a clear head when things go awry).

4. Find the unsexy projects to drive impact fast.

“It's a delicate balance between showing right away that you can make a difference, and also being a sponge and soaking up as much information as possible and that you're hungry to learn from everyone. When you're juggling this tradeoff in your head, I'd err on the side of showing in the first week or two that you can make a tangible impact because startups thrive on speed,” says David Mok , Director of Content and Partnerships for Labelbox .

“If you work with your manager on strong goals, this should be baked into your onboarding — but startups also usually don't have a lot of structure yet. Actively seek out a few pockets where you can make an impact. Hint: it's usually found in the places of the business that are not fun or sexy. Examples could be spending some extra time to QA a feature, writing multiple versions of marketing copy to see what looks best, or creating a sensitivity analysis or quick spreadsheet model for a business decision.”

5. Align your personal values to the company mission.

McKenna Quint, Head of People, Plaid

To lay the groundwork for long-term success, look for where your values overlap with the company’s — you’ll need to return to those values when best-laid plans get thrown off course. “Companies often have their mission and values on the website and interview for folks that align to them — but those values don’t show up in any legal agreement you sign when you agree to join a startup. And yet, they are arguably more important than what’s in that legal document,” says Plaid’s McKenna Quint. “Make sure you see your personal values reflected in the values of the company. Plaid has a principle ‘embrace openness and positivity’ and that principle is a direct quote from our founder and CEO and reflects what he wants our company to look like. That really resonates with me and reflects the kind of company culture I want to build.” (To learn more about Plaid’s culture and values, check out the Review story and podcast interview with its Head of Engineering.)


No startup is without its fair share of problems to solve on the path to scale, whether it’s narrowing in on your ideal customer profile, navigating complex markets , or putting out mission-critical fires. Armed with what’s likely a shoestring budget and limited resources, you’ve got to choose carefully what to tackle at any given time.

6. Relentlessly prioritize to avoid the wrong high-quality work

“Communicate clearly and regularly, especially these two items: 1) What you understand to be the current highest priority project and focus area, and 2) What you are currently working on,” says Dan Donohue , Director of Program Management for PatientPing . “Good communication habits linking the strategy and problems of the day to individual contributor work will make you more confident and efficient today, and pay massive dividends as your team and company scale.”

One of the biggest wastes at a startup is valuable people delivering the wrong work at high quality.

To contextualize your goals, Matt Sturm (Senior Manager of Marketing Ops for UserLeap ) keeps tabs in specific increments. “Focus on the goals for the next 6-12 months. Those are high-level enough to stop you from getting too worried about day-to-day turbulence, and soon enough that you don't get carried away with ‘what could be.’ If no one can tell you the 6-12 month goals and where to find progress against them, ask relentlessly. It's good for everyone,” he says.

7. Pre-product/market fit? Focus on reducing risk.

There’s a reason the article on Superhuman’s product/market fit engine is still a Review audience favorite — it’s at the heart of product success (or failure). “In the early days, the story crafted about the startup is more important than tactical execution. If you join a team that doesn't have product/market fit, the question you should ask daily is: How are you helping the team find it?” says Joseph Blau , former Sr. iOS Engineer at Uber.

Farhan Thawar, VP of Engineering, Shopify

Farhan Thawar , VP of Engineering at Shopify, echoes this idea that product/market fit reigns supreme in the earliest stages of startup-building. “Align yourself with the risks of the company. If you’re an engineer but the company is not acquiring customers fast enough, spend your time in marketing. Have range, and don’t try to be too narrow in your focus in the early days. Gain knowledge in a few different areas of the business so you can reduce the overall risks of the company.”

It’s a feat worth the sweat and tears, according to CEO and founder of RenoFi, Justin Goldman : “The best role in startup land is being one of the very first hires for an experienced founding team for a product you deeply believe in that is pre-product/market fit. Having a front-row seat to see how an experienced founding team zigs and zags their way to the other side is something you have to see first hand.”

8. Solve the present (not future) problems.

A healthy dose of optimism is critical when you climb aboard a startup, but Daniel Scott , Digital Marketing Manager at Kandji has also seen it go sideways. “What I wish I'd learned earlier is to choose projects more carefully. There are often a ton of good ideas and people can be overly optimistic about what can be pulled off. Better to tighten what you say yes to and then commit to it 100%, execute well, learn from it, and move to the next thing,” he says.

Patrick Gardner , CTO of Time by Ping has seen many folks get bogged down in the what-ifs, rather than anchoring to what’s true right now. “You have to enjoy the problems of the moment — really tune your approach to accomplishing what needs to get done now to survive. It is so easy to try to do too much at once or get ahead of yourself attempting to solve future problems that you can underperform in the present .”

9. Think MVP, not perfection.

Laura Behrens Wu, CEO, Shippo

Prioritizing is critical at any startup — from the founders to the most junior folks. Shippo co-founder and CEO Laura Behrens Wu leans on this formula to get it right. “80% of work should be focused on the no-brainers and projects that will lead to immediate growth in the core segment and 20% of work on future projects and crazy ideas that could be future growth levers,” she says. “Despite all of the things going on, it's an important skill to not over-complexify things. You should be able to dumb it down to one or two things that really matter because they fuel a flywheel.”

Andrea Spillmann-Gajek , Head of Growth and CS YOU at SV Academy , agrees that when it comes to startups, simplicity is almost always best. “Strip everything down to its basics (or MVP), especially for super early-stage companies. Constantly ask how you can simplify and speed up. If it will take you three weeks to roll out a new program, feature, or newsletter, how can you simplify? What's a hackier solution to test it out?” she says. (For more on getting closer to your customers with Minimum Lovable Products, check out this Review fan-favorite article .)

What can be squeaked out as an MVP at 60%? What actually needs to be done closer to 90%? Get super comfortable with things not being perfect, while continuing to hold high standards for yourself and the team.


Within your small-but-mighty startup team, at some points, you’ll feel like the Blue Angels — individual jets flying in unison. Other times like you’re skydiving alone with a malfunctioning parachute. Don’t put these critical relationships with teammates on the backburner — invest in building rapport from the start.

10. Be ready to learn and teach in equal measure.

“Consider a startup like going back to school — you're going to be surrounded by other brilliant minds and you're all in a state of learning. Be ready and willing to learn from your colleagues, but also be ready to be the teacher to those same colleagues. Everyone in a startup brings with them their own valuable experience, and it's up to you collectively to make it a success,” says Fabian Eckstrom-French , Head of Partnerships at stensul .

11. An underrated question to ask in your initial 1:1s.

Steven Dorcelien, Customer Success Manager, Remind

“Invest heavily in establishing relationships, establishing your credibility, and learning to navigate the organization. Spend the first few weeks mostly in 1:1s asking questions, listening attentively and taking good notes,” says Jim Patterson , Chief Product Officer at NEXT Trucking.

Steven Dorcelien , Customer Success Manager at Remind , agrees that you’ve got to carve out this time early before your to-do list grows even longer. “Grab a coffee (or a quick Zoom meeting) with as many of your colleagues on different teams as you can in the first 90 days. These interactions will go a long way in showing how much you value them, the company culture, and your success at the startup,” he says.

To kick off these conversations, Zack Fisch Rothbart , Head of Operations and Legal at Pequity , leans on a simple question:

Ask your team members, “What’s the one thing you wish more people would ask you?"

12. Everyone shares Chief Culture Officer duties.

Whether you join sales, marketing, engineering — each piece of the org chart weaves together to form the startup’s cultural fabric. “Not everyone that joins a startup is aware that you are not only responsible for building the business together, but you are building the culture together at the same time. You only want crew members who are aligned to the success of the business — no passengers allowed,” says Brian Duffy , Director of Sales for Suki.

13. Don't bemoan the growing pains — embrace the bigger pie.

Cindy Smith, VP of Partner Strategy & Ops, Upstart

“Don't expect your job or company to stay the same for too long. If the company is growing then things will change — people, systems, process and even product,” says Cindy Smith , VP of Partner Strategy and Operations at Upstart .

Change is hard for all of us — especially when it’s happening in rapid succession. Shippo CEO Laura Behrens Wu reminds us that growing pains are often a good thing. “When a startup grows fast your role might change and initially it may feel like it’s changing for the worse because people are getting hired above you and your scope shrinks. However, that's normal as startups go through hypergrowth . Startups often start with generalists and then bring in specialists. That is a great opportunity to be learning from the best,” she says.

It's much more exciting to have a smaller scope of a high-growth pie that keeps growing to be a bigger pie than to own the entire pie but have it stay small.

14. Pause and give thanks when the going gets tough.

Plaid’s Head of People McKenna Quint spends her days thinking about the people engine powering high-growth startups, so leave it to her to make this all sound so poetic: “Along the way, pause and appreciate your people. I can’t begin to describe the wondrous feeling of being around folks who are unrelentingly optimistic and have endless wells of energy to throw at complex problems. You know that feeling when, at the deepest part of your gut, you are smiling?” she says. “While you’re experiencing the ups and downs of a startup , being around people whose vision for the world and whose values align with yours is a soulful experience. You are building an incredible community at the same time you’re building a product. Don’t get too busy that you forget to stop and relish in the relationships you’ve formed along the way.”


Several years ago on the Review, repeat founder-turned-VC Angus Davis shared an email he sent to his company, comparing the lessons he learned from becoming a pilot to working at a startup . One particular teaching from his flight instructor still sticks with us: “ Takeoffs are optional, but landings are mandatory. Delaying or canceling a flight is annoying at best, and often painful, with real negative repercussions for your goals. But it’s always, without exception, better to delay a takeoff than to fail a landing.” Keep that takeaway in mind when trying to keep up with a startup’s breakneck pace.

15. Embrace the art of slowing things down.

Warren Lebovics, Co-Founder, Pequity

Warren Lebovics , co-founder of Pequity , unpacks a critical difference between large and small companies . “At larger companies, one of the most difficult parts of your job is to move projects forward through a series of approvals. At startups, one of the most difficult parts of your job will be to help slow things down enough to ensure you're being thoughtful about projects flying out the door. Don't be penny-wise pound-foolish. By all means, save runway where you can — but don't pass on software that costs $100/month to instead spend the equivalent of $1000/month on inefficient processes,” he says.

Remember — you likely can’t copy/paste from a larger company’s playbook. “Don't over-engineer and don't try to mirror a process that worked for you at a later-stage company. Whether it's systems or processes, not everything you build today will scale 10x, and that's okay because you'll be continually reinventing as the company grows. Better to learn and then pivot and adjust quickly,” says Sylvia LePoidevin , Head of Marketing at Kandji.

16. Find problems, but bring solutions.

“When there’s ambiguity, think through the issue first and sketch out a plan — even if it’s just a rough idea. Give the decision-maker an idea to respond to rather than always asking them to come up with the solution. It is both a way to learn more and challenge yourself, but also can actually help you get a response much faster from the decision-maker,” says Samet Gray , Manager of Product and UX Research at FairShake .

Mark Kilens, VP of Content & Community, Drift

Upstart’s Cindy Smith concurs: “Take it upon yourself to own solutions to problems. It’s one thing to identify issues, there will be lots of them in startups, but what the company needs are owners and people to fix them!”

To get started, Mark Kilens , VP of Content and Community at Drift, suggests you look beyond your particular startup’s guardrails. “Folks that join startups need to become learning machines, taking elements from both internal and external forces to create and improve processes. We have to learn from external forces and use patterns that have worked for previous startups – and most importantly, try to keep things simple,” he says.

As an employee at a young and small company, you’re more than a 9-5 cog maintaining structure day-to-day, you’re building the functions that this company will use throughout its life. It’s a once-in-a-lifetime experience, so make the most of it.

17. Don't hoard your ideas.

“Don't aim for perfection before getting feedback. Do your research and have a point of view, but don't feel like it has to be perfect before you start to socialize the idea and get feedback. You'll waste a lot of time in your head and potentially fall behind if you try to get something perfect before gathering input from others,” says Christina Louie Dyer , Head of Social Impact at Lob.

As Alison Lee (Chief of Staff of Altitude Learning ) reminds us, that doesn’t mean going in whichever direction the wind blows.

Anchor on the vision, but hold assumptions and plans more lightly than you think you should.

18. Avoid the headaches that come from "I'll fix this later."

Liz Fosslien, Head of Content, Humu

“Set yourself up to scale. I've fallen into the trap of hacking something together thinking, ‘If this works I'll just fix the setup later,’ and then spending months importing a CSV into a Google spreadsheet, manually reformatting it line-by-line, redownloading it as a CSV, etc. Once you know you're going to invest in something, spend a little extra time upfront to put the right tools, processes, and documentation in place. You'll save yourself a lot of headaches down the line,” says Liz Fosslien , Head of Content at Humu . (Her previous Review articles on embracing emotions in the workplace and leading through crises are must-reads for startup managers and operators alike.)

To combat this “I’ll fix this later” mindset, John Zanzarella , VP of Sales for PerformLine , relies on a simple rule: “Build processes and systems for anything that you end up doing twice.”

Even if there are processes in place if you spot an opportunity to make critical tweaks, by all means, speak up. “Most policies, procedures or methods are not as fixed as you think. That process you don't like? Someone probably threw it together in 15 minutes and then moved on to the next urgent thing. If you don't like it, offer a way to improve it,” says Nick Hurlburt , Director of Engineering at Tech Matters .

19. Use benchmarks as your guide.

Anuj Bhatt, Head of Integrations, Tesorio

“Always seek and bring data to the table. If you’re at a company that’s not data-driven, push the culture to look at data and make data-based decisions. Understand what good, better and best is based on data benchmarks for your industry, business model and company stage. Seek peers and mentors for more reference points and case studies to bring back to the CEO and leadership,” says Shirak Zakaryan , Head of Finance and Operations at Troops .

And if you find there are no benchmarks to grasp a hold of, keep your head up and remember you’re not alone, says Anuj Bhatt , Head of Integrations for Tesorio . “Embrace the unknown. As part of a startup, you are in the trenches with everyone else when trying to figure out what that next right step is. And the definition of ‘right’ will change over time. Priorities will change, pivots may happen, projects may be abandoned, your feature might succeed or outright fail. Learn from the mistakes, celebrate the wins and remind yourself that you're in it for the experience,” he says.


If you’re joining a startup for the first time from a background at larger companies, it can be an adjustment working so closely with the top brass within a flatter org structure, where even the most junior folks are expected to act like an owner. As imposter syndrome creeps in, keep these tips in mind.

20. Remember to pick your head up and look cross-functionally.

“Even if you lead a particular function, it's still so important to understand what every other function is doing and how you can help. If you don't lead a function, there will be many times you feel like you do. Speak up — things can always be improved, and your team should want to hear your ideas,” says Pequity co-founder Warren Levobics. He adds an important caveat: “But be mindful of bringing up ideas at the right time. If your team is putting out an all-hands-on-deck fire, it's probably not the right time.”

Amanda Irizarry, Business Operations Lead, Clearbit

Amanda Irizarry , Business Operations Lead at Clearbit , echoes that the traditional guardrails between functions don’t exist when you climb aboard a startup. “Be comfortable with being uncomfortable. You may come across some uncharted territory and unfamiliar tasks — embrace that discomfort and see it as a learning opportunity. Having a ‘that's not my job’ mentality will not work. Be a team player and be willing to hop in on new things — again, that's where the learning happens!”

This applies even to more specialized roles, as Lob Senior Recruiting Coordinator Cecily Odiari learned. “My mentor shared feedback with me that I should try to look at how my work fits into the larger organization. In a role like mine, we can tend to be very detail-oriented and focus on a myopic view. It’s important to back up and learn how my work aligns with the organizational goals,” she says.

21. If you don't know who's in charge, it's you.

“Think like an owner. See the company as both a community and an asset, as your cause to fight for and your responsibility to protect — you will win the trust and respect of your colleagues. View working at a young company as an opportunity to create value across several different verticals. Be hungry to learn everything you can, and be brutally honest with yourself and your team about what skills you have, what skills you don't have, and what skills you're eager to learn,” says Kevin Caldwell , co-founder and CEO of Ossium Health .

Janna Biagio , Director of Customer Success and Community at Datapeople similarly advises a wide scope: “Being able to both see the gap and address the gap is the hallmark sign of an early-stager.”

If you're looking around the room to figure out who owns the improvement or scalability of processes, or has the responsibility of opening up communication lines between teams and team members — it's you!

22. Own the little things.

Ankit Gupta, Co-Founder & CTO, Reverie Labs

“Anyone in a startup is a critical team member (if you're not critical to your startup, your startup is hiring too fast and this is a red flag) and you should take ownership over the outcomes . For example, break out of the mold of ‘the timeline I was given is X’ but instead say ‘the timeline ought to be Y,’” says Ankit Gupta , co-founder and CTO of Reverie Labs .

John Zanzarella of PerformLine agrees that those little moments of ownership have an outsized impact. “ Think of it as your own business. If there is trash to empty, empty it. At an early-stage company, little things can make a big difference and when you treat the business as it’s your own you put the appropriate level of thought in every decision,” he says.

23. Don't hold on too tightly.

"Startups can change direction and grow very quickly, which means the role you're needed in at any given time may not be the role you expected. The more you can adapt to the needs of the company, especially in the early days, the more likely you are to grow with the company. Growth at startups often isn't linear, and some of the most successful people I know changed roles five or more times in the early years of a startup because they were willing to go where they were needed. This also helps you develop a broad skill set that can open up other opportunities down the road," says Erica Galos Alioto , Global Head of People at Grammarly.

Another tip from Humu’s Liz Fosslien: “ The moment you can, delegate. When you've built something from the ground up, it can be hard to hand over ownership of even a piece of it to someone else. You'll accomplish a lot more if you abandon your ego and let your team help you,” she says. For more here, head over to another ultra-popular Review article that launched a startup maxim: Give Away Your Legos .


Your emotions will run the gamut from the highest highs to the lowest lows — sometimes in the same week. And while folks are getting more comfortable embracing emotions at work or opening up about failure , often it’s approached from a retrospective lens, complete with a happy ending. In the moment, managing and harnessing your emotions before they get the best of you when chaos abounds is a tall order. Don’t just grit your teeth and white-knuckle it, take care of yourself and keep burnout at bay .

24. Find your edge

"Don't let imposter syndrome drag you down — you were hired for a reason. When I joined my first startup, I stepped into a newly-created sales strategy role, and I definitely had imposter syndrome. In my previous job, I had been on the other side of the table as a buyer, and I had no idea how to sell or support sales. But I did understand how buyers thought,” says Jon Zucker , PMM at ZEFR . “I found that chatting with sellers gave a great background on the roadblocks they felt they faced on a daily basis. By using my background as a buyer, I was able to help provide color to why those roadblocks existed and propose new solutions to solving them. I realized quickly that what I lacked in experience was far less valuable than what I had gained from my past life. You'll never totally fit a job description, and that's okay.”

25. Set your boundaries.

“There will always be more work, and it will fill 100 hours per week if you let it. That's not good for you or the company. Figure out your priorities outside of work, in collaboration with the key stakeholders in your life (partner, kids, etc). This means setting specific goals. For example, instead of ‘spend one-on-one time with my partner,’ agree to have dinner together at least five nights a week,” says Andrea Spillmann-Gajek of SV Academy. “Things will come up, it won't be perfect, but hold your boundaries as much as possible, and renegotiate with your life and work stakeholders if you find you're consistently unable to hold your boundaries . If something new comes up, does something else have to slip or get reassigned? Own that discussion and have it upfront. Do not just let things slip without communicating that. Own setting and communicating realistic timelines and priorities.”

26. Find a third party to share the load.

Howard Ekundayo, Engineering Manager, Netflix

“If you’re financially able, get a therapist immediately. Howard Ekundayo , Engineering Manager at Netflix .

“Don't get me wrong — this experience can be incredibly gratifying. With that said, the tested culture, best practices, regulations, and organizational structure that typically institutionalizes a healthy work-life balance is likely non-existent at a startup. To fill in these gaps, an objective, third-party source of support that encourages introspection, offers healthy coping mechanisms, and helps define boundaries can be instrumental in ensuring you're able to show up as your best self, confident and ready for whatever challenges come your way.”

27. Don't lose yourself along the way.

“Remember: your work won't love you back ,” says Humu’s Liz Fosslien. “Yes, it's amazing to build something from the ground up. Yes, an IPO can change your life. But don't lose yourself in your work. Your family, friends, and hobbies still matter. Make time for your personal life.”

As Pequity co-founder Warren Lebovics reminds us, it’s a constant balancing act. Take advantage of the moments when you can rebalance the scales.

There are generally two operating speeds at startups: 1) busy as hell, and 2) quiet as hell. There will be times when you need to sprint. There will also be times when there are lulls — take full advantage of those lulls.


In the thicket of countless deliverables, milestones and sprints, setting aside time for career planning and personal development can quickly fall by the wayside. Keep your eye on the horizon — and consider the steps along the way to reach those goals.

28. Capture milestones in your captain's log.

Mariam Khan, Senior Technical Onboarder, Wonderschool

Both Mariam Khan , Senior Technical Onboarder at Wonderschool , and Alison Albers , Customer Success Director at Time by Ping , used their transition to a startup as an opportunity to instill new healthy habits.

Something I try to keep up (after wishing I had done the same at my previous job!) is a weekly log . At the end of every week, I make a note of one thing I've done and one thing I've learned. Startups allow you to wear so many hats and contribute at so many levels that it's fun to see all of the ways you grow and all of the parts of the organization you touch over time,” says Albers. “And the learnings vary quite a bit — some are just fun facts I pick up about the team or company, but other learnings come from mistakes I've made. I've found that jotting them down at the end of the week is a helpful way to recognize them and move along without dwelling for too long.”

Khan also keeps a weekly commitment to chart her path. “I started scheduling a weekly time slot for myself to self-reflect on my professional development. This was something I regretted not doing at my last company and I wanted to use the startup as an opportunity to change.”

29. Advocate for your career goals.

Andrea Spillman-Gajek, Head of Growth, SV Academy

One more tip from Andrea Spillmann-Gajek of SV Academy: “As companies scale, your role will shift. There's a ton of room for upside, but you may need to advocate for yourself. You'll likely start as more of a generalist and then will likely specialize. What matters to you? What do you want to own, what influence do you want to have? Think about this both in terms of business areas (PR, product management), but also in terms of the work you want to do (IC, manage, consult),” she says.

30. Take on projects with an eye for the future.

We’ll end with one last piece of advice from Liz Fosslien: “When there's a lot to do, it's easy to ‘wear multiple hats’ to such an extent that you end up spread too thin and never build up a cohesive skillset. Remind yourself where you want to be in a couple of years, and try to take on projects that will help you get there. I've found it useful to break that down even further by listing your top five goals for the month,” she says.

Part of working at a startup is getting pulled in a million directions. Feeling confident about your priorities can help you make the progress that matters — and more easily say no.

Top startup leaders and operators share their best tips for new startup employees, including hitting the ground running, how to prioritize what to work on, and growing your career.

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The Product Strategy Stack — Reforge

The Product Strategy Stack was created by Ravi Mehta and co-written with Zainab Gadiyali. They have brought together product leadership experiences from Tinder, Facebook, TripAdvisor, Airbnb, and more. Apply for our next cohort to learn from Ravi and other Reforge Partners here .

As software has eaten the world, product has become the most important lever for a company's success. In the past, companies gained a strategic advantage by excelling in supply chains, logistics, manufacturing, and other operational capabilities. Today, companies win or lose based on the quality of their products—and this puts enormous pressure on product teams to not just deliver products, but deliver products that drive the company's strategy.

But strategy is often misunderstood. The word "strategy" has been stretched to a point where it is almost devoid of meaning. Too often, the terms "vision," "mission," "strategy," "goals," and "roadmap" get conflated into a jumbled mess—leaving product leaders without the context they need to focus their work on the difficult task of moving the company forward.

Sometimes, this lack of clarity is apparent. Product teams may know that they don't have a clear enough understanding of the strategy. More often, the lack of clarity manifests in hard to diagnose ways. For example, product teams may struggle to answer prioritization questions:

Should I prioritize building a new feature or optimizing an existing flow?

Should I prioritize closing more deals or extending existing contracts?

Should I prioritize building this tool in-house or license a third party service for now?

In answering these questions, product leaders may think to themselves: "prioritization is hard," "these tradeoffs are impossible to make," and "I don't feel confident in this prioritization." In many cases, the difficulty prioritizing these low-level execution questions is due to a more high-level problem.

Difficulty prioritizing is often a strategy issue, not an execution issue . It is impossible to make rigorous prioritization decisions when the guidance on how to do so is missing, unclear or disconnected from what you are trying to do.

This problem not only affects prioritization but also manifests in other hard to diagnose ways: muddied UX, miscommunication within teams, lack of coordination across teams, diminishing returns, product-market fit saturation, and negative impact on team morale. In many cases, these execution issues are the symptom of gaps in strategic thinking.

Gaps in strategy make it harder for teams to execute. This results in loss of opportunities. Execution becomes much easier when the strategy is clearly defined, communicated and connected to the company's mission and its day-to-day work.

In order to diagnose and fix these issues, we need to be able to track the issues back to the source. To do this, we can't think about "strategy" as some amorphous, all-encompassing concept. Instead, companies should think about the relationship between mission, strategy, roadmap, and goals as a stack of distinct concepts:

Company Mission - The world your company sees and the change it wants to bring to that world.

Company Strategy - The logical plan you have to bring your company’s mission into being.

Product Strategy - The logical plan for how the product will drive its part of the company strategy.

Product Roadmap - The sequence of features that implement the Product Strategy.

Product Goals - The quarterly and day-to-day outcomes of the Product Roadmap that measure progress against the Product Strategy.

The Product Strategy Stack.pngThe Product Strategy Stack.png

Product Strategy is the Connective Tissue

Importantly, each layer of the stack builds on the previous layer. Put another way, each layer is a prerequisite for the successive layer. We cannot have a company strategy without knowing our company's mission. We cannot have product goals without knowing our product strategy. Given this relationship between the layers, Product Strategy serves a critical role—it is the connective tissue between the objectives of the company and the product delivery work of the product team.

Tops Down = Definition, Bottoms Up = Evaluation

The Product Strategy Stack is a system we can use for both planning and execution:

Tops Down

Teams can work from the top of the stack down to 1) define the stack, 2) work at a progressively finer level to plan product execution, and 3) align the company to that execution plan.


In addition, teams can work bottoms-up to 1) communicate the status of execution and 2) track how well the product team's work is driving company-level objectives.

Defining Product Strategy.pngDefining Product Strategy.png

Slack vs. Discord: A Case Study

Before we take a closer look at the stack, let's look at an example by comparing the stacks of two different companies: Slack, the workplace productivity platform, and Discord, the messaging platform designed for gamers.

Different Missions

The missions for Slack and Discord are entirely different. Fundamentally, Slack is for work and Discord is for play. Slack's mission is to make people's working lives simpler, more pleasant, and more productive. Discord's mission is to give people the power to create belonging in their lives.

Different Company Strategies

These different missions fuel different strategies. Slack's strategy focuses on improving workplace productivity and Discord's strategy focuses on building communities, initially with a focus on gamer communities.

Product Strategy - Slack vs Discord.pngProduct Strategy - Slack vs Discord.png

Similar Product Strategies

However, once we get into the product, things begin to look more similar. The user experience for both products is surprisingly alike. A casual observer might mistake the apps for each other, if it were not for the different color schemes. The desktop clients for Slack and Discord use nearly identical multi-column layouts, with UI to select a particular space, select a channel within that space, and a chat window for that channel.

Although the mission and strategy for Slack and Discord are entirely different, there is significant overlap in the work their product teams have done. A PM at Slack and a PM at Discord might be working towards the same product goal, but in service of entirely different company strategies. Therefore, it is critical for roadmaps and goals to be tethered to product and company strategy rather than defined in isolation.

In certain cases, this may mean that PMs at Slack and Discord arrive at the same answer. For example, both products have the ability to react to a chat message with an emoji. Since both products have a social element to their mission, it's important to provide a lightweight way for people to react to each other within the chat.

In other cases, the Slack and Discord products will diverge to better align with the companies respective missions and strategies. For example, the products have a different emphasis for their 3rd party integrations.

Since Discord focuses on community building, it prioritizes features that will help its users feel a sense of community, such as integrating with Spotify so you can see what kind of music your friends enjoy. Since Slack focuses on productivity, it prioritizes features that will help its users become more productive, such as integration with JIRA so its users can easily file tasks based on a Slack discussion. Without a clear strategy, product leaders at Slack and Discord would not know which features to prioritize.

The Product Strategy Stack helps us solve one of the biggest reasons for startup failure—ambitious goals that are untethered to a clear strategy. Slack and Discord have been able to succeed in very different markets—not because of very different products, but because each aligned its product strategy, roadmaps, and goals to a well-defined company-level mission & strategy.

Before we take a closer look at each layer of the Product Strategy Stack, let's look at the problems the stack is designed to solve. There are four common traps teams fall into when defining product strategy.

Misconception #1: Goals = Strategy

???? The Product Strategy Stack defines a clear distinction and relationship between goals and strategy.

Goals are often conflated with strategy. Neither of these terms share a universal definition within the industry, nor do companies take time to ensure that the understanding of these terms is universal within their org. Strategy is the plan to achieve your goal—not the goal itself. Your strategy tells the team how they will win. The goals tell your team what winning looks like. For example, a chess player will have a detailed set of plans (i.e., the strategy) to win a match (i.e, the goal).

A company might mistakenly say "our strategy is to increase revenue by 20%." Increasing revenue is a goal, not a strategy. There could be multiple ways to increase revenue—such as entering a new market segment or doubling down on converting freemium to paid customers. How should the goal be achieved? This how is the strategy, which is not always clearly defined. Instead, companies should define both the goal and the strategy: "Our strategy is to increase revenue by 20% by expanding into two underserved markets, Mexico and Brazil."

Misconception #2: Achieving Goals = Achieving Strategy

???? The Product Strategy Stack provides a tool to help teams track how well product team's work is driving company-level objectives.

Companies want to put in place the right incentives to reward employees for adding value. However, it's much easier to evaluate whether or not a goal was achieved than to evaluate whether or not a strategy was achieved. Teams are thus incentivized to prioritize goals that are often short-term.

However, achieving goals does not necessarily mean that a company has made progress on its strategy. Goals may have been defined in isolation or based on incorrect assumptions. In addition, strategy is subject to external factors, such as competitive moves and market conditions. Companies must be vigilant about understanding strategic progress beyond achieving short-term goals. If companies lose sight of that strategic progress, then they will eventually get disrupted over the long term.

Kodak invested in Ofoto, a photo sharing app in 2001, before Facebook existed. Ofoto was going to help Kodak expand their print business by making it easy for their customers to print digital images. Kodak achieved the goals they set for Ofoto, but they failed to achieve a digital photo sharing strategy. Kodak missed the opportunity for digital photography to become their new business, and filed for bankruptcy a few years down the road.

Misconception #3: Product Strategy = Company Strategy

???? The Product Strategy Stack clarifies the relationship between company strategy and product strategy.

A common mistake is for product leaders to assume that product strategy is the same as company strategy. In doing so, they under-appreciate the role that sales, marketing, support, and other functions play in company success. Product has become more central to strategy as logistics/operations have been commoditized, but product is not the exclusive driver. By focusing on aligning other functional strategies with product, companies can better position themselves to win in the market.

From the outside, Stitch Fix may seem like a styling app that better understands your styling preferences over time and uses this knowledge to deliver the right set of clothes to you. However, in order to be a be profitable business, Stitch Fix needed not just a great interface that was easy to use and delivered a great match, but also a great operations strategy that would bring operational costs down. Stitch Fix heavily invested in data science to optimize their clothing inventory and logistics management . This helped them better predict how much inventory to purchase and how to move it out of the warehouse faster—product strategy and operational strategy worked together to deliver a valuable and hard-to-replicate offering.

Misconception #4: Goal → Roadmap

???? The Product Strategy Stack defines the Product Roadmap as a prerequisite to Product Goals.

Many companies believe that teams should set goals first, then define the roadmap to meet those goals. The thinking goes something like this: As a company, we know what we want to accomplish (i.e, the goals) and we'll empower our teams to figure out how to do it. However, this rarely works in practice. In the absence of any roadmap, teams are rudderless. This "goals first" approach incentivizes teams to do whatever it takes to achieve short-term goals, often at the expense of a focused feature set, clear UX, and long-term progress towards the strategy.

Instead, goals should flow from a product roadmap that has been designed to deliver value to users. As a result, product teams are empowered to move away from "seeing what sticks" to a customer-centric approach to product development.

Stripe has rapidly expanded its offerings from its core payment product to a set of related products and services, each reinforcing its strategy. These offerings include Stripe Atlas (a service to help startups incorporate) and Stripe Press (a publisher of books about economics and technological advancement). A "goals first" approach would have encouraged product leaders to focus on the short-term task of optimizing payment adoption and conversion, not the strategic task of expanding offerings into initiatives that may take years to pay off. By helping online businesses set up faster, and sharing ideas which help build better businesses, Stripe is better positioned to bring more businesses online and turn them into Stripe adopters. This drives Stripe's mission to "increase the GDP of the Internet".

Frame 4642.jpgFrame 4642.jpg

Company Mission

The world your company sees and the change it wants to bring to that world.

Company Mission is at the top of a Strategy Stack. The Company Mission defines the company's purpose. A good Company Mission is aspirational and has emotional appeal—it motivates your team to come to work every day and your customers to embrace the role your company plays in their lives.

Great companies are mission-driven and seek to align strategic initiatives to their mission. For example, Google's mission to "organize the world's information and make it universally accessible and useful" is manifest in its products such as Google Search, Maps, Android, and Gmail.

Company Mission is the most durable layer of the stack—typically lasting for years before it is outdated. Your Company Mission shouldn't be limited by execution considerations. Often, a Company's Mission is aspirational beyond its scale (some 10 person companies have as grand a mission as a 10,000 person company). Your Company Mission should only change as the company's view of the world changes (sometimes because the company has made its dent in the universe!). This typically happens over the course of years, whereas the rest of the strategy stack changes on a monthly/quarterly/annual basis.

Some companies define both a vision and a mission. In this case, "vision" is a description of the world your company sees, and "mission" is the role your company plays in that world. For simplicity, we can think about vision and mission as a single layer in the stack. The vision and mission work hand-in-hand to paint an aspirational picture of what your company is designed to accomplish.

In 2017, Facebook changed its mission (established in 2010) from "Making the world more open and connected" to "Give people the power to build community and bring the world closer together." In a letter Mark Zuckerberg published, he acknowledged the shortcomings of the earlier mission statement. With a pivot in their mission, Facebook made more strategic investments in building infrastructure and tooling for users to create and engage with communities.

Company Strategy

The logical plan you have to bring your company’s mission into being.

The next layer in the stack is Company Strategy. Your company strategy flows from your mission. It defines the plan by which your company will achieve its mission and and generate value from that mission. Often, companies think about strategy in quantitative terms (our strategy is to achieve a CAGR of 20% over the next 3 years). However, this conflates strategy (the plan) with goals (the measure of progress).

Instead, strategy should be rigorously logical. It clearly defines the sequence of steps your company needs to take, and it should account for the company's position in the market, unique strengths, and the set of situational risks/assumptions that factor into the plan. Importantly, strategy must be defined granularly enough to be executable—it must provide enough context for teams to be able to define effective roadmaps and goals.

As we saw with Slack vs. Discord, Company Strategy plays an important part in defining what makes a company successful. Get this right—because a well-defined strategy empowers and aligns the entire company.

Company Strategy changes more often than Company Mission. Typically, a well-defined strategy will last 1-3 years, and companies should re-assess their company-level strategy once a year.

Example: Quora's mission is to share and grow the world's knowledge. Google's mission is to organize the world's information and make it universally accessible and useful. Both companies have similar missions, but operate out of completely different company strategies. Google's strategy involves indexing the Internet to provide easy access to knowledge when a user searches for it. Quora's strategy involves accessing knowledge in a structured question-and-answer format.

Product Strategy

The logical plan for how the product will drive its part of the company strategy.

The next layer of the Product Strategy Stack is its namesake. Product Strategy serves an important role in the stack—it is the connective tissue between the objectives of the company (its mission and its strategy) and the work of the product team (product roadmap and goals). Like Company Strategy, Product Strategy is a rigorously logical and executable plan. The Product Strategy defines how the product will drive the company's strategy and enable the company to achieve its mission. As a result, an effective product strategy cannot exist without a clear understanding of what the company seeks to achieve. An effective product strategy cannot exist in isolation.

Product Strategy changes at the same pace (or slightly more often) as Company Strategy. Typically, a well-defined product strategy will last 1-2 years, and companies should re-assess their product strategy once a year.

Quibi and TikTok had similar missions and strategies. Both companies sought to provide bite-sized entertainment uniquely well-tailored to mobile. But, the two companies implemented completely different product strategies. Quibi's product strategy was to enable Hollywood's top creators to bring their craft to mobile devices, and TikTok's product strategy is to enable its own users to create and share snackable content. Quibi's product strategy failed to capitalize on the social nature of mobile devices and the rising importance of the creator economy .

Product Roadmap

How you sequence product strategy over time.

Once a team has defined a clear Product Strategy, the team is ready to plan out how that product strategy will be implemented over time. The result is a Product Roadmap that guides the team in sequencing its efforts. Proper sequencing is critical to success. As we discuss in the Product Strategy program, sequencing enables product teams to unlock compounding value by prioritizing the learning and product outcomes that will have a disproportionate downstream impact.

The Product Roadmap should come before the Product Goals. The Product Roadmap provides a thoughtful, proactive framework that product teams can use to organize their work. A well-defined Product Roadmap helps teams focus on the important task of long-term value creation for customers. In contrast, product teams operating without a roadmap (or tasked with developing a roadmap in response to goals) will be tempted to achieve goals by any means necessary—resulting in a product that is inconsistent, over-optimized, and caters to the short-term needs of the company.

Product Roadmaps tend to be defined on a 6 month to 1 year time horizon. They play an important role in quarterly goal setting and should be revisited every quarter.

Netflix - By 2007, Netflix observed a rapid decline in the DVD market. Instead of investing in improving DVD rental sales, Netflix pivoted to provide a streaming service "Watch Now." By doing this, Netflix replaced their DVD rental strategy with a streaming strategy and fundamentally changed its roadmap. Their roadmap defined an important sequence. Netflix launched its streaming service by working with partners to deliver an initial catalog of 1,000 shows and movies in 2007. It wasn't until 2013 that Netflix launched its first Originals and pivoted from a streaming aggregator to an original content producer.

Product Goals

The outcomes that measure strategic progress.

The final layer of the Product Strategy Stack is Product Goals. The stack is a system that enables product teams to translate an aspirational company mission into effective product goals, with Product Strategy acting as the connective tissue between those concepts.

Product Goals are set within the context of the Product Roadmap and Product Strategy. They are not valuable in and of themselves, but as a measure of progress towards a pre-determined plan that generates value for the customer.

A good Product Goal is objectively measurable. Most often, a goal is defined as an impact to a quantifiable metric—such as "increase first day return rate by 5%". However, this doesn't need to be the case. Sometimes, the best way to measure progress is to set goals for deliverables—such as "launch new onboarding flow by March 5th." Teams should set goals that reflect their understanding of strategic levers. If a team does not know how to move a metric, then they should not commit to moving that metric. Instead, they should commit to product work that increases their level of understanding.

Product Goals are typically set quarterly and tracked on weekly or daily basis. Teams should revisit Product Goals at least once a quarter to both measure achievement of the goal and assess whether that goal has led to strategic progress. Sometimes, missing a goal means that something needs to change upstream from the goal—often the Product Roadmap or Product Strategy. Other times, missing a goal simply means that the goal was defined incorrectly. In this case, the Product Roadmap and Product Strategy stay the same, but the team should redefine the goal to better measure strategic progress.

In 2013, Tripadvisor added Instant Booking to the product. Up until that point, Tripadvisor had helped travelers pick a hotel based on the opinions of hundreds of millions of travelers, but travelers needed to leave the product to book those hotels. At the time, one study found that Tripadvisor influenced more than 60% of hotel bookings—bookings happening outside of Tripadvisor's product (primarily through online travel agents and hotels that advertised their prices on Tripadvisor).

The Product Strategy for Instant Booking was clear: make travelers' lives easier by giving them the option to shop and book directly on Tripadvisor. But, the product team struggled to make Instant Booking successful. The problem was that the team's Product Goal was not updated to match the team's new Product Strategy. The team was tasked with maintaining or increasing average revenue per traveler, and Tripadvisor's price advertising business continued to be very good. As a result, the product team faced a contentious decision: optimize Instant Booking at the expense of revenue or maximize revenue at the expense of strategy. In this case, the team achieved its Product Goal but did not make enough progress towards its Product Strategy.

The Product Strategy Stack is a powerful tool to help you connect your product team's work with company objectives. However, it can be difficult to diagnose strategy problems. Often, these problems surface as low-level execution issues. In these cases, it's helpful to use the layers of the Product Strategy Stack to work backwards towards the root cause.

Let's look at the symptoms of a poor strategy stack, common strategy gaps that many companies face, and an example of a well-defined and well-executed strategy stack.

What does a poor Product Strategy Stack feel like?

Difficulty prioritizing

The most common symptom of a poor strategy stack is difficulty prioritizing. For example, a team may struggle to evaluate the trade-off between optimizing a flow for new users vs. catering to the needs of power users.

Miscommunication within teams

Difficulty prioritizing often leads to a break-down of communication within teams. Some teammates will want to go one way, and others will disagree. Without proper context, people will rely on their individual opinion, rather than align to a shared purpose.

Muddied UX

The lack of clear priorities can take its toll on the user experience. A clear strategy leads to a simple UX. When the strategy is not clear, the team may make inconsistent or compromised choices. Over time, this can have a disastrous impact. The history of tech is littered with bloated products that got disrupted by more opinionated and streamlined upstarts.

Lack of coordination across teams

Without a clear overarching strategy driving roadmaps, teams across a company can get easily misaligned and prioritize different things. This is especially true when teams prioritize different outcomes which make sense locally for their group but do not move the company forward. For example, an enterprise sales team may implement a complicated feature for a single customer, while the core product team is focused on streamlining the product to better support SMBs.

Diminishing returns

In the absence of strategy, teams tend to focus on short-term optimization of metrics rather than long-term value creation. In time, teams over-optimize. They reach a "local maximum" and hit diminishing returns on their efforts. Each "win" is less impactful and harder to reach.

Product-market fit saturation

Eventually, companies hit the limits of their product-market fit when strategy is poorly or incompletely defined. Teams cannot improvise their way to new sources of product-market fit . Instead, product leaders need to anticipate saturation and proactively expand their product market fit to reach new audiences and/or new value.

Negative impact on morale

Over time, a poorly defined strategy weighs heavily on a strong team. The lack of clarity makes a team's work burdensome. They may lose pride in shipping a product that feels unfocused, or feel defeated as diminishing returns set in. They may feel they are not getting the context and resources they need from leadership. Eventually, high performers will churn if they don't believe in or can't understand the strategy.

Great vs. Incomplete vs. Poor Product Strategy Stacks

A Product Strategy Stack is one of three types: Great, Incomplete, or Poor.

Great stacks have clearly defined components which are stacked in order: Company Mission, Company Strategy, Product Strategy, Product Roadmap, and Product Goals. Great stacks help build great companies.

Incomplete stacks usually have one or more components missing. Often this component is company or product strategy. Working on incomplete stacks leads to misaligned priorities across teams and shipping product with unclear strategic direction.

Poor stacks may have some components missing, but most importantly - the components exist in silos and lack connection with each other. Poor stacks make it almost impossible to set concrete goals. Managers are often found filling templates without a clear understanding of strategy.

Great vs Good vs Bad Product Strategy.pngGreat vs Good vs Bad Product Strategy.png

Clubhouse Case Study

The Product Strategy Stack can help us both define our own strategy and analyze the strategies of other companies. Let's apply the Product Strategy Stack to a recent success story to better understand how companies translate their strategy into product direction.

Clubhouse Company Mission

In less than a year, Clubhouse has grown from a small experiment in audio chat to a social network attracting millions of users, including well-known guests such as Elon Musk and Bill Gates. Clubhouse has described itself in a way that helps us understand its Company Mission:

Clubhouse was designed to be a space for authentic conversation and expression—where people can have fun, learn, make meaningful connections, and share rich experiences with others around the world.

Importantly, this statement makes no mention of "audio" as a defining trait of the company. "Conversation" is a central part of its mission, but we need to look further down the stack to understand how audio plays a role.

Clubhouse Company Strategy

The following helps us understand Clubhouse's Company Strategy:

Clubhouse is a new type of social network based on voice—where people around the world come together to talk, listen and learn from each other in real-time.

From this statement, we can reverse engineer the key points of Clubhouse's strategy:

The company is creating a new type of social network to fill a whitespace that exists in the market.

Voice is the central element of this new type of network. Earlier social networks capitalized on a defining feature of mobile—an integrated camera. Today, audio has become an increasingly important part of mobile, due to the ubiquity of Airpods and growing role of audio as an interface. The founders of Clubhouse explained their focus on voice: "Clubhouse is voice-only, and we think voice is a very special medium. With no camera on, you don’t have to worry about eye contact, what you’re wearing, or where you are."

The company sees its users playing an active role, with equal opportunities to listen and talk*.* This blurring of the line between creator and audience is critical to Clubhouse's strategy.

The company explicitly defines its audience as "people around the world," highlighting the global and inclusive nature of its community.

Clubhouse Product Strategy

This Company Strategy provides context for the app's Product Strategy:

When you open the app you can see “rooms” full of people talking—all open so you can hop in and out, exploring different conversations. You enter each room as an audience member, but if you want to talk you just raise your hand, and the speakers can choose to invite you up. Or you can create a room of your own. It’s a place to meet with friends and with new people around the world—to tell stories, ask questions, debate, learn, and have impromptu conversations on thousands of different topics.

Clubhouse Product Roadmap

Now, a product team can take this product strategy and define a clear roadmap. Some items could be:

Identifying friends who are currently in a room to help people pick which room they want to join.

Easily enabling a person to move between the audience and the stage.

Robust profiles to help people get to know speakers and attendees.

A way for people to identify their interests and explore rooms based on those interests.

Tools to help moderators and speakers attract an audience.

We can see a progression from our aspirational mission to executable roadmap items, each of which reinforces the company's strategy.

Clubhouse Product Goals

Finally, we can define Product Goals that measure strategic progress. Some goals could be:

Maintain an average speaker/attendee ratio of 1:10

50% of new members join a room with 1 or more existing connections

80% of daily active users have an opportunity to speak once a day

These goals measure how well the product helps people engage in authentic conversations and make meaningful connections—they are defined relative to the company's objectives, not in a vacuum.

Based on this analysis, we can see that Clubhouse has a complete, tightly aligned Product Strategy Stack. Each feature the company has implemented ladders up to a well-defined product and company strategy.

Should Clubhouse add audience interactions like reactions and chat?

Let's look at how we might use the Clubhouse Product Strategy Stack to make a prioritization decision. Many live experiences, such as Facebook Live and Twitch, give audiences the ability to interact with creators by sending text chat and reactions. Demand for this type of feature is already surfacing on Clubhouse—some participants have taken to rapidly flashing their "Mute" button to simulate clapping.

Clubhouse's Product Strategy Stack helps us ask the right questions:

Will audience interactions lead to meaningful connections?

How do audience interactions reinforce or hinder Clubhouse's voice-only product strategy?

Will audience interactions help bridge the gap between creator and audience?

Will audience interactions make Clubhouse more or less inclusive?

What do you think? Should Clubhouse add audience interactions? If so, what type of interactions make sense?

The Product Strategy Stack serves an important role—it doesn't provide the answer, but it does provide a framework that leads to an answer aligned with the company's mission and strategy. It helps us resist the temptation to reflexively respond as feature ideas come up, and encourages us to treat each feature as a stepping stone towards the future the company wants to build.

Clubhouse Product Strategy.pngClubhouse Product Strategy.png

The Product Strategy Stack is just the beginning. Every function within a company must be aligned in order for a company to achieve its full potential. Technology, marketing , operations, and other functions need to define their functional strategies, roadmaps, and goals to ladder up to the company's strategy and help the company achieve its mission. We can see this level of alignment in a successful company such as Apple, where every element of the business reinforces a singular strategy and mission. Achieving this level of alignment isn't easy, but the strategy stack can help.

Product vs Marketing Strategy.pngProduct vs Marketing Strategy.png

Want to go deeper on Product Strategy? Apply to become a Reforge member to participate in our Product Strategy, Product Leadership, Scaling Product Delivery and other programs.

Ravi Mehta Ravi is a Reforge Partner, creator of the Product Leadership program, and leads Product Strategy . Ravi was the CPO at Tinder, Product Dir at Facebook, and VP Product at Tripadvisor.

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about 1 year ago
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Understanding SAFEs and Priced Equity Rounds: Fundraising + Investors, Legal, Safes

YC Partner Kirsty Nathoo gives the lowdown on several different ways to capitalize your company and how those impact founder equity and cap tables overall.

Watch if:

  • you are raising money
  • you aren't sure how startup investment documents like SAFEs work


Facilitator: I would like to introduce Kirsty who is going to talk in much detail about SAFEs, notes equity, and the like. Kirsty.

Kirsty: Thank you. All right. Good morning, everybody. So, my name is Kirsty Nathoo. I'm the CFO, one of the partners here at Y Combinator. And I have now worked with probably over 1,500 companies in terms of getting them Incorporated, doing our YC investments, and then seeing them through their subsequent raises either on convertible instruments or on equity rounds. So, I've seen kind of a lot by now. And so this presentation is to give you some understanding of some of the things that people don't necessarily understand when they're raising money and to hopefully help you avoid some of the pitfalls that we've seen...some of the mistakes that we've seen founders make. So, the key message in all of this presentation is that it's important that you understand at all stages of the company's lifecycle how much of the company you've sold to investors and, in connection with that, how much therefore you also own. The thing that makes this complicated is that most companies will raise money on convertible instruments first, and because those convertible instruments aren't yet shares, it's not immediately obvious for a lot of founders how much of the company they've sold. So, I'm going to talk through some of the mechanics of that and help you understand how all that works so that you don't get surprised when it's too late and you can't do anything about it. So, the other thing that you should also be aware of is that a lot of companies and a lot of founders will just say, "Oh, I don't need to worry about my cap table. My lawyers deal with my cap table. I don't need to worry." And actually, that's a really dangerous statement. Again, you should make sure that you're understanding this. It's your responsibility as the CEO or as the founder of the company to understand all of this. And there's lots of ways that you can maintain your cap table. There's lots of ways that you can keep track of this. And the simplest form is just a spreadsheet. All it's going to show is who owns how many shares and that's it. That's all you need at the beginning. But there are other services out there that can help and I'll include them on a list of resources after the presentation, but there's tools like captable.io, and Carta, which also help for you to keep track of these things.

Okay. So, these are the three sections that I'm going to talk about. First of all, I'm going to talk about SAFEs and particularly for U.S. companies. Most companies will raise money first on SAFEs or some other convertible instruments, which I will talk about briefly as well. And I know Jeff mentioned the SAFE last week in a little bit of detail, but I'm going to go into much more detail on that and also how the sections of the SAFE works. The S stands for simple. And so hopefully, you will believe me with that and you will all be ready to understand what's going on in that SAFE as you come out of this presentation. Then we'll talk some more about dilution again so that you can see. We're going to walk through the lifecycle of a company from incorporation up to raising a price to series A round so that you can see how things change over that period. And then I'll give you some top tips on other items to do with raising money. All right. So, first of all, the SAFE. So, let's cover what it is and then we'll go through the details of how a SAFE is built up. So, as I said, SAFE, the S stands for simple. The rest of it is a Simple Agreement for Future Equity. And put simply, it's an instrument where the investor will give you money now in exchange for a promise from the company to give shares to the investor at a future date when you raise money on a priced round. There are minimal negotiations with a SAFE. Really, there's only two things that you're probably going to negotiate with the investor, which is how much money you're going to...how much money the investor will put into the company and at what valuation cap. So, really, those two things are the things to negotiate. Whereas when you compare that with a priced round, there's a whole raft of things to negotiate. And that's what makes the price round a lot harder to close and to raise money on them than a SAFE does. So, that's why often companies will start with a SAFE and then when they get to the point of being able to raise more money and they have a lead investor, which they negotiate with for the price round, then the SAFEs when they convert into shares will piggyback on the terms that has been negotiated with the lead investor in the price round.

The other thing to bear in mind is that a SAFE is not debt. So, some of you will have raised on what's known as convertible debt. That's a different instrument. Debts has generally an interest rate attached to it and it has a maturity date where the debt needs to be repaid. SAFEs have neither of those things. So, it's important to understand that there is a distinction between the two instruments, but in terms of conversion in the way that they convert in a priced round, there are some similarities. So, this is the first section in the SAFE. And this paragraph actually includes pretty much all the key details that you need to understand in a SAFE. So, it talks about in exchange for payment by investor, you're gonna...the investor is putting in a certain amount of dollars around this date. And down here, the valuation cap is some number. So, really, those two blanks are the two negotiating points. This paragraph here is something that we've added just recently in our newest version of SAFEs. And this is something that will hopefully help you so that once you've read our SAFE that we have available on our website once, if there's this paragraph on the SAFE, then you know that you have read the SAFE. The idea behind this is that if anything changes in the SAFE, either the company or the investor cannot say this paragraph. It can't say that it's the same as the SAFE that's on the Y Combinator website, and so you'll know as a founder that you should be looking at it more closely to see what's been changed. So, this is just something to keep your eyes open for if you receive a SAFE from an investor.

Okay. So, the anatomy of the SAFE is pretty straightforward. It's only five pages in length, so it's not very long. We've tried really hard to keep the language not too legal so that it's easy to understand. And really, it's split into five sections. Section one talks about what happens in various different sets of events. And so, most of the time, what's going to happen is there will be an equity financing at some point in the future. And so the first part of the section talks about what happens then? How does the SAFE convert? Or there might be a liquidity event, i.e., the company might get sold before the SAFE converts. So, it also addresses what happens if the company is sold whilst the SAFE is still outstanding. Or the company might decide to close down whilst the SAFE is still outstanding. So, it also addresses that. So, those are the three real key events that might drive change from the SAFE. So, it addresses all of those. And often we get questions from founders or from investors saying, "But what happens? What happens if?" And actually these three sections are the answers to pretty much all of those questions. And then there's a couple of other sections where we clarify the liquidation priority, which just means who comes first in the queue to be repaid in these different situations and also, clarifying that the SAFE actually terminates, i.e., it does no longer exist if any of the top three events happen. So, that section is kind of your instruction booklet. If something happens in your company, that's the section you look at to see what happens to you SAFE.

Then the next section, the section two is just the definition section. So, anything that were referred to within the SAFE will be explained in section two. So, if you're not sure what the company capitalization definition is, you go to section two to look at that for an explanation. Section three are the representations that the company makes to the investor. So, it's saying things like the company is duly formed, it's correctly formed in Delaware. Section four is the representations that the investors make to the company, so it's things like the investor saying, "Yes, I agree, I'm an accredited investor." And then section five is kind of legal boilerplate language that needs to be in there. So, really, from your point of view, the sections that you really need to understand are sections one and section two. Obviously, you need to know what you're representing in section three as well, but those section one and section two are the key, key parts. And that bit is only three pages long of the SAFE. So, I'm pretty sure you can all read three pages and understand what's going on. So, I encourage you to do that. Okay. Some of you may have heard, in the last couple of weeks we announced a move to a different type of SAFE. We've really... We've introduced the concept of post-money SAFEs. And it's important that we understand what post-money means. What it basically means is, after all, the SAFEs have converted, what happens at that point? And we'll go into that in a little bit more detail in a moment, but it's easy to get confused about what post-money means here, but it's after all the SAFEs. And the reason why we introduce these is that we wanted to make it easier for founders to understand the dilution that they were taking, how much of the company they'd sold to investors, and so how much less of the company they owned? It was all... And it's a lot easier to understand that with post-money SAFEs than with the previous SAFEs that we had which were known as pre-money SAFEs.

Okay. So, basically, when we're talking about pre-money and post-money, we're talking about the same thing. It's just a different way to express it, to explain it. And so in both a priced round down for SAFEs, the formula stays the same. So, the pre-money valuation plus the amount of money raised equals the post-money valuation of the company. Okay. So, if you have a $5 million pre-money valuation and you raise $1 million, then the post-money valuation of the company is $6 million. Okay? And that's important to remember in a moment. But really, that's as simple as it gets. So, then, based on that so that you can understand how much of the company you sold when you were raising money on SAFEs, the formula is just your owners or the ownership of the investors, the ownership that the investors will take is their amount raised divided by the post-money either valuation in the case of a priced round or valuation cap in the case of a SAFE. So, in our example, before, if the investors were putting in $1 million and the post-money valuation was $6 million, then they will own 16.67% of the company. Does that all make sense to everybody so far? Okay. Good. So, I'm going to talk only about SAFEs with valuation caps here to keep things simple, but just be aware there are other different flavors of SAFEs that you can use and that you may have already used or that you may find that you'll use in future. So, there may be the concept of a discount instead of a cap. So, instead of capping the valuation at say $6 million, it says there's a 20% discount on the series A price. There's also an uncapped SAFE, which basically just says, "I'm going to put money in now as an investor and when you do a priced round, I'll get the same price as the priced round investors are going to get." That's pretty uncommon because the investors who are putting in money early want some kind of bonus for putting in the money early. So, it's pretty unlikely that you'll use one of those. And then finally, there's a SAFE that's uncapped with most favored nation clause, which is basically what that says is, "I'm not going to agree a cap right now, but if you raise some money from some other investors who do have a cap and those terms are better than my terms, I get their terms as well as an investor." So, this one can sometimes happen if you're raising money very early on and you don't really know what the cap is and maybe, you know, you just want to punt it for another month or two, but it just creates a little bit more admin for the founders because it's another thing that they have to keep track of. So, we see them sometimes, again, not all that common. By far the most common is just the valuation cap only.

All right. So, now we understand SAFEs and how they're made up. We're going to talk about dilution and understanding how your cap tables work. All right. So, we're going to walk through this process. So, we're going to start with our company's incorporation, which Carolyn talked about right at the start of the startup school course, I believe, so, hopefully, this will not be anything new to you. Then we're going to talk about what happens when you raise money on SAFE some post-money SAFEs, then we're going to talk about what happens as you hire people and start to issue equity to employees. And then the company is going to do a priced round. And so what happens to the cap table at that point? And now I'll warn you. This is starting to get into the math section of the whole thing, so turn your brains on and keep concentrating. All right. So, incorporation. So, let's just assume it's a really simple company, there's two founders, and they split their shares equally between the two of them. So, in this example, each founder owns 4.625 million shares. So, there's a total of 9.25 million shares issued and each founder owns 50%. That's pretty straightforward, right? And so at this point in order for them to own those shares, the founders have done the paperwork, they've granted those shares through a restricted stock purchase agreement and there's vesting on those shares as was talked about with Carolyn earlier in the course. Okay. So, then the next thing that's going to happen is this company raises some money on a post-money SAFE, and they raised from two investors. So, the first investor comes in quite early and they put in $200,000 at a $4 million post-money valuation cap. And then a little bit later on, investor B comes in, puts in 800,000 at an $8 million post-money valuation cap. So, if you remember back to our formulas, the ownership that investor A has at this point is the amount of money that they've put in divided by the post-money valuation cap which gives them 5% of the company. Same for investor B, 800,000 over 8 million, which gives them 10% of the company. So, in total, the founders at this stage sold 15% of the company. So, even though this doesn't change the actual cap table because these aren't shares at this point, this is just a SAFE, this is just a promise to give shares in future, the founders should know at this stage that they have sold 15% of the company. And if they've sold 15% of the company, then they can no longer own 100% of the company. So, now instead of the founders earning 100% of the company between them, they've been diluted by the 15%, so they're going down to 85% of the company. So, it's important to have that in your brain when you're raising money because whilst the cap table, like I say, doesn't change, the fact that you've just sold 15% of the company is an important fact and it's an important thing to know because you want to make sure that you're not selling too much of the company because you know that there's a lot of future fundraisings that are going to happen with the company and therefore, there's going to be more future dilution. Is everyone happy with how we've got to that 15%? Yes, the question.

Man: So, the founders are the only ones getting diluted at this. The earlier investor doesn't get diluted.

Kirsty: Right. So, the question is, it's only the founders that are being diluted at the moment. And yes, that's exactly right because that's the construct of the post-money SAFEs. All the latest... The latest SAFE investors don't dilute the earlier SAFE investors. It just dilutes the existing shareholders. And at this stage, it's just the founders who are the existing shareholders.

Man: Does it make sense to have shares in the treasury so that they can probably anticipate the dilution?

Kirsty: Okay. So, the question is, does it make sense to have shares authorized, but unissued, I think is what you mean? So, at this stage, it doesn't necessarily make a difference as you'll see in a moment. You actually create new shares that you're going to issue to these SAFE holders when they convert. So, at this stage it's fine to just have the shares that the founders have and maybe some that you want to give out for hiring.

Man: Why you were saying D has a different post-money valuation cap?

Kirsty: Well, in this example... So, the question is, why do they have different post-money valuation caps? And so in this example, you know, it could be for any number of reasons, but in this example, we're assuming that, you know, this one happened maybe a month after incorporation and maybe this one happened six months after incorporation and more has gone on in the company and so there's slightly less risk, and so the company has been able to negotiate a different cap. But things change through the company and it's totally fine to have different caps because as you can see from here, you just calculate everything separately and then add it all together. Okay. So, a company has raised $1 million. First thing it's probably going to do with that money is hire some people. And when you hire employees, you're probably going to give them some equity. And so in this example, the company creates, at this stage, a option pool, otherwise known as an AESOP or an employee incentive plan. There's lots of different names for it. And in this example, they have created a plan or a pool that has 750,000 shares in it, and they've issued out of their 650,000 shares to early employees. So, this has now changed their cap table because they've issued shares. And so the fact that there's more shares being issued means that the cap table changes because we now have more shareholders. And so now we have a total of 10 million shares that have been... Fully diluted basically means the combination of issued and set aside in the option pool in this case. So, now we have our founders instead of owning 100% have 92.5% of the company. And the option plan in total is 7.5% of the company. But remember, those SAFEs. So, these founders don't actually have 92.5% because they have also sold 15% of the company. And so actually, they own less than the 92.5%. They actually own 85% of that, which is about 78.6%. So, again, this is where it gets dangerous for the founders. If they forget about the SAFEs, the founders are sitting there saying, "Well, I own 92.5%. This is great. I own still loads of the company." And they have forgotten about the SAFEs and the dilution they're about to take from that. So, again, it's really important to keep track of how much you've sold on your SAFEs so that you can do that calculation and say, "Actually, I don't have 92.5%. I have 85% of that because I've sold 15% of the company." But it's also these numbers have been diluted by those SAFEs as well. So, as you'll see in a moment, these numbers change as well.

Okay. So, now we're going to fast-forward about, let's say, a year. The company is doing well. It's raised the price round. And it has a term sheet for the price round which says that the pre-money valuation of the round is $15 million. And they're going to raise a total of $5 million dollars of which the lead investor, which is the investor that they do all of the negotiations with is going to invest $4 million. And so if you remember from our formula at the start, the post-money valuation is the pre-money valuation plus the total raised. So, the post-money valuation is 20 million. The other thing that gets negotiated as part of the priced round is the option pool increase. So, generally what happens is that the investors in the series A will say, "Okay. We're gonna put some money in. We know that this money is going to go towards hiring. So, we want you to create an option pool for all the new employees that you're going to employ and give equity to in advance so that it's sitting there ready for those employees." And so, usually, you'd see that the option pool is about 10%. It might go up to about 15%. But anything more than that is fairly non-standard. Yes. Where did that come from? Over there. Okay. Yes.

Man: Is the 10% coming from the founder or collectively?

Kirsty: So, the question is, is the 10% coming from founders or collectively? And you'll see in a moment is going to dilute the existing shareholders and the SAFE holders, but it doesn't dilute the new money.

Man: So, how is the option pool represented on the cap table? Is it represented on the cap or what form does it use?

Kirsty: So, the question is, how is the option pool represented on the cap table? So, if we go back to here, we just show it so that we have the options available from the pool that haven't been issued is a line, and anything that has been issued from the pool is a separate line. The reason why we show those two things separately is that these shares are considered outstanding, they're considered issued, whereas these aren't. And so that's the difference between what... That's what fully diluted means. It means outstanding shares, which are these two lines, plus any shares reserved under the option pool. All right. Where are we? So, quick math question for you. What do we expect that the lead investor will own? What percentage of the company do we think the lead investor is going to own after the round closes?

Together: Twenty percent.

Kirsty: Twenty percent, yeah, for the lead investor, 25% in total for all of the series A investors. Okay? Because the lead investor is going to put in $4 million divided by $20 million gives 20%. So, you'll see in a minute in the cap table that that all works through in the calculations, but it's always good to just do that quick check so that you can sense check what's going on in your cap table. All right. So, in the priced round where you have or where the company has raised money just on post-money SAFEs, and then has raised a price round, three things will happen. And these three things happen at the same time in terms of the documents, but in terms of the calculations, it's important that the order is correct. And so the three things with post-money SAFEs is that the first thing that happens is the SAFEs convert into shares, then an option's pool is increased or created if there isn't one already, and then the new investors invest. And you'll see in a minute how that all works through with the calculations. Now, one other thing that starts to get a little bit confusing here is one of the sort of the lingo of how this works is there's often the lawyers and the founders will talk about the SAFEs being included in the pre-money. And what that is basically saying is that when the new investors invest and they calculate their price per share, the calculation includes the shares from the conversion of the SAFEs. So, even though the SAFEs themselves are referred to as post-money SAFEs, that's talking about how the SAFEs convert. This sentence where the SAFEs are included in the pre-money is talking about how the series A price is calculated. So, it gets a little bit confusing because it's talking about post-money on pre-money, but that's just something to bear in mind when this happens. And obviously, at the time that you're raising a priced round, you're going to have a lot of advisors, you're going to be working with lawyers who can explain all of this to you as well.

All right. Let's go through these three steps then. So, the first step is our SAFEs are going to convert. And we already know because we've already done the calculation that these SAFEs are going to convert into 15% of the company. And so 15% of the company means 15% of the total fully diluted shares, both common shares and preferred shares. So, investors get preferred shares, which have a different set of rights and privileges than the common shares, which is what the founders and employees get. So, we have enough information here in the cap table that we have here to calculate what the actual number of shares are here because we know that they're going to be 15% of the total issued shares. So, we know that this is 85% of the total issued shares, so we know what our total is. And then once we get the totals, we can work out what 5% of that is and what 10% of that is. So, after a bit of algebra, these are the numbers that come through. So, now at this point, we have 11,764,705 shares in total because it's preferred shares plus common shares. Our first SAFE investor who we said was going to have 5% has 588,000 shares, which represents 5% of that 11.7 million. And our second SAFE investor has 10%. Now, it's important to remember that this is partway through a whole process. It's partway through those three steps that are happening in a priced round. And so actually, you're never going to see your cap table looking like this. This is just one step in the calculation, but it's just to break out so that you can see where that 15% has come from. And you can also see here that when we were saying that the founders instead of owning 92.5%, they owned about 78%. You can see that here because they've been diluted by that 15% as have the employees with their options. So, this is the post-money part of the post-money SAFEs after the SAFEs have converted, but before anything else has happened in relation to the priced round. Got it? Okay. All right. So, the next step is... We have a question. Okay.

Man: So, the percent of... If you can go back. So, does the 5%, 10% have anything to do with the post valuation and the SAFE stage?

Kirsty: Okay. So, the question is, does the 5% and 10% have any...

Man: Like, the SAFE stage.

Kirsty: Yeah. Okay. Yeah. So, the 5% and 10% is based on the valuation cap in the SAFE. And so assuming the priced round valuation is higher than the valuation cap in the SAFE, then this is just looked at with reference to the SAFE and it's just connected to the existing shareholders. If in the very rare circumstances that the priced round is lower than the valuation cap on the SAFE, then, actually, the SAFE investors will get a better deal because they will sell their share...their SAFEs will convert at the same price that the series A investors have which has a lower price than the valuation cap. So, actually, there is the potential that this can go up. This percentage can be higher if the price round is valued at a lower price than the cap on the SAFE.

Man: Does that not trigger the conversion if it's not?

Kirsty: It still triggers the conversion even if the valuation is lower because it's the fact that they've raised money that triggers the conversion, not the price. So, it's just something to bear in mind that when we're talking about this, the post-money SAFEs and in this example that you're selling 15% of the company. There is potential that it could be higher, but it's a pretty rare situation where you raise a priced round that's priced lower than the valuation of the SAFEs. And it's also something to bear in mind of trying not to negotiate too hard on the SAFE to make your caps too high because if you raise money on 100 million dollar cap, but then you can only raise money on a $25 million priced rounds, let's say, then you're actually selling more of the company to those SAFE holders than you expected.

Man: If the founders had convertible debt at this point in time, where does that ...?

Kirsty: Okay. So, the question is, if there's convertible debt, so, this would happen here as well. So, it would... The calculation for convertible debt is slightly different, but it would happen in here and you would show them just as other investors because they would be converting into shares in relation to the priced round as well.

Man: What if you went crazy and actually sold 85% of your company and the valuation is lower at the end? What happens can shareholders?

Kirsty; Well, so that's the big question. So, the question is, what happens if you go crazy and sell 85% of your company? Yeah. I mean, that's the problem. The founders can raise too much money on too low valuation caps when they're raising on convertible instruments. They don't realize how much dilution they're taking. And then they get to their priced round and they look at their cap table and they're just like, "What? I only own, you know, 10% of the company now." And unfortunately, there's not a huge amount you can do at that point because you've already entered into the contracts with the investors to do this. And so that's why it's important to not get into that situation in the first place.

Man: You had made a point earlier that the SAFEs are priced...if the cap is higher than the priced round, then you'll do actually a lot better. Can you explain that 'cause I know the SAFE...

Kirsty: Yeah. So, the question is how the cap works in relation to the priced rounds. So, if the priced round is higher than the cap, then the SAFE converts at the cap, which means that the SAFE holders basically get more shares for the same amount of money than the series A investors get. So, in that situation, that's how you know what percentage you're selling. But in the situation where the cap is higher than the priced round, then you would never... It wouldn't be fair to the SAFE holders to have them getting a worse deal than the series A investors because they put money in earlier. And so what happens then is that the calculation, if you go back to the section one of the SAFE where it says what happens in a priced equity round situation, it says, "If the cap is higher than the priced round, then they just use the priced round price to calculate their shares." And so because that priced round price is different, these numbers will go up.

Man: So, you don't lose much, right? The founders don't lose much.

Kirsty: Well, it depends. It depends on the delta. So, if it's only a little bit different, then, yeah, maybe instead of 15%, they've sold 16%, let's say. But if the delta is really big, then it could go up. But again, there's something to be aware of, it's in the current environment, it's pretty unlikely that people raise priced rounds at lower valuations than their SAFEs just because when you're raising money on SAFEs, the investors won't agree to invest at a ridiculously high valuation because they want to get that bonus of the lower price when their SAFEs convert. Yep. Okay. Let's keep going. All right. So, this step you're gonna have to trust me on. So, the next step in the intersection is that the option pool is increased. And this is actually quite a complicated calculation. It gets a little bit circular. And I'm going to be sharing a model with everybody so that you can see how this works if you're interested. But basically what you're trying to do is to get to 10% of the post-money shares are sitting available in the option pool. And in this example, we're going to increase our option pool by 1.695 million. And you'll see in a minute that that flows through into the cap table and you'll see that 10%. But just trust me on this one, because this is quite a complicated calculation. And then step three, the new money invests. So, this is where we have our series A investors putting in $5 million. And there's a couple of calculations that happen in there. So, the price per share, this calculated for the round is the valuation divided by the capitalization. So, this is the pre-money valuation, 15 million. And when we're talking about capitalization here, what we're meaning is this is the total fully diluted shares after the SAFE conversion and the option pool increase. So, that's why this is step three because our SAFEs have converted and our option pool has increased. And so we have our 10 million shares that we had issued, 9.25 to the founders, 725,000 in the options pool, plus the SAFE conversion shares, plus the increase in the options pool. And you'll see the numbers in a moment. So, then the number of shares that the series A investors get is the amount they're investing divided by their price per share. So, those are the three calculations that you need to remember for your series A.

So, here we go. Here are those calculations. So, we're saying that the capitalization, we have our 10 million shares that were already issued, we have our 1.76 million shares from the conversion of the SAFEs, and we have our increase to the option pool of 1.695 million. So, that gives us 13.5 million total shares. We divide our $15 million by those shares to get a new money price. So, this is the price that the investors will pay for their shares of $1.114. So, that means that the $5 million of new money that's coming in will buy 4.48 million shares. And the lead investor because they're putting in 4 million will get 3.59 million of those shares. So, these are the calculations that get worked through. This is what the cap table then looks like post-money. So, this is now... Everything has been done in the round. So, we still got our founders, we still got our options. Those numbers haven't changed. These numbers changed because it's increased by 1.695 million. And you can see here that now this is 10% of the total shares, which is what we were targeting, because that was agreed in the term sheet. We have our SAFE investors who... The number of shares haven't changed because we had already done their calculation for the conversion. But their percentages have changed. It's gone down a little bit. And the reason why those have gone down is because the SAFE investors have been diluted by the series A money and by the increase in the options pool. And then we have our lead investor and our other Investors in our series A. And as you remember, when we did the quick back of envelope calculation or the point of getting the term sheet, a lead investor owns 20%, our other investors own 5%, so in total, they have 25%. And so the founders up here now own 51.5%, which is a big jump from the cap table that they originally were looking at where they owned 92.5%. And that's where this gets complicated. If you don't understand your dilution, if you don't understand how much of the company that you've sold, when you get to this point and you look at the cap table and you're saying, "Oh, no, I only own 30% of the company. How did that happen?" There isn't a lot you can do because most of that dilution has already happened because you've raised money from the SAFEs...because you've raised money on SAFEs. And so that's why it's super important that you keep track of this dilution because at this point, there isn't a lot you can do about it. All right. Moving on. So, a couple of top tips for you. We've mentioned briefly about convertible notes, and that's just another instrument that you can use to raise money in the early days. Often we find companies outside of the U.S. will raise money on convertible debt. There's nothing wrong with it. It is a little bit more complex just because you have to deal with interest that accrues on it and maturity dates, but companies deal with that. But what I would say is try not to have a combination of SAFEs and convertible notes just because it makes things a little bit more complicated in the calculations. So, if you start raising on debt, then probably stick with it, but ideally, start with SAFEs because it's actually making your life a little bit easier.

So, again, we are now recommending that companies use post-money SAFEs, but there are pre-money SAFEs available and some of you may have already raised on pre-money SAFEs, that's totally fine. It just makes it a little bit more complicated to understand dilution. But you can still do the same back of envelope calculation to get a ballpark figure even though it's not exactly accurate. If you have raised money on pre-money SAFEs, then it's fine to come to in future raise money on post-money SAFEs. The calculations just get a little bit complex, but it's totally doable, so that's fine. Don't panic. I would suggest that you probably move on to post-money SAFEs even if you've raised money on pre-money SAFEs just so that you can keep track of your future dilution. And a quick word on optimization in all of this. When you're raising money on SAFEs, don't try to over-optimize for the cap. It gets really easy to start seeing this as a company. And you start talking to your friends and you start saying, "Well, I've raised money on a $6 million cap," and they say, "Well, I've got an $8 million cap, and so I'm more successful than you are." And as Jeff mentioned last week, fundraising is not the be-all-and-end-all, it's a means to an end. So, just don't try to over-optimize, don't try to push this up too far because you're negotiating with investors who do this all day and every day and you're probably not somebody who negotiates this all day and every day. And actually, when I run the numbers on the calculation that we've just been through, if we'd have changed that 800,000 that was raised on an $8 million cap to a $10 million cap, the ownership at the close for the founders would have been 52.7% rather than 51.5. So, it's not actually a huge difference, especially if you have two or three or four co-founders. And the extra pain for negotiating that $2 million cap is probably not worth it. Just take the money, do what you need to do with the money, and make the company a success instead. Okay. So, in conclusion, use post-money SAFEs where you can. Hopefully, all of you can use those going forward. Understand what you're selling with the company. So, make sure that you keep track of your dilution and understand where the company is being sold. And finally, again, don't over-optimize for valuation caps because it doesn't actually make as much difference as you think it's going to make. Okay. So, we have a couple of minutes for some more questions.

Man: So the only you care about is the voting power and not the money?

Kirsty: Sorry. Repeat that. Is the question, do you care about voting power?

Man: You care only about voting power and not about the money you get.

Kirsty: Yeah. So, the question is, don't you care more about voting power? And that's definitely something that gets negotiated as part of the series A term sheet. And so where the voting power tends to come from in here is the composition of the board. And so generally, you want to keep the founders having a majority of the board. And so often the series A, what you'll find is that there's, you know, if there's two founders in the company, you'll have two founders on the board and you'll have a representative of the lead investor on the board. And so the founders still have the majority. And that's really whether the voting power comes from.

Man: How important is to find the lead investor and how should one approach to finding a lead investor?

Kirsty: Okay. So, the question is, how important is a lead investor? So, when you're raising money on SAFEs, you don't necessarily need a lead investor. The beauty of the SAFEs is that as soon as somebody agrees to invest in your company, you can say, "Great, here's the SAFE, sign it and give me all my money." So, even if that's only a small amount of money, that doesn't matter as long as you've negotiated how much they're putting in and what the valuation cap is. So, for SAFEs, it doesn't matter at all, but you don't have a lead investor. At the priced round stage, it is important that you have a lead investor because there's so much to negotiate that you don't want to be negotiating with a bunch of people. You want to negotiate with one person... Oh, well, one investor who is setting out the terms because they're putting in, in this example, $4 million after the 5, and then everyone else gets pulled along with those same terms.

Man: Okay. What is the maximum amount of company you should give up on a seed round or a SAFE round?

Kirsty: Great question. So, the question was, what's the maximum amount that you should give up in a seed round or a SAFE round? If we just quickly go back to this. Okay. So, this is actually a fairly standard cap table that we'd expect to see where the founders own just over 50%. We see that in the vast majority of cases coming out of a series A priced round. And if you think about it, these numbers are set. Generally, in pretty much any series A round, the lead investor is going to want round 20% and the total amount sold of the company is going to be around 25%. The options pool is going to be around 10% post-money. So, that's already 35%. So, then, really, all you have to play with is what the SAFE investors get to drive what the founders own. So, the more you sell to the SAFE investors, the less the founders are going to own. So, in this example where we were selling 15% of the company, that's probably about the range that you want to be looking at. Obviously, every company has a different circumstance. And getting some money in less good terms is better than getting no money in at all. So, there's always, you know, discretion that has to be made. But yeah, this is a fairly standard cap table about 15% on SAFEs, about 25% to the lead, to the series A investors, and about 10% options pool with the rest of the founders. Okay. One more question and then we've probably got to wrap up. So, let's go to the back over there.

Man: If you take a bunch of money for bootstrapping... Do you recommend that be part of the pre valuation or should it also ..?

Kirsty: Okay. So, there's two things there. First thing is, what happens if the founders are putting in money themselves? And the second thing is, should they put in SAFEs? Not SAFE notes because that makes me grouchy because SAFE is not debt, so you don't call them notes. So, that's one of the things to bear in mind. They're just SAFEs. So, the other question was around the founders. Well, there's different ways you can do that. Founders are putting in money, they can just loan the company money. And so then, you know, if they're putting in $25,000 and then they raise $1 million from their SAFE investors, they could repay the founders. Or there are situations where the founders would put that money in on a SAFE and so they potentially get some...or they would in that situation get some series A preferred shares when the SAFEs converts. So, you can do either way. All right. I think we finished on time, so that's good news. Thank you very much for listening. I know this stuff is difficult.

YC Partner Kirsty Nathoo gives the lowdown on several different ways to capitalize your company and how those impact founder equity and cap tables overall.

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Stripe Atlas: Guide to pitching your startup


Many outcomes important to startups are gated by pitching : the ability to quickly tell someone about your company and make them intrigued enough to want to learn more. You pitch your company every day to everyone—potential employees, investors, and prospects.

This is not a natural skill for many founders. Stripe Atlas has helped a few thousand companies get started and assisted dozens with refining their pitches. We distilled these lessons to help the community. They are focused on pitching investors, from the perspective of an early-stage company.

We’ve worked with Y Combinator to update this guide with perspective from YC CEO Michael Seibel, YC and YC founders who started their companies on Stripe Atlas.

Put yourself in the shoes of the person receiving your pitch. They’re well-educated, savvy about startups, and sharp about business. They want to like you—this is a job for optimists.

They won’t know this field as well as you do. They have not breathed the problem space like you have. The jargon and industry assumptions may be new to them.

Explain assumptions in your pitch like you would to a smart friend in a different field. Be explicit about connecting dots.

They’re also highly likely to be overwhelmed.

Yours will not be the first pitch they’ll see today, or the last. Reviewers at top accelerators and early-stage VC firms see hundreds of pitches every day, generally only for about two minutes each. Your objective is to pack as much positive signal into those two minutes as possible and ensure the reviewer retains one core idea to communicate to someone who asks about you.

The review process continues for days on end. It is exhausting. Far too many pitches retread the same tired ground.

Help your reviewer quickly understand (and remember!) what parts about your company are exceptional .

Most businesses are not impressive at conception. That is what early-stage means. Reviewers will use you as a proxy for whether you will plausibly create a massive business given the opportunity.

The hardest or most impressive thing you’ve ever done, even if not strictly professionally-related, should be in your application. This is especially true if it is “off the beaten path.” The applicant pool is replete with founders who have been conventionally successful in conventional ways. They were good students, they studied hard, and they went to excellent schools.

Many of them are going to have a very difficult time adjusting to life in a startup, where there is no set curriculum, there are no points awarded for effort, and there is no teacher establishing and enforcing deadlines.

Investors know this; they’ve seen it before.

If you’ve ever succeeded in something which is obviously difficult or impressive, say so. Olympic-level swimming doesn’t sell enterprise software but it suggests you are no stranger to hard work over long timescales. You don’t have to be a Nobel Prize winner, either–complex projects with many moving parts which you brought to completion over obstacles are also interesting, since that’s a startup in a microcosm.

If you’ve made money on the internet before, even in ways you’re vaguely embarrassed of (affiliate marketing, eBay arbitrage, etc), that is very useful signal.

Mention the most impressive thing you’ve ever built. Startups make products and convince people to use them, and the first skill is considered harder to learn from scratch; hopefully you’re not starting from scratch.

If you can’t point to either an impressive project or sterling engineering credentials, aggressively sell your technical ability by pointing to specific evidence of it. In general this will sound less like “I have a degree in a technical field” and more like:

I worked in a chemistry lab in grad school. We needed four pages of paperwork to buy $8 of chemicals. I bubblegum-and-duct-taped spreadsheets and a Python app together; no more paperwork. It spread virally in the chemistry department. The Purchasing department wanted to shut it down but couldn’t because people loved it too much.

The sort of engineer with this anecdote probably wouldn’t get hired at Google, but the anecdote demonstrates enough skill to ship software, enough product sense to make something people want, and a certain scrappiness in the face of constraints. Those are more important than the fact that that app probably took a day to write and has two dozen users total.

Don’t sell yourself short ! We all have doubts, insecurities, and places where our skillset isn’t where we want it to be. You don’t have to belabor these in your application. Remember, you only have two minutes. Describe what you’re doing and what you’ve accomplished, not what you couldn’t do and couldn’t accomplish. Failure is only as relevant as the insight you drew from that experimental result.

You’re likely applying as part of a team. Explain how the team knows each other–a key risk factor for startup teams is that they will break up during one of the many, many stressful moments the next few years will bring, and close relationships mitigate against this risk. Explain how your skills complement each other. If your team is heavily skewed in a particular direction (all hard-core technologists but no demonstrable sales ability, for example), either explain how being lopsided helps obviate weaknesses in other areas or explain your plan for bringing on someone to help you balance the team.

You also want to convey a sense of urgency and velocity . Successful startup founders work on projects which take years but also cover a heck of a lot of ground in any two-week period. If you’ve ever done an ambitious project on a ludicrously short timeframe, that is a good story to tell. Your current project should show an “[impressive amount of work done] given the period of time you’ve had to do it”, to quote Michael Seibel , who is a partner at YC.

Include a concise description of what exactly you are building and who should use it.

The most common problem, by far, among the pitches Stripe Atlas reviews is a lack of clear detail about what is being built. Reviewers use ability to describe what one is doing as a heuristic to determine whether one can successfully do it.

This pitch says nothing, in 18 words:

COMPANY will help e-commerce stores sell more products using cutting-edge AI-enabled algorithms and machine learning.

This doesn’t evince enough understanding of either machine learning or e-commerce to make a reviewer think the person who wrote it could successfully build this product. It also doesn’t say what the product actually is . Be particularly explicit about what the end-user experience looks like. Your reviewer is likely an early adopter and product enthusiast; they want to be able to envision themselves using the product.

Here’s the same product, in the same 18 words:

COMPANY built Google’s typeahead search box as a Magento plug-in. It boosts search-to-purchase conversion and AOV.

This is packed with concrete, compelling detail . This let the investor immediately visualize the product, by comparing it to a familiar one. It says a product or prototype exists (note the past tense on “built”). It mentions the tech stack (Magento) and the market for the product (non-technical SMBs who use Magento). It demonstrates that the founders understand e-commerce as a business model. It gives two compelling reasons to use the product. It also avoids marketing fluff (like “cutting-edge”), which pitch-weary reviewers are utterly immune to. This pitch makes the reviewer want to know more .

Clarity is particularly important when you’re tackling recently popular ideas, like blockchains or machine learning. Some founders interested in it might be world-class experts; many more read about it in the newspaper, and cannot discuss it in more depth than a newspaper article. You want to quickly demonstrate that you’re not just another founder chasing the fad.

When you’re talking about your product , you want to describe exactly what you have now and what is single-digit weeks away. You can include longer-term aspirations when talking about your market .

You can almost never go wrong with stating facts and making those facts more concrete. You are expected to be an expert in your space, or on your way to becoming one. If you know the number, say the number. If you can avoid a flight to abstraction by including specific details, give the specific details. This helps establish that you are indeed informed enough about this field and market to spend the next few years of your life improving it.

Investors are optimists. They’ll project success for your business and try to envision what the success case looks like. A company whose success case is too small can be an excellent business but a poor investment.

Venture investors are looking for companies which can sustain revenues of hundreds of millions of dollars per year, minimum. “Niche” products where the ceiling is millions of dollars are only interesting to the extent they unlock adjacent, bigger markets. If you’re building Altair Basic, give some thought to convincing the investor “Today, it’s an interpreter for hobbyists. Tomorrow, it’s an operating system for all microcomputers–we’ll call it Windows.” You don’t have to fill in the blanks between Windows 1.0 and present-day Microsoft; who could possibly have known that in advance?

Many investors want to invest in not just a winner in a large market but the winner. You want your success case to result in you dominating the market, not sharing it. This means both that you need to displace current players and that your product or go-to-market strategy need to be able to build a moat against someone doing the same to you.

A fragmented market which could be centralized is always interesting. Taxis before Uber or hotels before Airbnb are both great examples; the core innovation in both cases was a transformatively better product which had strong network effects. This turned geographically disparate many-players markets into a single worldwide winner-take-most market.

Some markets are obviously billion dollar markets without elaboration: cancer medication, search engines, online advertising, etc. If your market is not obviously a billion dollar market, show a sketch of math on why it is (or a citation to a credible source that says it is) or an argument as to how winning your niche market means you’ll win a larger, more attractive market.

Fermi estimates are good ways to concisely demonstrate market size and quality of analysis. Start with a tight bound on the number of customers there are. Multiply by your share of the market (given success). Multiply by how many interactions they’ll have with the product per year. Multiply by the revenue (or margin, if margins are slim in your industry) associated with each interaction. Although you might think claiming a larger potential customer base is better, you’re better off claiming a tight, well-defined customer segment; this suggests that you’re likely to aggressively optimize your product and marketing for them and win them, rather than making a mediocre attempt at reaching everyone and delighting no one.

A thumbnail sketch is good; a rigorously tuned financial model is probably overkill. Leave the reviewer with the impression that you’re able to make good snap judgments about opportunities; you’ll be doing that a lot.

Doing a startup means you are going to spend several years learning every nook and cranny of a problem space. You should already be thinking about this problem, in detail, and doing your research, both in reading voraciously and in talking to potential customers.

Make it obvious to your reviewer that you’ve already started this work.

Your reviewer is smart but likely not an expert in your space. Reading your pitch should teach them things, including things which are not obvious to a well-educated individual. Much like conversations with customers, a novel insight leaves someone with a reason to remember you and think of you fondly.

For example, if you’re selling learning management software to startups:

Traditional learning management software is optimized around the needs of companies with long-tenured white collar employees, like hospitals, or high-turnover blue collar employees, like food service workers. Nobody has a good solution for startups undergoing hypergrowth, because they resemble neither population. 100% growth in headcount yearly means 50% of your engineering team, finance department, and management are new to their job and this fact never changes . That’s why our product is focused on customized crash courses for white collar employees.

“Accountants at startups have similar tenure to fast food cashiers” is a striking fact. Most people, even those in startups, have never had to think about that before… and the implications come quickly after it. Of course continuing education for normal accountants is not responsive to their needs. Now that you’ve demonstrated that insight, you can talk about how it drives specific product, marketing, and sales decisions.

Your pitch should also explain how your take on this space is unique. Acknowledge your competitors–if you don’t have any, that suggests that either you’re targetting a very unattractive market or (more worrisomely) that you haven’t done even minimal research on the space. Explain how you’re different and what that accomplishes for you.

We’ve built Heroku for Powerpoint decks; you edit text (Markdown) locally and then view your presentation online. Customers currently use Powerpoint or Keynote, but their carefully built presentations break at display time, since they often don’t control the machine or projector they’ll display on. Google Sheets is better at consistent display, but the online editing experience is terrible. We let people edit in an environment they’re familiar with–any text editor–but since we compile the presentation to HTML and Javascript it is guaranteed to work anywhere with a modern browser and an internet connection.

There are many great businesses in the world that are not great startups. People who make equity investments in startups do so because they believe there is a small chance that the company grows to be massive.

Investors remember what the current giants of the industry–Google, Facebook, etc–looked like in their earliest days. It was not typically like a well-rounded business run by a competent operator which was doing pretty much everything pretty much acceptably. No, the huge companies of today looked like they were shoestring operations doing almost everything wrong run by very unlikely people… but they had a little seed which was just irresistible.

Facebook was a hacked-together toy which could do basically nothing, and yet, it spread to everyone who touched it like wildfire. Google was just another search engine in a world that had dozens, but it was so much better.

Many pitches look like “business plans”–an overview of every aspect of the company. Business plans, as an institution, can’t decide to optimize for breadth or depth and so optimize for shallow verbosity. You have very, very limited bandwidth. Focus it on the things you are great at.

Understand that, while the eventual goal of the enterprise is to make a lot of money, investors understand that they’re looking at acorns, not trees. You don’t have to show profitability now, and focusing overmuch on your timeline to getting to it suggests misunderstanding of what investors want. You are selling growth, growth, and growth. Less than half of companies accepted to YC in a recent batch had revenue , to say nothing of profits, as of their application.

Being able to talk about the economics of your business is great! Definitely do, particularly if they are attractive! But the most attractive economics are the ones which suggest that you’re able to grow. For example, if you are capable of calculating your unit economics in e.g. a food ordering business, knowing that you are profitable on a per-order basis is a very positive thing; show that math. If you can calculate customer acquisition costs given a channel and demonstrate that it could be scaled upwards, that’s wonderful.

If your revenue for this month exceeded expenditures by $2,000, on the other hand, that’s not all that interesting. Similarly, plans on how you’re going to shave a few hundred dollars off your budget by refactoring your app or changing hosting are not interesting. You can’t cut costs into becoming Google.

There are three hurdles regarding your metrics: do you know what you should be tracking? Are you actually tracking it? Are the numbers you have exceptionally good relative to the amount of time you have been working?

You should know the common metrics which startups in your industry or which use your business model are judged by. A16Z has written extensively about startup metrics . You can also ask more experienced friends or colleagues in similar businesses. Don’t reinvent the wheel; your industry already has prior art that everyone knows how to quickly evaluate.

If you have shipped a product, you should have in-product analytics installed so that you thoroughly understand the use of your product. In addition to increasing the rate at which you can improve your product, this will let you demonstrate confident mastery of user behavior. This makes you more credible to investors.

Consider this insight: “60% of our users immediately invite their teammates, because collaboration on a team is the key value proposition for this; that’s why users migrate to us from Excel.”

Cite metrics correctly , especially revenue. Do not cite gross merchandise volume (GMV) as revenue; if you facilitate a transaction between two parties and collect a fee then the total transaction is GMV but only your cut is revenue. Do not cite one-off payments for a long service as revenue in a particular month; an annual contract for e.g. software might be invoiced in March and collected in April but the revenue is recognized evenly over the period of service, not all in March or April. Fudging revenue suggests malevolent intent or incompetence.

You might be so early in your company that you don’t have good instrumentation built yet to report metrics. This is common, but you should at least demonstrate understanding of the metrics to convey that you will make data-driven decisions in the future.

If you have “traction”, highlight your traction. Get used to this word; it is a vague term of art but you’ll be asked about it incessantly for the next few years. The best definition of it is “quantitative evidence of product/market fit.” Definitions are diverse because businesses are diverse–both Apple and Berkshire Hathaway are worth billions of dollars but one look at their websites will tell you they value very different things.

Startups often ask us what numerical targets reviewers are looking for. This is difficult to generalize about, because they’re not static targets. Reviewers want evidence of great progress given the stage you’re at and hints that you will accelerate in the future.

You don’t need every number to be stunning, but there should be some evidence that you have something working and special. At Snap it was that users opened the app an average of 7 times per day (when most apps struggle to pass the “toothbrush test”–twice a day).

Your reviewer will read literally thousands of data points today–the average pitch includes more than 10. No one can remember that many arbitrary numbers, so reviewers compress them to “zero”, “non-zero”, and “impressive.” Impressive is in the eye of the beholder, but since people find it useful to have numbers, here are some rough estimates for where very early-stage startups level up from “great; they shipped a product” to “excellent; something is probably working about their customer acquisition.”

For B2B SaaS sold on the low-touch model, like Basecamp : $10,000+ monthly recurring revenue; 100+ active, paying accounts

For B2B SaaS sold on a high-touch model, like Salesforce : At least one pilot for a software product (not a consulting engagement) worth $50,000+ or more actively underway; some evidence of a sales pipeline (1~2 letters of intent signed, etc)

For mobile apps : Hundreds of thousands of free users or thousands of paying users, ideally with rate of acquisition increasing over a period of at least several weeks

Ad-supported websites : Millions of visitors per month, ideally with sustainable growth in traffic over a period of at least several weeks

The longer you’ve been working, the higher the bar is. “We have 20k active users” sounds much more impressive for a company which launched last Tuesday than it does for one which has raised an angel round and been active for 3 years. This suggests a way to (truthfully) help reviewers see your project in the best possible light: if you have been interested in a project for a while but have gone full-time / pivoted / “gotten serious” / etc more recently, date your startup to that more recent milestone rather than the earliest date you had thoughts in the shower about it.

These targets may strike you as high. They are high. At least some companies in the applicant pool have them. If you do not, you need extra effort on the qualitative parts of your application to demonstrate that you have the skills, drive, and opportunity to achieve these numbers quickly and then grow explosively from them.

Include a prototype if possible. Prototypes demonstrate the ability to ship working software. Many fewer early-stage tech entrepreneurs than you would expect can successfully ship working software.

You get two minutes. You might get as many as five or ten if your written pitch suggests that your company is likely quite interesting. This is not enough time to evaluate an entire software product.

You need to make the reviewer’s first few minutes with your software absolutely sing .

Nobody has ever written in their comments on a company “Wow, their sign-in screen blew me away. I want to invest in that sign-in screen.” Give people a link that drops them into a fully-authenticated session on a pre-populated account which already has dummy data in it.

This is not a training session . You don’t have to go through the standard first-run experience or explain to them how to use every feature of the software. You should, instead, immediately show the most impressive interaction or output of your application. Often, will involve showing the goal state of your application and allowing the user to work backwards. For example, if you were pitching email marketing software, you’d start with a finished or almost finished email in your application and ask the user to try editing or sending it.

Fake things liberally. If there is an interaction which is asynchronous or requires the involvement of another party in real use of the software, fake an immediate response. (You can be totally transparent that you’re doing this.)

Bring a level of design and polish appropriate to what you are doing. Many accelerators specifically prioritize founders who have “product sense”, which is a non-specific blend of artistic taste, keen appreciation for good user experience, and an understanding of what the best products in a market already do. You should make sure to demonstrate product sense, particularly if you are in a market where it is fundamental to the success of your company, such as e.g. B2C mobile apps.

Some companies can’t reasonably demonstrate a prototype—Stripe Atlas has seen pitches for everything from medical devices to sewage systems. If you have a physical product, consider video or photos of it. If you are too early-stage to have functioning software, mockups will at least let you show that you have good design and product sense.

Many pitches have a sense of humor, optimism, and joy for life in them. This is a good thing to have if it is natural for you; don’t feel the need to make your writing more stilted simply because that would sound more professional. If you’re not naturally blessed with the gift of gab, you can work on your storytelling later; just write the facts like you’d describe them to a smart friend.

Can you have too much fun in a pitch? Well, while many investors look for a certain cheeky irreverence for meaningless rules , remember that startups are a workplace and your investors operate under substantial public scrutiny. Don’t tell stories which suggest that you have catastrophically poor judgment, particularly not in a fashion where you expect the reader to applaud you for poor judgment.

Risk-taking is encouraged in startups; stupid risks are not. Walking into the office of a person in a position of authority without a meeting scheduled is a risk, but it suggests ambition and sales ability. Describing crimes you’ve committed generally suggests poor judgment.

Silicon Valley has a subtle culture around warm introductions (“intros”). As Marc Andreessen explains :

Getting a warm introduction to a VC is a basic test of networking skills. … It turns out that the skill required to network into a VC is the same as the skill required to network into a customer, into a supplier, into a distribution partner, into the press, into an executive search firm.

If you have a high-quality intro available to you, ask for it. A high-quality intro needs both of two things: it needs to come from someone who is credible to the decisionmaker, and it needs to include specific evidence of you being above the market average in some respect.

This is a high quality intro if it comes from e.g. a person that an investor has previously funded:

I worked with $ENGINEER at a previous company. They are among the most effective individuals I have ever met. Our CTO estimated that moving to continuous deployment would take a team of people six months; they solo shipped it in two weeks.

Any intro from someone who is not known-to-be-credible from the perspective of the decisionmaker is a low-quality intro, virtually regardless of what it says. Any intro which does not include specific evidence of above-market ability or a strong, costly personal recommendation is a low-quality intro, virtually regardless of who sent it.

A low-quality intro is, at best, zero signal; at worst, it is negative signal. Don’t spend time getting low-quality intros just to have an intro.

People who are inculcated into the Silicon Valley intro culture are generally very careful with intros, because they carry a very real social cost. An intro isn’t just an email; intros which lead to successful outcomes work out to the advantage of the person giving it by tightening their ties to both parties to the intro. If one makes a habit of making other-than-successful intros, one loses the capability to make intros that matter.

You don’t need an intro to apply to YC. That fact is one reason why they’re successful; they have had their pick from the vast pool of talented people who do not have a high-quality intro to a Silicon Valley VC available to them. About half of a recent YC class had no pre-existing social connection to YC. That said, if you have a high-quality intro available to you, take it; it is not the case that it is zero value.

Many companies which go on to substantial success are passed on by investors, often multiple times. This isn’t necessarily a reflection on the company or founders—YC explains that constraints in the number of startups they can help per batch mean that, for startups which are near the bubble, the reason for non-acceptance is likely to be something in another group’s application which made them just marginally better to include in the class.

If your pitch doesn’t succeed this time, that’s totally fine. Continue executing on the plan for your business. You will have other chances to pitch investors, just like there are always more prospective customers or employees available. You might even close funding from the same investor! Half of YC companies in a recent class had at least one founder who had applied unsuccessfully to YC before.

Don’t give up. This will not be the hardest moment in your company’s life; dust yourself off and try again. Improve yourself, your company, and your pitch for the next opportunity.

If you’re accepted to an accelerator or you raise investment: congratulations! But! You haven’t won yet . Take an evening to celebrate, then get back to the work. The prize for success is that it unlocks harder challenges with more at stake for next time.

Regardless of whether you’re just getting started or ready to move onto harder challenges, we’re here for you. Stripe Atlas is happy to help our companies with individualized pitching advice. If you are a Stripe Atlas member, we’ll be happy to walk through your YC application with you.

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Stripe Atlas’ guide to pitching your early-stage startup to investors, customers, and employees.

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