Startups are just stories about the future
Plus Garry Tan drama, sports betting, a new creator investment, maritime security
Returning the subject of important narratives again and the criticality of good storytelling from last week.
I think if I’ve made one consistent mistake over the last couple years it’s been assuming that the components of an idea/business/valuation are 75% inherent/intrinsic qualities and 25% narrative.
In retrospect, I think I got that backwards (or worse). Narrative is everything. After all, startups are mostly just stories about the future.
Maximizing valuation is not unto itself a winning strategy but crowning yourself a winner clearly is. Remember, markets are reflexive so the winners win because they’re gonna be winners.
The missing piece that most companies get wrong is that to the extent they have a nominally compelling narrative at all, their narratives are entirely inward-facing (ARR growth, markups) instead of outward facing (vision of the future, stakes and consequences). That’s the difference between narrative weight and mere hype.
Whether you have $10k or $10M of revenue, on the scale of what you need to accomplish (hundreds of millions growing to billions), it all rounds to zero. What matters is putting up proof toward something important and greater than yourself: vision and a story for the how the world changes when (not if) you win, and just as importantly what happens if you don’t.
When you only have internal milestones, vision, and focus (look at how much we raised), you’re only as good as your latest announcement; you own nothing.
Narratives and storytellers that win can make the case for why they own the future.
H/t to Ashley Meyer and Beezer Clarkson for talking through this with me
More YC / Garry Drama
Garry Tan and I got into a bit because he insisted that YC isn’t about building what’s fundable but rather about pursuing passion, left of center ideas, and truth.
Methinks the lady doth protest too much
Here’s the truth about Y Combinator.
YC has helped start any number of great companies. YC is good!
YC’s value proposition is making only moderately credentialed young people (recent stanford grads, big tech engineers, etc.) look maximally legible to the capital markets. It’s a factory line that takes in engineers and manufactures buzzy seed rounds.
That is a useful function in the market and society. As a result of their work in templatizing and productizing company building, there are more companies. The SAFE alone has created tens or hundreds of billions of value in the world. Why lie?
All the values Garry is espousing are genuinely great: funding illegible ideas, doing your life’s work, bucking consensus, etc. We strive to do that work here at Slow but it’s not the only worthwhile approach. YC is doing something very different and doing it very successfully.
YC is the startup navy. They take young people and give them process, structure, rules, and scale to win. It’s not possible to operate at that level of scale (hundreds of companies at a time, nearly 1000 per year) and remain an independent boutique. It beggars belief that you can be BOTH the biggest AND the the most artisanal.
And funding “plenty” of non-consensus things doesn’t really mean anything when you operate at that scale; there is always random variance in numbers that large.
So if YC is the navy (process-optimized, standardized, sequenced, moving in unison) we’re looking for pirates.
Founders who wage asymmetric war
Founders who have a lot of fun
Founders who accept cast offs with open arms
Founders who don’t give a shit what you think
At the end of the day we’re all capitalists in the business of (hopefully) making money. That is nothing to be ashamed of and no one should hide from what they do well. We believe that it is on its own a worthy goal and that startups, by dint of existing and succeeding, are good for the world. We’re not bashful about that.
Ban sports betting apps
Sports betting is one the biggest challenges to my generally libertarian attitude. I had no idea how big the latent demand would be and how much damage it would do - couldn’t conceive of it. Total L for “don’t yuck their yum” school of social policy.
I would happily accept more casinos in exchange for banning FanDuel, draft kings, etc. And no, sports betting via “event contracts” on Kalshi, Polymarket, Robinhood are not better.
For all the ways that casinos in NYC would be an eyesore and body blow to the social fabric, the current omni presence of online casinos are worse.
If people want to bet, fine. But make them leave the house and see the sun each time they do. No more infinite access. Make it a concerted vice bounded by place and with appropriate indignities instead of a lifestyle.
Ban sports betting apps. Ban sports betting ads. It’s a tumor that has to be cut out.
New seed rounds
In 2018, a typical SF/NY Series A was 8 on 32 post with 500k-1M of revenue in ~1-2 years.
Today a typical SF/NY seed is 6 on 30 post with 500k-1M of revenue ~6 months.
Most seed investors are momentum Series A investors now. Adjust your frameworks accordingly.
Creator Fund: Tayla Cannon
For as long as we’ve been working together, Megan and I have been talking about creator-led healthcare practices and the opportunity for providers with big audiences to build big businesses. Now Megan is live with the latest creator fund investment in Tayla Cannon, a physical therapist building both a media brand and software platform for other PTs (and much more over time).
She deeply understands both sides of her community and her vision addresses their pain points. The PTs are burned out, trading time for money with no path to sustainable impact, looking to scale their practices virtually while delivering high-quality, consistent care. The patients are active who don’t want pain dictating their training or life and are seeking proactive, progressive care — not just five exercises to do at home.
Our investment will support Tayla as she grows her community and leadership in the space while accelerating the infrastructure she’s building to deliver on her vision of modern physical therapy.
You can read more about the investment in Techrunch and in you can read the full investment memo in Megan’s newsletter.
Oceans: next frontier
Angele, the associate at Slow who wrote the previous nuclear waste deck is back with her maritime security thesis.
TLDR -
The Oceans Are Infrastructure. Subsea cables, ports, offshore energy, and shipping routes quietly power the global economy, but remain largely invisible until something breaks.
Threats Are Rising and Becoming Harder to Detect. Maritime risk is increasingly asymmetric: from sabotage and illicit activity to autonomous swarms operating far from shore.
Autonomy Is the Next Great Accelerator. Advances in compute, sensing, and connectivity are lowering the cost of persistent presence and persistent threats.
Gaps Remain Hidden in Plain Sight. Defense investment has taken off, but navies won’t be enough. Securing the seas will also require bringing innovation and next-gen ISR capabilities to the “coast guard” and asset level.
Angele is very sharp and well connected around deep tech and critical industries. One to watch.
You point about the inward-facing nature of most start-ups stories is right on. As someone who does category strategy for start-ups, I have a folder full of quotes about storytelling and narrative similar to your insights:
"Learning to tell a story is critically important because that's how the money works. The money flows as a function of the story.” Don Valentine, founder, Sequoia
"Every investment price, every market valuation, is just a number from today multiplied by a story about tomorrow." - Morgan Housel, The Collaborative Fund
"No one ever made a decision because of a number. They need a story." - Daniel Kahneman
"People did not choose between things. They chose between descriptions of things." Michael Lewis, The Undoing Project
“Companies that don't have a clearly articulated story don't have a clear and well thought-out strategy,” says (Ben) Horowitz. “ The company story is the company strategy.”
...are just a few.
The question is if there is relatively widespread acknowledgement about how important that larger lens vision and story is, why do so few start-ups have one? What imperative or pain is missing that would get founders to tell and sell a larger vision?
i have a ton of respect for YC - i've always thought it's a great signal for what technologies and concepts are ready for commercialization. That doesn't mean there aren't weird stuff, 'too early' stuff, etc. Sometimes (often?) the founders know "something" is ready before the markets do.