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Interviews with world-class startup founders about their unique paths to uncover tactical insights they've learned about how to fundraise, grow, validate, hire, scale, and lead teams while building your startup.
Get full access to detailed takeaways on each episode, additional case studies, and more at join.foundingjourney.com
2 weeks before I started that too late, I ended up closing the deal.
Michael Houck:That's Zaid Ali. He sold his first company at 18 years old.
Zayd Ali:Feeling you're right when it happens, and you open up the bank account, you see some zeros for the first time is is a great deal. Then there was this deep feeling of what next.
Michael Houck:Within months, he founded Valley, an AISDR that's raised $3,000,000 from Jason Calacanis and Antler.
Zayd Ali:Once the first domino falls, the rest of them fall.
Michael Houck:But those dominoes didn't start falling right away.
Zayd Ali:Within a couple months of getting the funding from Antler, I could see logically that we were running into serious headwinds.
Michael Houck:So he went back to the idea for his first business and realized that AI had changed everything.
Zayd Ali:There was this technological unlock where everything I was doing with humans, all of that could now be done with Gen AI.
Michael Houck:So he told his investors he was pivoting, and thankfully, they were on board. He said, wow.
Zayd Ali:Like, this is more progress than you've made in 6 months since we invested.
Michael Houck:Zay told me the pros and surprising cons of fundraising during an AI gold rush, along with how to get a junior VC to convince a GP to meet with you, and how and why to sell a product before you actually build it, along with a lot more. This is Zayd Ali's founding journey. So Zayd, welcome to the podcast.
Zayd Ali:Thanks, Alec. It's, it's good being here. Thanks for having me.
Michael Houck:Yeah, man. I love starting these conversations off by sort of going back and thinking about where you got started as a founder, as an entrepreneur. And you actually sold a company in high school. Is that right?
Zayd Ali:Yeah. So I started it started my senior year of high school, and then ultimately took a took a gap year to grow it. And then 2 weeks before I started at Tulane, we ended up closing the deal to, to sell it. So secured its journey to to to getting to that point, but, a lot of fun, and that's how it got started off.
Michael Houck:How do you even learn to sort of identify a market, grow a business, navigate an acquisition process when you're, you know, what, 18, 19 years old? How's that work?
Zayd Ali:Yeah. Okay. It's a it it was an interesting story. So I guess to to kick things off, I was this was my summer going into my senior year. Everybody was looking for for internships sort of around the BC, Maryland, Virginia area.
Zayd Ali:I I grew up back in Washington, DC. And I decided that I wanted to go and get an internship in in Tanzania. My sister wanted to climb Kilimanjaro, so I was like, hey. Can I come with you? I'll stay with you.
Zayd Ali:Whatever. So she begrudgingly was like, okay. So I went over to Dar es Salaam, got an internship at this at this Fintech company called Serapu. It was a super interesting time. But, anyways, while there, I'm scrolling through Snapchat, and I see this guy that I've met 2 years prior.
Zayd Ali:On one of his stories, it was a black square, and it said, hey. Does anyone wanna start a company with me? And I had started a nonprofit in high school, and that's where I fell in love with entrepreneurship. But I really wanted to start, like, my first true startup. So I swiped up.
Zayd Ali:I was like, sure. No idea what it does. And got on the phone with him. We ended up talking, going back and forth, and he was telling me something about client acquisition for financial advisors.
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Zayd Ali:I understand a single word that he was talking about. But anyways, decided to jump in and say, hey, this is great. And we ended up cofounding the company together coming in again to my 2nd semester. And in terms of identifying the market, this was sort of he came to me with this idea around, hey. Financial advisors are constantly looking for new clients, especially sort of these mid market financial advisors where they don't have perpetual referral stream.
Zayd Ali:You don't really wanna work with sort of your lower tier FAs so they don't have any money to spend. Your upper tier FAs, they're gonna have, again, that consistent stream of either a client base that they've had for generations, or that referral network is so strong, they never need to look externally. But right in the mid market, you have this group of people who are constantly being given sort of $2,000, $3,000 a month budgets by the firms that they worked with to go out and try to find new ways to go to fire customers. So, anyways, we decided to target them. We saw the majority of people that the majority of financial advisers were using very traditional methods to go and acquire customers or clients.
Zayd Ali:They were going to conferences, going to the golf course. They were just sending direct mail. So we said, great. Let's try to bring some digital marketing strategies into this super archaic industry. And things were kind of moving along.
Zayd Ali:We got to about 5,000 in MRR pretty quickly, but then we couldn't break past that plateau. Where things changed is I stepped into growth sales and top of funnel, and he stepped in to sort of fulfilling the back end operations once we bring somebody in. We saw that next inflection point to about 10, 15,000 MRR once we made that change. And then COVID nets. And financial advisers, they can't go to conferences.
Zayd Ali:They can't go to the golf course. Now they're sitting at home still needing ways to grow their business. And so digital marketing was immediately where they started looking. And then that's where we ramped up sort of all of our outbound efforts, redid our website. We said, now is the time.
Zayd Ali:And then that's when we started scaling 20, 30, 40, 50, 60, 70. And then we hit another plateau around that 70, 80 k MRR mark. And at that point, we were pretty tired. I was about to start school. And we said, alright.
Zayd Ali:Do we think we can go and and get this thing acquired? And so I think I looked up, like, how to sell your startup. And there was a, like, a a website brokerage company that had a Google ad, and I just clicked on the first link. And it's called website brokers, and they sell companies sort of on ecommerce companies and service companies between sort of half a 1000000 in ARR up to 5,000,000 ARR. Called them, got on the phone with a guy named Paul.
Zayd Ali:He said, send me financials. I said, great. He gave us evaluation in 2 hours, and then we were like, awesome. Signed agreement with him. He started building some buyers for us.
Zayd Ali:We took buyer calls. We had, like, 4 or 5 really interested parties. Did a a really quick bidding war. It took about 2 months. And after 60 days, we had a LOI in place, and and the company was bought right, again, 2 weeks before I started school.
Zayd Ali:So, yeah, that was the that was the journey of of the first company.
Michael Houck:The 2 hour evaluation. I love it. Were you happy with the 2 hour evaluation?
Zayd Ali:To be honest, like, I didn't know it seemed in the ballpark. Right? Well, we got sort of 33 to 4 x on on EBITDA, which for a service company is, like, right where you wanna be. This is great.
Michael Houck:What did it feel like after you sold it? You know, this is the first thing you sort of taken through to liquidity. How does it feel to kinda give up maybe like that?
Zayd Ali:It's a mixed feeling. It's a good question because there were sort of there was 2 back to back feelings. The feeling right when it happens and you open up the bank account, you see some zeros for the first time is is a great deal. It was very unexpected because I didn't go into it thinking I was ever gonna sell this company. I really went into it seeing, okay.
Zayd Ali:Like, what can I learn about building a start up? So there was never this, like, I don't know, pot at the end of the rainbow that I was looking for. I didn't expect it. So when it finally hit, like, that was great. And then there was this deep feeling of what next.
Zayd Ali:And what really hit me sort of 24 hours later was I felt like I had built up a lot of expectation. There was okay. 17 year old kid started this company. It was acquired, and I immediately felt like I stepped onto this hamster wheel. I was like, shoot.
Zayd Ali:This is great. I can maybe take some time off, but I need to know somehow figure out how to get to the next level. And is this something that I'm gonna do for to am I on this entrepreneurship flywheel, and is it something that I really wanna do? So there's a lot of reflection. I then went to Tulane.
Zayd Ali:I had a semester there. And over the course of that 6, 7 months, it became really clear, like, I needed to start that next thing. It wasn't a function of expectations. It wasn't a function of, hey. I need to go and do something 2 x bigger, 3 x bigger.
Zayd Ali:It just seemed really clear to me that there wasn't another path for me. Like, I've fallen in love with this. This was the bug. I then started my next company with, with the same guy just a couple months later.
Michael Houck:Yeah. So you're motivated to just go out and do it again right away, basically.
Zayd Ali:That's what it was. I didn't know if that was the case, and it I I'm glad that I realized sort of what my motivations were, what those inputs were for me to to be able to to work the way you need to work to build a company and and to find opportunities, scale a team. Like, they're you need to understand what well you're pulling from. And that's what I think I realized after that first experience. So, yeah, it was I needed that type of building momentum in my life to be able to fuel my well.
Zayd Ali:And I'm glad that I I was able to figure that out pretty early on.
Michael Houck:Okay. So let's fast forward. Now you're building Valley. The beginning of this journey, though, you went and did Antler's residency program. And you were also a member of Launch House.
Michael Houck:You were a great member of Launch House when we were running it. Are those types of, like, community accelerator programs valuable for for a founder? Like, what's your perspective on that?
Zayd Ali:Yeah. I think they're incredibly valuable, especially if you're not a, quote, like, in network founder. So for me, like, I had never never started a venture backed company before. Yes. I'd have this bootstrap services company, which at that time, nobody in the valley really, really valued.
Zayd Ali:I think that's now starting to change. But, but, yeah, I I didn't have a fancy degree. I wasn't technical, and so I would have networked founder. I needed a way to jump start the network of Silicon Valley investors, founders get into that bubble. So the first place that that obviously offered that to be in was Watch House.
Zayd Ali:That was an incredible experience, and I think the biggest benefit there is you there are very few places where you will have more focus and be surrounded by more energetic and purpose driven individuals and intellect. Right? I think just being able to surround yourself with incredibly intelligent people who have that same gene, that same bug of wanting to go and create is something you don't get when you're not in in Launch House or in Antler or a Y Combinator. And so Launch House was a great experience, and then happy to talk about the Antler experience because that was incredibly transformative as well for me. But I think there's tremendous value in being around those types of people and seeing what you can accomplish in a 4 week program, in a 6 week program.
Zayd Ali:What I find is that a lot of I say founders, but people in general, I don't think they know what that next gear looks like. Like, when you really push yourself to a 100% capacity, what can you get done in 6 weeks? When it's a binary, You're getting funded and you have a a a ticket to building a true start up versus you get rejected. When your back's against the wall, what can you do in 6 weeks? And once you see what's possible in that time frame, it it reframes your mind so you're moving at a more consistent pace because you you understand what your potential looks like.
Zayd Ali:And that's something I think an accelerator does really, really well.
Michael Houck:Yeah. And you actually took funding from both. You like, we invested in you, and, also, you you got the investment from Antler, which not everyone does. I guess, in both cases, like, how did you manage to make either yourself or, you know, the opportunity stand out?
Zayd Ali:Yeah. I remember the the the first aid of Antler, it was, be so good they can't ignore you. Right? That was the saying that they said over and over and over again. The essence of that, at least the way I interpreted it, was just compound that time.
Zayd Ali:Right? I wanted to prove that what I was doing week on week on week built on top of each other so I could draw this direct line of, hey. This is what you initially brought me in for, and this is where we are now. Right? It's very easy as a founder when you have a 1,000,000 different things that you need to do to create sort of this scatter plot of progress.
Zayd Ali:It's very difficult to draw a direct sort of a to b line going up into the right. And so for me, I sort of work backwards from where do I wanna be at the end of this 6 week program. And for me, it was I needed to have at least a 100 people on both sides of our marketplace because we are building a a social network for founders and investors. We could talk about that company later on. But, but, anyways, so so that's where I needed to be.
Zayd Ali:I need the product in user's hands, and then I needed to somehow get past this chicken and the egg problem and show that I can grow both sides of this marketplace. And so backwards from there, there's a pretty simple line that I needed to draw. Number 1, I need to go build an MVP. So as a nontechnical founders, figured out how to use some no code tools with my then cofounder, Will. For any founders, Flutterflow, amazing.
Zayd Ali:Take a look at it. It's a brilliant product, if you're nontechnical to go build web apps and mobile apps. So, yeah, we built an MVP in a week. We then stress tested it, brought in a couple beta testers in week 2. Week 3, we got all the entire Antler Cohort on our product, and we convinced Antler to say, hey.
Zayd Ali:Screw your your startup day reports where we go around the room and talk about what we're doing. All of that is now gonna happen on Phish. So we got them to adopt it internally. Week 3 is when we brought on a bunch of investors. Our pitch there was you invest in lines, not dots.
Zayd Ali:You have a group of incredibly high signal founders here who are in batch in residency. Come get some asymmetric information. This is where the alpha is gonna be. Look at the companies that are breaking through the noise on Phish. We got some incredible investors on.
Zayd Ali:Jay Cal joined with some other high high signal angels. And then from there, week 4, we started to make some introductions. This was totally manual. Right? So connecting founders and investors on the platform.
Zayd Ali:It wasn't happening in our app yet, but do things that don't scale. So we were just trying to make any mutual connections that we could. Week 5 was just pitch preparation, talking with the partners, trying to figure out sort of what scalability of the $1,000,000,000 outcome with Vish looked like. And then at the end, it was it was IC. And so I could draw this very direct line if this is what you brought me to do.
Zayd Ali:This is what I did. I told you that I would achieve this by the end of the of the of the program, and this is what we have. Now, ultimately, we ended up getting the investment, and and Jeff, who's the the general partner there, he was like, say, I told you this when he joined. I'm gonna tell you this again. I hate your business.
Zayd Ali:It sucks. However, you did make a promise, and you lived up to it, and that's a type of matter that we're looking at back. And and the pace, the speed, and the execution quality are are the things that we really care about. Because if it's not gonna be this idea, it's gonna be something else. Like, those traits permeate around markets, around industries, whatever you end up doing.
Zayd Ali:So we're gonna write you the check. And lo and behold, 6 months later, we ended up pivoting from Phish to to what we're building now, which is Valley.
Michael Houck:Yeah. I mean, I think at one point, Jeff called you a maniac. Right? And that's the it's like the same vibe that I got when we first met and sort of also the reason that we backed you. You're a solo founder.
Michael Houck:You're young. But we definitely saw that in you, and it was like, well, okay. This guy is gonna make it happen, whether it's this idea or after a pivot or whatever. This is the guy. Yeah.
Michael Houck:Talk to me about the pivot then. Like, when you reach that point, what did that feel like? How do you know it was the right time? Yeah. Walk me through that.
Zayd Ali:It's an interesting question because founders often hear this conflicting advice, which is just don't die. You have to be a cockroach. Just keep surviving. Don't take no for an answer. Just persist, persist, persist.
Zayd Ali:And then you also hear sort of the the glorified idea of the pivot. Right? Like, these incredible companies were all born out of out of pivots. You had, bourbon raise some funding. 18 months later, they launched Instagram.
Zayd Ali:18 months later, they're acquired by Facebook. And so there is there's no one that can give you that answer. And I've had a few founders asked me this question. I think it comes down to a couple of things. One, it it's sort of the the logos and the pathos.
Zayd Ali:And so there's the logic behind it, which is, okay, in the case of fish, there was really no business model that was sustainable. We had a consumer social product, which had a TAM that was too small to monetize with ads. We couldn't monetize with subscription because nobody would wanna talk to the founders that needed to pay $30 a month to go and talk to investors. So there's the the logical reasons behind why this product wouldn't work. But if so, that that is not enough to convince me that that it something that I was willing to commit my life to is not worth committing to anymore.
Zayd Ali:And so the second piece is, look, as a founder, you need to have intuition. You need to make decisions with 60% of the information that a normal person would have to make that decision with conviction. And I could feel that there I would could pivot myself into circles, but that you needed to take a step back and have some intellectual honesty. Take a week away from the business and look at it objectively again. Remove yourself from the situations that are telling you to keep grabbing on to this thing if you feel like your tank is running on empty.
Zayd Ali:A week away from the company will tell you if that's something that you wanna jump back into or if that separation was was worthwhile because you got the clarity that you needed. So for me, that was the process that I ran through. Like, within a couple months of getting the funding from Antler, I could see logically that we were running into serious headwinds, and we kept building different types of products and different variations of this. We tried to move into investor updates, sort of like short form investor update instead of instead of sending emails. But it turns out, of the million problems a founder cares about, trying to find a better way to send investor updates is at the bottom of their list.
Zayd Ali:And so there wasn't anything that I was really grabbing on to, and it took a week away from the company to say, yeah. I I don't think that there's a business to be built here. It looks like the investor founder ecosystem is a lot bigger from the outside in. Once you're operating in it, it's a very insular. It's a small world, and it's a difficult problem to solve.
Zayd Ali:And so at the end of the day, intellectual honesty and and logic, you know. If you're gonna be a successful founder, you know.
Michael Houck:Yeah. I remember we had a couple jam sessions at one point about the investor update idea. I remember pacing around my my kitchen talking about that would be great. What would you say to somebody who's maybe seeing these signals that maybe deep down in their gut, they know should pivot, there's not this big venture scale outcome with what they're doing, but they're choosing to ignore them. Like, what would you say to that person?
Zayd Ali:It's an interesting question. The only person who can make this decision is is the founder. I was in a really interesting situation where the only thing convincing me to keep building fish was that other incredibly smart people invested in the company. And so I was thinking, okay. Hold on.
Zayd Ali:Launch House has invested in this business. Jason Calacanis has invested in this business. Antler has invested in this business. These are intelligent investors. So there's must be something that they see that I didn't see myself.
Zayd Ali:I don't think that if Jeff came in and said to me, Zay, I think you should pivot, I would have done it. I would have. Right? I don't think if you came to me and said, Zayd, you should probably pivot. Even though maybe in the back of your mind when we were talking about this investor update thing, you're it's not gonna work.
Zayd Ali:I wouldn't have done anything differently. Right? I needed to come to that conclusion myself. So I would be a sounding board. Right?
Zayd Ali:I would help them try to find a an avenue that may work. Right? And we we came to a couple of conclusions after that conversation, but I wouldn't convince them to depart from the business because it's ultimately up to the founder and and they know the market much better than I do. The founders have figured out themselves.
Michael Houck:Okay. We made the right choice. Valley is a venture scale opportunity. We're ready to go on it. Like, what what was that like?
Zayd Ali:It was almost by the time I communicated it to investors. It was I had a a a lot of conviction there. I think one of the reasons and I did mention this earlier. But when I was thinking about my fit with BISH, there was really not a clear why me or a why now. And I used to think that that was sort of a a nice to have to, like, give to investors of, like, they'll ask, what's your why me?
Zayd Ali:What's your why now? Who cares? Like, I can build a cool company without it. But it became very clear that it was all the only 2 questions you really need to to answer when it comes to founder market fit. And so with Phish, there was no reason why me and an out of network founder should go and build the social network for Silicon Valley, and there's no clear why now.
Zayd Ali:It's like all of the social networks have kind of been done, and we've probably done too many already. Why did someone do it before? And so with Valley, the first two criteria were very clear. Right? So I previous previously had appointment setting experience, hadn't done a venture backed company before.
Zayd Ali:But I knew intimately well what was required to go and set appointments for different types of customers and what the SDR motion looks like. And why now? There was this technological unlock where everything I was doing with humans around finding prospect lists. Right, copywriting personalized messages, handling responses for our customers, all of that could now be done with Gen AI. And so I said, okay.
Zayd Ali:There's a those two things clearly line up. I have a really clear picture around what the first version of the product looks like. And I also have a group of people in my phone that I can call who'll be my first users. So I called them up, and I said, hey. This is what we're thinking of building.
Zayd Ali:Is it interesting? And we walked through a couple different ideas, a couple different approaches, a pop up ways that we could solve this problem for them. By the end of those brainstorming conversation, they were saying, hey. When is this gonna be ready? When can I test it?
Zayd Ali:How much will it cost? So for me, in 30 days of having those conversations, I said, I've got the why me. I have the why now. I have the customers. I have a clear idea what the prototype or the MVP will look like.
Zayd Ali:And I know how long it'll take me to go build it because we scoped it out with our future users. So when I went to investors at the end of January, February of 2023 and said, hey. We're pivoting. Here's why. Here's all the data and proof on how this is gonna be the right decision.
Zayd Ali:Here's how big the market is. Here's our here's our early customer list. Wow. Like, this is more progress than you've made in 6 months since we invested in Phish. I mean, in 30 days.
Zayd Ali:So for me, it was really clear because all those things lined up. I think I was lucky in the sense that the the technological shift, the idea of pivoting, having the early customers all aligned, but I think it's what's required to have an idea worth jumping into. You need to see those clear signals.
Michael Houck:Do you think that's true for both venture backed companies and bootstrap companies? You've obviously done both, had success with both. What are the differences and similarities between the 2?
Zayd Ali:So the differences is for a venture scale business, you need to have either a 10 x productivity boost that you're offering to market or a 10 x cost reduction that you're offering to market to ultimately break through the types of customers that you're looking to acquire to build a long term to scale a business, to build a solid foundation. Having both of those is great. And in the case of FISH, I've got conviction. We have both of those recipes here to to change the paradigm of the way things are being conducted right now with appointment setting. With Bootstrap businesses, they're just as hard to build, but the ideas are easier to come by in the sense of you don't need to have a 10 x differentiator.
Zayd Ali:You can have a 1.5x differentiator. You can sell into a derivative of a of a larger market. So for me and adviser appointments, what I'm what we were doing was it wasn't unique in any way. Right? Booking appointments on LinkedIn had been done in the b two b SaaS world for for years.
Zayd Ali:All we did was find a market that hadn't, fully adopted these types of solutions, and we started just building a specific service for that vertical. We had the same exact solution, but we just called it advisor appointments, and we we focused on reaching out to financial advisors. And so I think there are more adjacent markets that you can target with service businesses where you don't need to have a 5 x or a 10 x improvement. It can be that 20% better or 20% more focused, and you can build an incredible cash flowing business. However, I will emphasize the point that I think both are equally as hard to build because they're it's a lot of work, and it takes it takes a lot out of you, for sure.
Michael Houck:Yeah. Different challenges, but both both very, very hard for sure. You mentioned Jay Kao, Jay Kao Kantas. He came in, I think, pretty early, 25 k, angel check. I know from experience that when you get sort of a brand name, high profile investor like that, it can have a big impact on how people view the company and how they view you as a founder and how they view the potential of what you're doing.
Michael Houck:Is that something you saw as well?
Zayd Ali:A 100%. It was a weird feeling realizing the difference, the different lens that people viewed our business with. It happened both with J Cow and with Antler coming on the cap table. It was for some reason, people give you a bit longer to speak before they interrupt you. They're much more willing to get on the phone after you send them a cold email.
Zayd Ali:Your response rate goes from 5% to 50% when you add those investors in in your subject line. I'd always heard about sort of this idea of momentum fundraising and sort of once the first domino falls, the rest of them fall. I didn't realize how viscerally true that was. And it's and maybe it was a sign of the times, but, yeah, it it made a massive difference. We did J.
Zayd Ali:Cal, sort of founder University Accelerator, and then, like we talked about earlier, we did we did Hamlet's Residency. But it does make a big difference. And for us, like, the thing that I changed was the subject line in our cold emails when we went on fundraising. It would just precede 25% month on month growth, dash, Antler, backed by Antler and Jason Calacanis, dash, round 50% build. That's all I needed to say.
Zayd Ali:It was, like, a 100% open rate when we'd email a partner. And the response rates went through the roof when we made that that small change to the subject line of our cold emails. And on the back of that, it made fundraising a lot easier. Still not easy, but we could at least get our foot in the door in a way that we couldn't before.
Michael Houck:Let's talk about fundraising. So I think you have a lot of pretty interesting opinions. You've also did some pretty interesting stuff during the raise. First thing, I guess, is Jeff talked about this. I've talked about this.
Michael Houck:When you come into a pitch, when you're talking to an investor and you sort of bring this electricity, this charisma, this high energy to the meeting, it really does make a difference. I think people underestimate the amount of not even necessarily being prepared versus not prepared, but just the way that you approach the meeting makes it makes a difference. It was that like a conscious thing that you did?
Zayd Ali:It wasn't a conscious thing. I don't know. I feel like if if you have to make it a con you need to be energetic in every aspect of running your business. Right? Like, you are gonna work 16 hour days.
Zayd Ali:The rest of your team are gonna work 16 hour days. There's gotta be somebody that's there in the trenches that can bring energy to the room and get people amped up. So, no, I don't think it was it definitely wasn't a conscious thing, and I think I don't think it should be a conscious thing. Because if you feel like you have to turn that on, it's depleting for you. And so, no, I think it was I was amped up to be in the rooms that I was in and to go and and have the opportunity to go and build a business that we were building.
Zayd Ali:So naturally, that brought a lot of energy. I also think I'd reframe I've been trying to reframe my mind And whenever I feel anxiety and I feel like the the butterflies in my stomach, just telling myself that's excitement, that's excitement, that's excitement, that's not anxiety. I can't remember what podcast I heard this on. It must be like a modern wisdom Chris William Williamson, Chris Williamson podcast. But, that reframing so I think also in the early days, it could have just been nerves and anxiety that would force, like, the smile on my face and and bunch of, amped up energy to to to come into a room.
Zayd Ali:But yeah. And I also think that's a great hack. Like, I'll I'll run that playbook in my head what before I go to, like, a public speaking event. I'll need to tell tell myself, this is excitement. This is excitement.
Zayd Ali:This is excitement. And, eventually, you start to reframe that feeling into excitement versus anxiety, and that sort of brings you out of your shell versus trying to, to to cover up.
Michael Houck:So that's what you're doing before we turn record on. Now now I understand.
Zayd Ali:Yeah. Exactly. Exactly.
Michael Houck:Okay. If you had to pick you're you're going into a pitch meeting with a big investor. You had to pick coming in with that high energy, that charisma versus maybe having the business more polished than otherwise would be. Which one's more important?
Zayd Ali:Yeah. That's a good question. You know, I wanna say it's a mix of both. We're not gonna cop out like that. It depends on the type of founder you are.
Zayd Ali:I think for a nontechnical founder, people are looking for the charisma, for the leadership, or the excitement, and your job is to get the investor excited about the business. And you can do that in a number of ways. You can do that by bringing energy. You can do that by bringing by amping them up with the they might have a mundane day. They're on their 9th call, and you come in with a with sort of a shock to the system.
Zayd Ali:That's a great way to kick off a call. At the end of the day, an investor is gonna invest in a business that they think has legs. But in the early days, they're investing in a person and a leader and a team that they think has legs. And so it'll be different when we go do our series a and series b. But I think for that first funding round, a lot relied on as a nontechnical sales focused founder, do does the investor think that I have a character to be a person to go and sell a 100 k contract when we are selling against $1,000,000,000 incumbents?
Zayd Ali:Right? And those soft skills of charisma, leadership, electricity, what whatever they wanted to say, those are important when it comes to building sort of the fundamental investment case for the company. So I think one actually flows really nicely into the other, meaning sort of the soft skills of the founder flowing into, is this an investment opportunity, and can they penetrate a market against large large incumbents with some sort of output there? But for technical founders, it it it may may be different. Right?
Zayd Ali:Because it's you're indexing on the strengths of the founder versus lack of weakness. And so how strong are those strengths, if that makes any sense?
Michael Houck:Yeah. No. It makes sense. Another thing that I think a lot of founders get tripped up on is trying to create urgency as part of the fundraise. You talked about how sort of the process all came together really quickly once you got those first couple of checks in.
Michael Houck:Founders see that happening and then they try to sort of recreate it. And I think that investors can usually see through that these days. And maybe that wasn't true as much. Maybe they didn't care as much in the SERP era when there was so much money around. Everyone's pouring money into funds and they had a lot to deploy and things like that, but it it's definitely changed now.
Michael Houck:Do you think that founders should sort of try to create that urgency anyway, or or how should they think about that?
Zayd Ali:Yes. I doesn't work to the degree it used to, but I definitely think it still works, and it's just a good way to create a to to run a process. It doesn't matter what the funding environment is. You can still run a very structured process and create sort of your own FOMO circle even if this is the macro environment isn't bleeding FOMO. Right?
Zayd Ali:Everyone's trying to run trying to find best to place to put money. So, like, for us, right, when we started to figure out the way to raise this round, I said our process is gonna start on x day. I booked probably 15 calls back to back to back to back to back in a 2 week period. All of these were intro calls. I had my narrative ready.
Zayd Ali:I'd practiced this in the mirror a 100 times. I'd given it to my parents, to my sister, and it was a well oiled machine. So come day 1, 14 days back to back to back, we ran these calls. From there, you can very quickly weed out who's interested, who's not, and you start to take these 2nd calls. Talk with partners.
Zayd Ali:You start to fill out terms, and you can now you want to avoid the back channeling. So you don't wanna mention any names, but you can start to play each fund off of each other. Hey. We're floating these terms. It's looking like things are moving along well.
Zayd Ali:We're gonna have another conversation with them on Thursday. Why don't we talk on Wednesday? Right? So something as small as that can drive urgency for a fund to push the conversation that much further. Right?
Zayd Ali:You're pushing other companies that they're looking at down the pile because they need to prioritize yours. That in the back of somebody's mind may not be, hey. They've got, a turn sheet. We need to move right now. But it's showing that they're prioritizing your company, and they need to move quickly on you.
Zayd Ali:Otherwise, you're having additional conversations. They're not the only fund that they get. So that's number 1. I think that running a structured process is a good way to bet the investors who are actually interested and start to play other investors against each other to get someone to a decision quickly. 2 is the FOMO element is not so much a, I don't know, try to raise the price as much as you can.
Zayd Ali:But for me, like, I would talk about when we were raising our pre seed, the first couple investors we talked to to try to set up those first conversations, I would mention things like, hey. We're not raising right now, but we are growing revenue x percent month on month. If somebody wants to pull us into market, we'll have those conversations. And so small framing there. It's like, okay.
Zayd Ali:Somebody wants to pull us into market versus I need to go on raise funding. Then the last piece is the best way if you wanted to actually drive FOMO is is go jack up revenue. When we could send a pre read deck that said, in March, revenue was x. Next slide. April, revenue was y.
Zayd Ali:Next slide. May, revenue was z. Something as simple as that is the best way to drive urgency in FOMO. So people can give you all the tips in the world of running the structured process, back to back meetings, small sort of phrases that you can use to reframe your business in the minds of investors. The best way for you to go and actually drive urgency is revenue.
Zayd Ali:Show that you have a business that people are pulling out of your hands and you have real customers that are giving you real money to go and and use the the solution to a problem they're having. And that's ultimately, like, if I think about one thing that changed the fundraising game for us, revenue, revenue, revenue.
Michael Houck:Wanna get more insights like that? Each week, I actually interview multiple founders. For the ones who don't join the podcast, I write up a case study and share it with all founding journey members. I also write weekly tactical deep dives, share start up opportunities, and analyze trends that I've noticed. We've also got a community of founders and investor and pitch deck database and more fun stuff, like over $60,000 in perks and discounts to help you build, grow, and raise capital for your startup.
Michael Houck:Go to join.foundingjourney.com to get access. That's the honest truth. If you're struggling to get revenue, you can do all the hacks, you can do all the positioning, you can do everything else. And maybe you will get someone to buy into you and your story, you as a founder. But at the end of the day, if you have the revenue, they're gonna come to you.
Michael Houck:Process is gonna be a lot easier. All that stuff sort of solves itself.
Zayd Ali:100%. I'll I'll talk a little bit about the the playbook that we ran because I think it's really useful for for b to b companies that are looking to acquire their first customers. When we were setting up those first investor meetings, at the same time, I was going on LinkedIn and reaching out to people who would need appointment setting services. A lot of these were B2B SaaS founders, some financial advisors that I knew I could sell I could sell to them. And it was a $30 LinkedIn sequencing tool.
Zayd Ali:I didn't need to use any AI in this case. It was a basic template. Hey. Not looking to sell you anything. Here's what we do.
Zayd Ali:We're backed by the early investors in Robinhood and Calm and, there you go, name brands actually that do help. Yeah. We're looking to solve this problem. Let me know if you can give me 15 minutes of your time. Again, not looking to sell you anything.
Zayd Ali:So we're setting up first calls. We're also setting up calls with these these, like, customer feedback interviews. Right? I'd walk through the problem that we were solving. I'd walk through a Figma mock up of the product, and I would say, hey.
Zayd Ali:This is what we're doing. It's gonna help you set appointments. It's 1 tenth the cost of hiring an SDR. It's going to be 10 x more productive productive. It's gonna be 10 x cheaper.
Zayd Ali:Tell me about your current appointment setting process. What are you doing? Are you using offshore individuals? Are you hiring SDRs? What does the ramp up time look like?
Zayd Ali:What does retention look like? And they'd start to give tell me their problems. From there, I'd show them how Valley could solve 50%, 60%, 80% of their problems today, and they would end those calls. Those calls, number 1, would be blocked for 15 minutes. It would end up lasting for 30, 45 minutes.
Zayd Ali:By the end of those, they'd say, hey. Can I buy this thing? In the early days, we had them sign LOIs. Later on in the fundraise, we'd actually be had an MVP so we could have them purchase the product. And so while I was taking these investor calls, day by day by day, we were converting these customer feedback calls into customers, and they could see that revenue graph go up into the right.
Zayd Ali:Anytime I would send an update email and say, hey. Did you have any update on the decision? Who are we talking to next? What's going on? By the way, I wanted to give you some up to date information.
Zayd Ali:When we spoke, revenue was x, revenue is now y. What a great way to create urgency just to show that your business is actually growing while they're sitting on the sidelines having lunch.
Michael Houck:Yeah. I mean, it's it's the best way. And that was a really smart strategy coming in sort of from the from a psychology perspective. You're not trying to sell them anything. You're just trying to get a little bit of their time to solve their problem.
Michael Houck:So smart, shows you really care about them and their problems. Customers are way more willing to give you their time as a result. I think a lot of founders get scared about selling before the product is built, right? Even taking LOIs, but definitely taking money. You guys sold before you had the MVP and then just re had the MVP is when you started taking on revenue.
Michael Houck:What are sort of the reasons you think people do that, and how can they sort of get past it and and start being more aggressive?
Zayd Ali:Your product is never gonna be good enough. And so I think that there's a really big fear of of rejection or a fear of of embarrassment, whether it comes from people in your network saying like, hey. You decided to quit your job and go start a company, and this is what you're putting out. Or it comes from family. It comes from the customers that you're giving your product to.
Zayd Ali:Right? Your product is never going to be good enough, especially in saturated markets. Like for us, I still think our product is is quite there to compete with the outreach and sales ops of the world. They've had 10 year head starts. So I think that's number 1, the bigger hurdle that people need to get over.
Zayd Ali:But if you're not giving your product, putting your product in the hands of customers, if you're not launching it on socials, if you're not getting feedback from the market, there's no way that you'll graduate level 1 to go to level 2. Level 2 will you'll have a whole other host of challenges that still won't be good enough. Customers will be upset because they're getting value from your product, but it's super buggy, and so they're gonna be constantly blowing up your Slack channel. You're still not gonna feel great. You have to graduate from there to get to level 3.
Zayd Ali:I think number 1, people are just, are afraid of the initial reaction. Number 2, it's people may be afraid on the inability to follow through. They're saying, hey. Like, a customer is signing out live for this thing. Right?
Zayd Ali:I need to be able to ship by this deadline. So many other factors that are going on in this business. What if I miss it? Right? What if I lose that trust?
Zayd Ali:And for us, the best way that we solved it was putting ourselves on the same side of the table of the person that we were speaking to. So the way I would frame it is we've had this conversation, we've talked about your problems, Talked about how me and our team wants to go and solve this problem. And I would say, hey. Think of us as your outsourced development shop. Right?
Zayd Ali:We've talked about your problems. I wanna go build the best solution in the world for you. Think of me as your devs that you're hiring, but you don't have to pay me a dime. Only thing that we need to go do to go and build this product is I need to go raise from some of the investors that we're talking to, here's who we're talking to. Signing this nonbinding LOI will really help me show there is pull for for this product that people like you care about what we're building.
Zayd Ali:Would you be game to to sign this? And if an investor wants to talk to you, would you be able to take 30 minutes of your time to tell them why this is interesting to you? What problems it will solve? So the reframe that happens in their mind is we are now tackling this problem together. I've told him my problems.
Zayd Ali:He wants to go and solve them. He's gonna build this thing for me for free, and all I have to do is spend 30 minutes potentially talking to an investor and signing a noncommittal agreement. That sounds like a sweet deal. And so I was able to bring the the potential customer up to speed on what the process looks like for me to be able to follow through on the commitments that I was making. And so even if we weren't able to hit a deadline, even if the product wasn't able to live up to that first spec that we talked about, they felt like they were part of the process and they felt bought in.
Zayd Ali:And so a lot of those customers that we brought on in March of 2023, they're still with us today because they have been building next to us day by day by day by day, and it started with that first framework.
Michael Houck:How did the investors respond to the LOIs? But I know sometimes people will think, LOIs, does it really matter to investors? They really care about revenue. What what do you see?
Zayd Ali:The LOIs meant nothing. What they cared about was that I showed them the LOIs, and they'd say, okay. This doesn't mean anything. Can I talk to this customer? And so it was a way for me to get my foot in the door for them to make the ask, and then I can make the intro.
Zayd Ali:So the first two LOIs that I showed to our investors are now our investors, but at that point, potential investors. They said, okay. Great. Who cares? Like, LOI LOIs are letter of nines.
Zayd Ali:And so I then went back to those people and said, hey. I know that you're committed to this process. I know that you wanna see this this product in your hands. Would you be game to speak to these investors? Takes 30 minutes.
Zayd Ali:And then in future conversations, I made that ask after each customer interview.
Michael Houck:Super smart. I actually remember that pre seed or the pre read deck that you sent around.
Zayd Ali:Yeah. Yeah.
Michael Houck:It was super abnormal to me because you had nothing in it except for just, like, tech. I think everyone tells you, oh, you gotta have charts. You gotta make sure your deck is designed. Obviously, this is a pitch deck, so it's a little different, but it was just text. But why why no design?
Zayd Ali:We tried a bunch of different decks, and I feel like I wasted a ton of time trying to work on, like, the the most beautiful graphics and positioning things and looking at a bunch of different templates and, like, problem solution, TAM, competition, whatever. What I really and we kept trying to optimize our deck throughout the fundraising process. And I realized, like, if you design your pitch deck, in order to get an investor to a decision, the decision is always gonna be no. Right? An investor isn't investing in a deck.
Zayd Ali:They're investing in a person. And so what I wanted to do was fully focus on the story. Right? I wanted a deck that could somehow communicate the story, but also add some drama to the story. So I don't know.
Zayd Ali:We have some slides in there that was our customer's prior cost of appointment setting was blank with Valley. We brought it down to and then there's, like, 3 blank slides. They have to click click click try to get to the number $71, and then ends up being 10 x cheaper. So, anyways, we had some fun with it, but I realized that, like, the goal of this deck is just to get me to a meeting. Do something different.
Zayd Ali:Everybody is seeing the same templates when it comes to pitch decks. Probably look online. There's gonna be slight derivatives of the same 10 slide deck, which is great. Right? And I think it still works in many cases.
Zayd Ali:For me, it just wasn't clicking because we were in a hybrid competitive market. We were raising in the midst of the whole OpenAI wrapper debate, which is any company that's building on top of this API is gonna be dissolved in the next 4 months. And so I was there were a lot of headwinds that I was facing. I needed a way for people to have a reason to probably stand out from the noise of OpenAI wrapper simultaneously with the sort of downturn of preceedancy funding. But decided, let's try a pre redec.
Zayd Ali:I think it was ultimately 25 slides. Again, like you said, just text. There's no charts. There's no competition. There's nothing.
Zayd Ali:From there, we were able to get that first meeting just because we stood out. And then on the call, I still wouldn't use a deck. I would talk through, here's the founding story. Here's the problem we wanna solve, here's why it's gonna be a $1,000,000,000 company. And then one of the other one of the pieces of advice that I give to founders and something that helped me a lot was keeping an FAQ bank.
Zayd Ali:So every time I had a question, making sure that I wrote down the corresponding answer or how I objection handled that point so I can refer back to it in future meetings. And I can also send it prior to my a call with the next investor. Right? Because I know that these are questions they're gonna ask. How can I preemptively address those concerns and show that I'm thoughtfully approaching these conversations and thinking about things in ways that most of their founders may not be thinking about?
Zayd Ali:So that was really, really helpful. And I I did see an inflection point when we started tracking what those questions were and refining those answers because you get the same ones every every call pretty much.
Michael Houck:That's one of my favorite things that that you did. And I think a lot more founders should do this, where when you're talking to a VC fund, you're talking to your first meeting is probably not with the decision maker. Right? Especially if they're a bigger fund. If they're a small fund, sure.
Michael Houck:Maybe it is. But bigger fund, definitely not. And so you sort of play this game of telephone with that person trying to communicate the opportunity to somebody else, but you just had one meeting with them. Maybe you sent them a deck. They don't have the full story.
Michael Houck:They're not you. Blocket's lost translation. And so you sort of equip them to get through those conversations.
Zayd Ali:200%. So the what I realized that our biggest bottleneck sort of in phase 2 of our fundraise was we could get the person on the phone really excited about the business. We could talk through sort of why we stand out to a bunch of the other outbound appointment setting solutions that were popping up sort of like our class of startups. The issue was the translation piece, right, where that person, analyst associate principal, or potentially a partner needed to go and communicate that to the rest of the partnership when they went to IC. Let's say that we took a meeting on a Wednesday.
Zayd Ali:They say, great. We have our partnership meetings on a Monday. I'll review my notes, and we'll get back to you on Tuesday. By the time they have that, I see a lot of the nuance around why Valley is an interesting opportunity, and it's very easy to get lost. And so the core tenants of our business, which is outbound tool using AI, automating parts of the SDR and BDR workflow, they'd heard, like, another 100 companies how we're offering the same exact thing.
Zayd Ali:And so for me, I needed to make it incredibly simple for our core, for the the the investor that we spoke to to be able to translate the the nuance of our pitch to people in the partnership. So created the FAQ bank. I created about 8 different decks, 5 slides each, and then recorded the looms of me going through those decks. Those videos would be 2, 3 minutes long. The longest one, I think, was 9 minutes going through what our intensibility looks like, how we build a moat, why Valley becomes a $100,000,000,000 company, how we stack up against Outreach, all the main objections that I that I knew the associate analyst principal would hear in those in those forums.
Zayd Ali:From there, we were able to to get to the 2nd meeting, and then from there, we were able to close-up the fundraise. So, like, that was the final insight in addressing the bottlenecks sort of across the process. It started with just getting people to respond to the email, open the email, and get the 1st call. From there, it was how do we get from 1st call to 2nd call? And then once we got the 2nd call and have we're in those rooms, it was a lot easier to get things done.
Michael Houck:How did you know what those objections was it just, hey. I got this question from them. I know they're gonna get the same question from their boss, or how how do you anticipate them?
Zayd Ali:It comes from the questions that the associate or analyst, again, principal, whoever you're speaking to, is is asking. And so I didn't get this right off the bat, but it's in that first crop of investor calls that we would take, like, let's say our first 15. Right? Or the questions they ask, there's clearly these for that rhyme. And you can also use their follow ups because usually if somebody is somewhat interested, they're gonna send a crop of follow-up questions to try to understand the opportunity more before their next conversation.
Zayd Ali:So just pattern matching. Right? Your first 15 calls, you're getting your feet wet. You're warming up the the pitch muscles. Try to see in those first 15s what's rhyming between the questions you're receiving on calls, between your follow-up emails, and say, okay.
Zayd Ali:This is clearly like, these are the parts of the picture that aren't colored in for investors right now. How can I preemptively address those? And in the next 15, send those looms proactively, send those decks proactively, or have really refined precise answers when I get on the phone.
Michael Houck:We actually had a chat a few weeks ago too, where, we went super deep on sort of your fundraising journey specifically for Valley. I actually wrote up a case study about that. People can go to foundingjourney.com to check that out. One of the things you said is that founders shouldn't let an investor who hasn't written a check intro them to someone else. I think that's so true.
Michael Houck:Why does that hurt instead of help?
Zayd Ali:It seems like a a great offer. Right? The investors just rejected you. They wanna be helpful instead of just stand on the sidelines. They're like, I can introduce 5 other puns.
Zayd Ali:Investors, number 1, talk. 2, they like to follow other investors. And so when an investor invests, they wanna follow that investor. Investor doesn't invest, they wanna follow that investor. I don't think that there is a worse signal than getting an intro from an investor who passed.
Zayd Ali:All it's gonna do is, like, before you get on that conversation, they are going to already have a sort of predisposition in their mind that you're not an interesting opportunity because their best friend, who they probably respect and love their decision making, they probably co invested with them in a number of times in the past. They said this is a great opportunity. It's no sort of discredit to the investor that they're they're introducing. But, again, there's a reason why they're friends. There's a reason why they share a deal flow.
Zayd Ali:It's because they like to invest together. And by the same token, they're gonna like to not invest together. That's reason number 1. Reason number 2 is you want to go into whatever meeting you're gonna get with a clean slate. The more people that are referring you to other investors when they have invested, it's just the the more people who know that you've received a note.
Zayd Ali:And that compounds. Right? So I made the mistake early on and very quickly realized that those calls were a waste of time. And I appreciated the offer, but don't accept. Don't accept.
Michael Houck:Are there any circumstances where you would consider taking an intro in that context? Like, maybe the company is in dire straits, or or is this just always gonna be a thing?
Zayd Ali:I'm sure that there's probably edge cases where it's worth it. I just have never talked to a founder who received a check from a from an intro from an investor who said no. I've never heard a story where that's worked out. I've only heard the call lasted 5 minutes. They weren't interested.
Zayd Ali:There may be situations where look. If you're running out of avenues, take that meeting and see if you can turn a no into a yes. And if you can, like, those are often your biggest supporters. Right? You see that in sales all the time.
Zayd Ali:You see it in start ups all the time. Right? Where you've got a a product in market that no one thinks will last, no one thinks is valuable. And and when you change perception from, hey. It's also really cool.
Zayd Ali:They stick with you forever. If you're really struggling, then it might be worth it, but I haven't heard of a a successful story there.
Michael Houck:Yeah. Not too many, if any, come to mind for me as well. You mentioned AI. Right? Obviously, Valley is an AI company.
Michael Houck:You guys are doing exciting things there. Everyone sort of mistakenly is assuming right now that plaster AI on your pitch deck, if you get the AI domain, you're doing something vaguely in AI, that you're a 100% gonna get funded. Anything can get funded in AI right now, or at least last year. What was the raising process like for you? Like, was that true?
Michael Houck:Was it straightforward? Yeah. Tell me your thoughts on that.
Zayd Ali:No. It was not it was not easy. It was not straightforward. There's a reason why we had to go and figure out all these weird strategies to try to go and raise because it wasn't easy. The and so I mentioned this earlier, but we were, like, in the depths of the AI rapper debates.
Zayd Ali:OpenAI is gonna go do this in 2 months. OpenAI is gonna go do this in 8 months, and and your business is gonna die. Obviously, that proved not to be the case, and I just need to find really clear ways to object and handle that concern. And the answer that we use was really simple. It's like I would ask an investor that, why is OpenAI here?
Zayd Ali:Right? What is OpenAI's goal? If they responded anything other than their goal is to build the best outbound sales tool in the world, I would say, there is your answer. They're here to go and build AGI. They're not here to go and build incredible sales technology.
Zayd Ali:They're not here to go really deep with sales leaders at Front, Miro, Datadog, Zoom, Rippling, Deal, you name it. They're here to go and do it something entirely different, which is beautiful and amazing. It's gonna make people a lot of money. And if you wanna invest in that thing, co invest in that thing. I'm here to go and build the world's best outbound sales tool and build a better world for buyers and sellers where they can actually live in harmony and not get spammed with a bunch of BS that they're gonna delete in their inbox.
Zayd Ali:And, like, that is the problem I'm here to go really deep on. If you think OpenAI wants to go solve that problem, then we're probably not gonna be the best fit. And it was a very clear answer, but it took me a really long time to arrive at that point. It seems obvious now, but when I was consistently getting hit with why doesn't OpenAI go and do this, where's the defensibility? Initially, there there were clear answers there because you look at it and you're saying, okay, the speed of development is going down very quick.
Zayd Ali:It didn't take us very long to go and build this MVP. Somebody else could go and build this MVP and eventually sort of came to the conclusion that if the cost and time of creating software is going to 0, technical moats won't exist for long. There are only gonna be a couple ways that you can build defensibility in a startup. You can have distribution moats. Right?
Zayd Ali:So you have sort of long term sales lockups. You're in an account for 3, 4 years, or you have some sort of distribution advantage through founder brand or community content. You have a brand moat, which is you're known for one thing and you sort of have mind sharing customers in in the brains of customers that you do this one thing incredibly well. And as soon as somebody pops up and say, hey. We're looking for an outbound tool.
Zayd Ali:Val is the 1st tool that comes to mind. And you have network effects, and network effects aren't going anywhere. And potentially data motes, and that was something that we talked about. So distribution, brand, and data modes were the 3 things that we would that we would match you when it came to passibility. And I'd also talk about I was very conscientious about why outbound starting here allowed us to build the data modes, distribution modes, and brand modes that we needed to go and build the the long term vision around the product, which is ultimately sort of a a go to market brain at that point.
Zayd Ali:It's shifted a bit. But, yeah, that was the initial answer, and then there was a much more simplistic answer, later on.
Michael Houck:It always looks more simple in retrospect, for sure. Any other sort of disadvantages or or advantages of sort of raising in that sort of crazy fundraising environment that that it was last year?
Zayd Ali:Yeah. I'm sure that it was helpful to be an AI company and be one of the first sort of popping up in this AI for go to market. It was a consensus that AI was one of the first go to market would have been sort of the lowest hanging fruit for sort of AI optimizations and AI efficiencies. So that was a helpful trend sort of to be or wave to be riding because people were actively looking for bets to make there. And there was just a a lot of sort of back and forth in the VC ecosystem around what are the 1st gen AI bets that you're gonna make and sort of are we gonna bet on the application layer?
Zayd Ali:Are we gonna bet on the infrastructure layer? Like, all of these species were just getting worked out. So I think there was a bit more concern when we were raising than there is today even because investors were very worried about this being the next crypto. And so they're like, we're not gonna go and chase this next wave. We're gonna be much more conscientious.
Zayd Ali:We're gonna learn from our mistakes. And then people realize, like, hold on. They're staying powered here. Like, this is real. This is transformative.
Zayd Ali:This isn't their actual enterprise use cases for this tech where crypto, saw a few, but not many in the early days. I think that there are benefits, obviously, of being able to be an AI company a 100%. You're seeing significantly more capital going to AI seed stage companies than than companies that don't have AI. But it isn't always food selling. You need to have very clear ideas around what does your moat look like, what does long term defensibility look like, is there resiliency in this offering.
Zayd Ali:And distribution is more important than ever when technical moats are pretty much going to 0. And if people see you getting traction, they can build a replica of your product pretty quickly. So how are you going to get 6 months, a year in some sort of distribution advantage compared to other startups that could build similar tech.
Michael Houck:Probably more to that too. The markets get so crazy when there's the hype bubble, the FOMO.
Zayd Ali:Yeah.
Michael Houck:It's very chaotic. We saw that too. But Yeah. Okay. Last kind of thing I wanna hit on here is, I I don't think a lot of people would have guessed this if they've listened to the conversation up to this point, but you're you're super young.
Michael Houck:Right? You're, like, super young for for a venture backed founder who's had a previous exit. How do you sort of evaluate in your position the risk of kind of going all in and spending essentially your twenties on a startup versus, you know, other priorities that can happen in life?
Zayd Ali:Okay. This is great. We're just talking about this. I so I think that there is for me, I will get into these existential loops. What motivates me?
Zayd Ali:Why am I doing what I'm doing? Is sort of the well that I'm pulling from a a a positive well? Is it a poisonous well? What's the chip on my shoulder? Like, I'll think about all these things because the way that you need to work to build a company is atypical.
Zayd Ali:It is not for work life balance. It is a very intense extreme life. And so I'll ask myself these questions and I get to and I'll I'll think myself into loops, but I get to some three core truths. Number 1, is there anything else that I'd rather be doing right now? And the answer is always no.
Zayd Ali:2, do I think I could be successful at any other profession? No. And 3, is it fulfilling? Do I feel like I have a purpose here? Do I feel like it energizes me?
Zayd Ali:Do I feel like it fills my well versus drain it? And the answer is always yes. So if those 3 three things are true, I can sort of pontificate around how I wanna spend my twenties. I can think about there's this saying that you what when you live your twenties, you're either gonna be an underskilled 30 year old or an underlived 30 year old. You just have to choose which one you want.
Zayd Ali:I think that's total Right? I think that there is when you have those three things and you understand that those are sort of immutable truths and you have clarity on those three things, you can figure out a way to structure your life around that. And there isn't a lot of open space in the life of an early stage startup founder or late stage startup founder. It's it's always gonna be hard. But if you know that's what you wanna do, you know that it's camp there's nothing else you'd rather be doing, and you know that it motivates, fulfills, and and sort of grabs on to this whatever this idea of purpose is, you don't really need to think much harder.
Zayd Ali:So I don't. And so those things are true for me, and and and that's why I've decided to devote my twenties to doing this. And, yeah, it'll be another decade of building in front of me.
Michael Houck:I love it, man. Somebody's gotta get those, appointments scheduled and and and make, sales and actually efficient process across the board. So There
Zayd Ali:you go.
Michael Houck:Very last thing we like to do, we do a little rapid fire outro. I got 4 questions I'm gonna ask you. Just give me quick hit responses. Yep. Okay.
Michael Houck:Name one investor who other founders should take capital from and why.
Zayd Ali:Jeff Becker, general partner at Antler. This Antler has done more for me than I could possibly articulate in a quick fire round. But from 1st one of our 1st investors, 1st customer, friend, adviser, has helped us build our entire adviser council. Like, this guy is relentless in building with you. That's the one thing I'll say about working with Jeff is it's not this traditional founder investor dynamic.
Zayd Ali:It doesn't feel like for a lot of I I talked to a lot of my founder brands. Like, investors will sometimes feel either, like, bosses or people actually really resent their investors. With Jeff, you're on the same level. And it's, the first thing he said to me when he invested in Valley was, I'm now your employee. Tell me what you need.
Zayd Ali:Put me to work. And, yeah, I think that that that explained into a team.
Michael Houck:I love that. Yeah. We need more investors like that.
Zayd Ali:Do.
Michael Houck:Name one thing that you would change about the start up world.
Zayd Ali:That's a great question. The one thing I changed about the startup world is I I talked about this way at the beginning of our conversation, and it's starting to change, but we need to appreciate Booststrappers more. I felt like in my sort of early startup experiences with adviser appointments and then Phish, which eventually turned into an agency, by the way. I didn't talk about that earlier. But it didn't people didn't qualify it as a startup, and it's a lot of work, and it's difficult.
Zayd Ali:And I've been on both sides, and it should be more respected or more valued than it is. And I'm starting to see now that founders are in an era where they need to grow profitably. They need to go and find ways to not rely on venture capital. They're suddenly like, oh, wait. This is actually pretty cool.
Zayd Ali:So, yeah, that that's one thing I would I would I would wanna change.
Michael Houck:Yeah. I mean, I totally agree about Bootstrappers. We raised a ton of money for my last company. This time, I've chosen to sort of do it myself fully. Different challenges as you mentioned earlier, but just as if not more rewarding for sure.
Michael Houck:Next one up, what's the number one piece of advice you would give to a first time founder?
Zayd Ali:Revenue. Start by building a good business before you go and and build a great business. What I tried to do with Phish was I tried to build a great business out of the bat. I saw the glitz and glamour of a social network for Silicon Valley founders, investors, connected, meeting, money, transacting. Like, that is a it is an exciting company to build.
Zayd Ali:I didn't think about what the fundamentals were in the unsexy parts of that business to actually make it work. And so build a good business. A good business has revenue. It has sort of traditional growth models. You understand your unique economics.
Zayd Ali:Like, there is there's scalability there. Once you have that core kernel of something that works, the basic things about a business, money in, money out, then go and think about how can I make this incredible and conquer the world with it? That would be my biggest piece of advice if I think about what I'd wanna say to myself 3 years ago.
Michael Houck:And this last one, this is a Peter Thiel question. What's something you believe that most people disagree with you about?
Zayd Ali:I think culture should be exclusive, not inclusive in the sense of culture should be like a glove. Right? I find that there are a number of of companies, sort of later stage companies that will have cultural tenants like innovation, respect, empathy. It's like, who doesn't want that? Right?
Zayd Ali:Your culture is your company identity. It should be an opt in or an opt out thing. It should actively exclude people from joining your company and bring people into joining your company. It should be something that 10% of the candidates that you interview actually want to be a part of. And so for us, like, we have cultural tenets of Olympian work ethic.
Zayd Ali:Right? If you want to achieve what 0.1% of people achieve, half you're willing to put in 0.1% of people are willing to put in. We have a tenant of no sugarcoating, which is sugarcoating wastes your time and my time. It's the least empathetic thing that you can do for someone. You'd be direct and whether that is in some cases, people would imagine that that is pretty dickish and it's it's sort of very yeah.
Zayd Ali:It's blunt and it's too frank for a workplace. For us, it's we don't waste time with that. Right? The most empathetic thing I can do for you is give you the most direct feedback possible. So for a lot of people, that's not a workplace that really excites them, but for a lot of people, it is.
Zayd Ali:Right? And that is the environment they've been waiting. I think that there is this sort of demonization of working incredibly hard and front loading your time and and sort of saying no to work life balance. When people come to Valley, they are looking for a place where they can work harder than they ever have before. They can work longer than they've ever had before, but they're given more freedom and responsibility than they've ever had before.
Zayd Ali:Right? That is a conscious choice that people are making to opt into our culture. So when I say exclusivity versus inclusivity, it's I wanna be hyperinclusive of the people that are looking for that work environment, and I should be able to say, hey, this may not be a fit or people should be able to say, hey, this isn't fit for me. Culture specific.
Michael Houck:That's great. I completely agree. I've seen the pros and cons of that at different points throughout my career. It's definitely true. Okay.
Michael Houck:So thanks for coming on. This is a great conversation. Where can people go to find out more about you, to find out more about Valley? Yeah. Where should I go?
Zayd Ali:Yeah. So I'm posting a bunch of content on LinkedIn, when it comes to the future of sales. And if you're looking to to book appointments, head over to join valley.co. We can, we'll help you out.
Michael Houck:Cool. Thanks, Sid.
Zayd Ali:Alright. Thanks, Matt. This was fun.
Michael Houck:Thanks for listening. I write up my main takeaways from every conversation and make them available to all of our members at foundingjourney.com, along with a bunch of other perks and more content. If you found this conversation valuable, subscribe to Founding Journey on Spotify, YouTube, Apple Podcasts, or whatever your favorite podcast app is. I post a new episode every Thursday. Also, consider leaving us a rating or a review.
Michael Houck:As a brand new podcast, this is the best way for us to get out there and founders to find us. See you
Zayd Ali:next time.