Einar Vollset

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326 appearances 2 recordings 1 series first heard Jan 2025 last heard 10 Mar

Einar Vollset’s voice in public audio — every appearance, attributed to the second.

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Recordings per month over the last 12 months — 1 in all, peaking in Mar 2026 with 1.

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Startups For the Rest of Us · Episode 748 | The Ins and Outs of Startup Investing · 14 Jan 2025 podcast

And quality investments, like, you know, like a friend will do it. That's great. But like, how many friends do you have? Do you have 20 friends that are really, truly, rigorously, like is high quality and that you can put $5,000 in? Yeah. starts to get difficult. And then, you know, on top of that, like once, even if you get passed, like, can I even get my checking? Can I get the deal flow?

Then it's like, okay, well, who's setting the price here? Are you going to be able to get it? Because whatever VCs tell you, like the name of the game in VC is entry price, exit price. If you overpay for your investments, then you're not going to make any money. You know, if you invest at $50 million pre for a pre-product or

you know, pre-revenue business, it's a really big hurdle for you to make a reasonable return, obviously, because you overpaid for it. And so that's sort of the third thing that comes into it. It's like, do you have the pricing power? So can you get the deal flow? Do you have the pricing power to get a reasonable valuation? And can you even put your money in?

And that's alongside like, okay, well, you probably have a full-time job. How often are you doing these investments? Are you learning fast enough to stop doing stupid shit and start doing good investments? And that's really the reason why, along with this spreading of risk, why people invest in venture funds as opposed to just being individual angel investors.

He was one of the main ones there in his day.

Yeah, and I think, you know, I think like, I know for a fact, that's sort of what YC, you know, partly why YC started. It's like, because it was, it used to be kind of like, how do you, how do you get access to this? It's like, and it was like, oh, you know, my dad plays golf with this lawyer who can get you an intro and then you can get like, but like.

I think in part, that's why, like, you know, VC started out so geographic and remain to this day so geographically concentrated because sort of what it was like, like you'd get everyone was sort of there and you had to kind of be there. You had to be in Silicon Valley in order to get money. And like you had to have those connections and be able to work a warm intro.

I mean, that's still the case for the cases people like, you know, figure out a way to get an intro to me. That's turtle number one kind of thing. So for sure, that's that's been that's been part of it.

Well, I mean, there's a couple of different things here. And actually, like a billion, to a degree, like a billion dollars is apparently too small even in some cases. Like there was actually, I think it was Sam Altman who wrote a piece, you know, Mr. OpenAI, but used to be president of YC. He wrote a piece, How to Invest in Startups. And I think that was like 2018, 2016, something like that.

And his main point in that article, which I still think is up, was, you know, you shouldn't invest in anything Unless it can be $20 billion or more. Like, you know, just don't even waste your time unless you think it can be a $20 billion exit. And, like, I mean, that article was in part the reason why, like, TinySeed became a thing. Because, like... That's crazy. It is.

You know, that's that, like, I get it. Like he's, he's talking his own book at the time, you know, like that totally makes sense. Like if you're, if you have a lot of, if you have a lot of AUM, a lot of money to put on, you know, like, and you're, you're writing big checks and big outcomes and this is where you're To a degree, like, okay, it doesn't matter. Like, entry price doesn't matter.

Valuation doesn't matter. Like, you just got to find that thing that goes to $20 billion, right? That's the whole game. And while that's true, like, if you're playing that game, then that's how you should be playing that game. Effectively, our argument was like, look. There's got to be a way in which founders and investors can both succeed where outcomes are not quite $20 billion.

You know, like I think most of the people, you know, listening to this would agree that like a $75 million or $100 million exit, even if it's like selling to some lowly private equity fund. That's pretty good.

I think a lot of people listening to this will think to themselves, yeah, if I owned 80, 90% of a company and sold for $75 million, I'd be having a pretty good Christmas right about now, if that's what was happening. And so effectively, what we're thinking with TinySeed is like, look, there's got to be a way where you can have that be success and everybody makes out well.

And that's sort of the ground thinking on the investing side for TinySeed is like, how do we make that happen? And really what that boils down to is a couple of different things. Like one is I don't think it works for every single industry, every kind of product, every kind of service. Like there's just some things that are just requires a lot of capital, is extremely capital intensive.

You know, like it makes total sense to keep raising money. And like if you keep raising money and burning money, then like the sort of winner take all stuff makes total sense here. Like your Airbnbs, your hell, you like your new open AI stuff, right? Like it makes total sense. I'm going to raise money.

gazillion a trillion dollars and it is whatever and even some of the smaller stuff is like look my standard thing is like look if you're going to do like a home grooming startup service type thing that it's got it's got to be capital intensive like it's like an uber you you got to spend money on it and like you're going to get diluted you know up the wazoo and you have to gun for an enormous outfit to make any money but like what we realized is like okay but there is this subset of specifically b2b sass where like it can work because for a

Yeah, a lot of the time. Because like the gross margins are like, you know, 95%. That's not unusual. And quite often on the discretion side, I talk to founders and they're like, yeah, do you think I'm profitable enough? I got 65% free cash flow.

Yeah, like expanding revenue. And it's like, it's crazy. I mean, like you even see this in some of the like go public companies like Zoom. And I think Zoom actually is the sort of poster boy for this. You know, the Zoom, I think they went public with more money in the bank than they raised.

Yeah. And that's sort of like what B2B SaaS is like. And so I think it works for that. And in a sense that like there is this notion that it basically, like if you take a little bit of money once and then you don't need to raise anymore. You can if you want to, but you don't need to. And so that's what works for tiny seed or mostly bootstrap or tiny seed like companies.

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