Rob Walling

So let's talk about valuations, like how these valuations happen. And there was a big realization at one point where you and I were talking because I had always heard, boy, you need billion dollar exits in order for a venture fund to make money. So how does TinySeed, this is a question I think I ask, I think everyone asks, so how does TinySeed make this work without a billion dollar exit?

So let's talk about valuations, like how these valuations happen. And there was a big realization at one point where you and I were talking because I had always heard, boy, you need billion dollar exits in order for a venture fund to make money. So how does TinySeed, this is a question I think I ask, I think everyone asks, so how does TinySeed make this work without a billion dollar exit?

How does all that work?

How does all that work?

I'm like, okay, yeah, I think you're profitable enough. This is great. On recurring revenue, on millions of recurring revenue.

I'm like, okay, yeah, I think you're profitable enough. This is great. On recurring revenue, on millions of recurring revenue.

Yeah, something like that. It's just incredible. Yeah. Once they hit escape velocity.

Yeah, something like that. It's just incredible. Yeah. Once they hit escape velocity.

Exactly. And that's the thing, A, the epiphany that I think I had at one point, or you kind of explained that to me. And it totally makes sense when you name the numbers, but the fact that the venture industrial complex is so focused on valuations and so focused on these large exits has almost to a point like brain, I'll say brainwashed some folks into thinking that's the only way to do it.

Exactly. And that's the thing, A, the epiphany that I think I had at one point, or you kind of explained that to me. And it totally makes sense when you name the numbers, but the fact that the venture industrial complex is so focused on valuations and so focused on these large exits has almost to a point like brain, I'll say brainwashed some folks into thinking that's the only way to do it.

And what it does is it leaves out, you know, I talk about my 1-9-90 rule where I say around 1% of startups should go after venture, about 90% should bootstrap, and I think about 9% should raise probably some type of funding. Maybe that's tiny seed, maybe it's angels, but it's like not venture track.

And what it does is it leaves out, you know, I talk about my 1-9-90 rule where I say around 1% of startups should go after venture, about 90% should bootstrap, and I think about 9% should raise probably some type of funding. Maybe that's tiny seed, maybe it's angels, but it's like not venture track.

The idea there is that going for $10 billion, $20 billion outcomes, it leaves out so many founders, thousands of founders who maybe should or maybe want to raise some type of money and still have a great outcome, right? And there is really no outlet for that outcome. before that we knew about it before us. It was Indie.vc and us. And then, you know, there's obviously some individual investors.

The idea there is that going for $10 billion, $20 billion outcomes, it leaves out so many founders, thousands of founders who maybe should or maybe want to raise some type of money and still have a great outcome, right? And there is really no outlet for that outcome. before that we knew about it before us. It was Indie.vc and us. And then, you know, there's obviously some individual investors.

There's a handful of others, but that's where it is. And so what's a trip is every application process for TinySeed, we do run it twice a year, every six months, we inevitably get one company that we make an offer to And they come back and say, we'd love to take your money. We want to be part of it.

There's a handful of others, but that's where it is. And so what's a trip is every application process for TinySeed, we do run it twice a year, every six months, we inevitably get one company that we make an offer to And they come back and say, we'd love to take your money. We want to be part of it.

But you know, we were looking for like a $10 million valuation or someone came, remember someone said 20 million and they were doing, they were doing 30, 40 K MRR, whatever. I mean, it was a respectable company, but it's like, no, we're like, no, that you don't understand. You don't get your cake and eat it too. Right. You don't get tiny seat at that valuation. That's not how we work.

But you know, we were looking for like a $10 million valuation or someone came, remember someone said 20 million and they were doing, they were doing 30, 40 K MRR, whatever. I mean, it was a respectable company, but it's like, no, we're like, no, that you don't understand. You don't get your cake and eat it too. Right. You don't get tiny seat at that valuation. That's not how we work.

And that's the challenge is if you're in a, especially if you're a first time founder or I've never had a big exit, I heartily believe this. And I've heard Dharmesh say this as well. So it like makes me think it's a really good idea is if you haven't had an outcome yet and you get some type, you get an offer for never have to work again money.

And that's the challenge is if you're in a, especially if you're a first time founder or I've never had a big exit, I heartily believe this. And I've heard Dharmesh say this as well. So it like makes me think it's a really good idea is if you haven't had an outcome yet and you get some type, you get an offer for never have to work again money.