I'm Michael Houck. I founded Launch House in the summer of 2020 after getting laid off by Airbnb during COVID. Before that I had been part of the early team at Uber Eats.

Launch House was a membership club for startup founders built around a one-month-long co-living experience.

We put 20+ founders in a mansion and ran events, talks, hackathons, and other programming to help their startups.

We ended up also raising a venture fund and investing in some of the startups.

It was sort of like Soho House meets Y Combinator in a TikTok creator house.

We ran cohorts for a little over 2 years. It started when I booked Airbnb in Tulum with no plan other than to convince a bunch of founders to come live with me during the pandemic (this was summer 2020).

2 of the people who were in that first house were interested in the project and ended up becoming my co-founders.

Well, we’re no longer working on Launch House. It still exists due to the venture fund but has been shut down other than that.

But when we got back from Tulum after finishing our first two cohorts, we decided to get a mansion in Beverly Hills. We knew this would be expensive so we thought we’d need to try and raise some money.

We talked to a few investors but they thought we were crazy and, to be fair, they were right. We had nothing, and it was too early.

We did manage to get an offer from a VC fund, but the terms were around what Y Combinator used to offer and we ended up rejecting it in favor of self-funding.

Between the initial $25k I’d put in to fund Tulum and, now, an additional $210k for LA between the three of us, we’d put in around $250k total.

It was honestly a pretty insane decision in retrospect. All we had done at that point was curated some IRL experiences with really high quality founders.

But the world was starting to emerge from the pandemic and we felt we could build a brand around it.

By March of 2021 we had gotten in touch with Balaji Srinivasan and he put in $25k as our first investor. We fit a thesis he had around network states emerging from entrepreneurial communities.

We were then able to close a round in a few weeks using that stamp of approval from an investor as well-regarded as Balaji. We raised a $3M seed round at a $20M valuation.

By early September of that year we’d expanded to a townhouse in NYC. We had a ton of demand and had done around $900k in revenue over the first year of the business.

Around that time, Andrew Chen from a16z Andreessen Horowitz gave a talk at the LA house and was blown away by the energy. He told my co-founder that it felt like early YC.

Before the end of September — same day as my wedding actually — I was on the tarmac about to take off for my honeymoon with my wife when I got a call from my co-founder saying that Andrew wanted to do a Series A with us.

We negotiated while I was on my honeymoon — he ended up putting in $10M.

From there we kept the round small despite a lot of interest (though that was probably a mistake, given how capital intensive our business was).

We got some other strategic folks involved and ended up closing around $12M at $85M valuation.

In the first half of 2022 we filed to raise a venture fund for up to $10M. This had been the plan for a while. Investors loved it because we wanted the fund to return profits to the main company.

Basically, if you invested in Launch House then you’d get exposure to the longterm venture returns for the best companies in our community. It was like investing in a venture index fund.

Throughout the first 6 months of 2022 we ended up raising around $7.5M for the fund.

Our main goal was to build a recurring revenue business.

Early on, people were paying an annual membership fee on top of a one-time fee for the IRL coliving experience, but they primarily wanted the coliving and network that came along with it.

We wanted to keep them engaged year-round, so we used the funding to:

This meant hiring, too.

Our brand was extremely popular within the startup world at the time, and this was in 2021 when capital was abundantly available — so we wanted to be strategic about it.

In retrospect we probably should have taken as much capital as we could’ve gotten, and worried less about dilution, given the capital-intensive nature of the business and our growth plans.

But we looked for people who could add credibility in the areas we thought would be valuable:

Between the three of us we each had either direct or second-degree connections to a fair amount of investors, so we just combed through our network and worked on getting intros (or reaching out directly).

Existing investors were a big help once they came on board — for example we got introduced to Michael Ovitz by Andrew at Andreessen.

But social media was a huge too. Between our Launch House Twitter account and my own socials we were consistently getting in front of people.

Andrew actually had initially found us on Twitter — he was one of our first 100 followers.

People knew who we were because of all that. When we’d ask for somebody's email or DM them, we'd get a response.

It didn’t hurt that the company’s trajectory was rising so quickly that people thought calls with us were worth taking — at that point no one was sure how big this could become, but they believed in it. There was a lot of optimism.

We probably messaged between 50 and 100 investors, of which probably 30 turned into meetings across the two rounds. The vast majority of those meetings were for the first round.

Our close rate was probably around ~70-80%.

The fund was a lot harder because we didn't have a network in the LP world — we only had a network in the GP world.

Building relationships with those folks took longer — a little under half of them put money in if memory serves.

We emphasized that we were a strong founding team that has great credentials. Ironically, 2 of us were first-time founders (but from blue chip companies — Airbnb + Uber, and Google).

The one who had venture-backed company experience had only taken a company to Series A before though.

Despite that we were able to position ourselves as strong founders with a great network, and were trustworthy operators.

We also emphasized the long-term opportunity around the fund. We were really excited about that and so were the investors.

During the seed round we talked a lot about the future of education and how we needed more people building companies rather than doing theoretical work.

We talked about how Launch House could be a place that starts with this coliving experience, but eventually go down market to have a broader educational funnel built around new media channels.

The big trend that we were hopping on at the time was community in the age of a distributed decentralized Silicon Valley.

If everyone was going to leav SF then the global startup community needed a new institution for this new remote age. 

We thought Launch House could have filled that role.

We tried to do a little bit with both rounds. With the Series A, it was backed up in reality because we only wanted a certain amount of capital in the round. We didn’t want to take on too much dilution.

We already had a16z and they were the partner we wanted.

For the seed we didn’t have that constraint but the Balaji stamp of approval made other investors realize that this would be a hot round, and we encouraged speed to close as much as possible because we were managing the IRL experience at the same time.

If I was raising today I wouldn't really try to drive urgency as much. I'd focus more on the relationship and finding the right partners.

But if you're looking to drive urgency, don’t create a fake deadline.

Investors can see through that stuff, especially when the market's in their favor — it actually might work against you to try and do that today.

Saying no to the first offer was really hard. 

We were so early with the company. It was not even zero to one, it was like zero to 0.2. 

We knew it meant that our only option was to put a bunch of our own money on the line and hope it worked. 

That was more of a psychological challenge — it forced us to ask ourselves how committed we truly were, when we’d only begun working together two months before.

It’s not easy to put $250k on the line in that case.

As far as actually raising the 2 rounds that we did, the biggest roadblock was that some people didn't see it as a venture-scale business. 

Mostly because they didn't believe that we would be able to make the business big enough without the fund. Some chose to discount that.

Getting people to believe in the membership model when we didn't have a one was a challenge as well. We launched it around the same time as the Series A. Before that, everything was one-time payments.

And meanwhile our ask was that we wanted investors to invest at the valuation that reflected that we would be able to nail the membership model.

2021 was a crazy time.

We knew our announcement of the Series A was going to be a big deal. a16z is one of the biggest brand names in venture and Andrew is a high profile partner at the firm due to his personal brand.

So we worked with the Andreessen team to drive as much attention towards one thing as possible.

We wrote a Twitter thread that included links out to a blog post, a way to sign up or reply to join, and some other stuff as well. 

We had a video from a guy from Silicon Valley (the show) talking about investing in Launch House — We did a massive background push to drive attention to that. 

It's actually similar to what we do with Megaphone now — trying to drive attention towards social posts.

It involved timing an email blast the night before — and then when the tweet goes live — you tell your whole network to comment and engage with it.

It was key that we didn’t have competing places for them to go — just the Twitter post.

Driving that sort of attention really made the announcement blow up. From that moment on our whole brand was at another level. 

It was fun getting the company to that point — after that everyone took us very seriously. We were able to sign partnership deals with basically anyone we wanted. Coinbase, Solana, Polygon all did cohorts with us. And we were in talks with Brex and a few others when the company fell apart.

In terms of generating relationships with investors, you have to be doing something that is interesting.

If you want to go down the venture route, these people will be your gatekeepers for step changes in the company's trajectory by putting in millions of dollars all at once.

If that's the path you want to go, then you have to understand what they're looking at.

You have to do the work, but also position your company in a way that’s attractive to them.

If you're looking to build relationships with investors, the other thing you can do is add value to them.

You can curate interesting deal flow and show that you're at the vanguard of where some sectors/niches are going.

If you have access to things that they don't, they'll assume that you have access to knowledge that they want. 

That can mean that if you come up with an idea, they're more likely to be willing to explore it with you.

Another approach is talking about your perspectives online in a way that is coherent and well-written. 

It's far easier for someone to trust that you'll be a good custodian of a company if you can demonstrate how you think for the public to see. 

If they can go on your Twitter feed and see posts that are original, insightful, and interesting, they'll likely consider you as a de-risked investment.

Every startup investment is so risky for them — they're looking for reasons to say yes, but they're hyper aware of any potential reason to say no.

The less risky you can appear, the more attractive you'll be because they operate in is this world of insanely high risk.

I would also say not to be stingy with the equity.

We would have been far better positioned to weather the PR storm that we found ourselves in if we — a year earlier — had made it a huge party round Series A.

If you can get capital, unless the terms are really bad — take it. You don't get many of those opportunities, things can always change.

Another thing is that even in a market like this, you have to go in with confidence. 

Obviously we felt super confident about what we were doing, maybe to the point of delusion.

In a market that's more relationship-based, you have to be confident in what you're doing because if you're not, no one else is going to be.

If I were raising again for something new, I wouldn't pitch at all, even if I had no network.

I would go out and focus on spending time with investors, learning what they're excited about, what they're looking for, and seeing if that lines up with what I see as exciting. 

It's time consuming to do that, but it's way easier to raise money from somebody who trusts how you think than it is to get someone on a call after they see a deck, answer their questions for 30 minutes, and hope they give you millions of dollars. 

I'd recommend Andrew Chen all day long. He got into the trenches with us when things went off the rails and spent hours advising us, even though we hadn’t given him a board seat. 

He brought in other people, both from the firm and outside of it. He helped us navigate the tough times. I can't recommend him enough. 

One other is Jesse Middleton at Flybridge. He was our lead for the seed round. He's a community guy, so he understood what we were building. 

He really went above and beyond when we needed him to. He was also in the trenches with us and provided a lot of unique insight into our market.

I’d also recommend Brian Truong from Graph Ventures, another early backer. He’s a clear communicator and always willing to hop on a call. He’s genuinely helpful with his network, too.

Obviously I have to mention what we do. My newsletter, the podcast we're launching, the case study library that this is going to be a part of, all of it is amazing. 

I also made a LinkedIn post about books that I’d recommend to founders.

I'm now building a holding company with different entities within it. 

I've had offers to bring on capital for one of those, but I turned them down. To me the bootstrapping experience has been very different. 

With the venture experience you have more options to play with capital and test things out. You can be more liberal with what you test and experiment.

With the venture route, you're moving so fast that you're fumbling around trying to find something that works.

That didn’t prepare me to build a company — that prepared me to build a venture-backed company. 

With bootstrapping every dollar counts.

Being a bootstrapped founder better prepares you to be a startup founder in general than the venture route.

Building a bootstrapped company prepares you to build a company in general.

If I were recommending to somebody today, bootstrap a company first, and then use what you've learned about building a business and apply that to the venture route.

You're going to look way more attractive to investors — not just because you've had an exit — but also because of the way you speak about building a company.