Follow On Investors

Hey y’all — here’s today at a glance:

🔗 Houck’s Picks

My favorite finds of the week.

Fundraising

• This investor is looking to make 15 pre-seed/seed investments this year (Link)

• Peter Walker on percentage of company sold by funding in 2024 (Link)

Growth

• The viral app playbook from a $1M/month AI app founder (Link)

ICYMI

• Adam Nathan (0-$10M ARR in <15 months) has a new newsletter that is packed with cheat codes for startup marketing, product, fundraising, and culture. Check out Startup Tycoon here.*

• What the CEOs of the fastest-growing startups are doing (Link)

• Ben Horowitz on the two things every tech startup must do (Link)

• Marc Andreessen on how to de-risk a startup (Link)

• Everything they teach you at YC on one page (Link)

Also ICYMI on Saturday — here’s my full video on the entire history of Silicon Valley:

💡 Opportunity: Legal Advice Hotline

A “hotline” feels like the most late-1900’s concept imaginable, but hear me out.

Founders typically have a lot of questions in the early days of their companies that would best be answered by a service or other professional. Think legal, accounting, etc.

But those tend to be more expensive (and time consuming to find) than you’d like to have to deal with for simple questions.

So, what people end up doing is going to ChatGPT which can work sometimes, but is often too high-level despite your best prompting efforts.

A middle option should exist where you can call and an agent that’s been trained on the specific topic answers.

🧠 Framework: Beachhead Strategy

So, you want to change the world?

Don’t try to change it all at once.

Using a beachhead strategy, where your target and build specifically for a “minimum viable segment” of your target market at the beginning reduces complexity and scope which, for a tiny team just starting out, makes success significantly more likely.

This is another way of framing what Peter Thiel talks about in his famous lecture at Stanford about why it’s critical to start with a small market (counterintuitively):

📈 Trend: AI Agencies

Thinking of starting an agency this year?

Make sure it’s an AI-powered agency (or, should I see, agent-cy… sorry, couldn’t resist).

Agencies haven’t historically been scalable enough to get most Silicon Valley founders interested in them, but maybe AI will change that.

If agents can perform the actual work, after all, and you just need a team to manage those agents, the margins improve quite a bit compared to traditional agencies. Likely enough to significantly undercut them on price and cause considerable disruption.

💬 Quote: Follow On Investors

One of my biggest pet peeves in the VC world is that more investors than you’d think just wait to see who’s leading the round before committing capital.

It’s the ultimate sign that an investor either:

1. Is just looking for deals that are likely to get markups (i.e. short-term thinking) or…

2. Does not have the ability to reach conviction via first-principles thinking about why a startup is more or less likely to succeed or fail (which, ironically, is what leads to the largest returns)

Yes, “co-investing” alongside firms that have historically seen good returns may feel good but past performance is no guarantee of future success. Really, these investors are just playing the game to be able to say on their next LP deck that they got into x rounds led by “Tier 1” firms. It’s gross, and not at all about the actual startups.

Founders want to partner with investors who believe in them and what they’re doing, since this signals that they'll actually be able to rely on the investor along the journey.

Nikita Bier proposed just opting-out of this game entirely:

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