Start With a Small Market

Hey y’all — here’s today at a glance:

🔗 Houck’s Picks

My favorite finds of the week (there were a lot of great fundraising posts).

Fundraising

• This investor is looking to write $50k-$100k checks in Q2 (Link)

• This investor is looking to make 2-3 $500k investments (Link)

• 16 rookie errors to avoid when pitching VCs (Link)

• Benchmarked valuation multiples is various verticals (Link)

• Current median valuations at different stages (Link)

• A reminder that fundraising is a numbers game (Link)

• A fundraising secret that all YC insiders know (Link)

Other Finds

• How to quickly find old conversations in ChatGPT (Link)*

• How Stripe measures success for Atlas (Link)

• 16 AI opportunities (Link)

• The toughest parts of running a startup (Link)

• Why a venture-backed startup paid dividends to investors (Link)

• Why Silicon Valley culture is so special (Link)

• How to make $1M, $5M, and $10M in Silicon Valley (Link)

• A breakdown on how to start an ambitious company (Link)

💡 Opportunity: White Collar Common App

Higher education is broken for the reasons below and so many more. I felt this when I was in undergrad 10 years ago, and it led me to drop out twice.

Unfortunately it seems unlikely that the trend will reverse anytime soon.

Ironically part of the solution may come from the college application process itself: a common application for your post-college professional life, much like the one many colleges opt into today.

Sam Lessin explains:

The Common App allows colleges to get base level information they will all want (your name, high school, GPA, etc) and also each add their own supplemental questions, required essays, and more.

Sam doesn’t explore why this doesn’t already exist, but part of the answer is just that getting it off the ground will be really challenging.

There are only two ways to do it:

1. Convince the vast majority of employers in a fragmented niche

2. Convince the limited number of top employers in a consolidated niche

If you don’t have relationships in a consolidated industry already then the first approach will be hard and time consuming but ultimately more likely to succeed.

The key is to start with as specific of a niche as you can, dominate it, and then expand to other niches. Peter Thiel elaborates on why:

🧠 Framework: Idea Validation Framework

Most ideas, especially in B2C, get validated in one of four ways:

1. Signal Aggregation → Conduct experiments to gather data before launching (landing page tests, etc).

2. Strong Beta → Run a small scale beta and hit established benchmarks that are good for your vertical

3. True Fans → Find people who will be very disappointed if your product goes away (this is how I validated Megaphone with a $1,000/mo pricepoint)

4. Visionary → The least common. You have a vision for something, build it, and it ends up working out. Typically includes some combination of the other 3.

This framework defines the differences between each path to validation:

📈 Trend: Influencer Lifestyles

The nature of being an influencer is changing.

Increasingly, the most compelling content comes from people who are obsessed with an idea and live in a way that supports that obsession. They are billboards for their ideas.

The actual format of content, and being super polished matters less and less — consumers are instead valuing authentic takes from these creators.

Some examples:

• Sam Sulek

• Zach Pogrob

• Bryan Johnson

The biggest creators of 2024 - 2026 will be built on this approach. But traditional creator monetization options (ads and sponsorships) will have a more pronounced negative impact on that authenticity than it did on any previous generation of big creators.

So… what should they do?

Well, it’s time to build (products and services).

Mr. Beast has sort of gotten ahead of this trend with Feastables, but he’s not as well positioned to capture this trend as someone like Bryan or Sam.

This new generation’s content is simply more opinionated than his. It’s a feature, not a bug (in the same way that his content having extreme mass appeal is a feature, not a bug).

Feastables are decent chocolate bars, not hyper-opinionated lifestyle products.

Working directly with a creator is the easiest way to capture this trend, but obviously is limited by the scale that single creator reaches with their content.

Creator accelerators may be viable for the first time if this trend continues, along with white-labeling services that can produce truly non-generic products.

💬 Quote: Don’t Hire Too Fast

You need two things to justify hiring a big team:

1. Product-market fit

2. A scalable way to grow

When we closed our Series A we knew we’d hit PMF with our core offering — a month-long IRL coliving residency for founders in beautiful properties and with high-quality programming that encouraged and didn’t get in the way of serendipity (or hard work).

It was an easy sell despite the high price point, and the quality of applicants remained very high. Many of our members have raised millions or been acquired since joining. Multiple have built unicorns.

But we didn’t have a scalable way to grow.

Servicing coliving houses with programming, interpersonal conflicts between members, and more for a month requires multiple full-time employees. Eventually we ran into the issues Jack mentions, even though we did have PMF:

The hardest one of those to overcome was the last one.

Managing a team of ~25 before we had a scalable revenue model operational sucked up so much of our time that we weren’t able to find one fast enough, which meant hard decisions around cutting burn and ultimately made it impossible to continue the IRL experiences that were working.

So PMF alone is not enough — you need a scalable way to service the market too.

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