Learnings from David Sacks

An excellent metaphor from David O. Sacks (on the World of DaaS podcast) for strategy in 2023/2024 ?

If you try to maintain speed in really intense headwinds, you will burn a LOT more fuel.

instead, slow down and conserve.

When you have tailwinds, that’s the time to pour on the gas.

Given the macro environment, Sacks suggests we prioritize efficiency over growth:

?? Prioritize survival, not growth

?? Treat cash like it’s coming out of your next round

?? Aim for 2+ years runway

?? Start raising 9-12 months *before* cash out date

The biggest surprise from the podcast ...

I assumed that many start-ups are in great shape. A LOT of companies raised a ton of money in 2021 and presumably they are sitting on a LOT of cash with a reasonable burn (like 3-5 years of cash in the bank). These companies could take advantage of their position and acquire a lot of good tech companies.

But David said that this would be great in theory. In practice, he said it was very rare for companies to have more than 2 years of cash in the bank. So there are very few companies that can run this play.

In fact, a lot of startups that raised under huge valuations have warped cap tables…Instead of doing a one-time reset to something sensible, they’re going to cling to the old valuations and end up with a lot of issues.?

Another interesting exchange came from our discussion around bubbles.

Tech has bigger peaks but 2022 showed us that tech also crashes harder than all other sectors

more notes from the discussion:

• tech layoffs can create seat contractions which then can create more layoffs – a very bad spiral.?
• Some SaaS businesses get a ton of leverage over time (CACs decreasing) and some get worse.
• Regulating big-tech is very bi-partisan … but there does not seem to be much success.?It seems most regulations, like GDPR, actually strengthen the big tech companies’ hands.?

More on David Sacks: David is a co-founder and partner at Craft Ventures – one of the foremost SaaS VCs. He was the former COO at Paypal and co-founder and CEO of Yammer, which sold to Microsoft for $1.2 billion. He’s also invested in over 20 unicorns, including AirBnB, Facebook, Palantir, Uber, and SpaceX. On top of that, he’s found time to co-host one of the most popular tech podcasts in the world.

Listen Now:

• Apple Podcast
• Spotify