The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why Founder Mode is Dangerous & Could Encourage Bad Behaviour | Why Fundraising is a Waste of Time & OKRs are BS | Why Angel Investing is Bad for Founders to Do and the VC Model is on it's Last Legs with Zach Perret @ Plaid

Oct 16, 2024

Zach Perret, CEO and Co-founder of Plaid, shares his insights on the dangers of "Founder Mode" and criticizes OKRs as ineffective. He believes that raising funds often distracts founders, advising them to limit fundraising efforts. Zach also reflects on his decision to turn down a $5BN offer from Visa and discusses the implications of high valuations. He emphasizes the importance of addressing "grinder problems" and advocates for sustainable growth strategies, arguing that angel investing can hinder founders instead of helping.

50:53

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Zach Perret

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Quick takeaways

Zach Perret warns that 'Founder Mode' can encourage detrimental behaviors in startups, emphasizing the need for a more balanced leadership approach.

He argues that frequent fundraising distracts founders from their core responsibilities, advocating for raising capital only when truly necessary to maintain focus.

Perret highlights the importance of recognizing incremental progress to boost morale and motivation, encouraging leaders to celebrate small wins amidst larger goals.

Deep dives

The Misuse of OKRs

OKRs (Objectives and Key Results) are often misapplied in startup contexts where they can lead to detrimental behavior. Originally designed for manufacturing settings, OKRs misunderstand the nuances of the software industry, causing confusion among founders who try to implement them. Founders often feel pressured to develop specific metrics tied to OKRs, potentially fostering a siloed mindset rather than promoting collaborative growth. It's argued that while setting goals is vital, they should be customized to a business's unique needs rather than adopting a rigid framework that may not align with the company's mission.

Intro

3min

Navigating Growth: The Complexities of Corporate Decision Making

5min

Navigating Resource Allocation and Product Development

2min

Navigating Startup Success

6min

Evolving Strategies in Talent Assessment

2min

Navigating Startup Complexities

17min

Celebrating Small Wins in Leadership

12min

Future Aspirations for Plaid and Closing Remarks

4min

Zach Perret is the CEO and Co-Founder of Plaid, a technology platform reshaping financial services. To date, Zach has raised over $734M for Plaid from the likes of NEA, Spark, GV, Coatue and a16z, to name a few. Today, thousands of companies including the largest fintechs, several of the Fortune 500, and many of the largest banks use Plaid. In addition, Zach is also a Co-Founder of Mischief, an early-stage venture fund in San Francisco.

In Today’s Episode with Zach Perret We Discuss:

1. Founder Mode:

Why “Founder Mode” will be the most dangerous blog post written in the last decade for founders? What is most misleading about it?
What are “grinder problems”? Why does Zach believe that grinder problems are the best problems for startups to try and solve?
Why does Zach believe that OKRs are BS and should be removed? What should be used instead?

2. Lessons from Raising $734M for Plaid:

What is the worst advice that VCs give that most founders take?
Why does Zach believe that angel investing is more distracting than helpful for founders to do? What are the pros of investing alongside running a company?
Why does Zach encourage founders to raise money as infrequently as possible? What does this mean for the size and price of rounds Zach thinks we should see occur?

3. The $5BN Exit and the $13.4BN Round:

Why did Zach turn down the $5BN exit to Visa? Was it the right choice?
Does Zach regret raising at such a high price of $13.4BN when the exit did not happen?
Would Zach sell the company today for $13.4BN if offered it?
What did Zach not do that he wish he had done? What did he do that he wishes he had not done?

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