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20VC: Elad Gil on Startup Offense and Defence in a Recession, How The Venture Landscape Has Shifted & All Things Valuations, Secondaries and Layoffs

May 26, 2020

Elad Gil, a renowned angel investor with a portfolio including Stripe and Airbnb, shares his insights on navigating startups in challenging economic times. He discusses the shifting landscape of venture capital, offering advice on cash management and runway strategies for founders. Elad emphasizes the importance of understanding valuations and highlights the contrasting strategies of investors in the current climate. He also reflects on the future of M&A post-pandemic, while advocating for a rejuvenated governance approach in Silicon Valley.

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ANECDOTE

Elad's Career Journey

Elad Gil's career started in 2001, joining a startup backed by Sequoia and Matrix.
After multiple layoffs, he joined Google, worked on Android, and later founded and sold Mixer Labs to Twitter.

INSIGHT

COVID-19's Impact on Startups

COVID-19 is causing major shifts in the economy, work habits, and financing.
These impact startups through customer behavior changes, economic downturns, and venture capital adjustments.

ADVICE

Assessing Company Health

Assess company health by examining costs, burn rate, and revenue.
Aim for 2.5-3 years of runway due to COVID-19's uncertain timeline and potential second wave.

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Elad Gil is one of Silicon Valley's most successful and prominent angels of the last decade with a portfolio including the likes of Stripe, Square, Airbnb, Pinterest, Instacart, Flexport and Brex to name a few. Prior to solely company investing, Elad was an operator as Founder and CEO @ Color Genomics for their first 3 years. Before Color, Elad was a VP of Corporate Strategy @ Twitter following their acquisition of the company he founded, Mixer Labs. Before founding Mixer, Elad spent 3 years at Google where he was involved with 3 acquisition including the Android acquisition.

In Today’s Episode You Will Learn:

1.) How Elad made his way into the world of startups and how that led to his investing in some of the most prominent companies of the last decade?

2.) How is the venture and startup landscape shifting right now? What does Elad make of the large multi-stage funds re-entering seed? How does Elad advise founders when it comes to taking secondaries?

3.) What are the core elements startups need to assess to fully understand their cash position? What is the optimal runway to have and to raise for today? How can founders stress test their runway models? Where does Elad see the most mistakes when it comes to runway?

4.) Does Elad believe the VC messages of "Open for Business" during COVID? How does Elad advise founders when it comes to valuation sensitivity today? What are the core terms that founders should watch out for when raising? How does Elad see venture fund reserve allocations changing?

5.) What are the core tenets of an effective layoff strategy? How should they determine the right level of aggression with which to make cuts? How can layoffs be done in a way that maintains internal culture and morale? Where does Elad see many going wrong when it comes to layoffs?

6.) Which business will thrive in COVID times? Which will die? What are the leading indicators of each? How does Elad determine in the businesses that are growing immensely during COVID, those that are sustainable growth and those which are purely due to COVID?

Items Mentioned In Today’s Show:

Elad’s Fave Book: Master of the Senate: The Years of Lyndon Johnson

Elad’s Most Recent Investment: Deel

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