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Speaker 1

00:01

I'm Kat Mignalik and I'm a partner at Y Combinator and I'm excited to see you all here today. And I'm also excited to introduce you to Shanna Fisher. Shanna is the founder and managing partner of Highline Venture Partners, which is based here in New York City. And she's also a board partner at Andreessen Horowitz.

Speaker 1

00:21

As an early stage investor, Shanna invested in companies like MakerBot, Pinterest, 53, Refinery29, and even YC alum Stripe. So investors know her as someone who has this incredible ability to recognize greatness in early-stage entrepreneurs even before they have traction But maybe more importantly her portfolio companies know her as someone who helps them realize that greatness. So we're really lucky to have her here today, and I am excited to welcome Shanna Fisher.

Speaker 2

01:01

Thank you so much. It's so great to be here. Thank you so much to Y Combinator.

Speaker 2

01:09

I really am a big admirer of the program. I fund a lot of companies out of YC, and it's really the main reason I'm here. 1 thing that's important for me to say before I start is I really never blog or tweet or say anything about what I do. So why am I here?

Speaker 2

01:28

I'm here really because I love Y Combinator, 1, and 2, I love New York for startups. So when I was invited, I thought, okay, this will be fun. There's a variety of reasons why I don't really talk about what I do. But the main reason is I think really the companies are the most important thing about what I do.

Speaker 2

01:45

So it's really not important for me to talk. It's really more important for them to talk. So when I was invited here, I really had to think, like, do I really want to do this? And, you know, 1 of the main and what do I want to say?

Speaker 2

01:57

And the main reason I decided to come is because the reason I don't blog or tweet or talk about what I do is that I often am told I give the opposite advice of what people normally hear. So I thought that's a great way to use this time. I'm going to just go through the major areas that I hear over and over and over again that I'm giving people the opposite advice of what they normally hear. And I thought that would be the best way to use this time.

Speaker 2

02:30

So first of all, I made this presentation with a lot of help, but 1 of the things is it's in this beautiful format of paper, which I think is an amazing presentation format. So if you're wondering what this is, it's 1 of my companies that I love very much, 53's paper. So the first thing I'll cover is runway. I'm just gonna like hit a couple of major topics and talk about my thoughts on each 1.

Speaker 2

02:57

So 1 of the first things I see when companies come to raise money is that they're raising money for runway. So they'll often say, I'm raising a million and a half dollars, that's for 18 months, and that's what we're doing. Right there, I don't like that. So I like when people are raising money to get their company done by any means necessary.

Speaker 2

03:23

It's not about having 18 months. It's about making whatever you raise last. And whatever you're able to raise last, whether you're raising a lot or whether you're raising a little. And actually, 1 of the things that I think is really great about Y Combinator, and I've known YC since it was a Boston program, and if you meet companies from YC and you talk to them, even the ones that were in the Boston program 6, 7 years ago, what you realize is that they don't think about raising money as runway in the very early stage.

Speaker 2

03:52

They think about it as how am I going to get this done by any means necessary and how long is this going to last. And that's the most important thing. It's not about having enough, because runway really is about labor. It's about payroll.

Speaker 2

04:10

It's about rent. So what you often find in companies that aren't thinking about runway, they think about how am I going to solve some of those problems in different ways? How am I going to get not to pay rent? So 1 of the things I try to do for my companies, especially if they don't raise a lot of money, is how to get them free space for as long as possible, because that's just 1 of the ways to get the money ticking down.

Speaker 2

04:33

Another way is, of course, thinking about labor. How many people do you really need? Who are you paying? Why are you paying them?

Speaker 2

04:38

How much are you paying them? And that's a big factor. So I think runway is sort of 1 of those things, It's often the thing in the beginning that is like the most important of how to get as far as you can because, you know, your valuation only goes up after that. And hopefully that's sort of my philosophy on runway.

Speaker 2

05:02

Founders, cofounders. Common knowledge I think is that it's good to have co-founders. For some people, I think that's true. I have a lot of single founders in my portfolio.

Speaker 2

05:15

I think it's not always right to have co-founders. I think certain people that can take a company really far, actually, are not actually equipped to have co-founders. They're actually better being a single founder. And so I don't make exceptions to that.

Speaker 2

05:34

I like to see people that can take the company the distance. And having a single founder might sometimes be the best way to do that. If you do have cofounders, I think it's really important not to have repeat skills. Developer designer, obviously incredibly important.

Speaker 2

05:56

Product, sometimes that's inside a developer, sometimes that's outside. Sometimes that's inside a designer, Sometimes that's outside. I think it's really important when you're looking at who you're starting a company with. I can't, I'm not going to make a generalization.

Speaker 2

06:09

Sometimes, you know, people have known each other forever. They may have overlapping skills. They may have known each other growing up. And they may be the right person to start a company with.

Speaker 2

06:18

But a lot of times what I'm seeing are people that just met the person a couple weeks ago or months ago because they wanted to start a company. Now that starting a company is so – It's just something people do when they graduate. There's so many companies. People feel like that's the only way to do it.

Speaker 2

06:37

And I think that some people are just better to be single founders. And you should structure the company around your own skills. Time. That's time to launch.

Speaker 2

06:51

That's what this means to me. Common knowledge, I think, is you should get product out quick. You should iterate. And it should be live.

Speaker 2

07:01

Actually, I often take the opposite view on this. I think 4 years ago I might have said, launch quick, that's actually important. Today, because there's thousands of startups and it's a thing that many, many, many people are doing, I actually think you should take as much time as possible to make your product perfect. And because there is so much competition, you have to really think differently about what space you're in and how much time you're taking to launch.

Speaker 2

07:30

It's actually possible today to have smaller groups of users. Doesn't have to be live. But I actually don't think it's good to rush products out. I think if it takes you a year to make your product perfect, then you should take a year.

Speaker 2

07:46

It's not about getting it out. Because I think you have to have, like, the hooks in it and a couple of, like, traps that are going to be the reason why consumers love your product. And it can take a while to craft that. And it's not so important, I think, today to just get something out there, minimum viable product.

Speaker 2

08:06

I think actually what it's important to do today is to try to figure out how you're going to raise above and level above all of the competitors. And that's something that timelines and kind of goes back to runway are really important to think about initially. Location. New York versus San Francisco versus everywhere else.

Speaker 2

08:32

I really like, I love New York. I love New York to create companies. I think New York is a very creative city. I think it gives people a lot of inspiration.

Speaker 2

08:40

There's certainly a lot of input you get to your product that you don't get in a community where everybody is doing tech. There's a lot of money in the early stage in New York, so I think that's excellent. What there isn't is a lot of money in the middle stage. It's still California, I think, primarily that has a huge advantage with the trajectory companies are able to get.

Speaker 2

09:06

And doing things like Y Combinator, actually if you're going to be located in New York, is extremely strategic. You might not even think about the relationships that you're forming there, how valuable they're going to be 2 years from now. You're just thinking about how do I get my thing funded, how do I get my startup to be separated from everybody else, which YC is excellent at. But what it's also good at is really putting down roots in California.

Speaker 2

09:27

So if you're going to be in New York, you have to have some roots there if you're going to want to go back there. And having investors in both cities, I think, is also really important. Because you get very different perspectives. And that's why I think location has to be thought about very strategically.

Speaker 2

09:43

Certain companies, I think, have real advantages to be in a city and, and, an urban environment like New York or other cities. Others have real advantages with the amount of people you can hire and the talent that you find in California, so, northern California. So I think that's my view on location and I sometimes hear, I sometimes hear the opposite or not an honest evaluation of what are really the pros and cons. So this is like my favorite 1.

Speaker 2

10:12

Nobody knows anything, especially when it comes to investors. And I think about that all the time myself. And I find actually it's very liberating. It's very liberating because I know many of the great companies that I found when I found them, absolutely nobody else was looking at them.

Speaker 2

10:29

Most people didn't like them. And it was very difficult to tell that what they were going to become was going to be as big as they did become. And I think it's important for all of you starting companies to really remember when you're talking to investors it's very personal, it's very subjective. So if you hear negative comments, if you hear like this doesn't make any sense, 9 times out of 10 that might be true, but 1 time it may be that what you're doing is so new that like nobody can evaluate it.

Speaker 2

10:59

And that's when really great things happen. You also might be talking to an investor that have just done 10 investments. And they're not even in the headspace to do yours. So I think it's really important to, when you sit down with investors, talk about what are the last couple deals you did.

Speaker 2

11:16

Look, if you get someone that hasn't done a deal in a while, they're actually maybe more open-minded to you. And I think you have to be more strategic about, you can be more strategic about the people you're talking to, not just closing your round. You can close people that are really going to spend the time and actually have an open mind to what you're doing and give you good feedback. So it's really important when you're talking to investors to realize, look, they probably aren't in any better position to evaluate what you're doing in a weird way than the next person sitting next to you.

Speaker 2

11:49

There's a lot of patterns. People get stuck in patterns. I don't actually believe in patterns. I think patterns actually can trap you.

Speaker 2

11:56

So into wanting to see the same thing that worked before. But the river is always flowing, And the markets are very different. What worked today is not going to be something that worked 4 years ago. So personally, I try not to look for patterns.

Speaker 2

12:13

I'm also going to contradict myself a lot, so I'm talking about patterns. But I'm talking about my advice. But I think when you're starting and really crafting your company, just thinking about the role that investors play and who you're talking to and where are they coming from, do some research when you sit down with them before you just launch into your presentation. And you'll get a sense, hey, is this person even like a candidate, or are they probably kind of like, is their plate already full?

Speaker 2

12:42

A lot of investors can't even really, If they're a lead or a board member, if they're on more than 12 boards, that's like a lot. So if you're talking to someone on 12 boards or someone who's new, you're much more likely to get the results you want with someone who's very open-minded to what you're building. And these are some of the things to look for. Product development.

Speaker 2

13:07

I have a couple of things on product development that I find myself going over a lot. 1, actually, I got this advice from a paper. I was with the paper team this morning. And I asked them, like, what, you know, how do you guys think about product development as a startup?

Speaker 2

13:24

What are some of the things you did that you think are valuable? And what are the things that you think you wish you knew? And 1 of the things that's really important, and I really believe this goes back to the number of people on the team, I think it's really important to build for today. If you read development blogs and many people that have worked at bigger companies leave those companies with the same disciplines.

Speaker 2

13:48

And a lot of those disciplines you might read about in development blogs, like, aren't, you know, you're going to spend a lot of time on infrastructure, but you're not going to spend a lot of time on the product you're trying to build for today. And prioritizing what actually is building for today, having a big vision, because when you start a company, you often have a big vision, like, this is what we're going to do, this is our business, this is an area we're trying to disrupt. But from a real product development standpoint, what's today's problem you're actually going to solve. And I often advise companies that are also going to YC, go to YC to grow, because some of the connections and the relationships you're making have really been incredible difference makers for companies to either get other startups using their product or take advantage of the mentors there to teach them, like, really how to craft growth when you have that solid product.

Speaker 2

14:40

And I think that's, like, 1 of the best things to remember about building. Another thing I like to think about, again, time, I think you want to take as much time as possible to build a perfect product. 1 thing that's related to this is design. I think today design is really becoming, it's like all the same.

Speaker 2

15:02

Great design is all the same. There's the same CSS templates a lot of people are using. And so the designs kind of bleed into each other. You know kind of what makes great design today.

Speaker 2

15:13

It's like flat. It's whatever sort of Apple is also bringing forward, which is great, but you don't have any breakthroughs. So if everybody's using the same templates, the same full-bleed photos, the same sans-serif fonts, the same saturated colors, which are all beautiful, And today we're trained, especially investors are trained to look at a design and be like, oh, that's clean, that's beautiful, that looks like it's supposed to look, but it looks like everything else. So what I actually like to look for, and I funded a lot of stuff that did not look good because I knew, like, all you have to do is, like, the tip of the iceberg.

Speaker 2

15:48

You just have to put some design onto that. But if you have something really breakthrough, don't worry about how it looks because how it looks is often going to be something you can do. Use 1 of those CSS templates that everybody else is going to judge you by. But I think if there's any designers in the room, I think it's time to push past what everybody is starting to look like.

Speaker 2

16:09

And that's something that I look for. I know that we got to this design because this kind of pervasive design, because there was another pervasive design that kind of got overtaken by this 1. I think we're ready to have a new look. I don't know what it is.

Speaker 2

16:24

Of course, that's what I look for every day. But I'd really like to see products not be so skin deep Because I think that you can get trapped in the skin deepness of a product and not worry about like what are you really trying to do that's breakthrough underneath? How hard is it? How much time does it take to get perfect?

Speaker 2

16:45

And often design is last. And I hope there are breakthroughs there. But I really would focus on the iceberg of the product versus the surface. People.

Speaker 2

17:00

So related to Runway, people raise money and they say, we're going to go hire 5 people, we're going to go hire 7 people, we're going to hire 4 developers because we need 4 developers to get this done by 3 months. And what I've found is that Most people that are starting startups don't know how to manage people. And you know, you're going to find yourself overwhelmed. And it's really important to perfect how you manage people.

Speaker 2

17:28

1 by 1. So if you, say, have a single founder, you should hire 1 person and perfect it with that person. If you have 2 founders, hire 1 person, perfect how you're going to manage that person. And build the team that way.

Speaker 2

17:43

I think another thing is this is going to sound really cheesy, I guess, but diversity is really important. And, you know, if you look around and your founders and your company all look the same, you're just not going to have enough views of your user. And a lot of founders, I don't want to sound controversial, but most founders are male. I've certainly funded a lot of female founders.

Speaker 2

18:12

I've funded a lot of products that are for women, created by males, but they prioritize hiring women pretty early on. So it's sort of a, you know, equal opportunity thing. I mean, you want to find the best person for the job, but you really should think about bringing other people into the company, not just being female founders, but bring women into the company, either in design roles, development roles. You know, there's a lot of times in my companies they probably get tired of me doing this, but I meet a young female developer who I think has promise.

Speaker 2

18:47

And I'll like, just tell a company, you have to hire her. You have to train her. Because there's no way people are gonna get opportunities unless founders, founders who really are in the position of taking their companies forward do that. And you're gonna find those people are so valuable.

Speaker 2

19:04

You're not even going to, partly it's karma, but I actually believe it's 1 of those things that if you bring these people into your company, whether it's, you know, racial diversity or gender diversity or just people that don't think like you. Mental diversity, however you want to say it. I just think it's so critical to building great companies. And I think when I look back at my companies that have succeeded, This is what they've done.

Speaker 2

19:32

They didn't necessarily set out to do it, but they did it. And I think it's actually indisputably a great thing to do. We're not going to have more female founders unless they get more experience. They're not going to get more experience unless they get great experiences in other startups.

Speaker 2

19:47

So sometimes I think it's really important to prioritize these things. That's just my view. Can I talk to you for a minute? This is a big 1.

Speaker 2

19:57

Back to people. You think you're building a startup to create a product. You think you're going to launch a product and you're building technology. You're actually building people.

Speaker 2

20:06

You're building a team. And if you don't take care of managing that team, it's going to come over you like a tidal wave. You're going to have people coming up to you. Can I talk to you for a minute?

Speaker 2

20:15

That's kind of like what the symbol is of people want to take you aside. People want to know where am I, what's my standing in the company? What's my position in the company? Where, what's my role?

Speaker 2

20:24

Why is this person getting that role? Here's an idea I have. That'll happen if you don't work on managing the people. There's a really great paper called The Scarf Method.

Speaker 2

20:35

1 of the things I do is I love CEO coaches who really help founders grow as managers. The Scarf Method is something that he recommends. I've read it's a sort of a neurological approach to how to manage people, what people need to be managed. If you just type S-C-A-R-F period, period, period, you'll find the paper.

Speaker 2

20:57

If you don't, you can email me, I'll send it to you. It's just about what people need. And you'll find if you take time to think about how you're managing the people on your team, and you are actually now managing a group of humans, let's say you raise more money, you take your company a little further, you're going to hire people. I do advise not to hire people very quickly, especially if you've never managed anyone.

Speaker 2

21:21

I think you've got to perfect it. And you'll make mistakes, and those mistakes will become part of you as a good manager, and you'll be able to hire someone else and retain someone else. So you'll make mistakes. I think you should make mistakes early so that you go, and then you can correct that.

Speaker 2

21:38

And it's not at a mission-critical time. So that's a big 1. If you see yourself surrounded with, can I talk to you for a minute, out of your work, then you realize, okay, I need to step back and I need to figure out, am I managing the people around me? What's happening?

Speaker 2

21:57

Because the startup can be such an intense, I'm very empathetic, it's a very intense environment. You feel like, you know, what you're doing is extremely important. You lose perspective almost for everything else around you. And that's actually really important.

Speaker 2

22:12

It's really important to be in that no perspective place because that's how you can, I think, execute and do superhuman and great things? But it's really important to step back and realize, like, I'm managing people, not just the product. And many of my founders, many founders I meet are engineers, and it's just not something that they've done. But if you can do that, you'll be great.

Speaker 2

22:32

And no 1 will ever be able to kick you out of the CEO spot. The Equinox. So the Equinox is something I like to think of as that time horizon, the line between when you don't have to make money and when you do. So personally, I like companies that make money.

Speaker 2

22:52

I like companies that have business models. I like companies that think about the business model ahead of time, even if I think there's no greater value in what you do than if somebody is willing to pay. So I like companies with business models. However, I have definitely funded things without business models.

Speaker 2

23:06

And they've even had a really good idea, a clear idea, of what they're going to do. Even if they don't do it in the first year, they may not do it till the third year. But they have a very clear idea of what they're going to do. And I know there's a lot of examples out there of companies that don't have that.

Speaker 2

23:20

But I think you'll find you really control your destiny when you do control the money. Either you control raising the money, some people are very good at raising money, or you're in control of making money. So the equinox is like that time between it's like acceptable not to make any money and when it is. And I think that's really important to recognize.

Speaker 2

23:39

Many founders don't recognize with enough time when that equinox has passed. So there is a certain amount of time where it's all potential and investors invest in potential. You know, very rare. I mean, they look, they like to look for what they like to look for, but a lot of that is what's potentially, you know, what's potentially going to be valuable and they project onto a company.

Speaker 2

24:01

Now, there's a certain time when you can do that and a time when you need to stop. And as a founder you need to say like this is the time we need to cross over because we want to control our destiny and I think that's how I think of the Equinox. I think it's a very important concept that I try to help my companies with. So I'm wrapping up.

Speaker 2

24:19

Cosmos. This is really meant to be about inspiration. So I don't know if anybody's watching Cosmos on TV. So good.

Speaker 2

24:30

It's so good. And I went back and watched the old Cosmos. I remember growing up how much I loved the original Cosmos. And that really had a profound impact on me.

Speaker 2

24:38

And if you're watching Cosmos, and I really recommend everybody do. It's on Fox. It's just the head of the Hayden Planetarium is the narrator. And I recommend going to the Dark Matter show, actually, at the Hayden Planetarium.

Speaker 2

24:53

It's really extraordinary. And what I think of when I'm inspired by Cosmos is just the big problems there are to solve. And how on Earth, where we don't really even understand the edge of the observable universe yet, and how deeply interesting that is to me. And the problems of carbon and all the kind of things that are outlined through the narrative of that show.

Speaker 2

25:24

And I don't know what that inspires me. That inspires me. So if I see like lots of little apps, I'm sort of like, what is this? This is lots of the same stuff.

Speaker 2

25:32

I really love to see breakthrough things. I think people really truly are, you really only are going to achieve as big as you do dream, and that's very corny, but I think a lot of what I do is look for people that have really big dreams and they know how to build for today to get there. And they know how to look at and say, like, I don't want to just do another app. I actually want to do something that is meaningful.

Speaker 2

25:57

And whether it's maybe thinking about design in a breakthrough way or whatever you view as meaningful, whatever you view as inspirational, it's really important, I think, when you're starting your company to have that spark. Because if you don't have that, it's going to show. The authenticity shows. It takes Pixar 5 years to make a movie.

Speaker 2

26:13

Why are they the best movies? Because they took 5 years. And they're made with a lot of heart, a lot of people, and a lot of ideas. And there are so many companies right now.

Speaker 2

26:23

To level up, you have to do that. It's going to be very hard to level up if more people aren't doing that. So whether you're watching Cosmos or you're finding some other way to inspire you, you know, I really encourage everybody to dream big because you could get jobs and jobs would be a lot easier, a lot easier. Startups are really hard.

Speaker 2

26:41

So if you're going to do it, you got to go for it. And that's what I want to see. So that's all. I just want to say thanks.

Speaker 2

26:53

Email me if you have any questions on what I said. I hope you don't quote me, though, because that would, you know, I don't want to debate it. I just want to put my shit out there and see what happens. But if anything I said interests you, I'd love to talk to anybody.

Speaker 2

27:09

Thank you, YC. Thank you, 53, for helping me and this wonderful illustrator named Julia Liu, who just put together these incredible visuals. Thanks again. Incredible visuals.

Speaker 2

27:16

Thanks again. Thank you. Thank you. Thank you.