Advice From 5 IA40 Leaders

We polled the founders of five companies from our inaugural Intelligent Application 40 list to bring together some of the best advice they have from hard lessons they’ve learned throughout their journey or the best advice they received during that time.

When setting out to found a company, advice is never hard to come by. Mentors, advisers, professors, investors, Meetup groups, entrepreneur networks – there is no shortage of places to go to seek advice. The problem is – that advice can be as varied as the types of companies one can found.

We polled the founders of five companies from our inaugural IA40 list to bring together some of the best advice they have from hard lessons they’ve learned throughout their journey or the best advice they received during that time.

Cristobal Valenzuela, CEO of RunwayML, which is one of the Intelligent Application 40 winners
Listen to our podcast with Cristobal here.

Cristobal Valenzuela is the Co-founder and CEO of Runway, which offers web-based video editing tools that utilize machine learning to automate what used to take video editors hours if not days to accomplish. He says he learned a lot when he was just starting out — spinning his company out of this thesis project at NYU. Still, he says the most important thing to always keep in mind is your rate of learning — entrepreneurs should never stop learning.

“How fast you are learning as a company, as a team and as a product, how fast you are learning about your customers, how fast you are learning about the industry, about the competition, about the market, about technology. That rate of learning and how fast you can do something you’ve never done before, experiment, learn as much as possible, and then adapt is really, really, really, really important. It’s easy to get stuck and not be able to adapt. So, just have that mentality that you’re always learning. And then everything else will come.”

Justin Borgman, CEO of Starburst Data, which is one of the Intelligent Application 40 winners
Listen to Justin’s IA40 podcast here.

Justin Borgman is the Co-founder and CEO of Starburst, which provides a query and analytics engine to unlock the value of distributed data. Justin says the advice he gives any entrepreneur at any stage in their journey, but particularly to those just starting out, is to look inside themselves and consider whether they have the perseverance required because that is the single most important attribute to being an entrepreneur.

“You have to have a high pain threshold and a willingness to push through that pain because it is not for the faint of heart. It is not easy. I think some people are just built for that. They have the stubbornness, the drive to push through that when others get overwhelmed by it and bogged down.

One piece of advice I will share that I heard myself — I actually asked a now public company CEO founder, ‘Does this ever get easier?’ Because as you’re building, you always think, ‘Okay, at some point, it’s just going to get easy, right? Like I’m going to be relaxing on the beach, this thing’s going to run itself.’ And he said, ‘No, it’s just different kinds of hard.’ And that stuck with me because particularly as you scale, every new chapter has been a new challenge and in a totally different way. That’s part of what’s amazing about startups, I think, just from a personal growth perspective. You are always having to improve yourself and scale to the next level. And so that really stuck with me. It never gets easier, just different kinds of hard.”

Anoop Gupta, CEO of SeekOut, which is one of the Intelligent Application 40 winners
Listen to Anoop’s podcast here.

Anoop Gupta is Co-founder and CEO of SeekOut, which provides the Talent platform companies use to find, hire, grow, and retain talent. Anoop spent much of his career at Microsoft, but as he’s transitioned into the world of entrepreneurship and helping others evolve in their own careers, he said he’s started to better understand the importance of setting a company culture – and how it needs to be foundational for any entrepreneur.

“Throughout my career, I have worked with incredible people and was lucky enough to be at a place with a culture that really invested in people. In a larger organization, you kind of take culture for granted — in the sense that it is already baked in. In starting SeekOut, my appreciation and conviction that people and culture are paramount has grown. Having the right people and creating a culture of gratitude, humility, and empathy is foundational to success. My advice for others starting their own companies is to be proactive about defining your culture and to stay true to that culture as you grow.”

Clem Delangue, CEO of Hugging Face, which is one of the Intelligent Application 40 winners
Listen to our podcast with Clem here.

Clem Delangue is Co-founder and CEO of Hugging Face, an AI community and platform for ML models and datasets, which just landed $100 million in financing this year. He thinks the beauty of entrepreneurship is owning one’s own uniqueness and building a company that plays to each entrepreneur’s individual strengths. He shared his biggest learning during his early days was to always take things one step at a time.

“You don’t really know what’s going to happen in three years or five years. So just deal with the now. Take time to enjoy your journey and enjoy where you are now because when you look back at the first few years, at the time you may have felt like you were struggling, but at the end of the day, it was fun. Also, trust yourself as a founder. You’ll get millions of pieces of advice, usually conflicting. For me, it’s been good to learn to trust myself, to go with my gut and usually it pays off.”

Luis Ceze, CEO of OctoML, which is one of the Intelligent Application 40 winners
Listen to our podcast with Luis here.

Luis Ceze is the Co-founder and CEO of OctoML, an ML model deployment platform that automatically optimizes and deploys models into production on any cloud or edge hardware. Luis is an entrepreneur and tenured professor at the University of Washington. He said as a professor, you can have impact by writing papers that people read and then do something as a result. And you can directly impact your students – what they go on to learn, research – maybe even become a professor themselves. But getting into company building – where you actually put a product into the hands of a consumer has been a new and exciting experience for him. One of the most important lessons he’s learned, he said, has been to surround himself with people that he genuinely likes to work with because it creates a more supportive, trusting environment.

“People who are supported, they can count on people around them and feel like there is a very trusting relationship with the folks that you work closely with. I have no worries about showing weaknesses and always having to be right. I think it’s great when you say, ‘You know what, I was wrong, I’m going to fix it.’ It’s much better to admit when you’re wrong and fix it quickly than trying to insist on being right.”

Commentary: From Angel to VC – Five Things I Learned in the first 100 days

Over the last 10 years, I had been doing — or should I say dabbling in — angel investing. With time and some hard knocks, I ended up with a simple philosophy.

If I liked the founder(s) and thought they had the execution capability and they wanted me to invest, I would. It is hard to spend any meaningful amount of time on this when you have a full-time job — and I had what I call a more than a full-time job at Microsoft during this time. So, it was more like spending an hour or two with the founders and either you invest or you don’t.

A VC investment is a long-term relationship

S. Somaseger

When I joined Madrona Venture Group in November 2015, I was excited to spend more time digging into the new startups and possible investments that had taken so little of my time in the last ten years. I quickly learned that, far beyond the pure scale issue, there is a world of difference between angel investing and venture investing. It has been a fascinating learning experience so far, and I wanted to share some of my learnings and key take-aways that are specifically important for entrepreneurs as they think about growing their company and possibly seeking funding to accelerate their growth.

  1. Investing in a start-up as an angel investor is different than as a venture capitalist. There are a number of common attributes that you look for when you invest in a start-up – team, idea, execution capability, addressable market opportunity and the like. At the same time, some of the angel investments that I have made in the past aren’t necessarily the ones that I would make as a venture capitalist. One difference at the angel investment stage is that we are looking to find entrepreneurs and investment opportunities that will not only be great angel investments but have the potential to be great venture investments as well as big, lasting companies. But as an angel investor scaling to have a meaningful return can be a different equation than as a venture investor. For example, a $50M exit as an angel investor is exciting whereas that may not move the dial much for a venture fund that needs to return hundreds of millions of dollars to its investors.
  1. Every start-up is not necessarily right for VCs and not every VC is right for a start-up. There are many reasons why a particular VC may not be the right fit for a particular start-up and vice-versa. As an entrepreneur, do not take it personally or think you are going to be unsuccessful when a VC says “no”, though there is always value in trying to understand why someone doesn’t invest. As an entrepreneur you want to consider, do you want to build a business that you control solely, do you want to slowly and organically grow and/or do you want to stay small? If so, VC backing might not be a good fit. A VC investment is a long-term relationship, particularly with early stage VCs. Like any other relationship, having a high level of trust and comfort level, a strong alignment of vision and the willingness and ability to be open and respectful in working through disagreements and strategic misalignments are critical for a successful partnership. You want to feel that right off the bat with your investors because, at the end of the day, we are all on the same team focused on building a long-term, sustainable and successful business.
  1. Valuation is an art, not a science. On the one hand, valuation is very important and on the other hand it isn’t the most important thing. I like to say focus on the valuation but don’t fixate on it. There are many things that go in trying to determine the valuation including status of the product, customer engagement and traction, usage and adoption rates, revenue, track record of the founder, etc. The key thing to remember is that 100% of zero is still zero and likewise a smaller percentage of a ginormous pie is still very meaningful.
  1. Raise money from the “right” people for the “right” reasons. There is no fixed formula for when to raise money or how much to raise or at what valuation to raise. One principle that I like is “If the trajectory of the business is going to be significantly better with additional cash, by all means go raise the money.” When you think about which VC to partner with, money is important but is only part of the equation. The value that the partnership will bring to you (strategy, connections, mentorship, accessibility) is equally if not more important. For example, at Madrona, we invest a lot of time, thought and people resources in systematically helping our portfolio companies grow. This value-add is both at the company-specific level and across all our portfolio companies as we connect people and learnings across our portfolio.
  1. Time and money are equally important resources for a venture capital firm. From a venture capital perspective, the size of the investment does not necessarily dictate the amount of time they spend thinking about your business, but if this size is too small, it can discourage VCs from investing. For example if there is room for a 500K investment in a round, but the VC firm usually likes to invest at least $2-3 million in each company, the firm has to decide if it is going to devote the time and resources to an investment that feels smaller and likely has less ownership in a company. While money is a limiting factor for everyone, time is an equally important factor as VCs consider how they can best help all the companies in the portfolio.

As I think about these last few months – every interaction has been one of learning this new and somewhat different world – but what is consistent is the prevalence of cool and innovative technology, great businesses and excellent founders in our ecosystem here in the Seattle region. I’m excited to see where it will all go and remain optimistic about our future as a major tech hub of the world.