Steijn Pelle

Dear Founders, Early-stage investing is nothing like stock market investing. And when Angels or pre-seed VCs invest, they’re not thinking like growth-stage investors. You’re too early for that. You’re pre-product. Pre-revenue. Sometimes even pre-team. So what are they really betting on? Not your idea (there are thousands of those). Not your business (there isn’t one yet!). They’re betting on: 1) You. The kind of person who gets things done even when it’s hard. 2) Your market. Whether this is a wave worth catching. 3) Your timing. Whether now is the moment to catch it. Yes, traction matters. Any shred of data that derisks your story helps. The more you have, the better. But no amount of traction will overcome the above 1, 2, and 3. Early investors don’t just invest in companies. They invest in people they want to see win, and in macro trends too big to ignore. If you want to raise early… Don’t just polish your deck. Show them you’re the person who will find a way, no matter what. Yours truly, David

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Y Combinator's latest call for startup ideas validates something we’ve been building toward for a while. The next evolution of agencies is the convergence of software and services. What YC is really saying is this: charge for outcomes, monthly, fixed, whatever. But historically those outcomes were tied directly to human labor costs and hourly pricing. That model breaks when software introduces decreasing marginal cost. Agency businesses are still extremely hard. Being responsible for outcomes that directly impact a client’s revenue is a massive burden. AI doesn’t magically increase margins. If anything, it puts more pressure on agencies. What it does allow is software leverage. Augmenting labor so quality improves without scaling headcount linearly. That’s how you deliver a better client experience. That’s how you attract and retain better people. That’s how you disrupt incumbents. Most people are underestimating how difficult this actually is. Agencies are not software businesses. But the ones that survive will be the ones that understand how software and services operate together as one system.

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All VC "theses" fall into 3 categories. Know them and your pitch will hit 10x harder. 1. The Follower ("Access Thesis") - Their mindset: "I don't want to miss out." - The reality: They aren't analyzing your market, they just want to know who else is coming to the party. - The pitch: Sell momentum. Who's in? How much is committed? - Working with them: Take the check to fill the round, but check references first. Passive capital is fine; emotional capital is lethal. 2. The Pattern Matcher ("Heuristic Thesis") - Their mindset: "Does this look like the last winner I missed?" - The reality: They bet on traits (e.g., repeat founder, buzzy keywords, location, growth rate, etc.) and call it pattern matching; they don't actually care about what you're building. - The pitch: De-risk for them. Know and show how you check their heuristic boxes. - Working with them: They'll be good operational partners, but they may not get the vision. 3. The Prepared Mind ("True Thesis") - The mindset: "I’ve been waiting for a company to build exactly this." - The reality: They saw the future before you walked in. They don't need convincing that the opportunity exists, just that you are the one to capture it. - The pitch: Skip the generics and go deep on the specific insight you share and why you're uniquely positioned to build the future. - Working with them: High impact, but high friction. If you pivot away from their worldview, things get messy. Pitch FOMO to the Followers; pitch stats to the Pattern Matchers; pitch vision to the Prepared Minds. Pro-Tip: Listen to their questions to spot the type. "Who is leading? How much is left in your round?" = Type 1. "What's your CAC?" = Type 2. "Why now?" = Type 3.

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The cost of bad activation is WAY more than most founders realize. It’s easy to write off a few drop-offs as a "UX issue." In reality, friction compounds across your entire business model. 1. Higher Acquisition Costs If your signup flow has too many steps, your CAC goes up. You are paying for leads that bounce before they even see the product. 2. Lower Free-to-Paid Conversion Rate Users won’t upgrade if they can’t find the value. Slow time-to-value caps your revenue, no matter how good your paid features are. 3. Higher Churn Poor activation is the leading cause of early churn. If a user doesn't build a habit in the first week, they rarely stick around. 4. Weak Pricing Power This is often overlooked. If a product feels difficult or heavy to use, users value it less. They won't pay premium prices for friction. When you add these up, you’re technically suppressing the economics of the entire business. Stop pouring water into a leaky bucket. Fix your activation first. (Inspired by Dan Martell’s post on “The Cost of Bad Leadership”)

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Two days ago, OpenAI clarified the transaction fee it will charge Shopify merchants with its Instant Checkout product: 4%. This reinforces my argument that (independent) agentic commerce is a mirage: many Shopify merchants run on incredibly thin margins (3-8% net) and simply may not be able to support this. Further, they aren't in control of it: if ChatGPT's Instant Checkout affiliate link system overwhelms or front-runs their existing organic discovery, it could be disastrous for their businesses. Compare this to an on-platform shopping agent like Amazon's Rufus or Walmart's Sparky, which benefits in a number of ways when a customer purchases through their platform, obviating the need for the agent to charge a direct transaction fee. This transaction fee stacks on top of the existing merchant and payment processing fees that retailers pay. For CPG retailers with fixed COGS, an additional, obligatory 4% fee on an unpredictable volume of sales could fundamentally compromise the durability of their business. It also highlights the value of advertising relative to Instant Checkout's affiliate model: advertisers control the margin they forfeit through advertising with their bid and can optimally price it. For many retailers, 4% may be unmanageable as a transaction fee, but some lower relative amount could be feasible in the form of a bid. This is the difference between endogenous pricing and an exogenous imposition of friction.

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I've met with 200+ merchants and seen data from 20,000 subscription brands. Here's 4 tactics to scale from $0-$100M that all the bigger brands use: 1. Extreme offer focus The fastest growing brands all run very similar gamified offers. • Sexy intro offer. • Free/mystery gift. • Countdown timers. In recharge, you can A/B test until you find your most lucrative offer. This is the MOST important lever of a brands success. 2. Paid ad diversity. Some brands on recharge still do TV ads, news, and radio. While the fastest growing brands are doing it through Meta arbitrage. But these auctions are expensive and as more competitors enter the landscape, the costs are only going to go up. So you need to build a moat, either: • Differentiated product. • High retention through loyalty programs. • Owned distribution channels (facebook groups, retail, in-person events) 3. Channel diversification. Some of the largest merchants run... TV, Radio, Podcasts, Organic, and Influencer. I have a client who sells out after ONE radio showing every. single. time. Yes, 95% of brands rely on Meta, but you need some TOF diversification. 4. Subscription only focus. In 2024, we saw plenty of brands scale with non-sub offers. But in 2026, the key to scaling is getting every new customer to subscribe. I've analyzed recharges data on 20K+ merchants THOROUGHLY... Subscribers have a 3-4x higher LTV than non-subscribers and once a brand crosses 12-15% sub opt-in, subscriptions drive 40% total revenue. So all roads lead to subscriptions. If you want your brand to crush it this year, you have 2 options: A: Make the deal SO good they'd be a fool not to subscribe. B: Create landing pages with a default sub and hidden non-sub. Now you have my secrets... so go implement them. If you want to walk through how the fastest-growing brands on Recharge are running these plays at scale, talk to our team 👇 https://lnkd.in/gkdSVFWj

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Here's how Clay used "Reverse Demos" to find product-market fit and build a self-serve motion from scratch: When we first launched Clay on Product Hunt in February 2022, we got hundreds of signups overnight. We demo’d our product to them like we knew best: by running 30-minute presentations like college professors on Zoom. Unfortunately, few retained -- most likely because no one was actually learning during the demo. Potential customers were usually impressed when they saw me use Clay, but as soon as they tried to use it themselves, they got stuck and churned. Enter: the reverse demo. Instead of running canned demo meetings, we started emailing potential customers before meetings, asking them to come prepared with a specific data enrichment problem to solve. If they didn’t come with an idea, we’d use the first 5 minutes to come up with a personalized use case for them. Once they were in the meeting, we’d ask them to share their screen, give them a Clay signup link, and use Zoom annotations to show them exactly where to click to complete their workflow. Our goal on every reverse demo was simple: solve the customer’s stated problem within the 30 minutes -- and try to blow their minds in the process. Initially, we had to walk people through multiple calls before they had their "a-ha" moments. Through reverse demos, we were able to get it in under one call. Our goal was to build product habits: by solving any customer’s unique business problem within 30 minutes, we helped them build confidence with Clay and made it more likely for them to use the product to solve their future problems. The obvious benefit of the reverse demo was better customer conversion and retention. After 100+ reverse demos, we were getting people to “a-ha” moments within just a few minutes and most would convert after that call alone. But—much more importantly—the reverse demo helped us quickly improve Clay’s product. There’s no tighter feedback loop than getting your ideal customers on Zoom and watching them use the product for the first time. There were dozens of times that I noticed something on a reverse demo, whether bad UX, bad copy, or a bug, and asked Eric Engoron on our engineering team to ship a change the same day. Each reverse demo was a UX masterclass. That helped us go from 7 calls to convert a customer to just 1 in less than a year. Eventually this improvement gave us the confidence to remove our waitlist and launch a successful self-serve motion. This feedback loop was foundational for our growth as we navigated product-market fit and evolved our GTM motion.

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Bootstrapping & pricing power. Self-funded teams often under-price, fearing churn. Flip it: test value-based pricing with tiny cohorts, measure retention, and adjust monthly. Bootstrapping earns you the right to price for value because you know the user better. 💬 Founders: what pricing test could you run next week with five customers?

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