Alex Ung

DTC founders doing $1-5M: Your margin isn't "tight." It's leaking. I've audited supply chains for 17 years. Here's what I see every time: Founders scaling fast. Revenue climbing. Profit… stuck. Not because they're bad operators. Because COGS has 47 places to hide margin killers and most founders track 3. Supplier price increases you never approved. Freight surcharges buried on page 4 of the invoice. "Handling fees" that didn't exist last year. You can't negotiate what you can't see. Find your profit leak → https://lnkd.in/gqVsScBY

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i heard half of the current YC batch has already pivoted - we're entering the largest existential crisis in the history of tech. not just for founders. for investors. for talent. for everyone who built their identity around "make something people want" for 50 years, technology was upstream of culture. you built because you could. the market validated. that was enough. that's gone. AI just handed infinite execution capacity to anyone. the question is no longer can you build it - it's should you, and why does it matter. founders who can't answer that will pivot forever. investors who can't articulate it will chase consensus until the alpha is gone. talent will walk toward the teams with a moral compass and cultural intention. culture is moving upstream of technology again. the winners will be the ones who decided what's worth building - and made you believe it too.

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Perfectly stated: "But it didn't give them product-market fit. They earned that themselves. Stop worshipping accelerators. They're amplifiers, not magic. The only thing that matters: Build something people desperately need. And you don't need permission for that."

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founders that have only ever worked within a large company tend to be empty vessels. the most valuable skill at a big company is identifying who has (or could soon have) power and then aligning with and advocating for their ideas as if they were your own. take a spin through the recent YC class and you see a pattern of big company mids all founding the same AI for xyz... its not really their idea, it just sounds good. the board meetings will be especially painful. founders acting like they work for the investors, seeking approval, lost in the woods. there are exceptions. but they tend to be founded before zirp. when founding a company was hard and low prestige and there wasn't capital at every turn. an empty vessel doesn't jump into the abyss without first raising a $5m round from the 9 figure 'seed firms'. 

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Here's what often happens… Founder enters YC with their dream idea. Week 6 rolls around. "Dude, this sucks. You should pivot to credit card processing instead." They have 6 weeks until Demo Day. Panic sets in. They pivot to whatever might get traction, not what actually excites them. Then they're stuck building that business for the next 10 years. Maybe even as many as 50% of successful founders look back and say "that was really hard and miserable and I don't think I can do that again." They keep going but hate the journey. Paul Graham actually warns against this. He calls it "playing startup" - manufacturing ideas you think might work instead of scratching your own itch. The biggest YC successes prove this point - Airbnb founders renting their own apartment. Brian Armstrong building Coinbase because he lived through Argentina's currency issues. These weren't "good ideas on paper" - they were personal problems that needed solving. But the average success is often a different story. Most founders pivot to whatever gets investor interest, not what genuinely matters to them. The pressure cooker environment creates this dynamic. When you only have 12 weeks to show progress, you optimize for metrics. You choose the path that gets you funded, not the path that gets you excited to work every day. This is the hidden cost of the "move fast and pivot" mentality. Will you actually enjoy building your company? Ask "will I still care about this problem in 10 years?" as much as “Will this work”

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One of the most common mistakes I see amongst early stage founders is prioritizing whatever was said in their last meeting with a potential investor. More specifically founders tend to focus on metrics that investors mentioned they care about on a pitch call.  Oftentimes, investors have 5+ pitch calls a day and may have even just thrown out these metrics off the cuff without thinking very deeply…or even if they did mean it sincerely, they likely don’t know your business well enough to know what really matters. Don’t be led astray by trying to cater to the wrong audience. I say this as someone on both sides. I've been the investor giving feedback and the operator receiving it…and I’ve made this mistake myself. A lot of founders spend so much time talking to investors that they start building for investors.  This is natural in a way because they believe they need investors to survive (which may be true in the short run)…but what they really need is customers. They pivot based on what sounds good in a pitch deck. They chase the metrics VCs care about.  And they forget about their actual customers. Investor feedback commonly comes from pattern matching across portfolios, not from understanding your specific customer. That advice might be totally wrong for your business. I've watched founders build in completely the wrong direction because they optimized for fundraising instead of solving their customer's problem. They chase vanity metrics that look good on a slide but don't actually move the business forward. And by the time they realize it, they've burned months going the wrong way. Your customers pay you. Investors don't. Listen to investors. Learn from them. But don't build for them. Build for the people who will actually use and pay for your product.

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You’ve likely read several takes on last week’s YC batch. Still, I thought I’d share mine with a few themes I’m tracking. Given our focus on Series A, the value in YC for us is in tracking early rising stars and identifying where some of the smartest founders are starting to build. I won’t talk about the volume of AI agents — that was an interesting highlight from the last batch. What stood out instead was how much more grounded the applications felt — especially when it came to vertical focus, operational depth, and knowledge work. Here are three-ish themes that stood out: 1. Less focus on SMB, more focus on knowledge workers. I was surprised to see so few companies focused on the 90% of companies in the U.S. that employ 200 employees or fewer. The SMB market is sizable, and we, along with many other investors, have been bullish on tools meant to serve this market. Instead, this year’s batch included tools for accountants, pharma reps, legal back office, researchers, and more — a theme consistent with our observation of increased usage of AI as an assistant for teams with human bottlenecks. 1a. "Cursor for X." Cursor has left an indelible mark on the industry, so much so that founders are using the product as a blueprint for workflow-focused AI agents. A few companies that stood out were Vesence (Cursor for Lawyers), Nomi (Cursor for Sales), and Mesmer (Cursor for CTOs). To the point above, some of the most exciting tools are AI-native partners for high-skill professionals and knowledge workers. It’s worth mentioning that not one demonstrated clear evidence of a replacement. 2. Vertical Operating Systems. Our next evolution from vertical agents is vertically focused operations and management systems or platforms that function as full-scale operational support. You can think of these as AI-native versions of Toast, Veeva, or Guidewire. Standout examples include Kaelio (healthcare), Hemut (trucking), and Waffle (SMBs), all of which are building AI-powered infrastructure to replace legacy software stacks completely. 3. Healthcare – AI for clinical ops. A number of founders are building for the messy middle — the process-heavy healthcare system that, despite exorbitant costs, still isn’t functioning optimally. Standouts, in addition to Kaelio above, were Aegis (healthcare claims), Novoflow (medical ops), and SynthioLabs (Voice AI for pharma). There was also at least one personalized healthcare agent, Galen AI, that leveraged patient records to provide personalized healthcare (a step beyond ChatGPT and bots already used in virtual care delivery). My take: The X25 batch shows a market that is clear evidence of maturing in the right direction. I’m most excited about clear, immediate use cases and defensible, specialized systems that solve complex, industry-specific problems. AI is rapidly moving from a novelty to the core engine of our economy. Anything I missed? Feel free to share your thoughts.

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YC applications just closed Monday. If you didn't apply or don't get in, don't panic. It's not always the best move. A lot of really smart VCs actually prefer companies that skipped YC. A YC founder pitched me last week at a $35M valuation. $25K MRR. Ten pilot customers who'll probably churn after the initial period. "But we just graduated from Y Combinator." I passed. Not because the company was bad. Because YC pushed them into a valuation trap they can't escape. Here's what happens: - YC pumps companies to $20-40M valuations with $10-24K MRR, if at all. Vanity traction that disappears after demo day. - Six months later, you're raising a real seed round with $80K MRR. Every VC does the math: - $35M valuation for $80K MRR? - Next round we would need to invest at $50M+ to avoid a down round Pass. Now you're stuck in the "YC dead zone": Too expensive for seed investors Not mature enough for Series A Can't do a down round without killing morale Running out of money "We had a high valuation, because we diluted so much from early investors, including YC. Now no one will fund us. We're dying because we're overvalued." Meanwhile, the founder who raised at $10M outside YC? Same traction. Closed their seed in 3 weeks. Kept 25% equity instead of 18%. VCs are catching on. I know a dozen funds that automatically discount YC valuations by 30-40%. "YC companies come in with demo day momentum. We wait 4 months and invest at reality." To founders who didn't get into YC: You might have dodged a bullet. Raise at $8-12M with real ownership. Give yourself room to grow into your valuation. YC optimizes for finding the 1 Stripe in every batch. The other 199? Collateral damage. They don't care. The founders are the ones left holding the inflated bag and lose their life's work. If you're building a rocket ship catering to other YC founders? Maybe YC's worth it for the network. Building a solid, normal startup that's also going to the moon? You're better off raising smart money at a founder-friendly valuation. Most founders think missing YC means they failed. Sometimes it means they got lucky. #YCombinator #VentureCapital #Founders

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🚨 Founders: If you're not exploring cross-industry alliances, you're playing the wrong game. Some of the biggest breakout companies didn’t scale by outspending the competition they scaled by out-partnering them. 🚀 Think Figma embedding into dev workflows. 🚀 Calendly riding the rails of Zoom and Salesforce. 🚀 Zapier integrating with Trello and Slack before raising big money. 💡 The playbook? Fuse your solution with another industry's infrastructure and unlock distribution, data, or demand without burning capital. Cross-industry alliances do 3 things: 1. Collapse time by borrowing someone else’s audience. 2. Unlock non-obvious use cases that give you strategic moats. 3. Increase your valuation before the first funding conversation. If you're a startup founder and you’re stuck thinking, “We need capital to grow,” you’re asking the wrong question. Ask instead: 👉 “Who’s already serving my customer in a different way and how do we win together?” That’s how exponential growth actually happens. 💬 Founders: Which alliance would double your reach in 90 days? #Startups #GrowthStrategy #VC #EarlyStage #FounderTips #Platform #AI

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