Keith Rabois on 2023 macro outlook, startup valuations, founder advice, ChatGPT vs Google | E1650

Uncertain Markets

In 2023, startups face unpredictable market conditions, with inflation and consumer spending as key factors. Keith Rabois emphasizes the need for startups to plan for multiple scenarios, as no one can predict the market accurately. He advises founders to be dynamic, adjusting hiring plans and cost structures quarterly to navigate potential downturns or sideways movements 1. Rabois notes, "The best thing you can do is therefore plan for different scenarios. Like, you can't try to probabilistically pick one scenario" 2. This approach helps startups remain resilient amid economic uncertainty.

   

Valuation Norms

Startup funding and valuations have shifted back to historical norms, with seed rounds at $10 million and Series A at $20 million. Keith Rabois explains that founders must accept these changes and adapt their expectations accordingly. He stresses the importance of founders taking ownership of past valuation mistakes and being willing to "take the medicine" to correct them 3. Rabois states, "Investors are going to be much more selective, but even when they pull the trigger, they're going to demand terms that reflect reality" 4. This realistic approach is crucial for securing investment in today's market.

   

Hiring Dynamics

Major tech companies' hiring freezes and layoffs are reshaping the startup ecosystem by reducing entitlement expectations. Keith Rabois highlights that startups should focus on hiring individuals who are not swayed by big tech salaries, as these candidates often bring unique skills and ambition 5. He shares an example of a founder who rejected a candidate considering offers from both a startup and Facebook, emphasizing the need for startup employees to prioritize growth opportunities over salary 6. Rabois remarks, "If it takes you more than 30 seconds to figure out that you don't want to be the 700 developer at Facebook, then you're totally the wrong fit for any successful startup." This mindset is essential for building a strong startup team.