1
00:00:00,000 --> 00:00:00,350
[Miles] Okay,

2
00:00:00,400 --> 00:00:01,349
[Miles] so here's the thing.

3
00:00:01,700 --> 00:00:07,549
[Miles] Fourteen companies in a single YC batch hit a million in ARR before Demo Day even ended.

4
00:00:08,179 --> 00:00:09,880
[Grant] Three times more than the last winter

5
00:00:09,880 --> 00:00:10,029
[Miles] Wow.

6
00:00:10,029 --> 00:00:10,330
[Grant] batch.

7
00:00:10,330 --> 00:00:10,429
[Miles] 

8
00:00:10,429 --> 00:00:12,629
[Grant] That number stopped me cold when I saw it.

9
00:00:12,780 --> 00:00:13,379
[Miles] Right?

10
00:00:13,580 --> 00:00:15,330
[Miles] And Garry Tan posted it himself.

11
00:00:15,780 --> 00:00:17,380
[Miles] According to his post on X,

12
00:00:17,530 --> 00:00:22,280
[Miles] the W26 batch also clocked the fastest revenue growth rate in YC history,

13
00:00:22,679 --> 00:00:26,580
[Miles] Fourteen% week over week across nearly 200 startups.

14
00:00:26,830 --> 00:00:28,480
[Grant] Come on, that's wild,

15
00:00:28,530 --> 00:00:28,780
[Grant] right?

16
00:00:28,980 --> 00:00:33,030
[Grant] So today we're pulling one company out of that batch and really pressing on it.

17
00:00:33,130 --> 00:00:34,180
[Miles] Hex Security,

18
00:00:34,530 --> 00:00:36,680
[Miles] eight weeks to a million ARR.

19
00:00:36,884 --> 00:00:40,433
[Miles] They're running AI agents that do continuous penetration testing,

20
00:00:40,533 --> 00:00:45,183
[Miles] and their first customers were basically other companies in the same YC batch.

21
00:00:45,384 --> 00:00:50,283
[Grant] Which is either genius or a thing that only works inside the YC bubble.

22
00:00:50,484 --> 00:00:52,584
[Grant] That's exactly what we're going to push on.

23
00:00:52,683 --> 00:00:54,284
[Miles] And after the founder breakdown,

24
00:00:54,484 --> 00:00:55,384
[Miles] we zoom out.

25
00:00:55,433 --> 00:00:59,034
[Miles] The full W26 batch has some structural stuff going on.

26
00:00:59,484 --> 00:01:01,534
[Miles] 56 AI-native service companies,

27
00:01:01,734 --> 00:01:03,284
[Miles] 15 repeat founders.

28
00:01:03,347 --> 00:01:05,548
[Miles] and a finding that kind of surprised me.

29
00:01:05,548 --> 00:01:08,447
[Grant] The fastest growing ones didn't pivot,

30
00:01:08,548 --> 00:01:09,647
[Grant] they held course.

31
00:01:10,248 --> 00:01:10,697
[Miles] Exactly.

32
00:01:11,097 --> 00:01:12,798
[Miles] Then we get into valuations.

33
00:01:12,897 --> 00:01:17,997
[Miles] The default W26 round is sitting at $4 million on $40 million post money.

34
00:01:18,247 --> 00:01:20,497
[Miles] That's double what W23 commanded.

35
00:01:20,897 --> 00:01:24,647
[Grant] Whether that's earned or vesting trap before the Series A,

36
00:01:24,847 --> 00:01:26,647
[Grant] we're not going to hand you a clean answer.

37
00:01:26,897 --> 00:01:28,147
[Grant] That's the whole conversation.

38
00:01:28,548 --> 00:01:29,048
[Miles] Alright,

39
00:01:29,247 --> 00:01:31,897
[Miles] let's get into it, starting with that Garry Tan stat.

40
00:01:31,924 --> 00:01:35,174
[Miles] that and what it actually costs to hit a million before Demo Day.

41
00:01:36,224 --> 00:01:37,874
[Miles] The dashboard just sat there.

42
00:01:38,224 --> 00:01:39,274
[Miles] A million dollars.

43
00:01:39,524 --> 00:01:42,174
[Miles] I kept refreshing it like it was going to change.

44
00:01:42,624 --> 00:01:43,774
[Grant] That's the code open,

45
00:01:43,974 --> 00:01:44,324
[Grant] right there.

46
00:01:45,324 --> 00:01:50,024
[Miles] Garry Tan posted on X during Demo Day for YC's W26 batch.

47
00:01:50,574 --> 00:01:54,774
[Miles] Fourteen companies hit a million dollars in ARR before they even pitched.

48
00:01:55,274 --> 00:01:59,124
[Miles] According to Tremendous, that's the highest number ever recorded in YC history.

49
00:01:59,828 --> 00:02:02,028
[Speaker 3] Fourteen out of almost two hundred!

50
00:02:02,677 --> 00:02:05,128
[Miles] Three times more than W25!

51
00:02:05,528 --> 00:02:06,578
[Miles] One batch cycle!

52
00:02:06,878 --> 00:02:07,478
[Miles] That's wild,

53
00:02:07,578 --> 00:02:07,728
[Miles] right?

54
00:02:08,527 --> 00:02:08,927
[Speaker 3] I mean,

55
00:02:09,128 --> 00:02:13,578
[Speaker 3] when I first saw a million ARR on a seed stage company like a decade ago,

56
00:02:14,027 --> 00:02:16,828
[Speaker 3] that was a Series A signal—you'd go tell your partners!

57
00:02:17,328 --> 00:02:19,628
[Speaker 3] Now it's the YC admission bar for elite.

58
00:02:20,116 --> 00:02:28,766
[Miles] And Foundevo reported on the old benchmark used to be 150K to 500K ARR to be considered top tier at Demo Day.

59
00:02:28,966 --> 00:02:31,516
[Miles] That bar more than doubled in a single cycle.

60
00:02:31,966 --> 00:02:33,166
[Speaker 3] More than doubled.

61
00:02:33,416 --> 00:02:36,966
[Speaker 3] So what does that do to every founder who's tracking the wrong number?

62
00:02:37,427 --> 00:02:37,927
[Miles] Right,

63
00:02:38,027 --> 00:02:40,228
[Miles] and here's the thing—Rebel Fund,

64
00:02:40,277 --> 00:02:45,427
[Miles] which has been scoring every YC batch since 2013 with a machine learning algorithm,

65
00:02:45,877 --> 00:02:48,527
[Miles] published their read before a single pitch was delivered.

66
00:02:49,078 --> 00:02:50,177
[Miles] According to their analysis,

67
00:02:50,377 --> 00:02:51,478
[Miles] reported by Foundevo,

68
00:02:51,927 --> 00:02:58,677
[Miles] 35% of W26 companies scored in the top 20% of all YC companies ever evaluated.

69
00:02:59,127 --> 00:03:01,328
[Speaker 3] No previous batch came close to that.

70
00:03:01,747 --> 00:03:03,048
[Miles] Not even close.

71
00:03:03,347 --> 00:03:06,798
[Miles] So you've got two independent signals pointing the same direction:

72
00:03:07,197 --> 00:03:11,247
[Miles] the revenue numbers and a predictive algorithm that's never seen a batch this strong.

73
00:03:11,847 --> 00:03:13,197
[Speaker 3] I want to believe that,

74
00:03:13,548 --> 00:03:17,447
[Speaker 3] but I've seen enough Demo Days where the framing does a lot of work that traction can't.

75
00:03:17,647 --> 00:03:20,497
[Speaker 3] What does it actually cost to get to a million in 90 days?

76
00:03:20,947 --> 00:03:22,647
[Miles] That's exactly the question.

77
00:03:23,283 --> 00:03:25,233
[Grant] Because the compression is real,

78
00:03:25,683 --> 00:03:27,683
[Grant] AI tools cut build time down to weeks,

79
00:03:27,983 --> 00:03:29,933
[Grant] but the decisions you make at that speed,

80
00:03:30,183 --> 00:03:31,233
[Grant] the things you don't build,

81
00:03:31,483 --> 00:03:32,933
[Grant] the customers you say no to,

82
00:03:33,283 --> 00:03:34,633
[Grant] those are the ones that come back.

83
00:03:35,033 --> 00:03:36,533
[Miles] Or they don't come back,

84
00:03:36,584 --> 00:03:37,533
[Miles] and that's its own answer.

85
00:03:38,133 --> 00:03:38,483
[Grant] Yeah,

86
00:03:38,683 --> 00:03:39,133
[Grant] Exactly.

87
00:03:39,334 --> 00:03:40,433
[Grant] The number is impressive.

88
00:03:40,683 --> 00:03:43,084
[Grant] The story behind the number is the whole thing.

89
00:03:43,731 --> 00:03:53,231
[Miles] Garry also posted that average weekly revenue growth across the nearly 200 company cohort was 14%, the fastest ever across a full batch.

90
00:03:53,632 --> 00:03:54,532
[Speaker 3] Batch-wide?

91
00:03:54,831 --> 00:03:56,182
[Miles] Not the top handful,

92
00:03:56,532 --> 00:03:57,132
[Miles] All of them.

93
00:03:57,532 --> 00:03:58,132
[Speaker 3] Alright,

94
00:03:58,432 --> 00:04:01,831
[Speaker 3] so I want to hear from someone who actually lived inside that number.

95
00:04:02,032 --> 00:04:07,782
[Speaker 3] What did the sprint look like? What got cut? And what breaks when you grow that fast inside a 90-day program?

96
00:04:08,307 --> 00:04:10,757
[Miles] There's a founder from this batch who can answer that,

97
00:04:10,957 --> 00:04:12,957
[Miles] and the answer is a little uncomfortable.

98
00:04:14,207 --> 00:04:14,457
[Miles] Okay,

99
00:04:14,608 --> 00:04:19,658
[Miles] so one company from W26 that kept coming up when I talked to people was Hex Security.

100
00:04:20,207 --> 00:04:20,957
[Miles] Three founders,

101
00:04:21,207 --> 00:04:22,007
[Miles] Huzaifa Ahmad,

102
00:04:22,557 --> 00:04:23,408
[Miles] Khan,

103
00:04:23,608 --> 00:04:27,957
[Miles] and Prama Yudhistira hit 1 million ARR in eight weeks.

104
00:04:28,057 --> 00:04:29,057
[Speaker 3] Eight weeks.

105
00:04:30,139 --> 00:04:31,540
[Speaker 3] Walk through what they actually built.

106
00:04:31,889 --> 00:04:34,990
[Miles] AI agents that run continuous penetration tests,

107
00:04:35,139 --> 00:04:35,839
[Miles] not a scanner.

108
00:04:36,139 --> 00:04:37,639
[Miles] The agents find vulnerabilities,

109
00:04:38,189 --> 00:04:39,389
[Miles] chain exploits together,

110
00:04:39,740 --> 00:04:40,740
[Miles] write up the findings.

111
00:04:41,139 --> 00:04:43,439
[Miles] And the core pitch is almost insultingly simple:

112
00:04:43,889 --> 00:04:47,290
[Miles] companies pen test once a year; attackers are probing 24x7.

113
00:04:47,540 --> 00:04:49,540
[Speaker 3] So the CISO already knows the problem.

114
00:04:49,939 --> 00:04:50,240
[Miles] Right,

115
00:04:50,490 --> 00:04:51,089
[Miles] that's the thing.

116
00:04:51,240 --> 00:04:51,790
[Miles] You know what I mean?

117
00:04:51,889 --> 00:04:53,290
[Miles] No education required.

118
00:04:53,389 --> 00:04:55,189
[Miles] The buyer walks in already in pain.

119
00:04:55,540 --> 00:04:55,990
[Speaker 3] Okay,

120
00:04:56,139 --> 00:04:56,889
[Speaker 3] but Cynic-

121
00:04:56,819 --> 00:04:58,120
[Grant] It's Cobalt, Pentera,

122
00:04:58,269 --> 00:05:00,120
[Grant] NodeZero; that space has money in it.

123
00:05:00,319 --> 00:05:03,719
[Miles] It does; so I'd push on that; what did they not build,

124
00:05:03,819 --> 00:05:06,920
[Miles] because to close one million in eight weeks you're not building everything,

125
00:05:07,170 --> 00:05:07,670
[Miles] you're cutting.

126
00:05:08,170 --> 00:05:10,069
[Grant] You're cutting and you're pricing fast,

127
00:05:10,319 --> 00:05:10,469
[Grant] yeah.

128
00:05:10,469 --> 00:05:10,620
[Speaker 3] M.

129
00:05:10,719 --> 00:05:12,819
[Miles] Here's what's interesting about the founding team,

130
00:05:13,120 --> 00:05:22,170
[Miles] whose CFA came out of AWS and PlayAI; Ahmad Khan had an OpenAI internship and robotics at OpenMind; Prama did a stint at Codegen,

131
00:05:22,269 --> 00:05:23,519
[Miles] which got acquired by ClickUp.

132
00:05:23,411 --> 00:05:27,361
[Miles] These are not first-time operators guessing at what security teams want.

133
00:05:27,411 --> 00:05:28,961
[Grant] And they were inside YC,

134
00:05:29,311 --> 00:05:33,711
[Grant] surrounded by other W26 companies who needed exactly what they were building.

135
00:05:34,061 --> 00:05:35,762
[Grant] That's where the first customers came from.

136
00:05:36,012 --> 00:05:37,111
[Miles] Fellow Batch companies.

137
00:05:37,762 --> 00:05:39,061
[Miles] According to their YC launch,

138
00:05:39,262 --> 00:05:42,911
[Miles] their agents found critical vulnerabilities in dozens of YC companies.

139
00:05:43,361 --> 00:05:44,611
[Miles] SQL injection exposing

140
00:05:44,611 --> 00:05:44,661
[Speaker 3] Wow.

141
00:05:44,661 --> 00:05:48,861
[Miles] billions of records demonstrated network worms full code base access.

142
00:05:49,204 --> 00:05:49,704
[Grant] Wait,

143
00:05:49,853 --> 00:05:53,403
[Grant] their customers were essentially letting them hack them during the batch?

144
00:05:53,704 --> 00:05:55,653
[Miles] That's exactly it. Low friction,

145
00:05:55,903 --> 00:05:56,603
[Miles] high trust.

146
00:05:56,804 --> 00:05:57,504
[Miles] You know the founder,

147
00:05:57,704 --> 00:05:58,504
[Miles] you're both in YC,

148
00:05:58,603 --> 00:06:00,454
[Miles] you let them run the agent on your infrastructure.

149
00:06:00,853 --> 00:06:03,554
[Grant] Okay, but I want to pull on the valuation side of this,

150
00:06:03,653 --> 00:06:05,954
[Grant] because that's where things get interesting to me.

151
00:06:06,204 --> 00:06:10,903
[Grant] Eight weeks of revenue and they're reportedly at over $100 million in estimated valuation.

152
00:06:11,353 --> 00:06:15,254
[Grant] How much of what investors are buying is traction versus story?

153
00:06:15,668 --> 00:06:17,317
[Miles] I mean, I'd ask them directly,

154
00:06:17,418 --> 00:06:18,867
[Miles] because the traction is real,

155
00:06:18,968 --> 00:06:19,918
[Miles] the number is there,

156
00:06:20,117 --> 00:06:27,117
[Miles] but one million ARR in eight weeks on a recurring security contract is different from one million ARR in one-time project fees.

157
00:06:27,268 --> 00:06:28,418
[Grant] That's the question.

158
00:06:28,567 --> 00:06:30,067
[Grant] What's the contract structure?

159
00:06:30,168 --> 00:06:34,468
[Grant] Is it sticky or did a dozen batch companies sign six month pilots that don't renew?

160
00:06:34,817 --> 00:06:35,367
[Miles] Right,

161
00:06:35,418 --> 00:06:42,117
[Miles] because there's a version of this story where the box was just a perfect petri dish that doesn't replicate outside of it.

162
00:06:42,163 --> 00:06:47,813
[Grant] And there's the version where they crack distribution first and the product catches up. Both are possible.

163
00:06:48,014 --> 00:06:49,113
[Miles] Both are possible,

164
00:06:49,213 --> 00:06:50,014
[Miles] and honestly,

165
00:06:50,063 --> 00:06:50,863
[Miles] that tension,

166
00:06:50,963 --> 00:06:53,313
[Miles] distribution first versus product first,

167
00:06:53,463 --> 00:06:59,963
[Miles] you see it all over this batch, which is where things get really interesting when you zoom out from one company to the whole cohort.

168
00:07:00,101 --> 00:07:02,301
[Miles] Court." Flipped out around for a second.

169
00:07:02,777 --> 00:07:06,077
[Miles] Hacks worked partly because of where it sat inside the batch,

170
00:07:06,327 --> 00:07:07,027
[Miles] trusted network,

171
00:07:07,377 --> 00:07:08,127
[Miles] fast feedback,

172
00:07:08,377 --> 00:07:09,177
[Miles] peer customers.

173
00:07:09,477 --> 00:07:12,977
[Miles] So what does the rest of W26 actually look like?

174
00:07:13,077 --> 00:07:13,577
[Grant] Well,

175
00:07:13,727 --> 00:07:16,477
[Grant] the structure of the batch itself is worth paying attention to.

176
00:07:16,677 --> 00:07:18,677
[Grant] According to Extruct AI's breakdown,

177
00:07:19,277 --> 00:07:25,527
[Grant] 56 companies were building fully autonomous AI-native services. That's the single largest category,

178
00:07:25,627 --> 00:07:29,977
[Grant] and the VC Corner tracked 15 repeat YC founders in the cohort.

179
00:07:30,329 --> 00:07:32,279
[Miles] Fifteen—that matters.

180
00:07:32,729 --> 00:07:33,329
[Grant] It does,

181
00:07:33,479 --> 00:07:37,429
[Grant] because those founders walked in already knowing what office hours are for,

182
00:07:37,779 --> 00:07:41,229
[Grant] already knowing which part to push back on, and which advice to take.

183
00:07:41,579 --> 00:07:45,079
[Grant] They compressed the first month learning curve before the batch even started.

184
00:07:45,529 --> 00:07:51,379
[Miles] And you can see it in how they positioned early; they didn't spend week three figuring out who their customer was.

185
00:07:51,829 --> 00:07:52,129
[Grant] Right.

186
00:07:52,329 --> 00:07:53,529
[Grant] Now the AI angle,

187
00:07:53,729 --> 00:07:56,579
[Grant] I don't want to just say it was an AI batch and move on.

188
00:07:56,409 --> 00:07:57,709
[Grant] Because that's too easy.

189
00:07:57,809 --> 00:08:02,759
[Grant] What the extracted data shows is that the companies getting traction weren't general tools.

190
00:08:02,859 --> 00:08:04,259
[Grant] They were vertical plays,

191
00:08:04,609 --> 00:08:04,909
[Grant] healthcare,

192
00:08:05,309 --> 00:08:05,659
[Grant] legal,

193
00:08:05,859 --> 00:08:06,459
[Grant] security,

194
00:08:06,909 --> 00:08:11,159
[Grant] narrow high stakes categories where being wrong costs someone real money.

195
00:08:11,409 --> 00:08:13,459
[Miles] That's the pattern I kept seeing too.

196
00:08:13,659 --> 00:08:15,509
[Miles] When the cost of failure is high,

197
00:08:15,559 --> 00:08:18,759
[Miles] like a missed prior authorization or a security breach,

198
00:08:19,159 --> 00:08:21,409
[Miles] customers don't need much convincing to buy.

199
00:08:21,509 --> 00:08:23,259
[Miles] The sales cycle collapses.

200
00:08:23,663 --> 00:08:25,863
[Miles] because the pain is already felt.

201
00:08:26,213 --> 00:08:26,863
[Miles] Exactly.

202
00:08:27,113 --> 00:08:28,613
[Miles] And the companies that struggled,

203
00:08:28,913 --> 00:08:33,763
[Miles] I'd bet most of them were chasing broader problems where the buyer could always wait another quarter.

204
00:08:34,063 --> 00:08:37,463
[Grant] So here's the counterintuitive piece from the VC corner data.

205
00:08:38,013 --> 00:08:40,663
[Grant] Four companies pivoted mid-batch entirely,

206
00:08:41,013 --> 00:08:44,563
[Grant] but the ones that hit a million in ARR mostly did not pivot.

207
00:08:44,813 --> 00:08:48,963
[Grant] They found the customer before the product was finished and just kept going.

208
00:08:49,263 --> 00:08:49,713
[Miles] Wait,

209
00:08:49,763 --> 00:08:52,413
[Miles] so the lesson isn't be willing to pivot, it's...

210
00:08:52,217 --> 00:08:53,567
[Miles] It's almost the opposite?

211
00:08:53,967 --> 00:08:54,917
[Grant] I know, right?

212
00:08:55,117 --> 00:08:58,017
[Grant] The Pivot story is the romantic version of startups.

213
00:08:58,517 --> 00:09:05,017
[Grant] The W26 data says the fastest companies locked onto something real early and refused to let go of it.

214
00:09:05,267 --> 00:09:07,217
[Miles] Which is harder than pivoting, honestly.

215
00:09:07,717 --> 00:09:10,267
[Miles] Staying the course when everything feels uncertain,

216
00:09:10,467 --> 00:09:12,117
[Miles] that takes a different kind of nerve.

217
00:09:12,617 --> 00:09:14,817
[Grant] And that's the thing you can't see from the outside.

218
00:09:15,217 --> 00:09:16,917
[Grant] We can read the traction numbers,

219
00:09:16,917 --> 00:09:17,067
[Miles] Yeah.

220
00:09:17,067 --> 00:09:18,517
[Grant] look at the founder backgrounds,

221
00:09:18,667 --> 00:09:21,867
[Grant] but what we can't know is who actually gave these companies that.

222
00:09:21,721 --> 00:09:22,371
[Miles] That clarity.

223
00:09:22,871 --> 00:09:23,571
[Miles] Todd Lec,

224
00:09:23,871 --> 00:09:24,521
[Miles] the partners,

225
00:09:24,821 --> 00:09:25,471
[Miles] that's who knows.

226
00:09:25,921 --> 00:09:29,921
[Grant] The people sitting in a room for ten weeks watching who panicked and who didn't,

227
00:09:30,221 --> 00:09:33,221
[Grant] what do they think separates the Fourteen from the one eighty?

228
00:09:33,671 --> 00:09:35,821
[Miles] And that's exactly who we're going to next.

229
00:09:36,761 --> 00:09:43,911
[Miles] So, the partner read is what does a one million dollar ARR company actually do in week one versus everyone else?

230
00:09:44,211 --> 00:09:45,461
[Grant] Speed the first dollar.

231
00:09:45,561 --> 00:09:46,161
[Grant] That's it.

232
00:09:46,311 --> 00:09:48,061
[Grant] The tremendous piece nailed it.

233
00:09:48,211 --> 00:09:51,161
[Grant] The bar used to be 100K ARR at Demo Day.

234
00:09:51,311 --> 00:09:51,861
[Grant] Not anymore.

235
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[Grant] The 14 who hit a million weren't waiting for the product to be finished.

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[Miles] Right, they were selling before the product could politely say no.

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[Grant] Exactly.

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[Grant] And look, the pattern partners see Batch after Batch.

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[Grant] Founder Market Fit gets you to the first call,

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[Grant] but the willingness to close an awkward half big deal in week three-that separates the Fourteen from the one eighty.

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[Miles] That's the thing nobody wants to admit:

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[Miles] the uncomfortable sell.

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[Miles] You don't have logs yet,

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[Miles] you barely have a dashboard,

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[Miles] and you're asking someone to wire money.

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[Grant] Yep.

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[Miles] Okay,

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[Miles] but here's where I want to push on something.

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[Miles] Foundevo flagged that the default W26 round is 4M dollars on a F

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[Speaker 4] -

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[Miles] On a 40M post money.

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[Miles] Three years ago in W23,

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[Miles] that was 2M on 20M.

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[Miles] Entry prices doubled in 36 months.

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[Grant] And the top end hit 200M post money.

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[Grant] That's the highest single company Demo Day valuation in six years of tracking,

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[Grant] according to Foundevo.

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[Miles] So, and this is the uncomfortable question,

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[Miles] are founders locking themselves into a cap table problem before they even have a Series A conversation?

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[Grant] Yeah, I mean, I get the appeal.

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[Grant] Less dilution, stronger position.

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[Grant] But if you take 40 million as your baseline and your Series A round isn't dramatically better,

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[Grant] you are having a down round conversation.

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[Miles] Or a flat round,

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[Miles] which is basically the same conversation with nicer lighting.

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[Grant] Right.

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[Grant] And Tremendous actually flagged something weird.

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[Grant] The companies with the most revenue weren't raising at the highest valuations.

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[Grant] Deep tech was,

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[Grant] which means some of the riskiest bets in the batch got the most expensive terms.

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[Miles] Wait, really?

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[Grant] Yeah. So you've got this inversion where traction doesn't necessarily equal valuation.

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[Grant] Partners are pricing story and defensibility,

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[Grant] not just ARR.

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[Miles] Which is fine until the story needs to become a business.

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[Grant] Exactly.

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[Grant] And the exit math gets brutal fast.

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[Grant] You need a $400 million

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[Grant] to $500 million outcome,

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[Grant] just to make a $40 million post-money seed look like a good return for early investors.

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[Grant] Statistically,

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[Grant] most companies

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[Miles] Yeah.

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[Grant] never get there.

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[Miles] So the question partners are wrestling with,

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[Miles] and I don't think there's a clean answer,

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[Miles] is whether the new speed baseline creates as many traps as it removes.

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[Grant] Yeah.

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[Grant] You move fast,

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[Grant] you close before the product's ready,

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[Grant] you raise it a number that assumes...

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[Grant] Sometimes everything goes right and most of these founding teams are still three people and

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[Miles] Three people who just ran the fastest ninety days of their lives.

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[Grant] And the next ninety are a completely different race.

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[Miles] So Demo Day was five weeks ago.

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[Miles] Some rounds close fast,

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[Miles] most are still in process.

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[Grant] That's the part nobody talks about,

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[Grant] right?

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[Grant] The pitch goes great,

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[Grant] the FOMO is real,

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[Grant] and then you wake up the next morning and the math doesn't move.

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[Miles] Yeah, the term sheets were flying the first week.

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[Miles] Week three,

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[Miles] you're refreshing your inbox.

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[Grant] And that's actually the normal pattern.

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[Grant] Weeks two through four post-Demo Day,

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[Grant] the companies that close are closing.

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[Grant] Everyone else is negotiating or just sitting in limbo.

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[Miles] Here's the thing though,

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[Miles] the companies we've been talking about all episode,

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[Miles] the ones who hit a million ARR with a three-person team in 90 days,

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[Miles] they've got a different problem now.

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[Grant] Right,

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[Grant] because that spread is over and now they have to figure out like who's the fourth person.

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[Miles] Noting the first hire,

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[Miles] the first enterprise contract that didn't come through a YC connection,

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[Miles] the first real sales motion.

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[Grant] That's where most of these companies actually star.

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[Grant] And I've watched enough post-Demo Day cohorts to call it. The fundraising was the easy part.

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[Grant] Running the company after?

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[Grant] That's different.

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[Miles] After,

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[Miles] the round closes and suddenly you're running a company instead of a pitch.

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[Grant] And the spreadsheet gets tight fast.

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[Grant] You've got a team of three.

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[Grant] You just raised that $40, $50 million post money on a sprint everyone can see.

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[Grant] Now you need to justify that number to a Series A.

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[Grant] a partner while you're still figuring out who's building versus who's selling.

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[Miles] That's the trap, yeah.

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[Miles] The speed that got you to Demo Day is not the speed that gets you through year two.

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[Grant] So, here's what I keep coming back to.

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[Grant] The data is real.

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[Miles] Fourteen companies hit a million,

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[Miles] W26 scored in the 95th percentile, but I've seen enough strong starts turn into flat Series A conversations to know that inversion is possible.

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[Miles] The question is, does batch strength actually move the survival rate?

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[Miles] And the Rebel Fund algorithm flagged 35% of the batch in the top 20% of all time before a single pitch.

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[Miles] So the inputs are better than ever,

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[Miles] but does the post-Demo Day survival rate actually move?

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[Miles] Move.

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[Miles] I genuinely don't know,

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[Miles] and I think that's the honest answer.

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[Miles] Because the first 90 days and the next 270 are completely different races.

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[Miles] Zero to 1 million is momentum and finding customers who know you.

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[Miles] 1 million to 5,

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[Miles] 10 million,

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[Miles] that's when you need systems,

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[Miles] retention,

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[Miles] and people who don't have founder equity forcing them to stay.

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[Grant] First sales rep who doesn't know the product the way you do.

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[Miles] Yeah,

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[Miles] and that's not a Batch quality question.

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[Miles] That's a...

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[Miles] That's a company building question.

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[Miles] Batch quality doesn't solve that.

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[Grant] So the new baseline is real.

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[Grant] The bar for what elite looks like at Demo Day has genuinely moved,

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[Grant] but whether that translates to different outcomes a year from now.

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[Miles] We're not going to know for another 12 to 18 months.

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[Grant] And honestly,

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[Grant] most of these rounds aren't even closed yet, so we're still at the beginning of finding out.

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[Grant] Alright, that's a wrap on this one.

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[Grant] Grant,

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[Grant] what's the one thing you're still chewing on?

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[Miles] Honestly,

366
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[Miles] that cost of speed framing,

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[Miles] like the 1M ARR number is real,

368
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[Miles] but the decisions you didn't make to get there,

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[Miles] those come back.

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[Miles] That stuck with me.

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[Grant] Yeah,

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[Grant] and for me, it was the buyer already in pain point with Hex Security.

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[Grant] No education cycle,

374
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[Grant] no convincing,

375
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[Grant] just here's your solution.

376
00:15:41,604 --> 00:15:42,454
[Grant] That's rare.

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[Miles] Right.

378
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[Miles] And the bigger question we're sitting with.

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[Miles] Record Batch,

380
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[Miles] record ARR accounts.

381
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[Miles] But the survival rate doesn't automatically follow.

382
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[Miles] The hard stuff is still ahead.

383
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[Grant] The hard stuff is still ahead for every one of those three-person teams.

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[Grant] That's the show.

385
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[Miles] If you know a YC founder in their first year who tell their story honestly,

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[Miles] send them our way.

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[Miles] YearOne at HeyMato.com

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[Grant] And if this episode helped you see startups differently,

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[Grant] leave a review.

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[Grant] Seriously,

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[Grant] it matters.

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[Miles] Thanks for listening.

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[Miles] We'll see you next time.

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[Grant] See you then.