Keith Rabois: “I tell founders not to worry about runway. Worry about lift.”

“If you think about lift in a plane context, a company is only valuable if you achieve lift. Runway is a tactic for achieving lift, and you may need to extend the runway so that you have more time to get lift. But unless you’re actually achieving lift with that extra time, it doesn’t help you.”

He continues:

“I hate when a founder is like, ‘I want to raise this much money because it gives me two years runway.’… That is a stupid way to think about your fundraising.”

Instead, founders should ask themselves what they need to achieve to achieve lift, and then work backwards from that.

When Keith invests at Khosla Ventures and Founders Fund, they write internal memos about the three key risks to the company. Usually you can’t achieve all three in one financing, so founders should be asking themselves, What’s the most important inflection? And then structure their financing to achieve that.

Keith advises founders that it’s ok to let their runway go very low if they feel like they’re approaching lift:

“A lot of founders get very bad advice like ‘Oh, you need to have this much runway or you won’t be able to raise money from strength.’ That’s nonsense. If you have traction - if you hit a viral coefficient of 1 with three months of runway - almost every VC on the planet knows how to invest in that company, and it will not be a problem.”

Full video: Khosla Ventures “Lessons from Five Companies (Part II) | Keith Rabois & David Weiden“ (Aug 2024)

P.S. We’ve put together a YouTube playlist with every Keith Rabois insight we’ve ever shared. You can watch it here: “Best startup advice from Keith Rabois“