How Nancy Xu Raised $10M for Moonhub (Nancy Xu / Moonhub - Ep 40)

By Jason Yeh
May 7, 2024
54
min
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How Nancy Xu Raised $10M for Moonhub (Nancy Xu / Moonhub - Ep 40)

Join us on a journey through the winding roads of entrepreneurship with our guest, Nancy Xu, the Founder & CEO of Moonhub. From her early days training for the U.S. math and physics team to her academic journey at Stanford and her stint as a software engineer at Facebook, Nancy seemed destined for academia. However, her passion for impactful ideas steered her towards entrepreneurship, leading her to start Moonhub, the pioneering AI-powered recruiter. With over $10 million raised in just two years, we explore how Nancy's background in AI research and building crucial relationships laid the foundation for Moonhub's success. Join us as we unravel the fascinating story of Nancy Xu raising millions from big named venture capitalists like Google Ventures and Khosla Ventures.

Episode Transcript

[00:00:00]

Nancy Xu: there's a lot of uncertainty in building a startup, right? Like, you can have the best possible plan and likely nothing will go as planned. Um, but I think the exercise of thinking through it is very important because it gives you some sort of thoughts on, on knowing what it is you're heading towards and whether or not the thing you're heading towards is actually correct

Jason Yeh: I'm a believer in the idea that everything you've done in your past prepares you for your future. When I look at my own career from running product at big tech companies to being a VC for five years, running two venture backed startups. And now what I'm doing at funded and adamant. It all kind of makes sense, but it didn't always, that's the journey of being an entrepreneur.

[00:01:00] Today's guest Nancy, Sue, founder and CEO of moon hub has been on quite the journey herself. From her days, training for the us math and physics team. To our academic pursuits at Stanford and her stint as a software engineer at Facebook. Nancy's path seemed to be pulling her into the world of academia. But her love for ideas and her desire to make a tangible impact.

Let her down a different road. Which ultimately led her to start moon hub. The world's first AI powered recruiter. Which she successfully raised over $14 million for in less than two years. A lot of her success was created during your time researching and learning about AI, where she was able to build credibility, as well as a lot of important relationships. as always, before we get into her fundraise, I wanted to learn a little bit more about what inspired her to go down the entrepreneurial path. And it turns out it runs in our blood.

Nancy Xu: um, I was born in [00:02:00] China. And I came to the United States when I was quite young. So I was two at the time.

My, my parents are immigrants to the States. They came here originally for, you know, their grad school and education. And later, of course, um, now, you know, they, they live in the Bay area with me as well. Um, I would say my story is quite similar to many of these sort of immigrant stories you might hear, uh, in the United States.

I think a lot of what my personal childhood is shaped by seeing my own parents. First come here for school. Later, both my parents were entrepreneurs, seeing them run companies, and I like to say, you know, I think for, for me personally, I didn't know there was any other career besides starting your own company, which I think is quite different, um, from, from what a lot of people experienced growing up, but I think it's also quite common for a lot of folks who are immigrants, um, to, to the States here.

Uh, I, you asked about the personality type as a child. I was very, very introverted. I would say I've always been a bit of a tomboy, so I love everything [00:03:00] adventurous,

Jason Yeh: everything outdoorsy,

Nancy Xu: um, and uh, and also a bit of a nerd. So I've, I've always, you know, my, my greatest intellectual passion is, is math. I love doing math problems.

It's the nerdiest possible hobby you could have, um, but I really, I really do enjoy, uh, just thinking and learning more about the world.

Jason Yeh: Awesome. So,

Nancy Xu: yeah, go

Jason Yeh: funny. You talk about having these role models in your parents, entrepreneurs ran their own companies, uh, you talk about being hardworking and nerdy, all these things I can totally see. Um, one part of it that I wanted to dig a little bit into is like, what was your relationship with, with money and asking favors, because if your, your parents were running, you We're running companies, we're entrepreneurs, they were probably not raising venture capital dollars, I'm guessing, you can correct me if I'm wrong.

Um, but as we'll talk about a little bit later, like, there is a portion of what you're doing now that requires you [00:04:00] to go out, ask for favors, ask for money, and I, I wonder if, Anything that you were like as a kid hints at your comfort level with that or your discomfort with that. Like, what was your relationship with money

Nancy Xu: Hmm,

Jason Yeh: up?

Nancy Xu: wow, that's a loaded question. I've never really thought about that question before, Jason. Of my perception of money as a child. I will say, a lot of my I've always been someone who's very driven by ideas. As opposed to perhaps, uh, I think money is the mechanism to which you can make an impact in the world.

It's not, it's never been the end goal for me, personally. Um, I think for, for my parents, I will caveat and just go back and say, I know in, in Silicon Valley, when people think entrepreneurs, they think startup founders. So when I say entrepreneurs, you know, this is very different. So my dad, my father was a classic, you know, tech entrepreneur in the sense that you think of in Silicon Valley.

Um, but my mother ran, uh, more of a, you know, like a small business, local small business. So very different worlds [00:05:00] there. And I think that's allowed me to, to, See both the ups and downs and rollercoaster of what us running a company really looks like. And I think over time you get used to that level of uncertainty in your life and it becomes the new norm in a, in a way that I think allows me to be a better founder today.

Um, to your question about money in particular, I think as a child, I never really thought too much about money. Um, like I thought about it from the concept of, I, I saw my parents working extremely hard. Um, and that motivated me. And like for me growing up as a child, working on Sundays was the norm. And so I never, even to this day, I think when I don't work on a Sunday, I feel like it's a luxury.

Uh, and I, and I owe it to my parents to have given me that perspective about the world, um, and that particular element of the work ethic. But if you were to tell me, Hey, was my goal in life always to. Earn as much money as possible. I would say it's more along the lines of trying to [00:06:00] figure out how to make the most impact as, and, and, and money has always been the mechanism to do that.

Jason Yeh: Um, so at some point, and we'll get there in a second, one of the doors that you had to open, one of the things that you had to unlock was just asking for money and getting access to more money. But before we get there, I looked at your profile and your background, extremely impressive, tons of education, big logos.

Um, So you were, you were at Stanford and then you were a software engineer at Facebook and then looked like you were about to go down this path of being an academic. But at some point things changed. Um, I'm not, you know, I want to hear a little bit about how that shift happened. We don't have to spend too much time on that.

Um, but we'll quickly on ramp into actually raising money for the company. But I wonder if you could tell me a bit about that. Um, it seemed like your, your role models were all entrepreneurs. Um, but you, you did have this, at least a line item on your resume that seems like you thought about being [00:07:00] an academic.

What was going on there?

Nancy Xu: Yeah, it's a great question. I actually think this is a wonderful side way into some of the inspiration for starting Moonhub as a company. I have always, going back to my earlier point, I have always considered myself to be a bit of a nerd. I love, you know, I love research. I love thinking about the world in terms of interesting complex systems.

And I just love the act of learning. And for, for a good while I wrestled with these two different worlds, right? One is go be entrepreneur, which is sort of the career path that I had grown up experiencing and seeing. And then the other side is more of the intellectual element of You know, when I was younger, I, uh, I trained for the U.

S. math team, the U. S. physics teams, I did a lot of these very, I would say, lack of a better word, highly competitive intellectual activities, and I always felt like it was a place where I was quite good, um, but the caveat is, I do think [00:08:00] For me, the impact element at the end of the day overrides the sort of pure personal joy of just doing something intellectual.

And that's where, that's where, you know, being an entrepreneur eventually wins over, over being an academic. But I do think it's something I've always. I've always sort of identified with the ways of thinking that a lot of people think about when they pursue research, like this idea of, you know, running a hypothesis, having a certain level of focus, having a certain vision that is more than, than the next one to two years, but something that's longer term, five to 10 years.

And I think a lot of that transitions very well into being an entrepreneur as well.

Jason Yeh: Awesome. So at some point, making that impact through building a company beats out the intellectual focus of, of pursuing your PhD and, um, spending a life in academia. And so where I'd love to like fast forward to in that part of the timeline is really this [00:09:00] decision that you want to leave your PhD program to start a company.

In particular, I want to know when you were like, Well, I want to start a company. Were you like, I'm going to start a company and I know it's the type of company that I'm going to need to raise money for, or were you like, maybe I can bootstrap this, um, how did you think about the idea and capitalizing it?

Nancy Xu: sure. Yeah. It's an interesting question. I do think. Over time I've gotten a much deeper appreciation for different funding models that can be pursued in terms of being a founder or being an entrepreneur. And for me personally when I started Moonhub it was clear that this was the kind of company that would require venture fund.

And so we went out, we raised capital, we did the typical startup path.

Jason Yeh: Before you go, before you go on, can you say, can you say more on that? Like, what about Moonhut? This is going to be a company [00:10:00] that needs capital in the start. What about it? Like triggered that.

Nancy Xu: yeh. Vision is very ambitious and as an artifact of that. So at moon hub, our mission is to enable access to opportunity for every person on this planet with AI. And specifically the way we do that is by building an AI powered computer. Now, today in the world that we see right now, I don't think AI is at the point where out of the box you can build this, right?

So there is a lot of product and technology innovation that needs to happen in order to make this happen. And that's where, you know, there is a larger upfront capital investment required to build a company like Moonhub, which is not required of every business, right? And frankly, if you can go build a business that makes billions in revenue and you don't need that upfront funding, like, by all means, you should go do it.

Uh, but I think for the particular type of business we're trying to build at Moonhub, [00:11:00] that requires a Very sort of very specialist and expert talent to be working on the team. Um, it's a highly competitive space we work in. That's very, that's moving very quickly. So you need a lot of capital to go to market like this all necessitates a certain level of upfront investment and funding, which is more, um, you know, which is more synonymous with, with what you see, uh,

Jason Yeh: Awesome. That, that makes total sense. And that was my assumption as well. I just wanted to hear the founder articulated it a little bit more. Um, I have a lot of interesting questions in a, in a path that I want to take this conversation slightly different than other founders I talked to. Um, but before we get there, what would help is to have.

Clarity or a little bit more clarity around what actually happened in your fundraising in 2023. And the reason I say this is because when we prepare for interviews, uh, just jump on Crunchbase and see what was announced. [00:12:00] And you can never quite tell exactly what was happening because, um, Crunchbase picks up on when a round was announced, not necessarily when it was done.

Sometimes things get split up for various reasons, but at least on Crunchbase, it looks like. You raised three successive rounds in 2023, spaced apart by a few months each. Um, I don't know what's comfortable sharing, but if you could just tell me a little bit about what happened when you went out to say, raise that first tranche of capital and subsequently after that, that would provide a good launch point for us to have like a fun conversation.

Nancy Xu: Yeah, absolutely. Happy to share that. And we'll say what, uh, what is published in the media is not always the same as what the company is actually going through. So we've raised a couple rounds of funding. Um, in 2022, when we first started the company, we raised around at the time, Um, that round was led by Khosla, Gigi, some amazing investors, as well as [00:13:00] individuals, like, um, folks out there that you might know, like Ram Shriram, um, Susan, who used to be over at YouTube, CEO of YouTube in the past.

Um, and a lot, a lot of others, AI visionaries that I had known from my day at my time at Sanford, um, as well as the head of the CS department of Berkeley, et cetera. Now, after that round, uh, we started building out MoonHub, and we started going to bat, essentially building this AI powered recruiter, and what we realized is that, uh, unlike many companies, we wanted to start this not by a technology first solution, but by actually trying to figure out exactly what it was that recruiters at these recruiting agencies were doing today.

So when we first started MoonHub, we actually built out a recruiting agency We started to observe all of the workflows of our recruiters. And then later over time, we started layering on the technology solution that we've built today. Um, and by the time 2023 rolled around, you know, we'd [00:14:00] piloted this technology with a good number of customers and we were starting to see that the AI had reached a point where it could not only automate a lot of the work that our recruiters were doing.

But that there was a clear path for it to learn how to do the rest of the work that our recruiters were doing. And I think that has always been the really compelling vision for us, right? And, um, you know, today we help 100 plus startups, a lot of them, you know, just space capital. We'll work with a lot of these early stage founders who are trying to figure out how to like hire their first couple of engineers.

Once they raise funding, a lot of them, they'll come to moon hub and we actually help them do that. Um, so that was 2022. So by the time 2023 rolled around, we had a lot of interest from external investors that were not currently on our cap table, um, to participate in another round with moon hub. Um, but since we've been making revenue from pretty much the early days of starting the company, we had a [00:15:00] good amount of runway, uh, and we weren't actively raising at the time.

So what ended up happening was we decided we were going to raise instead of a larger series A, which we had interest for to do a smaller round, um, Add a similar, uh, valuation as what we would have raised if it was a series A, uh, but take less dilution as a company so that we could extend our runway, but also, you know, continue to continue to grow without, uh, having to worry too much about fundraising for a couple of years.

Jason Yeh: Awesome. That helps a lot. And that, that sort of breaks down. It was, it was a little bit confusing because of when the dates were. Um, so where, where I'd like to have a short conversation is, um, maybe talking a little bit about the two fundraising rounds and acknowledging some of the advantages you had, or like the things that made fundraising, um, [00:16:00] smoother for you than maybe others.

And. It's, I think what I'd like that to represent is not like showing off or anything like that, but exactly the things that certain founders can strive towards or like as they're building their career and thinking in the future. At some point, I might. Raise capital for a future company. Um, we'd love to like maybe even deconstruct that first round of capital.

And, uh, and maybe you tell us a little bit about what was at play here? What did people know about you? What were they excited about? Um, so that people understand like, well, one, like you might've had advantages, but it probably took a bunch of hard work to get to those advantages and like years of relationship building.

I'm, I'm speculating. But maybe we can start there and just like, let's talk about that first round of capital. You wanted to go raise, I'm not sure if you knew exactly how much, excuse me, but um, [00:17:00] maybe describe a little bit about what your first move was to say, like, I want to raise capital. Who did you call?

Who did you talk to, to even start strategizing what this would look like?

Nancy Xu: Yeah, it's a great question. I just want to say, I think it's wonderful that you're running this podcast, Jason, because a lot of people don't have, Much transparency into how this process runs. And the only time they really experience it is when they're running the process themselves. And I think a lot of people can benefit from learning a bit more about what it looks like for other founders so that they have some, some context going in and, and, and, um, and are well prepared for that experience.

So you asked what went well in that process or what do I think contributed to the process going well? So we, we had a relatively. Quick process for our first round. Um, at the time it was, it was just myself as a founder, uh, going out to basically pitching this idea that we were going to work on. I think there's a couple of things that worked in our favor.

One is the general level of interest in AI [00:18:00] and personal background, right? I, when I was at Stanford, I had worked on some of the, um, early work in large language models or these sort of foundational AI models that were being published and. I think that definitely contributes to a certain level of, um, founder fit for the problem, but there's sort of, there's, there's several dimensions you think about as an investor, right?

And this is me putting sort of the limited amount of time I spent angel investing and do for, for friends. It's like the team, the market, and then, um, the last is, is, is like the, the executional element of things. So team, you know, you want to make sure you have the right founder for that opportunity. I think for us too, I, from, from my education, also some of the work that I'd done after Sanford, I, I had a couple relationships with, with investors that I knew we wanted to work with.

So that was relatively, um, an easy introduction in the beginning. And then also my, you know, my PhD advisor, he personally had started [00:19:00] several startups and, Uh, Dave, who's now one of our investors at GV, had also backed up with my PhD advisor's company. So that's, you know, obviously a helpful introduction as well.

I would say as a founder, a lot of people think about how do we, how do we build a company to raise money? And I, I think this is the wrong way to think about how to build a company. Frankly, I think you should really think about a company from how do we build a company that is going to be a lasting and enduring business, not how do we think about a company to raise the next round?

And I think. It actually is quite transparent when you think of like, for a lot of investors, if you have the latter mentality, they, they kind of, they kind of get it. So you should really just figure out how are we going to build the right company and like be very transparent and honest in the process.

That's always been my approach. And, you know, Investors, there will be investors who don't like your vision or the way that you're approaching the problem and all is good, right? And a year later you get more traction and you go back to them and, um, You [00:20:00] know, they might be interested again. So. I wouldn't, I wouldn't worry too much about the no's in the process as well.

Jason Yeh: Awesome. So that starting point, um, makes a lot of sense. Uh, you happen to be, you were a deep, deep subject matter expert. Your experience shows that. And it happened to be a subject matter expert in a, in a field slash market that was, Like it was on the cusp of exploding. Um, and so the timing couldn't have been better for you to start that outreach for capital, and then of course, having some connections where people lend their credibility to you.

Create a warm introduction to have a start. Um, it's super helpful now that's for your first round of capital. And it's always great to, to be able to raise that first round of capital with some of those advantages. A lot of those advantages go away once you launch, right? Like a lot of your first stuff is belief, you know, belief, capital, and [00:21:00] people.

Betting on the future, but the moment you take in that money and you start executing something else has to be at play for the next round of investors to come in. Um, it sounds like from your initial description, you didn't need money, right? Like you raised a decent, uh, decently large pre-seed round and you were generating revenue right away.

Um, so something was happening. along the way that allowed you to go preemptively like raise another round of capital before you needed stuff. Um, if you had to guess what was happening or what were people on the outside observing either like through announcements you were making or meetings that you were taking, like what was, what was creating the heat around you and the company without you even having to say that, Oh, we want to go raise another round of capital.

Nancy nailed it. When she emphasized focusing on building a long lasting company, instead of building a company that [00:22:00] could raise capital. Make sure you're taking the time to reframe your mindset around what it actually means to raise capital and why you're fundraising.

When we come back from the break, Nancy shares, how she was able to generate heat for her race.

Nancy Xu: [00:23:00] Yeh, it's a great question Jason. In general, when you start to be more public about what you're working on as a company, you will get inbound interest from investors who want to talk with you. And it doesn't necessarily mean they want to invest in the company, right? I think it's a lot of it is just starting to build a relationship with founders.

That's, it's part of their job. And I think in that process, you know, if you are transparent about your intentions, I think most people will be. I think it's very fair to be [00:24:00] like, look, I'm not looking to raise now, but here are some things I'm thinking about. Can you help me with x, y, z things? And I think a lot of that is a, is a process of building relationships with investors that you like and maybe would like to participate in your next round.

Um, and as they get to know more and more about the business, I think if, if there's a, you know, if they think there's a synergy and there's some kind of inflection point happening in the company, then you know, they may come to you and say, Hey, we would like to do a grab before that inflection point, as a way of. preempting around with you. I, in, our particular case, so that's like how investors heard about us, you know, to be quite honest, like after we, we did some PR or we had some PR cover us after we decided to more publicly launch the company. And after that, you know, a lot of investment comes in.

We also happen to work in a space where a lot of our customers are startups. So because of this, the, the startups use [00:25:00] moon hub, we help them hire out their founding teams and then inevitably their, their investors go and ask those. Teams like, Oh, this is like, you've hired this amazing, like couple of people.

How did you hear, how did you do this, et cetera. And then they hear about moon hub and then they want to come talk to us. So there's also this like secondary funnel, which is a little bit more specific to moon hub. Um, but because of that, what happens is, you know, investors have talked to you. And then for us, like, I think the actual inflection point.

Was, the fact that we were going to more publicly launch what we were working on later in 2023. And I think that catalyzes a lot of interest for investors who want to, of course, get in before you more publicly launch and, you know, in some ways they're making a bet that the launch is going to go well, and it did go well.

And, you know, we, got all the traction we expected and more. And so I think it was a good bet for them before it happened. and I, I do think there is usually some kind of inflection point or. You're, you're experiencing a lot of growth. and get someone to want to [00:26:00] hop on before, you know, things get even bigger.

Kind of.

Jason Yeh: I love the call out that you made in the sort of generalist, the generalized setting of, in general, you know, when you're building, if, uh, you announce a round, people will, or announce a public, uh, product launch, you will have investors that reach out. And the one small thing that you might've glazed over, which I think is quite important to hear is when people reach out, like you can, you can almost tax them.

You can almost be like, sure. Yeah. Could you help with this and see if they're actually able to show value before they become an investor that not only one. Brings in value for the company, but also gives you more surface area to create a relationship with the investor. And I think that's helpful in both directions, right?

Um, Investors want to feel comfort around the team that they're backing. And if they have more touch points with the founder to understand who they are, how they think, how they execute, that can be very helpful and convincing to Them to [00:27:00] invest in the future rounds. And then, you know, everyone should be playing in a way where they're like, we believe we'll have a lot of options.

Right? If you don't believe that, then it's gonna be harder for you to fundraise anyways. But if you believe that you're gonna have a lot of options, then part of what you need to do is like to start. Dating you know, and like seeing who these investors are, seeing if you like spending time with them because you know, it is a relationship that is going to be around for a while.

Um, so, so great call outs there. I, I wonder, like everything I've heard so far feels very smooth. Right? Feels very like clean and, and, and like, fits into a great box. Um, I, I. I tend to think that that, that rarely is the case. Like a hundred percent of what happened was just super easy. Is there anything that comes to mind around like challenging times when it came to raising capital or, um, I don't know, experiences that like really hurt anything that you could share?

Nancy Xu: [00:28:00] Yeah. It's, it's, it's a great question. We, we have been quite lucky in that, um, every time we've raised capital, it's always been relatively smooth. And, and what I tell a lot of founders is, you know, it's always best to raise capital when you don't need it, because that's when you have the most right leverage in the conversations.

And I think we've. First round, exception being like, you kind of have to raise money to start the company, at least in our case. Um, but, but the second one, at least that's what we did and what I hope will happen in the future as well. I think in terms of what didn't go well, um, I think it's more about having I think it's very important before you raise money, you know, why you're raising it and how much you need to raise it. And, um, to be honest, I think we We were rushed into that process a little bit when we raised our second round because it was not something we had really, like, my mind was basically, let's figure out how to launch this product, let's [00:29:00] hire more people, let's go build the product.

It wasn't really, I'm like, okay, let's think about our next round of fundraising. So I do think in some ways we were a little bit like, Rushed into that process and we could have spent a little bit more time thinking in advance, like after your first round of fundraising, start to think about, okay, what are the milestones you want to hit for the second round?

How much do you want to raise? What are the, like, how are you thinking about the fundraising? Like in the back of my mind, I sort of knew what that timeline would look like. But to be honest, I think. We could have thought more about it during the process and the process was like we're talking like a week here So it wasn't like too much time to think about things One one piece of generalized advice I would say is for a lot of the companies so like a lot of companies come to moon hub After they raise a round and then because of the round they're able to hire more people and so we work with a lot of companies like that and sometimes I ask them about how their rounds go and and things and I will always say the best piece of advice I would give is like [00:30:00] once you raise your first round start to think about what the deck would look like for your second round.

Not because you're thinking about how to go raise the second round right but because like You're starting to think about what are the milestones you want to actually hit before you, you, you reach it so that you don't, you don't get to a point where like, I have six months of runway, have I really thought about am I, have I actually hit the milestones I'm trying to hit here?

Right? And I think that, that level of structure

is important

Jason Yeh: love that. Like for similar but different reasons, I, I love that advice. It's like also like trying to put together your narrative of like what we, what your narrative would be talking to investors in call it 12 months kind of dictates a little bit about your strategy too. It's like, it's a different way of thinking about executing strategy.

Um, through the lens of well, I'm going to have to tell people what we're doing, what we're trying to execute against, what we've done well. And it's one of the things that I like really lean in on when helping founders think through this. It's like, [00:31:00] sometimes people are like, ah, I got to like come up with a story and I've got to like, you know, put it together in a nice deck and it feels like a, A song and dance that you're just putting on for investors to a certain extent, maybe it is a little bit, but there's a lot of value in, in the rigor around like pulling together exactly what you're focused on.

What do you want to spend time on? So I love that idea of just maybe start thinking about it really, really like. Crazy early, right after you raise your last round. Um, there's a lot of benefits from that. Um,

Nancy Xu: Yeah, and look, there's a lot of uncertainty in building a startup, right? Like, you can have the best possible plan and likely nothing will go as planned. Um, but I think the exercise of thinking through it is very important because it gives you some sort of thoughts on, on knowing what it is you're heading towards and whether or not the thing you're heading towards is actually correct, right?

And I can tell you internally at Moonhub, people know that I'm very big on Basically just like ruthless prioritization and focus. So we, every quarter, you know, we publish these are the top three priorities we're working [00:32:00] on as a team. And if you're not working on one of these three priorities, like you got to rethink like what, what you're doing towards those three priorities.

And, um, I think it applies to like longer term company decision making as well. Right. It's not just like, okay, this is the hypothetical deck for the series A or the series B, but it's also. Um, if we want to, let's say, make a hundred million dollars of revenue in five years, like what are the real concrete steps that we need to be making each year?

And then from there, you know, okay, am I actually on track to get to that, that point in five years or about, maybe you're exceeding expectations, who knows? But having that, that concept of what it. It's a very enlightening process to go through that exercise every couple months.

Jason Yeh: And then the last thing I love. Asking founders who come on is you raised a couple of rounds of capital are off to the races. Um, and I tend to believe that founders who are in the mix, like tend to see the best founders coming up. [00:33:00] And in case any names come to mind where you're like, you know, I'd love for you to, you know, you should keep an eye on this one person, they've either just started a company or they're going to start a company and I'll tell you, Christina Cassiopeia, the founder of Vanta.

Came on almost two years ago and she had just raised her Series A. She's raised, you know, a hundred million plus since, I think. And when we asked her this question, she was like, I love this guy, Bobby Pinero. He's like building this tool that he wished he had. And like, I don't think any rounds, I think she had just angel invested in him and he just came on our podcast after, you know, raising his Series A.

So anyways, I don't know if there are any names like that, that you want to, you know, roll the dice and see if you can, uh, Just call your shot, but any names we should be aware of.

Nancy Xu: Yeah, I mean, definitely some. I'm just trying to think. We do, we work with a good number of companies that are quite early stage and not [00:34:00] public about what they're working on. Um, and in terms of the early stage startup environment, uh, the non obvious ones, I'll give a shout out to a couple interesting AI startups that I've seen recently. So, um, one is this company, U. com. It's a consumer search engine. Little bit more late stage. I think they're doing some really cool work on sort of more consumer side search, um, another company, a lot of these are our customers too.

So this is, uh, but I'm not, I'm not mentioning them because our customers, I generally think they're, they're cool opportunities out there. Um, another company I recently saw was, uh, another one of our customers called Marbury. It's, uh, it's very early. I think they're, they're still quite stealthy about what they're doing.

But the founder had actually previously IPO'd a company that he founded that was more in this 3D design space. Um, and it's now doing the reverse of that with AI. If you can imagine like, how do you build those 3D designs with AI to start, um, instead of [00:35:00] manufacturing and printing them. there's a lot of cool ones. There's a company called Whisper, which is a company that we've hired several computational neuroscientists and very niche roles for. That's one of those companies where you're like hunting down the 10 people in the world that are a good fit for the opportunity. Um, but they basically design like a, um, a device that you wear and you can think about things that you want to say, um, and it will transcribe them for you.

So it uses like very small muscular twitches that happen in your neck when you think about a concept and then they actually are able to use that to like, as a form of communication, which I think is quite cool. And it

Jason Yeh: Holy shit, that's insane. I'm glad that that was the one that you, you ended up on then.

Nancy Xu: Yeh, Yeh, Lots of interesting ideas out there.

Jason Yeh: well, Nancy, that, that was great. That was a very cool conversation. Awesome to hear how you got moon hub, uh, kicked off, raised the capital to do so. And, you know, we've [00:36:00] been following along from the sidelines, but excited to see all the stuff that you do.

And, um, yeah, this was a great conversation.

Nancy Xu: Yeh, Thanks so much, I appreciate you having me on, Jason, and had a lot of fun.

Jason Yeh: Cool.

Nancy Xu: if any of the, if any of your founders are hired, please come check us out, we'd

Jason Yeh: MoonHub. So the shout out would be moonhub. ai.

Nancy Xu: Yes, moonhub. ai, you're also welcome, you can just email me, nancy at moonhub. ai, and we'd love to help you hire to get all your teams hired.

Jason Yeh: That was my conversation with Nancy Sue, founder and CEO of moon hub.

The world's first AI powered recruiter. I hope this episode helped you gain a new perspective around venture capital and what it takes to scale your company.

After the break, I'll be sitting down with my producer page to talk about the main takeaways from our conversation.

[00:37:00]

Jason_Yeh: Hey P, how are you doing?

Paige Randall (2): A little jet lagged from yesterday,

Jason_Yeh: Jetlag? Oh, you know, I am the worst with jetlag. So, you know, I travel quite a bit and into different time zones and whether it's not shifting time zones or shifting time zones, travel just completely wipes me [00:38:00] out.

Paige Randall (2): actually Enjoy the airport, weirdly enough. But when I have a long, yesterday I had a long layover and I just, it just really, really got to me. Um, but, I'm back and I'm excited to talk about this episode because I feel like I say this every time. Nancy was very, um, like this whole episode, it just felt so beautifully laid out, like her whole story, um, even though I, I did find it interesting and you guys touched on this a little bit, but she kind of was going down this path of academia and she was getting her PhD at Stanford for AI and all of this stuff that gives her the perfect credentials for Moonhub and what she's doing now.

Um, so I did think it was a super interesting episode and into more of the Rey's information, everything seemed to be so smooth and laid out. I'm not sure if that's actually how it was and she was just giving us the pretty picture. Um, but I did, I did find a lot of [00:39:00] like, uh, the knowledge and insights that she shared be super useful.

Um, I just want to hear your first thoughts on, on the episode and the conversation.

Jason_Yeh: Yeah. You know, I think. I think this, her fundraising, it's almost always messier than people let on, but her trajectory around raising capital, given her background and how it all came around, probably was one of the smoother fundraising paths. And, and one thing that I'll point out is that I really liked the fact that she was going down a path of getting her PhD. Which is different than getting your MBA, for example, because like, if you're getting your MBA and I'm just thinking about myself, you get your MBA, if you've got an MBA, it's some of the expectation is that you should start a company. You should be an entrepreneur. You should do these things. And because of that.

I see a lot of MBAs who jump into businesses that [00:40:00] they probably shouldn't start just because they feel like the expectation is that they should start a business and they're just looking for the thing. In fact, when I say that I'm, I'm really speaking about myself. It's like, I, I have felt this intense pressure to live up to what people expected me to do.

Whereas Nancy, I think she was really happy to go deep in academia and really like study the science And because of that, I feel like starting MoonHub only happened because there was this real pull, like it had to happen. She had to do this, right? And then the fundraising happened because the fundraising kind of pulled her into it, as opposed to her like chasing something down.

And so because of that and all that background, I really do think it It was a great setup, great background, great understanding of problem. And then, you know, fundraising just kind of pulled her along. So later one,

Paige Randall (2): And I think it's interesting to note [00:41:00] that all of that is great and like smooth sailing, but at the same time, it's like, she still had to prove herself at Stanford in order to be able to get those connections in those intros. Like she mentioned that, um, her advisor for her PhD, uh, he also ran a few startups, he had done a little bit of, um, And he knew someone from Google Ventures that's now an investor for Moonhub.

And he obviously made that introduction. She was like, obviously that was, that was huge. And in my head when I was listening to it, I'm like, I mean, in order to make that introduction, though, he had to really trust you, or else he would have probably said no. So I just wanted to call that out to be like, even if you're set up at that advantage, you still kind of have this other layer to prove with all the connections that you do have, to be like, oh, she's legit, and pass her on.

Jason_Yeh: totally great call out. I mean, I think to, to layer it on a little bit more, [00:42:00] especially at adamant and funded, we are deeply aware of some of the. Inequalities and advantages that certain people have. Some might not be justified. And it's, it, it's a, um, it's an easy thing to get upset or easy thing to get annoyed about like, Oh, these people with these logos, that's why they got funded.

And they had all the access. They have all these advantages. And that's like a, it's like a pretty common storyline to pick up on in the world of Twitter, et cetera. But let's take a step back and say. But in some of these cases, she has a Stanford degree in network, but it's not like they're giving those away.

Like, they weren't just like who out there that we think is an interesting profile who fills some kind of DEI requirement. Do we want to give an opportunity to pursue like a PhD in AI? No, that's not what happened. [00:43:00] She's obviously incredibly smart. At the next stage, short being part of that community, which she earned for being as crazy, you know, as crazy intelligent and driven as she is.

Well, then she met some people, but even at that point, they would have had to have seen things based on their experiences with her that made them believe this is worth my introducing to this person, this person, this person. So, you know, there, there is some stuff that we can get annoyed at in this world, but then let's make sure we, we give people.

Um, the recognition they deserve when they earned it and they worked hard and they got into these places of better access to capital because of accomplishments, of real accomplishments.

Paige Randall (2): totally. I, I couldn't agree more. and I did want to, I did want to bring something up though that she mentioned that I thought was a cool strategy. I think you've talked about this with me, but I wanted to get some of your insights around this. So she brought up, um, [00:44:00] inbound investors and how those can kind of randomly arise if they're seeing interesting things you're doing.

And how, you know, you say this all the time. You can say you're not raising and you genuinely aren't. Um, but you can still ask them for help around certain things. And she was mentioning this and how she kind of did that and, and, and kind of went for, you know, getting advice from these investors when she wasn't raising.

Is it possible to do that? With outbound investors, where maybe you're reaching out to an investor you're not raising right now. And you're like, Hey, I, I have no idea even if you'll do this for me, but I have a few questions that I need answered around blah, blah, blah, blah, blah. Is that still possible if you're the one reaching out?

Jason_Yeh: Sure. Almost, almost anything's possible. I think what, what I always try to drive people to do is take a step back and think about in any interaction that I'm about to push forward to, like, what is the psychology of the situation? What will people be thinking? So what, We'll take the easy one, [00:45:00] which was inbound, right?

Inbound means they're interested in you. And so in a situation where they're interested in you, you've already kind of proven some sort of value that they are evaluating. And, um, when it comes to, when it comes to like doing things for founders, you're trying as an investor, if you think, Oh my God, I might want to invest in page in the future.

There's an opportunity for you to like activate a bit of that feeling of reciprocity, where if I help her today, you know, she'll feel like I did something for her. And maybe in the future, when we're competing for a deal, it'll be in the back of her mind and she'll want to work with me. Or like maybe doing something for her will like start building relationships.

So that's obvious, right? Like, If we know that I want you, then we can set up that dynamic. And Nancy was able to then ask for advice, ask for help. And I think that's an amazing way to handle inbound and to like [00:46:00] establish relationship with that while also pulling value out for the company. Now, the question about outbound is a good one.

And a lot of times we talk about outbound and getting intros first before your fundraising and having the Having the background for why you're reaching out, be that you'd like advice or you'd like insights or you'd like some things that they know. Now, this can be done for sure, but it has to be done in a way where the investor that's hearing from you believes that you're valuable.

So, um, the version of this would be if I got introduced to you, Paige, By Jonathan Lee, who you know and trust and you think is amazing. If Jonathan goes, Hey Paige, will you meet this entrepreneur, Jason Yeh? I've worked with him for a few years. I think he's really talented and he's doing some interesting things.

I don't think he's fundraising, but you should meet him. [00:47:00] Then. When that introduction gets made, you've been primed by someone that you trust, that this is a great entrepreneur. And in your head, there might be a future opportunity to invest. So we've again, recreated the situation that Nancy got in an inbound.

The harder one might be for cold, cold outreach, right? Cold is difficult because The thought always goes through an investor's mind of like, well, why, why am I hearing from this person? If they couldn't get me to me through an introduction, like, are they even that valuable? Most, most good companies can find me in different ways.

And so you have to navigate that. But if you were able to craft an email. That had something to do with your background. You went to the, you went to SUNY Buffalo and I went to SUNY Buffalo too. And I saw that about you. And I thought to myself, I would love to contact Paige. By the way, I'm working on this company.

It looks like you have a background in it. [00:48:00] If you have time over the next couple of weeks, we'd love to meet another, what do you call them? Buffs? What do you call it?

Paige Randall (2): I don't know. I actually don't know. Buffalonian.

Jason_Yeh: Uh, a fellow buffalo, um, you know, and you're like, you're leveraging something to then make sure that their thought isn't, oh my God, this founder is desperate. This founder is trying to like, trap me in a talking, and then this is gonna be a terrible company. But if you can set those things up, then the ask for advice, the ask for, you know, other things.

Other than fundraising is, is a good one, but you know, not always straightforward and easy to set up.

Paige Randall (2): That is really good advice right there. I want to encourage anyone listening to go back and take notes because you just gave them like three laid out options of how you could go about getting advice from investors while you're not raising and all of them were spot on. So thank you for answering that.

I did have [00:49:00] one more thing that I wanted to talk about, uh, which is. She was talking about how she got a lot of interest from investors, uh, right after she publicly launched Moonhub. So, she basically launched Moonhub, I think, I'm going to assume, in a way to boost her raise. Even if she didn't though, say she didn't. My question is around, Do you always want to do that? In my mind, my answer is always like, Yes, because you want to be drawing it, I'm not saying you have to publicly launch, but publicly launch a new product after some big traction happens, after something happens within the company.

I feel like that's probably the smartest way to launch a fundraise because there's interest being drawn to you. Whereas, you know, you just go out and raise a random month and you're like, Oh, I'm starting. But there's not, um, cause you want to have something that you could showcase to investors. So I, that's where my mind was heading and I wanted to hear your thoughts on it as well.

Jason_Yeh: Sure. I mean, I, I think [00:50:00] your instincts are good and you've, you've learned so much for the last page. Uh, these debriefs are doing their job. Um, I think on, on one level, Yes, if you have momentum in your company and things are happening and progress is being made, that's the kind of company that an investor would be interested in, as opposed to nothing's happening, right?

So I think that's a fairly obvious thought. Um, what I, What I try not to have founders do too much of is like put the cart before the horse or let the tail wag the dog. As in, how do I like do my company for fundraising? I would rather really think about, you know, what is the company I'm trying to build?

What are the next milestones? Does launching right now make sense? If launching right now makes sense for the company. Then think to myself, is this a good time to raise too? Because we're launching anyways, [00:51:00] we'll have press, we'll have people talking about us, maybe that'll drive momentum to actually raise capital.

I would rather that be the mindset and logic that you follow. Now, of course, there are always things on the margins where you're like, adjusting a little bit here and there. It's like, it would be slightly better if we did it then for fundraising and maybe adjust it. But primarily, I want to make sure people are like, we're trying to run the best company that we can.

We're trying to make the best decisions for the company. And if we do those things, that should be attractive to investors. And then we'll talk to investors.

Paige Randall (2): Yeah, that makes sense. I don't know, I guess my mind was thinking of it as in like, if there's nothing going on, or say it's a pre Uh, what is it? Precede? And you have nothing going on in the company. I guess I can't wrap my head around how you launch a fundraise

Jason_Yeh: I know what you're

Paige Randall (2): it's so early.

Jason_Yeh: know what you're saying for sure. And um, one thing I'll push everyone towards is if nothing is [00:52:00] actually happening in the company, you know, even at the earliest stages, if you're not making progress, If you're not, if there's no motion inside the company and you're feeling, thinking to yourself, I don't have anything to raise against. That might be true. That might be true. And maybe you shouldn't raise capital. That's kind of like the harsh reality because the earliest stage companies, even when they're not like with tons of customers and growing like, like a weed, they're moving, right? They're making progress. They're, they're recruiting the best talent that they can.

They're validating, validating their ideas with customers. They're interviewing customers. They're, they're putting up. Um, MVPs together, they're getting data on those things. And so there, there should always be something that you talk, that you can talk about something like real progress that you are excited about at any stage of the company.

And so everyone should be checking themselves. If they're like, Oh my God, I need to make something up to fundraise. That might actually mean, [00:53:00] you know what? You're not ready to fundraise. You should probably go back to the drawing board and really see what you need to work on within the company first, before you're even in a state to go ask people for money.

Okay.

Paige Randall (2): That's the debrief.

Jason_Yeh: the debrief?

Paige Randall (2): That's the debrief.

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