Starting a company is solving a simultaneous equation - you’re convincing the money that you have the talent, and the talent that you have the money.

@naval @grok how naval solved this in his early days?

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@naval ...and the clients that you have a product, and the engineers building it that there is a market.

Exactly founding a company is a balancing act of credibility and alignment. Investors bet on your ability to execute, talent bets on your ability to compensate and inspire, and the market rewards the equilibrium. Success comes from mastering both sides of the equation simultaneously

@naval It's more of a constrained optimization problem because talent is closer to fixed costs outside of founders with significant equity. You don't really need to convince them you have the money, they know they can leave if the paycheck doesn't come in

@naval @_screenshoter screenshot this

@naval That’s a sharp way to put it. In AI x crypto, we see a similar loop, models need backers to grow, and backers need to see real builders creating value. Tokenizing models on Modelz.io makes that equation a lot easier to solve.

@naval Startups live in the gap between belief and proof. You’re selling vision to both sides until reality catches up.

@naval This was 100% my experience.

@naval @naval is this correct approach? Bootstrap → prove concept & discipline. Raise Equity → grow aggressively once PMF is clear. Raise Debt → scale once revenues are stable, to optimize cost of capital and avoid over-dilution.

@naval @garrytan You’re also convincing the market that you have the product, and the team that you have the market

@naval

@naval Entrepreneurship is trust-building on two fronts. Both sides move only when the other does.

@naval And you don’t have to do anything except be yourself to convince anyone for anything ! If you are then it won’t last long…

@naval Success requires both resources and team, but each side wants proof you already have the other. The chicken-and-egg problem gets solved by demonstrating enough early progress that both groups see the potential instead of the risk.

@naval @garrytan This is basically my life in a nutshell

Getting life insurance is really that easy.

@naval The art of making everyone believe you have exactly what you don't have yet - until somehow, you actually do.

@naval It’s a constant dance of credibility! Investors want proof of execution, talent wants proof of stability. The founder’s real skill is creating belief on both sides before either side is certain!

@naval Perfectly put. The hardest part is keeping both sides confident long enough for the equation to balance.

@naval Systems will give you freedom a lot of people will not understand the power of actually exploring the internet and having freedom!

@naval And you're convincing the world to give you money

@naval And convincing yourself you are talented even when most well-meaning and smart people will tell you your idea will not work.

@naval In Hollywood, the same: convince the studio that you have the actor, and the actor that you have the studio.

@naval It’s like selling lunch to pay for dinner

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@naval Will the talent really question the money, from their vantage point?

@naval Easiest way to achieve this is to be the talent — that way you don’t need to convince yourself you’ll get the money, you just go get it 🤔

@naval And the customer that you have both.

@naval M⋅T=k M= money T= Talent k= business activation constant. (where k has to be non-zero to be of any value)

@naval and convincing yourself you can convince both parties

@naval There is another important point. You need to let talents see your personal charm, so that they are willing to work hard together with you.

@naval Chicken or the egg

@naval Building a company is never about money or talent alone. It’s about proving both exist, every single day.

@naval Lol at me all at once remembering the feeling of first trying to understand / solve ODEs ages ago

@naval I guess successful founders learn to be the proof for both sides until the equation solves itself

@naval It's a great analogy. There's a third variable in that equation too, convincing the market that you have the product.

@naval Let’s talk about that.

@naval this sounds like left foot on right foot, then right foot again on left foot, then iterating