Welcome to the Era of the Gritty Startup

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Silicon Valley is Silicon Valley partly because the stories we tell about it tend to come true. The whiz kid really can beat the giant. Mark Zuckerberg actually did kill MySpace. Anyone under employee count 250 at Google is probably flying private.

This, by and large, has been the case in Silicon Valley for over a decade. The story we tell ourselves is that disruption is inevitable, and the numbers will always go up. Even when the going gets rough, we tell ourselves that the next round of capital will always come through.

And this was a true story, until it wasn’t. Global venture capital investment fell from $83.8 billion to $75.9 billion between the fourth quarter of 2023 and the first quarter of 2024. During the same period, the number of VC deals plummeted from 9,458 to 7,520, representing a stark 20 percent decrease in deal volume. As we move into the fourth quarter of this year, all signs seem to be pointing to the reality that funding has dried up. Even AI companies are struggling to raise capital. Higher interest rates coupled with uncertainty over how AI would play out cooled off the markets indefinitely. 

Over the course of conversations with more than a dozen VCs, they all told me that the bar for them deciding to invest in a company is higher than ever. Our belief that the numbers will always go up is also no guarantee. As of June of this year, according to Benchmark partner Chetan Puttagunta, there wasn’t a single public software company projected to grow its revenue by 30 percent or more in the next year. And public software companies are typically the most dependable companies to work for or invest in. 

At the risk of sounding overly optimistic, I think this is a good thing. 

Many of the assumptions underlying the startup boom of the 2010s were fundamentally misguided. In my opinion, we are now exiting the age of glut and entering the era of the gritty startup—companies that take the best of what we learned and reject the harmful habits of yesteryear. This is not just about being “lean” or cash-flow positive. I genuinely believe that we are on the cusp of a spiritual and operational revolution in how we build organizations. 

Three lessons for the age of grit

To paint a fuller picture of “the gritty startup,” I’ll outline what I see as the three great sins of the previous age—and what companies navigating today’s landscape can do instead.

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Become a paid subscriber to Every to unlock the rest of this piece and read about:

• Rethinking stock-based compensation
• Growth hacking your way to user acquisition
• The paradox of abundant capital
• The three signs of a gritty startup