'Throw Everything Overboard That You Don’t Really Need': Spencer Rascoff Offers Founders Advice During a Downturn

Joanne Saunders
Joanne Saunders is a freelance writer. She writes about health, travel and clean tech entrepreneurs. Her work has been published in Huffington Post, Vacationer Magazine, and Comics Beat, among other publications.
'Throw Everything Overboard That You Don’t Really Need': Spencer Rascoff Offers Founders Advice During a Downturn
Photo by David Ruano

Lights were strung across the lawn and over the pool while about 150 guests meandered through the open concept home and towards the bar and the mounds of guacamole and warm churros. Hosted by McKinsey and Pacific Western Bank, “The Founder’s Guide to L.A.” event focused on advice from active angel investor, author and podcaster Spencer Rascoff, who co-founded Zillow, Hotwire, Pacaso, Supernova and–of course–dot.LA.

Through questions asked by McKinsey & Company Senior Partner Tarek Elmasry and the audience, Rascoff spent a half hour providing speedy and insightful advice to tech founders in attendance.


When asked what he looked for in a founder, Rascoff said, “I look for grit - somebody who has something to prove to somebody, and who has a chip on their shoulder–someone who’s willing to run through walls for that company and that idea.” Rascoff, who seemed even-keeled and energetic, explained that his ambition and drive came from the death of his brother in a car accident when they were both in their teens.

Though founder life is exciting, Rascoff now sees himself as more of a teacher.

“I did it for twenty-something years, and now I’m a coach and a mentor to my startups. I’m happy to be in my mid-40s and to be at this stage in my career. It’s a little less dangerous. It’s also intellectually stimulating and rewarding.”

He teaches a class on startups at Harvard College and Harvard Business School. No investor is perfect, and Rascoff has had his share of failures along the way, but he’s learned from those as well.

As the evening progressed, Rascoff advised founders to make financial cuts to extend their runway to cover 24 months of operations.

“Cut your headcount, cut marketing expense. Throw everything overboard that you don’t really need in order to extend the runway.” He said it may not be as fun as running a company during the good times, but great things can happen when managing a company through a difficult period.

As for advice for founders who are seeking equity, Rascoff made some grim observations.

“Equity is hard to come by right now. VCs are mostly hiding under their desks; they’re shoring up their existing portfolio companies with inside rounds, and it’s pretty hard to get investors to write new checks into new companies right now.”

An attendee with a background in robotics and aerospace asked Rascoff and Elmasry how to start a company that would be in a capital-intensive area when no one is easily giving money. Both suggested bootstrapping. Before investing, investors want to see more proof points these days–and at a slightly later stage, Rascoff explained.

Photo by David Ruano

Market volatility and recession fears have caused the IPO window to slam shut in 2022. Experts have predicted a return in activity in late 2023. But Rascoff thinks it could be even quicker than that, if historical trends repeat themselves. The IPO window has never been closed for much more than eight months, he notes, and the sector is already about six months into its current dry spell.

Whenever access to capital becomes easier to access, L.A. is perfectly positioned to be a major tech hub. Rascoff hailed the region as the place where media, entertainment, pop culture and influencers intersect. Along with consumer businesses, L.A. boasts incredible aerospace and a robust venture ecosystem. Recently, even the major Silicon Valley players have begun to appreciate the value of establishing a presence in L.A., he added.

Rascoff intends to ride these tailwinds. As general partner of venture company 75 & Sunny, he and his team is working with 100 startups and have incubated five companies, a quarter of which are proptech startups. He’s specifically excited about democratizing access to real estate assets, but he’s also focusing on vertical social media networks like All Trails and LinkedIn. With his daughter Sophia, Rascoff recently started a vertical social network aimed at foodies called Recon.

After the talk, the attendees continued the night under the lights, surrounded by lush green walls of foliage, drinking their beverages of choice and talking about tech in L.A. and the future. Despite the current economic struggles, there’s plenty of optimism in the room.

Subscribe to our newsletter to catch every headline.

Cadence

Henrik Fisker Says Tesla Price Cuts Haven’t Fazed Ocean Rollout

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

A Fisker electric vehicle.​
Courtesy of Fisker

Last week in the dot.LA newsletter I wrote about Tesla’s decision to slash prices by as much as 20% on their vehicles and how the decision might impact Southern California’s EV startups. I called the price cuts a “tough pill to swallow” for Fisker in particular since they would make many of Tesla’s price points more competitive with Fisker’s first production model, The Ocean.

The Ocean is currently undergoing homologation, but Henrik Fisker, the company’s CEO, confirmed to dot.LA that the company hopes the process to be completed at the end of February. From there, it could take several weeks to ship the SUVs from Austria to the United States.

Read moreShow less

Diankha Linear on How Community Is Revolutionizing Text Marketing

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

​Diankha Linear
Diankha Linear

On this episode of Office Hours, Community CEO Diankha Linear joins host Spencer Rascoff to discuss her foray into the startup world and the strategic approaching to scaling up.

Read moreShow less
https://twitter.com/spencerrascoff
https://www.linkedin.com/in/spencerrascoff/
admin@dot.la

LA Tech ‘Moves’: Dreamscape, LinQuest and PetDX Gain New CEOs

Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

LA Tech ‘Moves’: Dreamscape, LinQuest and PetDX Gain New CEOs

“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.

***

Read moreShow less
RELATEDEDITOR'S PICKS
LA TECH JOBS
interchangeLA
Trending