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This VC’s best advice for building a founding team

One of the most consequential decisions early-stage founders have to make is who they will bring on as their founding team. The first five to 10 employees will have a massive impact on the company culture, and the precedents set with them are difficult to change down the road. That’s why this season on Build Mode, we’re diving into what it takes to build a world-class founding team. 

To kick off season two, Isabelle Johannessen is joined by Yuri Sagalov, managing director at General Catalyst and former founder, YC partner, and seed investor at Wayfinder Ventures. Sagalov has worked with hundreds of pre-seed and seed-stage companies and has seen firsthand the best (and worst) ways to hire in the early days.

In this episode, Sagalov offers his best pieces of advice for founders who are hiring their first team, strategically building their cap table, and forming compensation structures that can scale with the company.

The three types of investors (and which one to avoid) 

Sagalov categorizes investors into three main buckets: the ones that are heavily involved and function as an extension of your team, the ones that will give you a check and then vanish, and the micromanagers. 

The first type of investor is the most valuable according to Sagalov: “They’re going to help you with recruiting, hiring, go to market. And the most interesting thing with those investors is often it’s completely disconnected from the check size.”

Although it may feel counterintuitive to turn down investments, working with VCs who will become overly involved in the process may cause more harm than good in the long run. Sagalov said, “The only bucket that I avoid is this third bucket of investors who give you money and they’re kind of in your kitchen, meddling. They have an opinion on everything. They get stressed out when things don’t go right.”

In a fundraise, everyone is putting their best foot forward, so Sagalov suggests reaching out to current portfolio companies before committing to an investor.  “The best thing you can do as a founder is actually talk to portfolio companies, talk to other founders that they’ve worked with, ask for concrete examples of how they’ve been helpful, if they’ve been helpful, and then actually ask how they were when things didn’t go right.”

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How to split equity with a co-founder 

As an investor, Sagalov looks for co-founders who have created an equity split that is fair but also hedges for future misalignments. He suggests creating a slight differentiation by plus or minus one share so there is a clear way to break deadlocks. 

Sagalov also reminds early-stage founders that these early decisions have staying power: “Oftentimes founders over-index on ‘I came up with the idea, so I deserve the lion’s share.’  Most of the journey of the company is ahead of them. You don’t want someone waking up five years from now feeling like they put in equal blood, sweat, and tears but own one-fifth of the equity.”

Talk to early employees about risk and compensation 

The first few hires should be all in on the startup’s mission. Oftentimes, joining an early-stage startup can be perceived as risky. Sagalov emphasized the importance of discussing the risks and potential benefits: “Fundamentally, what you’re looking for when you’re hiring the first few people are missionaries who, beyond even the compensation, want to join you for the mission of the business,” he said. “You want to be honest with them that there is a lot of risk on the journey.”

Next week on Build Mode, we’re talking with Sarah Lucena, the founder and CEO of Mappa, who discusses how founders can take compatibility into account and hire the right fit for the team the first time, using their AI tool. 

Isabelle Johannessen is our host. Build Mode is produced and edited by Maggie Nye. Audience Development is led by Morgan Little. And a special thanks to the Foundry and Cheddar video teams. 

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Anthropic’s Fable 5 can make weirdly fun video games with the click of a button

Anthropic has released Claude Fable 5, the first publicly available version of its closely watched Mythos model. What can Fable actually do? All kinds of things, it turns out.

Ethan Mollick, a notable AI researcher and University of Pennsylvania scholar, has been playing around with the model and seems to be having a lot of fun.

In his testing, Fable consistently “outperformed basically every other public model I have used by a considerable margin,” Mollick wrote Tuesday on his Substack. He added that it was “capable across many problems and produced some startling results — it would work up to a dozen hours executing on multi-page specifications.” 

Perhaps most strikingly, Mollick used Fable to create a variety of video games — all of which were generated via “one initial prompt” in Claude Code, the researcher says.

Among these, Snake is exactly what it sounds like. You’re a Pac-Man-like snake and you roam around eating apples. The snake never stops moving, and if you run off the screen, you die. It’s very 1980s arcade but, like many of those old games, it’s weirdly addicting. I played it longer than I’d like to admit before remembering I am a gainfully employed writer and not, in fact, a serpent who likes fruit.

Then there was Strata, where you’re roaming around in a seemingly endless network of subterranean tunnels and the goal is just to light as many lanterns as possible. The graphics look like a degraded version of Myst — they aren’t great — but the fact that the game exists at all, generated from a single prompt, is impressive.

Mollick even managed to create Duino, a game based on the Duino Elegies, the celebrated cycle of poems by poet Rainer Maria Rilke. I like the animation here best — the player is a lone figure in a nocturnal landscape — although there isn’t much to the gameplay other than walking around while Rilke passages materialize on the screen.

Aside from the variety of instant games Mollick produced, he also used Fable to create an isochronic map — a visualization showing how long it takes to travel between any two locations. The accuracy and detail is arresting.

The implications are pretty clear. Software projects that once required entire teams — games, mapping tools, highly complex specifications — are now being spun up from a single prompt. It’s reason for vibe coders of the world to rejoice. As for founders and operators watching AI capability curves, it’s a useful data point about how quickly the floor is rising.

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Hey Siri, here’s what I actually want from AI

Two years and a $250 million lawsuit later, Apple’s AI Siri revamp is on its way to your phones and laptops and even your mixed reality headset, if you happen to be one of like three people who actually uses the Apple Vision Pro. Apple revealed a slew of new information at Monday’s WWDC keynote about these long-awaited, AI-powered updates that can take advantage of the fact that our hardware is supposedly “built for Apple Intelligence.”

To be honest, it’s hard for AI to impress me enough that I’ll use it in my day-to-day life. I still don’t trust LLMs to provide consistently accurate information, I find it ethically untenable (and uncool) to use AI to help me write, and I don’t feel the insatiable urge to know what I would look like as a Studio Ghibli character. But every once in a while, the promise of AI tempts me.

That’s how I felt watching Apple’s Siri AI demos, which depict a world where your phone comes with an always-on, constantly-working assistant who knows everything about you and can help you keep track of all of the conversations happening on like 12 different apps on your phone at any given moment.

To paraphrase Katy Perry, it feels so wrong (what are the privacy implications?), but it also feels so right (I am so overwhelmed by my phone and am begging for help parsing it all).

I want Siri to be my own personal Emily from “The Devil Wears Prada” — a “second brain” that anticipates my needs before I even know what they are. I want Siri to read my texts and automatically make an event when a friend and I decide we’re going to meet up for dinner on Thursday. I want Siri to remind me when I’m walking past CVS that I have a prescription ready for pickup. If I forget to reply to an important work email, I want Siri to remind me that I didn’t write back yet.

Image Credits:Apple

Siri AI won’t be able to do all of that out of the box, but it’s moving in the right direction. In one example at WWDC, Justin Titi, an Apple senior director working on AI engineering, asks the smart assistant to remind him of the dessert that his daughter mentioned recently. Siri searches across Titi’s phone to find a text from about a month ago, when his daughter mentioned that she wanted to make coconut cookies. It’s simple, but asking Siri to find that message saves time, rather than scrolling up through an entire month of conversation looking for that one specific text.

The new-and-improved Siri is designed to use “personal context,” which refers to any information you put into Apple-native apps, like iMessage, Notes, Calendar, Mail, Photos, and more. Siri will also be aware of what’s on your screen, so for example, if you scroll past a picture of a nice park on Instagram, you can ask it to find out where that park is. (We still don’t know if Siri will be able to integrate into non-native Apple apps; it seems like it might be up to the developers to make that happen.)

There already are apps like Poppy and Poke that try to create this kind of mobile, agentic AI. But the paradox of these AI personal assistant tools is that you have to give up a lot of personal data and privacy to make them work correctly, which may just cause you more trouble (remember that time when a Meta researcher ran OpenClaw and accidentally deleted her entire inbox?).

Image Credits:Poppy/Second Nature Computing

I can’t say that I love giving any tech giant my personal data, but Apple at least seems to care more about security than the other FAANG (MANGOS?) companies. On-device AI will always be more secure and less energy intensive than cloud computing, since the data is processed directly on your phone. (This is how current Apple Intelligence features like email summaries and AI emojis are generated.) But for the more complex tasks that Siri will confront, Apple pioneered private cloud compute (PCC), a way for devices to parse complex data over the cloud without even exposing your data to Apple itself. (If it’s possible to hack PCC, it hasn’t happened yet, even though Apple offers a $1 million bug bounty.)

In a recent conversation with the writer Calvin Kasulke — who is so internet-brained that he wrote a novel that takes place exclusively on Slack — I confessed what feels like a taboo desire to outsource all of my “life admin” to an AI.

“When you talk about the nonsense of the tech detritus in your life… I think the question is, ‘Is all that you have necessary?’ If it is necessary, isn’t it worth cultivating the skill and spending the time to do it?” Calvin told me. “I don’t think that those are skills that one should allow to atrophy.”

He makes a good point: Maybe instead of asking Siri to remind me about the TV show that my friend told me I should watch, I could pay more attention when I’m talking to my friends. I don’t want to get into the habit of forgetting more consequential details from my conversations.

“I’m sorry, but all of the commercials that are like, ‘What if I had the computer buy my kid a birthday gift?’ I’m like, ‘What if you learned what your kid likes?’ … Like, I don’t know man, it sounds like [they] don’t want to do the fundamental act of being a person,” he said.

Maybe when I say I want Siri to be like Emily from “The Devil Wears Prada,” I should remember that Emily’s character is on the verge of a crash-out. I know I can’t psychologically impact Siri like Miranda Priestly damaged Emily, but will I become the kind of person who can’t function without the friendly robot voice in my phone? Do I want to be that person?

At least if I decide to opt out from all of this, Apple will make that possible. Unlike Google’s controversial Search overhaul, the new AI Siri can be toggled on and off, so you don’t have to use it. Until then, I’ll have to decide if it’s worth it to taste the forbidden fruit of Siri AI.

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GM joins race to build batteries for AI data centers and the grid

The race to secure power for AI data centers has spilled over into some unusual places, including the automotive world. 

Battery recycler Redwood Materials kicked off the trend last year with a new energy storage division and a project that attached old EV packs to a Crusoe data center in Nevada. Then, Ford said it was repurposing some of its battery manufacturing capacity to make grid-scale batteries. And now GM is announcing its own — arguably more ambitious — plans for an energy storage system (ESS). 

GM unveiled on Tuesday two new phases in its attack on the energy storage market. The biggest swing by far is GM’s new partnership with energy storage startup Peak Energy. For that partnership, GM is developing an entirely new sodium-ion battery chemistry tailored for grid-scale deployments.

Outside of China, no automaker has announced plans to build sodium-ion cells. 

“The way we’re getting into the market is the easy way, through ESS,” Kurt Kelty, vice president of battery and sustainability at GM, told TechCrunch. “The performance characteristics are just what is needed in that market.”

GM wouldn’t share with TechCrunch how much money it is investing in this energy storage effort. But we do know the company has committed $900 million to commercialize new battery chemistries, an investment that includes a new battery development center.

Sodium-ion batteries work similarly to lithium-ion, but they swap out key materials to make the cells cheaper, longer lasting, and less prone to overheating. The tradeoff is that sodium-ion batteries need to be larger and heavier to store the same amount of electricity. 

Peak Energy has already been working on energy storage systems that use sodium-ion batteries. Because sodium-ion batteries behave differently from lithium-ion, Peak has developed an energy storage system with that in mind. Its grid-scale batteries don’t have cooling systems or fire suppression systems because there’s less risk of overheating. The setup reduces upfront costs, and it should also eliminate costly maintenance, Paul Menson, director of energy storage commercialization at GM, told TechCrunch. 

“This is the manifestation of the hardest part to engineer is no part at all,” he said. “Eliminate the part, eliminate the problem.”

GM plans to sell sodium-ions cells to the startup, which will then integrate them into its products. But that won’t happen right away.

The first GM cells are expected to enter trial production at the company’s Battery Cell Development Center in 2028. TechCrunch was recently given an exclusive look at the new facility, which GM expects will cut about a year from the commercialization process for sodium-ion batteries, reducing costs in the process. 

GM’s sodium-ion cells are still years away from commercial production, however. In the meantime, the automaker will sell lithium iron phosphate (LFP) cells to LG Energy Solution for use in its energy storage systems. LG Energy Solution already works with GM through its Ultium joint venture, which makes batteries for the automaker’s EVs.

Alongside the partnerships with LG and Peak, GM announced that it was expanding its work with Redwood Materials, the battery recycling and energy storage startup founded by former Tesla executive J.B. Straubel. 

Redwood already buys scrap from GM’s battery factories and used battery packs from its EVs. GM has a pipeline of around 10,000 packs it’s sending to Redwood, and the startup has been operating a 12 megawatt/63-megawatt-hour migrogrid using second-life packs at a Crusoe data center in Sparks, Nevada. GM said it is buying a 7.2 megawatt-hour Redwood system for use at one of its plants in Michigan, which it estimates will save it around $3 million over its lifetime.

The GM installation is “a step one” for Redwood, Cal Lankton, chief commercial officer for Redwood, told TechCrunch.

Data centers, where Redwood already operates, and industrial sites like GM’s are “vastly different things,” he said. Where data centers might use batteries nearly continuously to absorb some of the power fluctuations from GPUs, industrial sites are more likely to use them to shave off peaks in power demand, which can lower monthly power bills, and use them to provide backup power in case of an outage.

“The factory is really excited because now we’ve got a more reliable factory,” Kelty said. “Ultimately, we’ll be having similar installations like this at all of our factories. It just makes good economic sense.”

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