Headline & Intro
Founders obsess over product and fundraising decks, but the quiet decisions about who sits on the cap table and who joins first usually decide whether a startup scales or stalls. A recent conversation on TechCrunch’s Build Mode with General Catalyst’s Yuri Sagalov puts those early choices under a microscope. His framework for investors, equity splits and first hires is aimed at Silicon Valley founders, but the lessons travel—if you adapt them. In this piece, we’ll unpack what his advice really implies, where it’s incomplete, and how European founders should tweak the playbook.
The News in Brief
According to TechCrunch’s recap of its Build Mode podcast, season two opens with host Isabelle Johannessen interviewing Yuri Sagalov, managing director at General Catalyst and repeat founder. Drawing on work with hundreds of pre‑seed and seed startups, he outlines his core advice for building a founding team.
Sagalov groups investors into three types: deeply involved partners who effectively extend the team, largely passive check‑writers, and highly intrusive micromanagers. He argues the first type is most valuable and that the meddling third type should be avoided.
He also shares views on co‑founder equity: he prefers splits that are broadly fair but not perfectly equal, so there’s a built‑in way to break deadlocks later. For early employees, he argues founders must be explicit about risk and seek people who are motivated by the mission more than compensation.
Why This Matters
What Sagalov is really saying is that founding isn’t a two‑person story. Your real founding team includes your earliest investors and first ten employees. They may not hold the title “co‑founder,” but they shape culture, decision‑making and long‑term ownership just as much.
His three‑bucket investor model highlights a blind spot for many first‑time founders: you perform heavy diligence on hires but almost none on the people buying 10–20% of your company. The distinction between helpful partners and anxious micromanagers is not semantic; it’s the difference between getting strategic help in a crisis and having someone amplify every wobble into a board‑level drama.
The equity comments matter just as much. An apparently harmless 50/50 split often creates a constitutional crisis the first time co‑founders seriously disagree. Slight asymmetry, plus standard vesting and clear roles, acts as tiebreaker and pressure valve. The loser isn’t the co‑founder with fewer shares; it’s the company that cannot decide.
On early hires, the call for “missionaries” is a pushback against the current market, where FAANG‑sized salary expectations meet seed‑stage bank accounts. The message: your first employees need a risk‑return mindset, not just a paycheck. If they don’t understand the downside, any turbulence will feel like betrayal.
The Bigger Picture
This advice lands in a very different environment from the 2010s unicorn boom. Rounds are smaller, due diligence is deeper and growth at all costs is out of fashion. In that world, the quality of your first ten people and first two investors is a much stronger predictor of survival than how fast you can buy ads.
It also matches a broader trend: the rise of “operator VCs” and “platform teams.” Many funds now advertise help with hiring, GTM and follow‑on fundraising. Sagalov’s first investor bucket is essentially that operating model at its best. But founder experience shows that the line between “hands‑on partner” and “overbearing shadow CEO” is thin.
We’ve also seen high‑profile co‑founder conflicts—public CEO ousters, messy buyouts, “title but no power” arrangements. Nearly every case starts with poorly defined roles and fuzzy expectations baked into the initial equity split. YC, Sequoia and other US players have been quietly nudging founders toward more structured co‑founder agreements for this reason.
Finally, the push to talk openly about risk with early employees sits alongside another macro trend: talent de‑risking. Senior engineers leaving Big Tech increasingly want liquidity timelines, secondary options and transparent ESOP structures before they join. The mythology of “join us, we’ll all be billionaires” no longer sells; transparent downside scenarios do.
The European / Regional Angle
For European founders, Sagalov’s framework needs translation on three levels: culture, regulation and capital structure.
First, many EU ecosystems—from Berlin to Ljubljana—still have a weaker equity culture. Founders sometimes treat early employees as salaried staff with a token option grant. Combine that with complex national tax regimes for stock options, and it’s harder to recruit the “missionaries” he describes. Recent reforms in countries like France and Germany help, but the legal friction is still far higher than in Delaware.
Second, EU regulation matters. Once you cross certain headcount thresholds, works councils, strong employee protections and data‑heavy compliance (GDPR, DSA, upcoming AI Act) make your early hires and early investors de facto governance partners. A meddling investor in Europe isn’t just annoying; they can push you into risky regulatory shortcuts that later trigger fines.
Third, the investor mix looks different. In most European hubs, you’ll often combine a lead from London, Berlin or Paris with regional funds or family offices. Some of those smaller checks behave exactly like Sagalov’s third bucket—emotionally attached, operationally inexperienced and constantly nervous. Reference calls with other portfolio founders are even more critical when the VC brand isn’t global.
The upside: European founders have more leverage than they think. Capital is chasing limited deal flow in many markets, and good teams can push for clearer expectations, governance norms and support commitments up front.
Looking Ahead
Expect the founder–investor relationship to professionalise further over the next few years, particularly in Europe.
Founders will normalize doing reference checks on VCs the same way they do on senior hires. We’ll see more standardized side letters defining what “hands‑on” actually means: number of hiring introductions, agreed response times in crises, boundaries on operational interference. Operator‑led funds will either prove they truly add value or get grouped into the meddler bucket and priced accordingly.
On the team side, tools will emerge that encode many of Sagalov’s principles by default: equity‑split calculators that factor in future role changes, better off‑the‑shelf vesting and cliff templates adapted to EU law, and transparent ESOP dashboards for employees. As remote and distributed founding teams become the norm, resolving deadlocks and clarifying decision rights will move from “nice to have” to existential requirement.
The remaining open question is cultural. Can European founders move from conflict‑avoidant consensus culture to more explicit conversations about power, ownership and risk at day zero? The ones who do will suffer a few uncomfortable early meetings—and avoid years of slow, political drift.
The Bottom Line
Sagalov’s advice is a reminder that your cap table and first hires are governance documents in disguise. Choose investors who behave like partners, not helicopter managers. Avoid lazy 50/50 splits that postpone hard conversations. Treat early employees as adults who deserve a clear view of risk and upside. European founders, in particular, have to layer this onto local law and culture, not copy Silicon Valley rituals. The real question: will you design your founding team on purpose, or let it happen to you?
