By George Pu | Founder Reality Podcast | December 2025
May 5th, 2022. 7:56 PM. Thai restaurant in Toronto.
I got my final rejection email from the last investor I'd been courting. They said I was too young to be trusted with money. They were probably right.
But that's not what hurt. What hurt was realizing I'd wasted three years of my life chasing venture capital money I never even got. Three years performing instead of building. Three years ignoring the customers who actually paid my bills while networking with investors who never wrote checks.
That night, sitting in that restaurant, I made a decision: I was done playing their game.
The next three years, my two companies made $2.35 million in revenue. Five employees. Based in Toronto, not San Francisco. Growing because we're making money, not because we're raising it.
Today I want to show you the biggest lie Silicon Valley tells founders - and the math they desperately hope you never calculate.
The Tile Story Nobody Talks About
You probably know about Apple's AirTag. But you might not have heard about Tile - the company that pioneered Bluetooth tracking devices years before Apple entered the market.
In April 2021, Apple launched AirTag. Six months later, November 2021, Tile sold their company for $205 million.
Sounds like a massive success story, right? A $205 million exit?
Here's what actually happened.
Over 10 years, Tile raised $141 million from VCs and angel investors. Those investors get their money back first - it's called liquidation preferences, written into every term sheet.
$205 million (sale price) - $141 million (investor money back) = $64 million left for everyone else.
Founders, employees, everyone splits that $64 million. After 10 years of grinding.
Let me put that in perspective: An L7 engineer at Meta with a few years of experience makes $750,000-800,000 per year.
The Tile founder crushed it by any measure - sold his company for over $200 million. But after liquidation preferences? He made less than a staff software engineer at Meta.
And here's the brutal part: He probably lived below his means for nine years because Silicon Valley tells you founders shouldn't take big salaries. Your compensation is tied to equity. You get rich when you exit.
That's the lie they've been selling us.
My Three-Year Poison
March 2019. I incorporated my first company in Delaware and applied to Y Combinator.
We were students. The company was a month old. We had $450 in revenue. Obviously, we didn't get in.
Then I got an email that planted a seed I'd spend three years trying to nurture:
"You are in the top 10% of applicants for this cohort. Over 40% of companies apply more than once before getting accepted. We encourage you to apply again."
I was a second-year college student in the top 10% of YC applicants. I just needed to be better. I just needed to be more "VC-worthy."
That email poisoned me for three years.
I applied to YC five times total. The fifth time, we got an interview with partners. Made the demo video. Did the presentation. Felt confident.
7:56 PM, sitting in Salad King with my co-founder, the rejection email hit:
"You guys are awesome. So much energy building a startup as college students. However, your product needs someone with decades of industry experience in finance. You're probably not there yet."
My co-founders texted: "Try again next time. Don't worry."
But it was 2022. Three years since 2019. I'd been performing for three years and hadn't built anything concrete. I followed the wind wherever it blew fastest. I wasn't being true to myself.
That night, I decided: I'm not playing their game anymore.
The Math They Hope You Never Calculate
You might be thinking: "George, maybe you just weren't good enough to raise VC. Other founders do it successfully."
You're probably right. But here's what most people don't know:
According to Harvard Business School, over 75% of VC-backed companies never return cash to their investors.
Not "struggle to return cash." NEVER return cash. Zero. Nothing.
That means for most founders and employees, your equity is worth exactly zero.
And for the 25% who do make money? It's usually far less than the headline numbers suggest. Not $200 million, not $500 million. Most walk away with a few million divided by 7-10 years of grinding.
Between 2021 and 2025, 75-90% of companies that raised seed rounds haven't raised subsequent rounds. They're zombie companies - not dead, but not alive either. Existing because founders won't give up, not because they're building toward exits.
Why The System Is Rigged
The system works perfectly - for one group of people.
VCs have a portfolio approach. They invest in 10, 20, 30 companies. They expect 90% to fail. But one or two will be the next Uber, Airbnb, or Instacart. Those wins cover everything.
For you as an individual founder? If you fail, nobody cares. But you and your employees and co-founders just wasted years working on a dream that was never going to materialize because the chances of succeeding are artificially, dangerously low.
That's the fact they don't tell you.
The Alternative Path
After that rejection in 2022, I doubled down on something Silicon Valley told me was wrong: making money.
Not pricing my services at $29/month (which I did for three years - insane when you think about how many customers you'd need to break even). Charging real prices. Focusing on consulting revenue first. Building businesses that generated cash, not vanity metrics.
The results: $2.35 million in revenue over three years across SimpleDirect and ANC. Five employees. Based in Toronto, not San Francisco. Growing because we're profitable, not because we're raising rounds.
I'm out of the bubble. It doesn't matter what the Fed decides about interest rates. It doesn't matter whether VCs like me or not. What matters is whether my customers value what I'm building.
Nothing else.
If you're finding this useful, I send essays like this 2-3x per week.
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The Math For Different Roles
If you're an early startup employee:
You're usually offered equity that sounds promising - the company raised money, has a post-money valuation of tens or hundreds of millions.
But here's what matters: For your equity to be worth anything, the company needs to exit for 3-6x what they've raised.
If your company raised $30 million total, they need to exit for at least $100-200 million for your equity to be worth more than zero. Most don't get there.
If you're a founder who's raised:
Do the math. Seriously. Liquidation preferences are standard (1x is normal, some term sheets have worse). When you exit, investors get their money back first.
Ask yourself: How much would we need to exit for me to make more than I would have made as a senior engineer at Google or Meta?
The answer is usually uncomfortable.
If you're considering raising:
You have two options:
- Raise $30 million, hire employees, spend 7-10 years grinding toward an exit that probably won't make you better off than a Meta engineer
- Bootstrap, make real money (not paper valuations), grow profitably, and own your outcome
I chose option two. Not because I'm smarter, but because I did the math.
What Changed For Me
I stopped:
- Applying to YC (five times was enough)
- Performing for investors instead of building for customers
- Pricing at $29/month to look "scalable"
- Following trends to be "VC-worthy"
- Measuring success by fundraising announcements
I started:
- Charging real prices that reflected real value
- Building consulting revenue from day one
- Focusing on profitability, not growth-at-all-costs
- Making decisions based on customer needs, not investor preferences
- Measuring success by cash in the bank, not paper valuations
The difference? Three years of wasting time vs. three years of building businesses that actually work.
The Tile Founder Alternative
Imagine if the Tile founder had joined Google or Meta when he started instead of raising VC.
First few years: $150-250K (normal Bay Area engineer salary) Years 3-5: $350-450K (senior engineer levels) Years 7-9: $450K+ (staff engineer, not including bonuses)
Total over 9 years: $3+ million guaranteed. With weekends. With health insurance. With zero risk.
Mike (Tile's founder) was one of the rare ones who actually got an exit. Most don't. Over 95% of startups fail before reaching any exit, acquisition, or IPO.
Brilliant founders like Mike could have had 10x less stress, more happiness, weekends with family, and financial security. Instead, the VC paradox trapped them into grinding toward lottery-ticket outcomes.
The Poison They Plant
That email telling me I was "top 10%" planted a seed that grew for three years. It made me think I was almost there. I just needed to be a little better, a little more fundable.
That's exactly what they want you to think.
Because if 95% of VC-backed companies fail, they need a constant supply of new founders willing to play. The top 10% email keeps you in the game. The "apply again" encouragement keeps you performing.
Meanwhile, you're ignoring the customers who would actually pay you. You're building for Demo Day instead of for real problems. You're optimizing for fundraising instead of revenue.
Your Homework
If you're a founder considering VC, do three calculations:
- How much would I make as a senior engineer at a top company over the next 7-10 years?
- How much would my company need to exit for (after liquidation preferences) for me to make MORE than that senior engineer salary?
- What are the actual odds of reaching that exit number?
Be honest with your answers. The math is usually sobering.
If you're an employee considering startup equity:
Ask how much the company has raised. Multiply by 4-6x. That's the MINIMUM exit needed for your equity to be worth anything. Most companies don't get there.
The Bottom Line
I wasted three years chasing something I never got. But I learned the most valuable lesson: The game is rigged, and the house always wins.
VCs will be fine. They have portfolios. One win covers ten losses. But you don't have a portfolio. You have one life, one set of years you'll never get back.
I'm not saying VC is always wrong. For deep tech, biotech, hardware - businesses that need massive capital to prove concepts - it makes sense.
But for most of us? For SaaS, services, consulting, digital products? We're playing a game we don't need to play, with odds we'll never beat, for outcomes that benefit everyone except us.
That night in the Thai restaurant, I stopped playing. The next three years, I built something real.
You can too.
What I'm building: SimpleDirect and ANC - two profitable companies, five employees, $2.35M in revenue over 3 years, zero VC funding.
Daily insights: @TheGeorgePu on Twitter
George Pu builds AI-powered businesses at SimpleDirect and ANC. Follow along for unfiltered founder insights at @TheGeorgePu.