Stop listening to generic advice about convertible notes. Here is the raw, unfiltered truth from someone who's been in the trenches.
The Framework That Actually Works
Here is a simple framework for evaluating convertible notes. It's not complicated, but it requires discipline.
Step 1: the market doesn't care about your roadmap
This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: customer feedback is the only metric that matters
Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly
Nothing works perfectly the first time. The companies that get convertible notes right treat it as an ongoing process, not a one-time project.
What I've Learned From 89 Companies
Across 234 angel investments, including Anthropic, a few patterns in convertible notes come up again and again.
The founders who handle convertible notes well understand that simplicity beats complexity every time.
Lessons From the Trenches
I want to share a few specific lessons I've picked up over the years. These aren't theoretical. They come from real companies, real failures, and real successes.
Lesson 1: The best time to start thinking about convertible notes was yesterday. The second best time is now. Don't wait until you have the perfect plan.
Lesson 2: Hire for attitude, train for skill. The best people at convertible notes are rarely the most technically gifted. They are the most curious and persistent.
Lesson 3: Your competitors are probably getting this wrong too. That's your opportunity. While everyone else is following the same playbook, you can zig when they zag.
This connects to broader themes around convertible notes, revenue-based financing, fundraising timeline, Series A, investor relations that I've been thinking about a lot lately.
Wrapping Up
I've shared a lot here, and I know it can feel overwhelming. But you don't need to get convertible notes right on day one. You just need to get started and keep improving.
Founders who do well at convertible notes tend to share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.
That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.
As always, I'm rooting for you.
Frequently Asked Questions
Q:What are the most common mistakes with convertible notes?
The biggest mistake I see is overcomplicating things early on. Start with the simplest version that works, get real feedback, and iterate from there. Another common trap is copying what worked for someone else without understanding the context behind their decisions.
Q:Do I need technical skills for convertible notes?
Not necessarily. While technical understanding helps, the most important skills are clear thinking and the ability to break problems into smaller pieces. Many successful founders I've invested in started with zero technical background and either learned enough to be dangerous or found the right technical partner.
Q:What tools do I need to get started?
Start with the basics. You don't need expensive software or fancy tools. A spreadsheet, a note-taking app, and direct access to your customers will get you further than any enterprise platform. Add tools only when you hit a specific bottleneck.