Tag: startups

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The CEO’s Evolving Job Description

Not long ago, I was asked: “Why do founders often fail as CEOs?” A rather provocative question. I wouldn’t go as far as to say founders often fail as CEOs as a blanket statement. Equally so, the question isn’t “why”, but “where”. People can “fail” in their positions for any number of reasons. “Why” is simply that they didn’t perform well under the expectations of the role. The better question comes down to “where” might they need to watch out for. Still so, there are many. But one that often catches founders by surprise is: the (in)ability to scale themselves with the company.

Founders often make great CEOs at the beginning. What I’ve seen and heard more of is the inability of founders to scale at the same pace as their company. As the company grows, the job description of the CEO changes as well. The same is true for all executive/leadership positions in a company. Something I personally love is at Shopify, every year the executives have to requalify for the position they hold, and that includes the CEO.

In the early stages, the CEO is a maker. They’re the most obsessed about the problem space. Their main job is to get the product to market. And test if it resonates. They get shit done. As the company scales (post product/market fit), the CEO is a manager. They’re no longer working on the daily/weekly updates of the product at a granular level, but making sure the entire organization functions as a well-oiled machine. How can the CEO enable their team members to be greater than the sum of their parts? To quote Paul Graham of Y Combinator, it’s the difference between the maker’s schedule and the manager’s schedule.

When you’re a small team of 5 or even 20, you’re the product lead. You decide the direction in which the product will go and you’re involved in the day-to-day nuances of the product itself, from the UI/UX to talking to customers to discover pain points, etc. When the company grows to 50 – give or take, you have already hired or are going to hire your first product manager, which means you won’t be involved in the day-to-day anymore, but rather in the larger strategic directions of the company and the product. As a maker, your decisions are tactical. On the other hand, as a manager, your decisions are strategic.

Similarly, Ben Horowitz, the second name in the investment firm, Andreessen Horowitz, wrote about peacetime and wartime CEOs. In the early days of a company, you’re at war. You’re selling; you’re networking. You’re fighting in a competitive market of attention. Not only from your customers, but also potential hires and investors. As your company scales past $100M ARR (among any of the other heuristics when you stop being a “startup”), you’re now a category leader and possibly a market leader as well. As the market leader in “peacetime”, you decide the rules of the game. You’re working to maintain your market position. You focus on the masses, and not the niches as much. And therefore, the job description of a leader born in an era of war is different from a leader born to maintain peace.

Many founding CEOs understand that their role will evolve over time, but unfortunately, many are still unable to keep up with the pace at which the company evolves. Effectively, CEOs have to always be one step ahead of the company’s growth to prepare the infrastructure for the rest of the team to grow into.

Photo by Patrick Tomasso on Unsplash

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Predictions Are Popular

Predictions are in season. It started back during the holidays. A number of my friends, colleagues and folks online have been making predictions of what is going to happen this year. And I’m sure some are sure to hit. Many to miss. Since I’ve been reasonably active on Quora and given my role in the startup community, many people have asked me: “What are some of the best startup ideas to start in 2021? In 2022?”

Over the past year, the pandemic became a forcing function for late majorities and laggards of the adoption curve to pick up newer social and technological trends. Subsequently, accelerating many timelines. Timelines that would have otherwise been realized two, three, maybe even five years out.

  • Social is back.
    • Consumer social has been back. The pandemic has saved on average 2-3 hours of travel time per day for the average worker, job-permitting. At the same time, quarantining has reduced, if not eliminated, many in-person interactions with friends. More time means people seek to find more places to place their attention.
    • Enterprise social is here. The pandemic has forced many businesses to go remote. Similarly, there’s been a migration away from metropolitan/urban areas to save on rent, as well as an opportunity to not be shackled by geography in the past few months. Now, as well as “post-pandemic”, businesses, as well as individuals, are looking for new ways to improve efficacy, communication, and culture at work. In efforts to both retain and attract talent.
  • Impact-driven and socially-responsible businesses are hot.
  • Diversity in the board room is gaining traction. And it’s created ripple effects in the financial world. LPs are demanding venture funds to invest in diverse founders. At the same time, when diverse founders consider which investors to bring on, they look at if the checkwriters at the firm are diverse. Some investors have acted proactively; some reactively. Nevertheless, the cogs are moving.
  • E-commerce, entertainment, streaming, gaming, remote tools, edtech are all up.
  • SPACs and 2020’s string of IPOs have created many “overnight” millionaires.
  • Investing in the stock market, in alternative assets, in syndicates, and more mean more capital is being recycled back into the economy at various stages.
  • There is more capital available at the early stages. New angels. More startups. Just like pre-seed/seed is the Series A from a decade ago, more institutional investors will move upstream. Who knows, there may be a pre-pre-pre-seed round one day.
  • Innovation around the home office space is building momentum.
  • Unsurprisingly, Zoom fatigue is real, which will only led a hand in hybrid work-life models post-pandemic. Equally so, innovation around virtual meetings is only a matter of time.
  • Oculus brought down the price of a VR headset to be as much as a video game console, which means more people can and will adopt VR. Leading to larger markets and more diverse consumers for VR/AR. More startups.
  • Mental health has taken center stage, where it had previously been overlooked or disregarded.

When will the pandemic end? I don’t know.

When will we get vaccines? While experts have given us an expected date, I also don’t know.

When will “normal” return? I’m willing to bet it’s on the magnitude of years rather than months. Then again, will “normal” ever return? I might be completely wrong, but I’m willing to bet the “normal” we knew will never return. But instead, we’ll have a normal 2.0.

In truth, I can only answer what I see in my very narrow periphery. And by definition, there are a hundred-fold more that are in my blind side. And the thing is, what I’ve thought of I guarantee many other founders have already seen, tried, or are trying. What I’m looking for this year, and every year, is what I haven’t thought of yet. But when I hear and see it, it’ll click. Everything I know will make sense.

Investors are lagging indicators of innovation.

Founders are the leading indicators. Listen to them.

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How to Build a Culture that Ruthlessly Prioritizes w/ Yin Wu, Founder of Pulley

Last week, I was lucky enough to jump on a call with the founder of Pulley, Yin Wu. Backed some of the best investors out there including Stripe, General Catalyst, YC, Elad Gil, just to name a few, Pulley is the ultimate tool for cap table management. In addition, Yin is a 4-peat founder, one of which led to an acquisition by Microsoft, and three of which, including Pulley, went through YC.

In our conversation, we covered many things, but one particular theme stood out to me the most: how she built a culture of ruthless prioritization.

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The Four Traits of World-Class Startup Founders

Proportionally speaking, I rarely make referrals and intros. Numerically speaking, I set up more intros than the average person. Frankly, if I made every intro that people have asked of me, I’d be out of social capital. It’s not to say I’m never willing to spend or risk my social capital. And I do so more frequently than most people might find comfortable. In fact, the baseline requirement for my job is to be able to put my neck on the line for the startups I’m recommending. The other side of the coin is that I’ve made more than a few poor calls in my career so far. That is to say, I’m not perfect.

I only set up intros if I can see a win-win scenario. A win for the person who wants to get introduced. And a win for the person they will be introduced to. The clearer I can see it, the easier the intro is to make. The less I can, the more I look for proxies of what could be one.

This largely has been my framework for introducing founders to investors, as well as potential hires, partners, and clients. Over the years, I realized that I’ve also been using the same for people who would like an intro to someone above their weight class.

Below I’ll share the 4 traits – not mutually exclusive – of what I look for in world-class founders.

  1. Insatiable curiosity
  2. Bias to action
  3. Empathy
  4. Promise fulfillment
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My Top Questions to Ask Portfolio Founders When Doing Investor Diligence

I’ve recommended in a number of essays on this blog the importance of founder-investor fit. That founders should always do their diligence on potential investors, like here and here. And for a more robust understanding, asking founders in their current and previous portfolio, specifically the ones that didn’t work out. Some of my favorite questions for (ex-)portfolio founders:

  • How has [insert name] been helpful for you in your founder journey?
  • What was [insert name]‘s involvement like when shit hit the fan? Do you remember specific examples?
  • If you were to build another company (if applicable), would you work with [insert name] again?
    • If they are building another company in a relevant field, and if they say “yes”: Why haven’t you?
    • What are scenarios in which you would, and ones you wouldn’t?

Then think to yourself, were those pieces of advice actionable? Did the context help or detract from your initial disposition? Your goal isn’t to point fingers, but to paint a more holistic picture of who you might be working with closely for the long haul.

The best investors can inspire founders to think on wavelengths they might not have considered before. Some may hurt when you first hear them, but if your investors truly care, they mean well. The only reason the truth hurts is because it is the truth. And it’s your job as the founder to do your best to fix it.

The red herring

When a founder responds to the above questions with, “X investor just spent less time with us”, it’s not enough to say that an investor isn’t great.

Each VC always has his/her first and foremost duty and responsibility to the partnership. By simple economics, most of their investments won’t work out. Investors generally understand that they have to:

  1. Spend more time with the winners ’cause they’ll return the fund (and then some, hopefully),
  2. And cap their time commitment with the ones who won’t return the fund.

While that isn’t an excuse for VCs to only focus on maximizing returns (i.e. selling your IP, forcing an acquisition, unjustly firing the founder), it is something that founders should keep in mind. When you raise venture funding, just be aware of the fact that investors need to prioritize their time, especially when the going gets tough. And while it is usually implicit in the investment, a great investor/board member will often have that conversation explicitly with you at the beginning.

This notion, on the other hand, contrasts with angel investors, who are often investing out of their own net worth. So the dynamics, as well as commitment level, for angels is different. Angels often have between tens to hundreds of active investments at a time, meaning their time allocation per startup is much more limited than a VC. For context, a VC is usually actively involved in 3-7 investments at a time, meaning they’re going to be more involved per startup.

In closing

At the end of the day, the world of entrepreneurship, and business more broadly, is a relationship-building industry. And it’s extremely hard for an investor to build great relationships and a reputation if they have a track record of burning bridges. With founders. Even other investors – downstream and upstream.

Photo by Dariusz Sankowski on Unsplash

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Two Types of Investments

Last week, I wrote an essay about the importance of brand-building for a VC. In it, I reference Fred Destin’s tweet. This post is more or less of a part 2 to the notion of “picking” versus “getting picked”.

As an early-stage investor, and even more so as a scout, where it is my job to qualify leads at the top of the funnel, there are 2 types of investments:

  1. Founders you pick
  2. And founders who pick (you)

The former is in order to build your brand. The latter is a result of the brand you built.

So for some additional context, in the last two days, I just had to ask a few investors who dance around this phenomenon and have a track record for winning outsized returns.

What I learned

In my email conversations with them, here’s what I learned:

On picking:

  • “Picking startups” is thesis-driven. “Getting picked” is value-driven. It’s not mutually exclusive. In fact, in many cases, it’s symbiotic.
  • “Picking” startups, especially at the earlier stages (i.e. pre-seed, seed), often comes down to if you can get conviction faster than anyone else.
  • The earlier the stage an investor invests in, the more likely he/she will focus on “picking” the founders. For instance, angels, pre-seed, and seed investors.
  • If an investor typically leads rounds, they are more likely to be “picking” as well.
  • Markets also matter. If the startups exist in a new market or are attempting to create that market, investors also spend more time “picking”.

On getting picked:

  • In situations where investors “get picked” and founders have leverage, valuations end up skyrocketing with larger rounds and less dilution. In effect, may misalign incentives between founder and investor.
  • For many, it’s a dichotomy they might reflect on when doing fund and deal flow analysis, but not as a pre-meditated approach.
  • For non-lead investors (i.e. angels, rolling funds, etc.), many of whom don’t have a huge brand yet, there is incredible value in empathy and operating experience, which often give you an edge over traditional VCs. Especially since you can’t compete with their check sizes.
  • To “get picked”, build relationships before founders need to raise. Be high-value, actionable, and timely. Hustle like the founders do.
  • Be differentiated. If you have the same thesis/brand/network as every other VC out there, you will just be another number, but never THE number – the signal for a founder among the noise. You don’t have to be unique on every variable (thesis, brand, network, operating experience, etc.), but you have to be stellar and unique in at least one.
  • Help founders with their “firsts” – first hire, first fire, first fundraise, etc. So that you will be the first fund they think of when they raise/need help.

Finding meaning in investments

If I could paraphrase the words of Keith Rabois of Founders Fund in his recent conversation with Jason Calacanis, picking and getting picked analogizes to:

  1. Investment you took a bet on when everyone else turned in the other direction
    • Where “your decision to invest in the company made a meaningful difference in their potential”.
  2. Investment where the company was going to get funded regardless of your investment, but your advice, resources and/or network sped up the escape velocity of that startup in a meaningful way

Keith was early into Airbnb, Palantir, and Wish, when others were doubtful on the product thesis. And it contrasted with his rationale to invest in Max Levchin‘s Affirm. He elaborates on the pod that Max might have gotten larger checks on better terms than he did with Keith. But Max chose Keith for the value Keith could bring to the table.

In closing

As Miami Heat’s Hall of Famer Pat Riley once said, “When you leave it to chance, then all of a sudden you don’t have any more luck.” Investing is all about being intentional. Whether an investor “picks” or “gets picked”, they set themselves for opportunity. In the words of Seneca, “luck is where opportunity meets preparation.” Preparation being the keyword. And for a VC, that includes:

  • A robust network (deal flow + potential hires + potential startup customers/partners + downstream investors),
  • Brand (network + content + knowledge/experience + track record),
  • Resources,
  • And a thesis.

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#unfiltered #37 Why are founders leaving the Bay Area?

In the past year, largely due to the pandemic, it’s been easier than ever to create a business from anywhere in the world. Zoom for calls and meetings. Slack for asynchronous communication. Upwork for gigs. Stripe Atlas for starting a business. Notion for knowledge hubs. As long as you have a stable connection to the internet, geography no longer matters.

Additionally, major US startup hubs (i.e. SF Bay Area, NYC, Seattle, etc.) exhibit a lot of noise, and it becomes harder to discern the the signal among the noise. In the past few years, there’s been an influx of talent from across the world into these hubs. Despite the diversity of backgrounds into this 7 million strong hub, most tech entrepreneurs are stuck in the same modality of thinking. When you’re surrounded by similar personalities who gravitate towards the models that have succeeded already, you’re only going to get more of the same. It’s part of the reason why even seasoned founders with exits under their belt, still go back to startup accelerators, incubators and fellowships. They’re looking for fresh ideas not just on product, but also on business models and culture and more, that fresh blood into the industry brings.

These hubs are bubbles for a reason. I only feel qualified enough to speak on the Bay Area, where I call home now. One of Silicon Valley’s claims to fame is that we’re in a bubble, and we know we’re in a bubble. Because of that, many of the best startup founders know that their initial beachhead – their beta audience – is not here, unless your customers are tech companies, tech meetups, or coffee connoisseurs.

In venture, there have traditionally been three considerations when deciding your geographical playing field:

  1. Move to where your customers are
  2. Move to where your talent is
  3. And, move to where your capital is

And in that priority. Customers > talent > capital. I work in an ecosystem that has long perpetuated talent = capital > customers. One of the best lessons from the pandemic is that the “talent = capital > customers” function isn’t necessarily true, and that it was a product of the noise – the FOMO – that exists in the Bay. Equally so, talent in the Bay, as well as other major tech hubs, are incredibly expensive. While there’s a theme of “talent is on a discount” during COVID, it is still wildly more expensive than other parts of the world. Not only talent, but also real estate, social and professional networks, capital (yes getting money is more expensive), and the market for attention (more on that, here and here). And arguably, the same quality in many other lesser known geographic regions.

While I’m not saying every entrepreneur that has moved their HQ has gone to where their customers are, the remote work lifestyle has set precedent for many companies to rethink what they thought they knew and what they now know. With robust remote tools, like Zoom and Slack, I believe we’ll continue to challenge our understanding of what normal is. And when most companies resume a hybrid model post-COVID, I’m curious as to the emergence of new talent hubs (or maybe the lack thereof) across the world.

*Elaborated off of an answer I wrote on Quora.

Cover photo by Rezaul Karim on Unsplash

#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.

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The Investor I Am Working To Be

I wrote an essay exactly a week ago about welcoming tough founder narratives. In it, the prerequisite to play in VC is to be open-minded – to “stay positive” and to “test negative”. I’m reminded of something Tim Ferriss shared in his recent interview with Jim Collins, “It is not that beauty is hard to find, it’s that it is easy to overlook.”

In a world where it is my job to evaluate people who stretch the margins – to stretch “common sense”, it’s easy to be cynical. On the same token, it’s also easy to be incredibly optimistic. As Blake Robbins of Ludlow Ventures puts it, “the best venture capitalists [are] able to perfectly toe the line of optimist vs. pessimist.”

Since then, partly due to the semi-recent influx of investment talks I’ve seen and been a part of – the holiday mad dash, if you will, I’ve had some time to myself to re-center my purpose in the venture world.

The role of an investor

As someone on the investing side of the table, it is our job to check founders’ blind sides. To consider things they may not be aware to even consider. Drawing parallels between seemingly orthogonal parts of the business that we know because we’ve seen hundreds, if not thousands of businesses. For example, if you’re creating a plug-and-play solution – a product whose main selling point is its ease of use, the more you have to spend on your customer success team, the less effective your product is.

Of course, we merely provide insight and context to a situation, but it is the founders who have the final say.

The brand of an investor

Craig Thomas, an LP, wrote on his Substack last month: “Brand is arguably the only thing that resembles a moat in traditional venture capital.” To summarize Nikhil Basu Trivedi words briefly, brand here is constructed by how strong the synergy between the various forms of acquisition channels (i.e. content, performance marketing/ads, virality/word-of-mouth) and the players in the ecosystem (i.e. founders, investors, LPs, operators, talent, etc.) are. In simpler terms, brand is about who knows and how well they know what you stand for.

Increasingly, in the world of venture, while “picking” the right investments via conviction and a thesis still matters, it’s becoming a world of VCs “getting picked“, as Fred Destin of Stride.VC tweets. This is especially true for the deals that investors expected outsized returns on – effectively, uncapped upside.

Craig provides a great graphic for why brand matters. The blue-dotted line, which he calls the Mendoza Line for VC firms, represents y = x + b. And the best VC firms have b’s where b > 1.

Craig Thomas’ chart plotting the relationship between brand and AUM (assets under management)

He points out that the fallacy here is when firms prematurely scale. Increasing their AUM (assets under management) before establishing and growing their brand. And it’s something I’m not keen on falling for.

Seen in another light, Correlation Ventures did a study that found almost 65% of venture-backed deals fail to return on investment. And only 4% make outsized “magical returns”. Proving that b > 1 is truly easier said than done.

returns on venture backed startups is very low in most cases based on data from Correlation Ventures

There’s a saying in venture: Luck only gets better with success. It’s largely described in the context that it only takes one epic investment to get you on the radar. And I believe building a successful brand is a leading indicator of success. Of course, having a strong brand and having outsized returns are not mutually exclusive either. In a 2015 Medium post, Blake quotes Brett deMarrais of Ludlow Ventures, which I think acutely sums up what it means to be a great investor. “There is no greater compliment, as a VC, than when a founder you passed on — still sends you deal-flow and introductions.”

As you might have guessed, I’m on the brand-building phase. Craig wrote: “Brand is reputation and access.” A great brand leads to better deal flow, which leads strong signals for downstream investors. Which leads to a stronger brand. Analogized, it’s what Reid Hoffman has said all these years: “a good product with great distribution will almost always beat a great product with poor distribution.” As an investor, a VC is their own product.

In closing

To quote Ruben Harris’ first boss in Ruben’s recent interview with Garry Tan, “To become a billionaire, help a billion people.” Through a mutual friend, I first met Ruben, Artur, and Timur back in ’18 around the inception of Career Karma and when they were hosting office hours at their apartment for folks who wanted to break into tech. At the inflection point in my career, I went to one of these to meet the individuals I had only been communicating over emails with. And within 5 minutes, Ruben said: “Here’s who you’ve got to talk to…”. And gave me 2 names I hadn’t even considered reaching out to beforehand. Both ended up being great influences on my growth.

True to their mission, even prior to the founding of Career Karma, they’ve been playing the connective tissue between talent, education and occupation. From their podcast to their company, the triple threat have created an impressive brand and community of givers and hustlers. And I highly recommend checking out their podcast to hear some of their community’s stories. Here’s one of my favorites. Congratulations on your A led by Initialized, Ruben, Artur, and Timur!

Similarly, that’s the investor I’m working to be. While I still have miles more to go in building a brand, I believe I’m taking steps in the right direction.

Photo by Daan Stevens on Unsplash

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2020 Year in Review

I’ve written 102 essays on this blog in the past year, plus some change, spending an average of 1-2 hours per piece and a range from 30 minutes to 2 weeks. An average of 1,200 words per post. While not mutually exclusive, over half of which were on startup topics. One in three described the venture capital landscape. 36 (excluding #0) #unfiltered blog posts, where I share my raw, unfiltered thoughts about anything and everything. 16 on mental health. A surprising 13 on cold emails and its respective ecosystem. And my first public book review. Some didn’t age well, like The Marketplace of Startups. Some will stay evergreen.

25% of my blog posts I started writing at least 48 hours before the publish date. 1 in every 3 (-ish) of the afore-mentioned, I rewrote because I didn’t like the flow. For every 2 essays I wrote, 1 of which I had to wrestle deeply with the thought of imperfection. In effect, half of my essays were a practice to overcome my own mental stigma of “writer’s block.” Yet after over a year of writing, I realize that I’ve become prouder of my writing than when I started.

So, as the year is transitioning into the next, I thought I’d take some time to reflect on my growth 100 (+2) posts after starting this blog. Let’s call them superlatives.

Top 10 most popular

Ranked by total views per post, the 10 posts readers visit the most.

  1. #unfiltered #30 Inspiration and Frustration – The Honest Answers From Some of the Most Resilient People Going through a World of Uncertainty – I asked 31 people I deeply respect to share some of their greatest drivers and darkest moments in life and how they got through them. You can find part 2 here with 10 more thoughts.
  2. My Cold Email “Template” – My friends have asked me for years what I write in my cold emails, and now, what and how I write my cold outreaches are available for your toolkit.
  3. Fantastic Unicorns and Where to Find Them – An essay on the parameters and the mental models investors use to find “unicorn” startup ideas.
  4. When Investor Goodwill Backfires – What It Means to be Founder-Friendly and Founder-Investor Fit – How founders can do investor diligence before signing the term sheet and also how to best manage founder-investor dynamics
  5. #unfiltered #24 How long do you take to prepare for a talk? – A Study about Time Allocation
  6. How to Build Fast and Not Break (As Many) Things – A Startup GTM Playbook
  7. 10 Letters of Thanks to 10 People who Changed my Life – Every holiday season I write thank you letters to the people I deeply respect. It’s one of the best times of the year to reconnect. These are the letters I wrote in 2019. Here are also some I wrote this year for more context.
  8. #unfiltered #18 Naivety vs Curiosity – Asking Questions, How to Preface ‘Dumb’ Questions, Tactics from People Smarter than Me, The Questions during Founder-Investor Pitch
  9. #unfiltered #11 What I Learned About Building Communities through Social Experiments – Touching Jellyfish, Types of Social Experiments, The Thesis, Psychological Safety and Fairness
  10. The Marketplace of Startups – While many of the remarks on this blog post are now obsolete, largely incited by the 2020 Black Swan event – COVID, the two questions at the end of the blog post are the two I still like to ask founders today.

Personal favorites

While not every one of these got the limelight I had hoped, each of these are ones I felt great pride in being able to write on.

Most challenging to write

I had been wrestling with how vulnerable I can allow myself to be in the public space. Writing this post was frightening, but I’m glad I did. It cascaded into deeper conversations with my friends, colleagues and readers, but also inspired more blog posts after this about mental health.

#unfiltered #26 Am I At My Best Right Now?

In closing

I first started this blog with the intention of chronicling my own learnings in the amazing world of venture. While I couldn’t guarantee it would be helpful to every individual reading my humble meandering, I could, at least, guarantee what I write has been or continues to be instructive for me.

Within the first month it had evolved into an FAQ and a means to provide value to as many founders as I can when one day the number of people I want to help exceed my available bandwidth. Wishful thinking at the time, but a cause that inspired me forward. After the first six months, with the introduction of the #unfiltered series, I began to write to think – a way to flush out simple, unrefined ideas to more robust concepts. While I’ll forever be a work in progress, I began to make new dendrite connections that never existed before. In a way, I was and am still chronicling my own journey in hopes that it will continue to guide people beyond my immediate sphere of influence.

Thank you, each and every one of you, for accompanying me on this journey we took yesterday and the one we’ll take tomorrow. And I hope this cognitive passport will continue to serve as your cup o’ Zhou (/joe/) weekly.

Cheers, and I’m excited for the adventure ahead!

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How Do We Welcome the Founder Narratives Behind the Curtains

Being a founder is one of the toughest jobs in the world. Resilience and grit are two (or one) of the indispensable traits of a 5-star entrepreneur. And most, if not all, investors establish grit as the baseline in founder selection, as opposed to the topline in various other careers. While I don’t mean to discount other career paths, all of which I have incredible admiration for, I can only speak in the world of venture where I spend most of my time in.

Yet that same persistence could very much be the same double-edged sword that makes or breaks you. In October, Ryan Caldbeck wrote about his decision to step down as CEO of CircleUp. It was and is one of the most candid pieces I’ve read about the founder journey to date. In it, one section particularly stood out. “Persistence was my superpower. But now I’ve now come to understand that persistence is a double-edged sword, and my decision not to take a break, to not take more off my plate, hurt me, my family and the company. That was the biggest mistake of my career.”

In the founder journey, there exist many moments a founder’s resilience is stress-tested. To get their first customer. To scale to a team of 10. 30. 100. To get their first investor. To raise their first institutional round. But the last thing a founding team needs is for some of their greatest evangelists – their investors – to create counterproductive friction. While it’s presumptuous of me to say that all friction is counterproductive, some friction and additional perspective is necessary to help founders make better, more informed decisions.

In his same essay, Ryan shares a feedback email he wrote to his former board member, as that member’s participation in the company had become “counterproductive”, “vindictive”, and even “destructive”. Unfortunately, these stories happen more often than I would like. It is why many founders believe investors are the gatekeepers to their startup’s success. But we’re not. We don’t have the right to be. On the same token, that’s exactly why it’s so important for founders to deeply consider founder-investor fit.

Michael Freeman found in 2017 that entrepreneurs are 50% more likely to report a mental health condition. Being a founder is lonely. But it doesn’t have to be.

Anton Ego’s words

A few weekends back, my friend and I re-watched my favorite movie. And as the movie faded into music, Anton Ego’s words echoed in my head. While it’s not the first time this quote has appeared in the venture world, it certainly won’t be the last:

“In many ways, the work of a critic is easy. We risk very little, yet enjoy a position over those who offer up their work and their selves to our judgment. We thrive on negative criticism, which is fun to write and to read. But the bitter truth we critics must face is that, in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so. But there are times when a critic truly risks something, and that is in the discovery and defense of the new. The world is often unkind to new talent, new creations. The new needs friends.

“Last night, I experienced something new, an extra-ordinary meal from a singularly unexpected source. To say that both the meal and its maker have challenged my preconceptions about fine cooking is a gross understatement. They have rocked me to my core. In the past, I have made no secret of my disdain for Chef Gusteau’s famous motto: ‘Anyone can cook.’ But I realize, only now do I truly understand what he meant. Not everyone can become a great artist, but a great artist can come from anywhere. It is difficult to imagine more humble origins than those of the genius now cooking at Gusteau’s, who is, in this critic’s opinion, nothing less than the finest chef in France. I will be returning to Gusteau’s soon, hungry for more.”

For VCs

One of my favorite investors often says, “stay positive, test negative.” While the greatest strength an entrepreneur can have may be grit, the greatest strength an investor can have is optimism.

Optimism in the world. In markets. In startups. But especially people. That even if one venture doesn’t work out, for the people I’ve had the opportunity to stand behind, I know one of their pursuits eventually will. It’s only a matter of time and luck.

That same optimism is a leading indicator for open-mindedness. As people who build our careers at the top of the funnel, it is our obligation to cast our net outside of what is most familiar to us. There will be a number of ideas and belief systems entrepreneurs have that challenge our own. And in many ways they should, as founders are on the frontlines of innovation, they are aiming to be “right on the non-consensus“, to quote Andy Rachleff. When I first got into VC, that same investor who said “stay positive, test negative”, shared another word of advice, “Some of the best ideas seem crazy at first.“

George Bernard Shaw once said something similar as well, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”

Optimism isn’t only isolated to ideas, but also to the people – the “unreasonable” women and men – behind those ideas and the decisions they make. These innovators aren’t perfect, yet somehow many of us expect them to be. And that dichotomy has created this unfair dynamic that stunts innovation more than we think. I have so much respect for the funds that have set aside capital to invest in founders’ wellbeing, like Felicis Ventures, Freestyle, Crosscut, and more. And I hope many more will follow.

The stories we tell

Over the past few months, I’ve had a number of conversations with founders, friends, and readers about “mental fitness” and “emotional hygiene”. If I could borrow two of my friends’ vernacular. And I’ve learned that we humans are such amazing storytellers.

These powerful narratives has kept the human race alive all these millennia. Before the written word, it was the art of the spoken word, passed down from generation to generation, that held tales of ancestral origins of where to hunt and where to migrate to each season. The same stories have started and ended wars. They have helped us conquer impossible odds. Some narratives today are compelling enough for us to buy a new product or to end a conglomerate.

Yet these exact stories, especially the ones we tell ourselves, can cause stress, anxiety, and depression. The ones that the people we care about and respect tell us can carry even more weight. From role models, parents, managers, friends, mentors, teachers, peers, and more.

In closing

I realized, in conversation, these past few autumn months, more than ever, the power of sharing those stories. To share that we’re not alone and that together, we may learn more than the sum of our individual parts. I understand that it’s no easy task. Even for myself, I debated for the longest time whether to share that I’m not at my best right now. But I’m glad I did. The feedback from the people around me I’ve gotten since brought forth clarity and solace. Similarly, six of my friends, who publicly shared how they get through their toughest times (Pt 1, Pt 2), told me after how grateful they were to have an enormous weight lifted off their shoulders.

Top photo by Nong Vang on Unsplash

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