Hey everyone! I’m finally back from Asia and writing this at 2am because, well, jet lag is a real thing. If anyone knows any cures or tips/tricks for jet lag, let me know. (Please and thank you!) I’m going to be traveling internationally a ton for the foreseeable future, so I need to figure this one out lol. I have a bunch of Asia updates ready for y’all over the next few weeks and some additional content on investing in art ready to go but I wanted to push out this week’s essay after being asked one question A LOT over the past few weeks. And that question was…

WHY I DON’T WANT TO BE A FOUNDER AGAIN…

One of the easiest ways to go viral on the tech-centered channels of social media is to essentially say that NOT EVERYONE SHOULD BE A FOUNDER. Boy, does this statement really fire folks up. And, the corners of the internet that will get the most upset are usually the exact type of person who needs this advice—folks that really shouldn’t be a founder…but we will get to that later. I readily admit that I will never be a founder again (Okay, technically I co-founded a fund after I founded a startup…but that’s it. No more. I’m done after this, I swear.)

I will tell anyone who wants to listen that I learned A LOT about being a founder. So, why wouldn’t I do it again? First off, I have very workaholic tendencies. This meant that as a founder I was working 24/7/365. I’m also a people pleaser who in the past struggled with boundaries, which meant that I was working 24/7/365 on things that really didn’t help me. As a founder, all my bad habits got 300x worse. I ate more, worse foods. I drank more at tech events, recruiting events, and fundraising events. I put other folks’ needs and wants before my own. My health deteriorated profusely, and I will spend the rest of my life now dealing with the repercussions of poor health decisions. By the end of my startup, I was a shell of myself and my life was in shambles.

Next, I lost myself and who I was within my startup. I became so passionate about what I was working on that it became a very unhealthy game of “us versus the world.” I got such a chip on my shoulder that I am shocked I can still walk without a limp. When you’re a founder, there’s such a tendency to believe that you are your startup. When the startup succeeds, you’re on top of the world. When your startup isn’t doing so hot, your self-esteem will crater. (All things aside, I do recommend that every single start-up founder pay themselves enough to have regular therapy sessions. Having a great therapist made things much more manageable, so I hope others can learn from my experience.)

Finally, I will never be a startup founder again because it did irreparable harm to my career and earning potential. It doesn’t take much to throw a woman’s career off target and being a founder did that to mine. The economy and legal community changed a ton while I was working on my own company and I missed professional opportunities that could have changed my financial trajectory for the next 50 years and would have netted more money than an exit likely would have. There is a time value of money and you need to think long and hard about whether or not you’re making the right decision for yourself, your family (current or future), and your career. You are the only one in control of your career so don’t make decisions without considering the impacts to your bottom line and your professional trajectory outside of what tech looks like at that moment.

WHAT MAKES SOMEONE A GOOD FOUNDER?

This conversation usually leads directly to folks asking who should actually be a founder and what I look for in founders of companies that we back at Vol. 1 Ventures. I think startup founders are a unique bunch and the skills, personality traits, and talents that make someone a successful founder are fairly unique compared to that of a small-business founder or creator (though there may be some overlap.)

Sooooooo…without further ado here are some things I look for when I am talking to founders…

Maturity. A founder should be mature.

I’m starting with this one because I honestly think it’s been overlooked in the era of frothy decisions by investors. Maturity matters. You need to be mature enough as a founder to understand what the job entails. You need to be mature enough to understand the duties and legal responsibilities of taking on investors, employees, partners, and customers. You need to be mature enough to understand how the world works—it’s hard to move fast and break things when you’re too immature to know what that even means.

In an ideal world, we’re building for everyone—not just a select few in the Silicon Valley bubble. In tech, maturity also helps prevent some inherent biases from slipping in where they can do the most damage. A mature person can understand the big picture and minute details while thinking about cause and effect.

As an investor, I want to know what your life experience has been before you decided to become a founder. Who shaped the person you have become? Who do you lionize? Who do you disdain? How were you raised? What values do you hold near and dear? How mature someone is likely derives directly from these things.

I also want to know if you’re only starting a company because you don’t know what else to do. Trust me, not knowing what you want to do at a juncture in life doesn’t mean you should become your own boss. This is in fact, not a mature decision.  

I don’t think maturity is based on education. Yes, I do have almost every degree possible to mankind. But going to school for so long didn’t make me more mature. In fact, I probably used my education to put off maturity longer than I should have. I did gain a ton of social skills from my time in academia, but again, I’m no more mature for all these letters after my name. I have also met a lot of people who were Thiel Fellows and they were almost as mature as the senior lawyers I met throughout my career. Basically, I think maturity has to be developed and come from within. If you’re not mature when you’re starting a company bad habits and bad influences will readily seep in and your startup will struggle infinitely more than one started by someone mature. Maturity allows you to see better decisions more clearly and understand why they are good decisions in the short term and long term.

Maturity also helps prevent a lot of founders from becoming listless and spinning themselves and their companies in circles. Maturity allows you to stay focused and not follow every red herring that pops up along the way when you’re building a company.

And finally, mature allows for people to be in control of their emotions. Control of one’s emotions is essential for anyone in operating in any professional capacity. Lack of control has also been proven time and time again to lead to the downfall of most immature folks as well.

Maturity is a very good thing. Be mature.

Stability. A founder should be stable.

I really like it when founders talk about being stable. Stability in all aspects of one’s life can be mistaken for being boring or unexciting, but in fact it’s a sign that you are a well-rounded individual. Stable people are also just a lot nicer to be around and cause less chaos in the lives of those around them, which I have found to be exceptionally nice as an investor. I clean up a lot of messes on behalf of my founders and having stable founders makes that clean-up job a lot easier.

Emotional Stability

A good founder needs to be level-headed and not someone who lives on an emotional rollercoaster. If a founder is addicted to attention, drama, or just utter nonsense, they lack the emotional stability to lead a scalable company. A founder cannot pop off and yell at everyone over the littlest things. Nor can a founder get so engrossed in dramas outside of themselves or their companies. A stable person knows when to stay out of the cray-cray fray. If a founder has a lot of relationship issues or a reputation for making poor relationship choices, they are most definitely almost always struggling with emotional stability in my experience.

If a founder is emotionally unstable, you see their teams struggling to follow them. You see major decisions being made on emotional whims with no bearing on reality. You see hires and decisions based on “vibes” that cause irreparable harm to the company’s culture. An emotionally unstable founder will be unable to keep their shit together enough to see the forest through the trees. It is chaos personified.

An emotionally stable founder has their eyes on the prize and isn’t concerned about other people or the day’s gossip in the arena. If a founder feeds off of chaos, you will be fighting a never-ending line of bullshit that will most likely never end in a good exit. Seriously, show me one chaos-addicted founder who led their company to a successful exit for everyone involved. There’s none. But if you want to argue for the sake of arguing, I’ll wait…

 Financial Stability

I hate that financial stability is included in this discussion, but this is a cold hard reality that all founders must face. The only reason I could make ends meet when I was a founder was that I had savings from my time in Biglaw, multiple exits from earlier investments, consulting gigs that were lucrative, and a partner who was financially stable. I had enough money to live, so I could put my company’s financial health above my own. And let me tell you, I did. After I ended my company, I was completely broke. I grew up in and around abject poverty so saying that your financial status can impede being a founder is a dagger to my own heart. But the cold, hard, world is a lot easier when money isn’t a problem. (I’m sorry if I’m the first person who has told you this…but it’s best you learn now.)

It is incredibly rare for founder with little to no financial means (individual or familial) to be successful. Why? Things cost money. It costs money to just be alive. And when someone becomes financially desperate, they make poor decisions – both personally and professionally. And, unfortunately no one really takes paper startup equity in a seed company as currency—so even if you have a highly valued startup, you need to have the cash to support your lifestyle.

If a founder is struggling financially or is driven solely by financial gain, there is a stronger chance that they will cut corners or make choices that can seem fraudulent or shady to others. This is a statistical truth that everyone in the start-up ecosystem must face.

What is in the best financial interest of a founder also might not be in the best interest of their team or company. If a founder is only involved with a startup to make money or using their company to fund their lifestyle or to keep up with their more successful founder peers, just plan on that company going to zero.

Good (And Active) Support System. A founder should have a good support system behind them.

Things are incredibly tough and challenging when you are a founder. Whether or not a founder has a support system is monumental when considering the chances of success for a startup. This problem is compounded by the fact that so many people in the startup ecosystem are chasing clout. When things get rough for a founder, they may find themselves abandoned and out in the cold by folks that they consider to be close friends in the ecosystem. If a founder doesn’t have much support outside of the startup ecosystem, it’s a huge red flag for me.

Every founder should plan on getting canceled at least once. We live in a society that is addicted to outrage and trust me, some little tiny sector of society will have the innate ability to find something wrong with at least one thing you’ve done in your life. This means that founders need to have people surrounding them who are ride or die. If someone isn’t going to show up for you when it’s not the popular thing to do, then they aren’t a part of your support system.

A support system also doesn’t mean being surrounded by “yes men.” As a founder, you need to have people that will tell you the truth. You need people who will have hard conversations with you. I always tell people that I am kind, not nice. A kind person will tell you what you need to hear, not what you want to hear. The kind people will have your best interests in mind no matter what. Find these people and treasure them throughout your founder journey.

If a founder is married or in a long-term relationship, I always inquire about what their partners think about their decision to start a company. If a partner is not behind the decision 100% you’ll see some push and pull happen in the founder’s life that won’t really help them be successful in the long run. An understanding partner who fully believes in a founder’s passion exponentially helps success happen faster and without as many hiccups. Having a good, stable relationship that can withstand the startup's ups and downs is a huge asset for founders that many take for granted as soon as they see the early signs of success.

Founder Product Fit & Founder Mental Acumen Fit. A founder needs to be the right founder for their company.

Does the founder really care passionately about what they are building? A successful founder can count on building for 10+ years before an exit these days, so the chances they burn out or grow tired of an idea or sector are very, very high. Startups rarely succeed after a founder exits their company, so I think a lot about a founder’s ability to stick with the idea they’re pitching.

Does the founder actually like the industry they’re building in? If a founder is pretty uninterested in an industry or sector, it’s going to be hard to translate that lack of passion into some form of success. I see a lot of people in an industry because they think it’s easy to build or because it’s an industry their friends are in (or, even worse, that’s what VC’s are funding at the moment.) Neither is the right reason to be in any sector or industry.

Does this founder have the mental acumen and acuity to build this product? Basically, is this founder smart enough to build what they say they want to build? Even better, just asking the simple question of whether or not a founder is as smart as they think they are, is a helpful place to start. I feel like we don’t wanna say when a founder just isn’t smart enough and that’s probably led to some exceptionally dumb investments by the venture community in the past 10 years. Not everyone is a genius. That’s okay, but it doesn’t mean you have to write them a check in the hopes that 30+ YC videos on YouTube will magically make them smarter.

Coachability. A founder should be coachable.

At Vol. 1 Ventures we invest in highly regulated sectors. This means a founder needs to be comfortable being coached and learning how to navigate very complex regulatory systems from people who have been there before them. If a founder isn’t coachable and I feel like putting them in front of a regulatory team would lead to issues, then it’s almost always a pass.

If a founder always thinks they are right, they will struggle to hire a truly exceptional team. On the flip side, if a founder always thinks the team should make decisions versus having a mission and vision led by a founder, you will see the tail wagging the dog. A great founder will be open to changing and adapting their leadership styles. And uniformly they will use coaching to help read the room in circumstances where it’s an absolute necessity.

As an investor, I look for founders who generally know what they’re doing. They don’t need their hands held with every decision. However, the best founders know what they don’t know. And that is crucial. When a founder knows to ask for help and is willing to be vulnerable when they need to be you get to see real magic happen in a founder’s life. (And by far those moments go the furthest in building a successful company for everyone.)

N.B.—A founder also needs to be mature enough to know who to take advice from. If I had a dime for every time I heard about founders taking advice or coaching from folks with clout or recognizable names where the help didn’t pan out, I wouldn’t even have to raise capital for our fund. Founders need to be cognizant of who they listen to and understand that just because someone is well-known, it doesn’t mean they actually know what they’re talking about. I end up cleaning up a lot of messes at startups where some big-name founder or fund gave shitty advice that ends up in catastrophe.

Plays Well With Others in the Sandbox. A founder should be easy to work with and respectful.

This is what I look at most when there is more than one founder at a company. Does the founding team handle conflict well? Do they blame others or are they able to take responsibility for their own missteps?

I always ask to have at least one meeting with the entire founding team together. Why? Ummmm…if you haven’t seen a team interact with each other and you’re investing you aren’t even scraping the surface of knowing what is going on with a company. I routinely see founders speak over one another, disregard what one another says, and even put each other down on calls to make themselves look better. (One, please don’t ever do this. Two, if another founder does this to you, get out of this professional relationship. You’ll thank me later.)

I’m also shocked that startup founders will still publicly berate and disrespect others on social media. You need to be able to get along with people to successfully run a company. You need to be able to handle conflict in a mature, respectful way. You will inevitably have conflicts with co-founders, employees, investors, partners, and customers. Getting along with people does not mean being an asshole in any shape, size, or form. Sometimes social mores are for a good reason and being an asshole is frowned upon in this world in almost every room you will be in as a founder.

Before you say but “(insert successful founder name here) is an asshole.” I can without a doubt say that I have interacted at length with some of the most successful people in tech (and other industries) that others have said were assholes. I can say that most of them were not assholes to someone unless they deserved it, so if the perception of someone’s behavior that you don’t actually know is your excuse for not being a decent person you are doing life wrong.

During due diligence, I always speak to a company’s employees, partners, past employers/colleagues, and competition. If there is a pattern of poor behavior that’s been displayed, there’s a small chance that person can change their ways, but most likely that won’t happen without an epic PR disaster or a personal disaster and I wish neither on anyone or their teams, or their investors.

Good Moral Compass. A founder should be moral.

How moral someone is very much matters when you are giving them money. Their moral code doesn’t necessarily have to align with yours, but they do have hold some morals as unbreakable. If a founder is morally malleable, you may not like how they shape their morals when it’s necessary.

Nobody wants to find out that they’ve backed a founder who beats their spouse or collects Nazi memorabilia. (I know more than one investor that those happened to.) If a founder has made morally questionable decisions, that’s usually just the tip of the iceberg. I rarely see someone who just cheats at one aspect of life. Nope. If someone cheats at one thing there’s a strong chance, they’re cheating on something else too. If someone stretches the truth then they’re probably stretching the truth on that deck.

Lack of Sense of Entitlement. A good founder is not entitled.

Nobody is owed venture funding. Nor, are you owed someone’s time or thoughts. No matter how good of an idea you have, there is only a small chance that it is a fit with but one of the hundreds of thousands of venture capital investors in the world. And just because you think your startup is the prettiest baby in the pretty baby contest doesn’t mean the judges think so as well.

A strong founder understands that past success is also not indicative of future success. I see second, third, and fourth-time founders with multiple exits who know that each startup is unlocking new challenges and that they’re starting from scratch. They know that their past successes do not entitle them to automatic success in any new endeavor.

Anytime a founder comes into a conversation with a sense that they are entitled to success or investment there’s a strong chance that inescapable problems will smack you in the face later. An entitled person will never understand their own role in a startup’s success. They will not understand that work ethic and creativity can trump a big check or big name.

Startups are hard work. There is no magic trick to make things work without putting in the time and effort. You can’t sleep your way to an investment. You can’t buy your way into founder product fit. You can’t be born into the right family as an alternative to product market fit.

We are not owed anything by this world. None of us. Sorry for such a nihilistic take, but you have to put any sense of entitlement aside in this business to be successful.

Absence of Ego. A good founder isn’t driven by ego.

This might be my most controversial take, but I think the only founders who are allowed to have a big ego are the ones who have built and successfully ran a massive, multi-billion, public companies. I’m a big fan of “show me, don’t tell me” when it comes to backing up what your ego is saying. If a founder has a big ego but can’t find their way out of their parents’ basement past 30, then we have a problem that only a therapist can address. As Ryan Holiday says, “The Ego is the Enemy.”

Put the Paranoia Aside. A successful founder isn’t paranoid.

The best founders I have seen frankly do not give a shit about what their supposed competition is doing. They know that companies pivot. They know that subterfuge is a thing. They work on building to the best of their ability and getting to market as soon as possible. Being stuck in an obsessive cycle with other people or imagined situations rarely helps a startup succeed. It does however help companies make reactive decisions for no reason, bring products to market much too soon, and will cause reputational and cultural risks to startups when present in spades.

The number of times I hear more about what a startup’s competition is doing versus what the startup is actually doing is really concerning. When a startup founder is stuck in a paranoid state they will rarely cycle out, so I tend to pass quickly.

Ability to Make Good Decisions. A great founder makes good decisions.

Does this person actually know what a good decision looks like? Do they know how to make good decisions on behalf of an organization?

Sadly, I think this ability can only be created by doing. I don’t think many people just come out of the womb with this ability. This means I am looking for founders who have probably a fair amount of work experience with mentors who helped them hone their abilities. A good founder shouldn’t be using their startup to make stupid, common-sense decisions. Do that on someone else’s time. This is one of the biggest reasons why I prefer founders who have significant previous work experience and aren’t building companies based on what they saw on the TV show Silicon Valley. 

I’m going to talk about drug, alcohol, and other addictions here as well. Why? Because we have to. I see a lot of folks in the startup ecosystem talking about using drugs and alcohol as if it’s something we should celebrate. It’s not. If you are a founder using drugs you probably need help.

Sadly, having addiction issues will always lead to someone making poor decisions professionally. It might not happen immediately, but it will happen. And when a poor decision is led by an addiction the chances that the decision is epically bad are higher than normal. It’s a major risk for investors and one that historically investors have pretended doesn’t exist…unless they want to get rid of a founder…

If you are a founder with an addiction there are resources for you. I highly recommend anyone struggling with addiction seek help before they start a company so feel free to use or pass on these resources to anyone who might need them.

SAMHSA Help Line

Drug Free America Community Resources

Jason Portnoy’s Blog

Alcoholic’s Anonymous 

And since I’m technically a VC I have to ask…

❤️ How Can I Help?❤️

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XOXO

Stevie