My not-so-secret motivation for pursuing a career in venture capital and startup investing was borne out of my professional experiences at the height of the sharing economy boom in 2012 and 2013. Through this time, I was exposed to both a wide array of founders attracted to building off these new collaborative business models, as well as the long tail of investors who were keen to capitalize on the next Airbnb, Uber, RelayRides (now Turo)… Two things struck me through this time that fueled my determination to build capacity for influence in this world. The first was the lack of diversity on both the founder (though the sharing economy probably had more women founders than other startup segments) and VC sides, something that has thankfully shifted and built incredible momentum over the last five years in particular. The second was what I saw to be a dangerous under-indexing of the motivations and ‘interpersonal’ qualities of the founders when evaluating investment decisions. (Let me be clear, I believe the sharing economy produced some of the most admirable founders and CEOs of the past decade, with only a few notable exceptions.)
In the last few years, we have seen the dramatic downfalls of founders like Travis Kalanick, Adam Neumann, Steph Korey, and Elizabeth Homes, while the leadership styles of Bezos, Zuckerberg, Musk and even Jobs, posthumously, are often cause for concern. It appears there is false dichotomy between the qualities it takes to build a unicorn, and the qualities it takes to be an exceptional leader, and historically investors seem to have optimized for the former. This has started to shift over the past few years, but most investors will still find themselves confronted by a choice to ignore problematic personality or relationship dynamics in favour of the potential outsized returns of the business or market opportunity. After all, you can always replace a CEO.
One thing I believe isn’t changing fast enough are the messages and resources we provide to early-stage and first time founders that set them up for success on both fronts, in the absence of enough role models in the real world. We are in no short supply of toolkits, bootcamps, accelerators and resources focused on finding product-market fit, executing on a go-to-market strategy, pitching convincingly and raising capital rounds. There is, however, a dearth of information and conversation on how to be a self-aware human being in the midst of all of this. I think it’s partly because it suits the broader narrative of founders with a chip on their shoulder, or as Naval Ravikant suggests, entrepreneurs driven by irrational behaviour that results in outsized outcomes one way or the other. But the other part of it is more likely about time. Time for reflection, time for questioning, time for personal evolution is always at the expense of time needed to build the business at all costs. Perhaps the fact that we are staring down the barrel of some of the most intractable problems our species will face is the catalyst we need as we stop and consider what’s really important, and how we optimize for a sense of innate purpose, over profit.
A tangible way this conversation is starting to shift is the rise of founder coaching, and of investors not only encouraging, but actively supporting this kind of personal development in tandem with the professional learning curve founders are already on. As serial founder Hiten Shah points out below, “especially early on, you are the root cause of pretty much every problem that occurs in your organization. How to think, how to deal with emotions, how to communicate, etc… whatever style and medium gets you to make progress on your self.
An example is the influential work of investor and founder coach Jerry Colonna, through his Reboot program, book and podcast, where he normalizes the personal struggles that come with being a founder and CEO. In a recent edition of his newsletter, my friend and colleague Nick Crocker beautifully explored the role of high-performance sports coaching (which we expect of our elite athletes) and made analogies to importance of founder coaching (which is often de-prioritized, dismissed or just not talked about). There is a groundswell toward recognizing that being a high-performing founder can be greatly assisted by being a high-functioning, self-aware person in a more holistic sense.
So what does all this mean, and why does it matter? Back to my earliest motivations for following this career trajectory, I believe if we start increasing emphasis on the interpersonal skills that make a great founder or leader (like coachability, self-awareness, humility and empathy) and deprioritise qualities like hubris, egocentricity and hunger for power (which we mistake for confidence, vision and authority), we may begin elevating and supporting new kind of founders. Founders that will by their very nature be more representative of society, that will build different kinds of businesses, hopefully optimizing for what the world truly needs, rather than what might be insanely profitable but ultimately drive negative or unhealthy behaviours. We can already see examples of this new breed of founder inspiring the next generation of entrepreneurs: Atlassian founder Mike Cannon-Brooks, Canva founders Melanie Perkins, Cliff Obrecht and Cam Adams, Buffer’s Joel Gascoigne, founder of Skillshare and now Otis, Mike Karnjarnaprakorn.
Can founders build more profitable companies at the same time as embodying the qualities of 21st century leadership: self-awareness, empathy, transparency, collaboration, equitable structures and democratic decision-making? The journey to proof is long, but our exemplars would suggest it is possible.
Can they be more fulfilled, more connected to purpose, more rich in the broadest sense of the word by keeping their own development and evolution at the core of what they do? Again, there is no single data point that can prove this out, but I would say there is more to be gained than lost in trying.
A note on coaching…
While coaching is certainly becoming more popular in the startup world, the collective understanding of what makes a good one, and what actually constitutes coaching in the first place is still being formed. I have heard VCs being dismissive of anyone but past founders or subject matter experts acting as coaches, and I have also seen comments made that the best coaches had often previously been teachers. In my previous role, I conducted behaviour trait analysis assessments and organised coaching for our founders, and my interest in people development led to me becoming a qualified organizational coach earlier this year (through IECL). I wanted to share a few thoughts on what a coach should be doing, and why a mentor, advisor or or consultant are not the same thing.
Many of the people who get called coaches in startup world would actually better suit the term ‘advisor’. These are the people with specialist knowledge of the field, who might be happy to get in the weeds with you, and who may be able to answer questions or direct you toward the best source of knowledge to help in decision-making. A good advisor is supremely valuable, but there will come times where your perspectives will differ, or you may in fact outgrow them.
A mentor is someone that might represent a future version of the person you would like to be. You might talk to a mentor about decisions you are pondering and what makes most strategic sense, and a mentor might give thoughts based on their own experience. This also can be catalytic in your decision-making, and mentors can be champions for you in areas you are looking to gain access or influence. However, similarly to advisors, there will be a time when your view of your own trajectory may not align with how the mentor sees you, or the value you can gain from the relationship diminishes over time.
A consultant? Someone who you pay to do something for you, because of their specialist knowledge and ideally ability to execute on it. Without the execution piece, you are really just outsourcing your own critical thinking process, and the outcomes will probably fall flat if not embodied in your own experience.
A coach has two key objectives, and should be measured only on their ability to do those things well. The first is to listen. The second is to ask the most pertinent question that will push your thinking. This is the best way to help a founder tackle the Gordian knots that hamper forward momentum. As Warren Berger, author of The Book of Beautiful Questions, puts it:
If you can help someone to think about a problem more clearly and gently guide them in the direction of possible solutions, you’re leaving room for that person to arrive at their own insights and make their own decisions—so that they have more “ownership” of potential solutions.
It’s this process of empowerment that is the unique domain of a coach, and one that truly teaches the founder how to fish, not where to fish and what to catch.
All four of these roles have value. And a person can bring a coaching mindset to their role as advisor, mentor or even consultant. But if you are looking to engage a coach, make sure you’re getting one. Questions beat advice, and while being coached is a muscle that needs training, over time even the simplest questions can yield the most powerful insights.
My friend and peer Jax Vullinghs has compiled a good list of coaches for founders in Australia. I’m not on it yet, but hope I will be some day :)
PS. Since my last newsletter, I have wrapped up after five years at Reinventure Group - you can read about the end of this chapter here. This week was my first week in the new role of Principal at Startmate, where I am responsible for finding the next generation of entrepreneurs and founders before they even know it. If this post resonates, get in touch at lauren@startmate.com.au
TECH
I’m fascinated by the way the media and content landscape is evolving at the moment, from the platforms being used to the creators stepping forward. Gaby Goldberg’s take on the rise of the curator is spot on.
Similarly, the no-code/low-code movement will be a defining point in the next generation of technology, democratizing what it means to be technical - here’s a great summary of this shift. (H/t @briannekimmel)
ECONOMY
Not even Isaac Newton was immune from the irrationality that is public market investing. So much for what goes up, must come down. (H/t Thomas Rice for this read.)
Related to my last post on the Resilience Economy, PlanetMoney’s The Indicator shares five things that have increased in popularity through lockdown. (H/t @bermster)
HUMAN CONDITION
The realities of COVID19 has seen students across the US recreating the college experience miles away from the universities they’re enrolled in.
The first episode of Small Giants Myths, Morals & Money finally catalysed me writing this newsletter. The final episode of Series 1 is potent. Get drawn in by the explanation of the etymology of prosperity in the first five minutes, stay for the wisdom of the remaining 40.
Enjoyed this, thanks (the coaching stuff in particular was great). However I disagreed with the below comment for a few reasons:
"investors will still find themselves confronted by a choice to ignore problematic personality or relationship dynamics in favour of the potential outsized returns of the business or market opportunity. After all, you can always replace a CEO."
It feels like the drive required to become a unicorn CEO often requires an iconoclastic worldview and/or a very strong personal drive to fill a void somewhere. The anecdotes of Zuck talking about "conquering" seem deeply personal and a key to what makes him, him.
There is massive personal growth required as a founder goes from sole employee to head of a >1000-person organisation and investors have to be willing to invest in that process of change as well. There is a huge amount of grey in the real world and I think it's really difficult for an outside investor to make an informed choice as to whether the CEO is a problem or if they are just going through a challenging period in their personal journey.
For most of these visionaries, if you replace them you lose the drive that makes their company unique, because other people are not motivated in the same way. Once the business has scaled, sure, you can (and sometimes should) replace the visionary founder/s because the skills required for success at scale are different. Just my two cents.