Earlier this summer, I was catching up a friend who’s at an early-stage fund. He said something which has stuck with me, paraphrased: “We try to tell ourselves all the time — we need to be the folks willing to have the hard conversation — with everyone.”
My wife is counseling psychologist and, I remember when she was in graduate school, she brought home a book called “Difficult Conversations: How To Discuss What Matters Most.” She wanted me read it, and of course, I resisted, but I did sneak in some passages. Of course, she was right — I should’ve read it, but the point was delivered: The ability to start and maintain a difficult conversation is essential in life as it is in business.
Now with some time logged on the investor-side of things in startupland, it is remarkable how many conversations I engage in as an early-stage investors. I am constantly communicating with people of all stripes — new founders, current founders, company executives, business executives while conducting diligence, other investors in my syndicate or downstream, members of the press, people who ping me cold, and so forth. The number of conversations I have on a weekly basis make it so that on the weekend, I go into a shell and hide to recharge.
Out of all of these business conversations, the most intimate chats involve founders that I’ve made an investment in. In the limited time I’ve been here, the culture has been to treat all interactions and communications as “founder-friendly.” That seems like the right thing to do, not just with founders but with everyone (right?), and also makes business sense — an investor’s reputation is his/her most important asset, and treating people directly or indirectly disrespectfully is difficult to hide from. People will find out.
Despite this common sense, the cult of “founder-friendly” may have also morphed into something beyond the realms of respect, honor, and civility — there has also been a loud, consistent narrative over the past few years that most investors aren’t helpful, that most can be a neutral or net-negative contributor to the ecosystem. Surely, not everyone is an angel. This has snowballed in many cases to the point where “founder-friendly” has transformed into a mantra of the “founder can do no wrong,” to the point where others in the ecosystem walk on eggshells. The risks are real — for instance, as I’ve written about before — sometimes investors don’t have an incentive to participate in difficult corporate governance conversations out of risk of contaminating their deal flow or creating de-positioning fodder for their competitors in the next competitive deal.
I was interviewed for some podcast you’ll never hear about this topic, where the host described me as a “founder-friendly” investor. I interrupted the host and said, “I am a company-friendly investor.” Of course, I am investing IN the founders to build the future they envision, but part of that commitment (I hope) is to build a company that takes care of its responsibilities beyond founder equity and terms — to be a steward of its customers, its employees, and people that matter to their ecosystem, however small.
When I started investing, I was lucky in that most everything began to work out of the gate fast. That’s not been the case over the last year. As I’ve been in conversations with founders, if I felt like something should be examined, or challenged, or questioned — I’ve done it. I have grown more comfortable with reaching out and broaching a more difficult subject. It can’t be done right away — it has to flow as part of a natural conversation, and that often requires more frequent communications. Of course, it’s done with as much respect as possible , but some topics are impossible to bring up without being unfriendly in some way. Thankfully, all of the conversations have been productive, even if they’re hard, and I’m glad that I’ve mostly picked people who are open to and willing to have difficult conversations.
To be clear, this is and should be bidirectional. I want founders to give me homework, or tell me to go hunt down something for them. I enjoy that work and wish more would take me up on it. If I’m not living up to a promise in their eyes, I want them to tell me. And, that goes for other people I work with, co-invest with, and so on. Feel free to have the hard conversation with me.
I wanted to write this post after reading a post by Rebekah Cox titled “Higher Standards.” I always follow Cox’s writings, and while I don’t agree with everything she writes, her incisiveness and keen insight into startupland is incredible. She not only addresses topics others are often too afraid to touch, she tackles them in her own style and uses a few well-placed words to do. In this particular post, Cox challenges everyone in the ecosystem to challenge everything. She writes:
VC is incapable of raising the bar and enforcing higher standards. It’s up to founders and startup employees to insist on pushing themselves even harder. To craft and execute against wildly ambitious visions for the future. To fall ass backwards into potentially revolutionary discoveries. To tinker and play…Push back on everything, even—especially—yourself. Every drop of common knowledge you fail to question. Every time you find yourself reading from the script of approved answers because you know doing so will not cause any trouble. Look with suspicion upon every comfortable moment. Find your own vision for the world and test it. Then, test it again and again. The world pushes against you? So what? Push back with your full force even if it’s only to see what will happen. No one has the right to be an amateur in the matter of mental training. It is a shame for a person to grow old without seeing the beauty and strength of which the mind is capable.
I love this passage so much. It is so true on many levels. Investors cannot build the future and can certainly not police the ecosystem, but everyone should be willing to push others we work with to be better, to have harder conversations, to help out and move forward. Cox’s rally cry at the end is not to just founders — it’s a challenge to everyone in the ecosystem to foster this kind of atmosphere by having hard conversations with those we work with and ourselves. Sure, some feelings may get hurt along the way, but we’re all adults here. It’s something I’ve been thinking on in my role and an area I want to get stronger in. Thanks to my friend for the quote and to Cox for her powerful writing.