Being the co-founder of a VC backed startup
I’ve now been the co-founder and CTO of Splice for almost 6 years. It’s officially the longest place I ever worked at. It’s funny because it does feel like we just started yesterday. I decided to write down some unedited thoughts and share them here. I remembered thinking that I’d love to know what it was really like to be a founder, but that’s not something I could find on the internet. Hopefully a future entrepreneur will find this post and will get a glimpse at what it is like for me. (sorry for the raw/unedited version, but I felt the post would otherwise stay in my draft folder forever)
I remember so clearly building the first prototype and hearing the excitement in the voice of my co-founder. The first pitches, the first hires, the first people we had let go 😥 The first arguments, the first fights, the first wins, the first 1:1s, the first dollars we made, the firsts disappointments. The first bugs, the first crashes, the first breakthroughs, the first townhome meetings. The first term sheets, the first board meetings, the first no, the first yes! The first employee departures, the first M&A, the first team off-site. The first exec meeting, the first OKR meetings, the first advisors, the first $10M paid to creators! Wow, so many memories, I certainly spent too much time thinking about tomorrow and not enough celebrating.
It’s been and still is a wild ride. It feels like we started yesterday, yet it feels like it’s been forever. Often people want to know what it is like to be the founder of a startup. They have this glamorous silicon valley image clashing with the image reflected by Silicon valley, the HBO TV show. The reality is hard to describe, it’s full of pain, excitement, highs and lows. It’s a processes that forces you to reevaluate and reinvent yourself constantly. It’s lonely yet you are surrounded by others going through the same thing.
The experience seems to be different for each founder depending on their personality, cultural, social and economical background (and unfortunately also their gender and skin color). Running a VC backed company is like playing a board game where only a few select group of people know the rules. It’s not like the rules are secret or anything, it’s just that they aren’t the rules most of us grow up learning. Those rules seem very foreign at first. Worse, those rules are implicit, they are enforced guidelines that are believed to guide you to a predefined notion of success. Mind you, those rules change with the market. The way you were raising money in 2013, would probably not work in 2019. So you have to stay up to date with those implicit and changing rules. Let’s be honest, this part of the system is very unfair, it favors a small group of privileged people who have the social capital to be taught those rules. Talent is everywhere, opportunities are not. I have to admit that this is something that really bothers me. I had the chance to discuss this topic with some VC partners I trust. It’s clear they are very aware of the situation and in some cases try to induce local change. It’s clearly not enough but I honestly appreciate their effort when they try.
A thing I also learned the hard way is that you rarely have an opportunity to correct your mistakes. Running a VC backed startup is like strapping a rocket to your chair, it might get you to the finish line faster, but a few small mistakes and you are out (and a crappy rocket might blow up). It’s an exciting process, especially if you have little patience, but the g-force you have to endure will take its toll on most of us. Another funny thing about this analogy is that if you don’t pass you, you get used to the initial speed and when the rocket is slowing down because you are getting close to orbit, you miss the initial speed and thrill.
I’m not a nostalgic person and I don’t live in the past regretting things, but I often think of the many mistakes I made so I don’t make them again. I wish I could fix those mistakes now that I know the consequences, but the time window is often closed. The best I can do is assume the consequences and not making those mistakes again as well as helping others who are going through the same challenges. As much as we love saying that we embrace failure, ask a founder how they are doing, the most common answer is probably a version of: crushing it! Unfortunately, the reality is probably very different. Self-doubt is probably the best feeling describing being a founder. But we don’t want people to doubt us, otherwise investors won’t support us, we won’t be able to hire top talent and we will fail to make the “X under X” list. So many founders at all stages struggle with depression, substance abuse, deep feeling of loneliness. It’s quite sad to see peers going through that while the media love glorifying or at least “glamourising” our self destructive behaviors.
VCs are not your friends, but they aren’t your enemy either. Like you, they are doing their job and their job is to make sure you exponentially increase the financial value of their investment. You can have a close relationship with some investors, they can provide you with great insights and be supportive. But their primary duty is to their firm and they LPs. They are being kept accountable and have to show results. This is not a secret, it’s their duty. It’s too easy to blame VCs when things go bad. Don’t get me wrong, there is a fair share of bad VCs out there, but remember that you are the one who agreed to tape a rocket to your chair. They provided you with the rocket, they didn’t force you, being VC backed is certainly not for everyone or every project. You told them you’d manage the pressure, the growth etc.. But did you make sure you were aligned on the conditions attached to using the rocket? If they don’t think you will make it, don’t be mad if they don’t want to add more gas in the rocket or suggest you stop the race. If they feel that you can make it but you are slowing down too quickly on purpose, don’t be mad if they pressure you to add more gas and take bigger risks. That’s part of the game.
Another thing to remember, it’s all about the story. That’s probably the number 1 rule of the VC club. The same way we say that the journey is more important than the destination, the story of a startup is almost more important than its actual output. The story is constantly developing but is always promising that there is always better things coming soon. If bad things were to happen, we turn them into good things. The story must always sell a better future so the valuation keeps going up and the excitement doesn’t die. At least that has to be true on the outside. I don’t think this approach is good or bad, this is just the way it is. It’s just part of the culture and everyone in it knows it.
Finally, something I didn’t hear a lot of founders talk about. Non-CEO founders aren’t seen as equals to the CEO. That usually becomes more and more real over time when the company grows to a big enough stage where the CEO founder has to start being a 100% CEO, making harder and bigger decisions and focusing on “CEO’ing” the company. VCs will provide more support and resources to a CEO than any other C suite roles and it makes total sense. It’s pretty logical when you think about it, the CEO sets the direction for the company, they energize, drive and motivate the exec team to accomplish the vision. VCs are most impactful when they can support the person setting the direction. Now here is what’s not often talked about. This is both a curse and blessing. As we all know, the people who are at the start of a company aren’t often the right people for later stages. And that keeps staying true as long as the company evolves. The thing is, as non-CEOs, it’s easier to redefine our roles or even move on in some cases. It’s much much harder for a CEO-founder. That can be very tough to realize that the company you dreamed of, built, launched might have overgrown you. Actually, scratch that, I don’t like this term overgrowing. It implies that you might not have grown fast enough. In my experience, it’s the opposite, I saw amazing founders who grew so much that they realized that their current role was not what they wanted or should be doing and they went out there and hired amazing execs (presidents, CEOs, CTOs, COOs..) who were a better fit for the current company stage. Because you have a rocket pushing your back, you don’t have much time to think about it, you just need to have a way to evaluate things quickly and make those decisions as fast as possible.
I hope I was able to give you a glimpse of what it might be to the founder of a startup. It’s exciting, thrilling and very often tough in ways you didn’t quite expect. Being VC backed is a choice, it’s a path and it comes with its set of rules. If it’s your first time, you might not know those rules and it’s ok to ask (also start reading blogs like Fred Wilson’s, Mark Suster’s and many more, you will find patterns). If your partners have more experience than you ask them to share, good VCs also know to explain those things clearly and the ones I know won’t judge you for asking but they will keep you accountable. If you learn how to ask questions, you will be able to catch-up very quickly.
Finally, for those who might think I sound a bit pessimistic, you probably don’t know me well 😎 Lately, there has been some increased backlash against being VC and VC backed startups. Some arguments were absolutely valid and some maybe less. My hope is that this post will bring some color to the discussion in a form that I hope is as objective as I could be.