HN user
I make money pre-seed investing in startups so I can lose money pre-seed investing in startups.
This was also my thought! OP is going to get a lot of arrows for this article, but it's a genuinely great write up that matches a lot of my experience with mass-market products.
It's a great account for people to reflect on. I've immediately sent this article to several early-stage founders who are burning astounding amounts of time on undesirable customers.
Please do!
I learned this one during a period at work when I was the host of 10+ large events per week and I needed to move around the room. Spending more than a few minutes in any one conversation was a problem and so I landed on this as the best way to break away without creating awkwardness for the other person.
Key to the "follow me" strategy is to just start walking - 99% of time they will follow you rather than stand there alone. If you know them well enough / the context is OK then a light touch on the shoulder / elbow to point them in the right direction also helps.
The flip of this is that if YOU don't know anyone else in the room then ask them something like "do you know anyone else here?" / "have you spoken to anyone else interesting at this event?" - usually that provides a pathway to someone new and you say "Great! Can you please introduce them to me?"
This is a great point on the value of recurring events! Multiple serendipitous / unplanned interactions (where both people leave feeling good) are an important pathway to building a relationship. As a child most of your friendships were a function of proximity & chance - school and community events provided opportunities for regular (but unplanned) interaction.
Recurring events make it easier to meet others, and the regular, repeated interactions help form stronger connections.
Over time it also deepens your options of people to move around room for conversation - which is a nice way to break out of being awkwardly stuck in a 1:1 conversation for too long.
"Follow me so I can introduce you to Bob" is a way kinder way to exit a 1:1 than "I'm going to get another drink/visit the bathroom" and leaving them standing alone.
This is great advice! One build on "it's all about direct connections" theme - getting attention when you are starting out is EXPENSIVE. One option you have is start with asking for more time and attention from those people that are already paying you money through Patreon.
Great businesses come to resemble their customers (what they value becomes what your business values), and this only comes from an insanely deep understating of your customers. Talk with your patreons and ask "why" a lot - "why" should be your most used word. This can get a little awkward, so one trick is to set expectations early in the conversation with something like "I'm trying to understand how to make you more successful, so I'm going to ask why a lot because on the other side of that I can help you more."
A fantastic book to read (before you quit your job) is Four Steps to the Epiphany by Steve Blank. Good luck!
If you have a strong enough “Why”, then you can tolerate any “How”.
Wanting to be your own boss, or having the ability to freely travel the world are both a great “Why” to create the activation energy to take the risk and start. But in my experience, it’s rarely a strong enough motivator to help someone persist through 4+ years without any meaningful wins.
The strongest "Why" usually involves serving something other than yourself. For some founders I’ve invested in, it’s a specific group of people (e.g. patients with a particular disease), or protecting something specific about the natural environment. Those people I have seen tolerate extreme suffering - to the point that I have had to physically bite my tongue in conversations where I wanted to tell them to stop and give up (but I never did - better a cut tongue than adding my opinion/ego to their burden). Some of those founders ultimately failed, others found enough wins and are still going (and suffering), a tiny number experienced wild success.
So if you want to persist, then an interesting question is "Who" or "What" are you serving besides yourself?
A separate but related question is how long can your personal cash flow sustain this?
Good luck!
Your experience matches with what I've seen.
If you give the cells something spherical [1] to adhere to then you can achieve a higher yield, but still only a monolayer.
There’s no one specific cause that stands out as common. All happy families are alike; each unhappy family is unhappy in its own way.
What IS common amongst terminal cofounder conflict is a series of ruptures in the relationship without any corresponding moments of repair. Over time the ruptures build up into complete relationship breakdown over an issue that seems trivial. People gradually work themselves apart and can’t come back. Some of my biggest failures as an investor have come from not understanding this dynamic.
What I’ve observed is that great cofounder relationships display a pattern where conflict is followed by a moment of restoration so that a strong positive relationship builds over time. The biological analogy of this is muscle hypertrophy. You repeatedly lift something heavy and your bicep muscle fibers are damaged. Under the right conditions of rest your body repairs the damaged fibers by fusing them, which increases muscle mass and so you get stronger over time. Or you don’t have a repair cycle and instead keep lifting heavy things without rest until you eventually get a traumatic failure and can’t lift anything for a long time (if ever).
In the stress of a startup conflict is inevitable, and to a certain extent at times it’s also required for progress. So the insight here is not “great cofounders have zero conflict”, but rather “great cofounders follow conflict with moments of repair”. If you consider each conflict a small tear in the relationship with your cofounder then for every tear their needs to also be a compensating motion of repair.
What I’ve learned to do now as the investor in the loop is to help cofounders notice early when ruptures are occurring without repair. Most of the time merely drawing attention to this dynamic is enough for them to course correct.
I've made > 100 pre-seed investments and the #1 cause failure in the first 3 years is founders quitting because of unresolved cofounder conflict. The first time I saw an obviously valuable, fast-growing company blown up because the founders couldn't agree on a $5000 travel expense I was astounded. Now it's something I've grown to expect - just one more risk to be managed.
To try and mitigate this my #1 question each time I meet with the founders I invest in is "how's your relationship with your cofounder(s) going?". If the answer to this question is anything less "fantastic!" we have a long conversation about why, before we talk about anything else.
A low cadence of communication between founders is also correlated with higher failure rates, so another fun question is "when was the last time you spoke with your cofounder?". Again I've stopped being surprised by the amount of founders that answer with "last week/month", which again needs to spark a conversation about why.
Do you need to raise capital in order to make payroll and keep your company alive? If yes, welcome to one of the most stressful periods of your business. In my experience this is a terrifying 3am-stare-at-the-ceiling territory level stress because it combines the prospect of your idea failing + damaging the great people who have quit other good jobs to come work for you. Spend as little time here as possible. Get an independent coach / therapist that can help you process this level of stress.
If you’re company is default alive and doesn’t NEED to raise right now then (congratulations, and) some of the below things might help you deal with the stress of fundraising:
1. Adopt the mindset that when fundraising it’s just as much YOUR job to say no to a potential investor as it is their job to say no to you. Most investors are not a fit for you. It’s your job to find the ones that are a fit for your business. Understand that the investor is incentivised to preserve optionality and give you an indefinite “maybe” rather than a quick no. In my experience great investors will give you a quick no with good specific feedback about why - that then lets you then calibrate if they missed an important point about your business (which means you need to level up how you communicate the story) or that you’re just not a fit for how they see the world (which is fine as early stage investing is more opinion than science).
2. View fundraising as a process - and structure that process in a way that best serves you. For me this means doing a lot of research up front about who might be a good investor for my business, preparing outreach messages and then crunching everything into a 90-day period from initial outreach to close (all money in the bank). The nice thing about how competitive VC has gotten is that they are all forced to broadcast their investment thesis in order to try and get inbound deal flow. Ideally target not just a fund but which General Partner at that fund so that you can draft initial messages that can say things like “Hi you’ve invested in X, and tweeted Y and Z which means we might be a fit for you”. It’s a three line email max. Use docsend for a teaser (max 10 slides) pitch deck so you know if they hit it. Understand that many investors will look at this on their phone so AVOID tiny text. If they hit the pitch deck but don't reply within 3 days email them again ask for a meeting. For a first round I like to have ideally at least 100 targets before I press the go button to send out all the prepared messages. If you’ve done great research then this should net you at least 20 first meetings as you search for a Lead (to price the round and set terms). Ideally jam ALL of these first conversations into the same 2 week window. If you let this stretch out over an extended period then some might be 3 meetings deep with you in DD while others you’re just taking the first meetings. This makes it hard for you to run a good process and having competing term sheets turn up within the same reasonable time window.
3. During the first meeting ask them lots of questions that let you qualify if they are a fit for you. It’s hard to have a list of generic questions to ask them as it depends on the context of your business but things like “do you Lead?” “what is your ideal investment size?” “do you have a target ownership percentage?” “can you give me examples of when you have led rounds in companies like mine?” “what is the decision making and approval process in your fund?” “normally how long do you take to go from first meeting to term sheet?”. If they don’t have good answers to these questions (or balk at answering them) then qualify them out as “Not a Lead” and move on. Stop talking to them until you have found a lead.
4. Do not believe positive language until someone gives you a term sheet. Words are free. I’ve seen VCs go 5+ meetings deep, repeatedly say things like “I will lead this round” and then say no. See my earlier point about their incentives to preserve optionality. Do not get your hopes up. The phrase "I am interested" is your enemy. Start to feel hope only if they send you a term sheet.
5. If you get a no ask for feedback - do not let them off the hook with things like “you need more traction” - push them to be specific about why they don't believe you will be successful enough for the risk you're asking them to take.
6. If you find a lead (and hopefully multiple competing leads) then negotiate terms, sign the term sheet and circle back to all the investors on your original list and invite them to Follow (if there is space in the round). If you don’t have a strong network or are doing this for the first time then lean on your Lead to help you. Great investors will do serious work to help you close a round fast. If you ask for help and your lead doesn’t lean in this is a red flag that they might be a bad investor for you.
7. Find ways to share the emotional burden. Getting told “no” over and over sucks no matter who you are. Find a way to share SOME of how bad this feels with your team (and then also share with them what about your idea that gives you the resilience to keeps you going). Authentic vulnerability helps build trust. If you know other early founders who are 12-24 months ahead of you then talk to them as well so you can vent and potentially learn some tips from them.
8. Good luck. This is a lottery if you are a first time founder without a good network.