I Assumed This Memoir Was Just Another CEO’s Personal Brand Reinvention. I Was Very Wrong.

You Might Learn About Entrepreneurship Reading Andy Dunn’s Burn Rate But You’ll Learn Much More About Being Human

The realization of how mistaken I’d been hit somewhere around page 24 when the author details slipping into a psychotic state where he believed he was the returning Messiah. You see, my purchase of Andy Dunn’s Burn Rate was primarily to be supportive (I like him), and this past spring, it went from its Amazon package to a ‘Later’ pile in my office. Last weekend, the yellow-covered memoir moved from that stack to my hand. And then I proceeded to binge-read Andy’s memoir.

Burn Rate punched way above its weight, but before I celebrate it, I want to be honest about what caused my initial hesitancy: Skepticism around whether the author was the right avatar to become celebrated for talking openly about mental illness. Andy and I are friendly and have that shared “lots of mutuals” Venn diagram which makes people feel connected. In short, I knew the public-facing version of Andy but actually not much of the human behind. And so my not-overly-generous assumption was this book was going to be more like a press release than a personal journey.

Wow, I sound like a cynical asshole for sure, but societal issues are frequently represented and explained not by the individuals who are most qualified to speak, but instead the people who have the means, access and ‘camera ready’ soundbites. And in doing so they distort the discussion, push aside others, and are ultimately extractive before moving on. The best version of these folks actually do want to help (and yes, I assumed Andy was in this group), but they’re still misunderstanding the impact of grabbing the mic versus using their status to elevate others.

However as the title of this post suggests, I was wrong. Burn Rate is an honest, vulnerable account of a life. A journey that Andy is still on, but at a point where he’s ready to talk about it. For himself. For those who experienced him along the way, knowing or not knowing the full story. And for those who don’t know Andy but might be on a similar ride (we all are to different extremes). And I am very very glad it got out of the ‘Later’ purgatory. I’d urge everyone to read it for themselves.

Before I hit publish on this, there were two things that especially stood out for me:

A) Family is everything. The family Andy was born into, the one he extended into via marriage, the one he’s creating with his amazing wife and child.

B) The parts of us that we know aren’t our best selves but we also fetishize their ability to drive us to success, and worry that without them we’ll somehow be less. Andy has lived this. I’ve lived this.

Thank you Andy for Burn Rate. I learned about you but I also learned about myself.

Seed Stage Founders Undervalue Angels With Marketing & Comms Expertise

Why Bringing These Two Skillsets Onto Your Cap Table Early Is Worth It

In 10 years of venture investing I don’t think I’ve ever participated in a seed round which had less demand than supply. From a macro sense, you can thank the bull run our industry was in for the last decade. And then specifically there’s surely some social proof dynamics as well — I’ve always believed that if Homebrew commits to your seed round the risk of not raising the amount you want basically goes to zero (equally so, since we see many opportunities from coinvestors, there’s often already capital coalescing around the startup).

In addition to our dollars, we are eager to help founders with the construction of their cap table, not just generically with the highest profile folks available, but more specifically where they might get some help along the way. Some angels are what I’d call Type O Negative in that they are so universally beloved and dynamically useful that we’d welcome them into *any* investment. More often though it comes down to a combination of circumstances: in what industry is this startup building? What expertise do the founders personally have? Who else is already committed to the round and what do they bring to the table? And of course the angel needs to be interested themselves. Plus all the puzzle pieces in terms of allocations need to fit. It’s not as easy as it used to be!

So while every seed round, and every startup, is its own special unique situation, I will say that there’s a set of skills that I often see underrepresented and which we advocate for including: marketing and communications. I could speculate *why* this gap exists (there are a number of reasons), but rather use the following paragraphs to make the case for including these folks (people like Jen Grant and Ashley Mayer, who we’ve had as advisors for Homebrew companies, and routinely seek to bring into funding rounds whenever they’d like).

  1. Founders Often Don’t Come From These Backgrounds…

Founders seem to disproportionately come from engineering, product and sales/business unit career paths. Seed cap tables are about adding new perspectives and abilities, not just another 10 angels who share the exact same background as the founding team.

2. ..Nor Do VCs

While there are excellent counter-examples, your VC also likely didn’t spend their career as a marketing or communications leader! While I believe I personally was one of the best product leaders of my timeframe when it came to understanding the nuance and strategies of comms [yes, I just broke my arm patting myself on the back], I’d still defer to people like Ashley or Aaron Zamost if they disagreed.

3. Seed Stage Startups Don’t Hire Fulltime For These Roles, And Certainly Not Senior Hires

These roles typically become FTE in your growth from 10 to 50 employees, not 1–10. So get them on your cap table instead of your org chart, versus just lacking access to this DNA until post-Series A.

4. Best Practices In Marking & Comms Are Highly Extensible

There are certain types of help that’s difficult to get if the person providing the input isn’t deeply involved in your day-to-day. And definitely once they’re on board fulltime, marketing and comms will be even more valuable. But at the same time, for seed stage needs, I’ve generally found they can provide much value ‘on demand’ without having to be caught up on the intricacies of your business.

5. Seed Stage Needs Here Are Usually About Preventing Things From Going Wrong

There are startups who are just amazing at marketing and comms from Day One, but for many it’s not an immediate critical workpath. You’re trying to build a software product, do customer development and find PMF. *But* doing marketing or comms poorly can create huge wastes of dollars or in the worst cases, get you in trouble. So think of these angels as risk management that can eyeball your general plans, and called upon strategically if there’s an unexpected issue to navigate.

6. Hiring Marketing or Comms Consultants/Agencies At Seed Is Often a Terrible Idea

What a waste of money (and time) to engage with mediocre or junior talent. The reality is that the best ‘for hire’ practitioners here are not doing seed-level consulting. It’s just not worth their time. And so instead you get what you pay for. This wasn’t always the case — there used to be, for example, a roster of excellent comms folks and even boutique agencies who enjoyed consulting for very early stage startups, but they’ve all gotten hired by VCs or growth stage companies, or themselves moved into more strategic upmarket roles, charging as much as the best lawyers, exec recruiters and other top tier service providers.

So there you go. Please make an effort to bring marketing and comms angels into your seed round. And when I specifically recommend this, and you ask ‘why,’ expect this URL in your inbox. Cheers!

Three Startup Pitch Deck Mistakes That Are Red Flags For Venture Investors

Fortunately They’re Really Simple To Fix!

You might think my job is about saying “yes” to founders, but statistically it’s *actually* about saying “no,” given we typically see 3,000+ companies annually in order to make 10–12 investments. Despite the volume, each opportunity to hear or read more about someone’s idea is a privilege and I try to treat it respectfully, despite not being able to spend meaningful time on the majority of inbound we receive. Hopefully every startup finds the right investors!

Some entrepreneurs are born salespeople, others find it more awkward but ultimately realize getting comfortable pitching — to investors, to the team, to potential employees, and so on — is part of the job. And without this talent, the risk unintentionally lowering the probability of building the success they desire.

The deck you send to an investor is often the first opportunity you have to tell your startup’s story, and there’s lots of great material out there on what a deck should do. But there’s fewer posts on the classic, and repeated, mistakes people make in these summaries. Here are three of them, which I believe will make most VCs lean towards the “PASS” button…

  1.           Don’t Put an Exit Slide in a Seed Deck (or any deck before growth round IMO)

I see these most often when entrepreneurs come from regions/cultures where tech startups are still new, or the investors they’ve been pitching are more traditional non-venture groups. But as a venture investor, I hate it. So much so that I wrote an entire post earlier on this topic alone. Here’s the most salient portion from that essay:

Why don’t I like to see “exit” slides in seed decks:

Narrows Thinking: Usually conceived based on what company is today, not what it can be

Speak of the Devil & He Will Won’t Appear: Often talks of different acquirers and market comps. Companies don’t get sold, they get bought so just go and build a big business. By ID’ing potential acquirers too early one may obsess over their market moves, etc.

Tell Me How You’ll Create Value, Not Just Realize It: Build a big profitable business. If you can do that (which is hard enough), I guarantee you there will be exit opportunities. Don’t try to reverse engineer.

Suggests Risk Aversion: Makes me wonder whether entrepreneur is looking for quick cash out rather than wanting a venture partner for a longterm company.

2. Focus on Milestones You’ll Use This Funding Round to Achieve, Not Just Time It Buys You

18–24 months. 18–24 months. 18–24 months. That’s what I see most often on fundraise slides. But companies don’t earn rounds based on how long they’ve been working since the last fundraise! They get more capital because they’re learning, growing, achieving. Tell me what you’re going to accomplish with my dollars as the headline. Then support this with how long you think it’ll take and why this capital is 100–125% of what you’ll need to get there.

3. Founder/Team Bios Which Feel Deceptive

Nice pictures of happy looking cofounders. With a bunch of education and corporate logos underneath. First and biggest are GOOGLE! HARVARD! Then I go to LinkedIn and see you have eight years of work experience, of which Google was a summer internship in operations team while you were in grad school. And Harvard was a two week executive ed course. And I wonder why you are playing these games with me, when I rather hear about where you actually worked or why you decided to study philosophy at a perfectly fine state university (or skipped college all-together).

Look, I get it, you’re trying to draft off the social proof of some credentialing, hoping that it at least gets you in the door, and fearing that without these logos, you won’t be able to permeate the notoriously homogenous (but changing!) faces of venture capital. But I truly believe you’re doing more harm than good when you push away your real lived experiences for what you think I want to see. At best, you’re going to get the investors you deserve (bad ones who care mostly about status), and at worst, you’re going signal lack of self-confidence, when we should be building mutual understanding and trust.

As with all advice, Your Mileage Might Vary. There are lots of different investor mindsets and preferences in what they fund. Don’t listen to me if this doesn’t ring true to you. But after thousands, and thousands, of decks, these are three slides that distract me and if I’m making quick judgment calls whether to lean in or not, cause me to pause.

Best of luck!

Celebrating Milestones Doesn’t Kill Your Ambition. I Realized This Too Late To Enjoy Many Of Them.

One of My Liabilities as a Leader Was Not Acknowledging the Wins Along The Way

“I don’t want praise, I want to know what I could have done better.” For years this was my default response to even the smallest of positive feedback. Forget the PROS, I just want the CONS.

There were a variety of reasons for this posture: a strong conviction in the value of lessons learned, a desire to learn from those I respected. But if you really pushed on it, there were layers of fear and insecurity on the other side of the self-confidence cookie. The things which didn’t doom me this time might catch me next go round, so let’s get on top of them. And an intense concern about complacency, as if any satisfaction in my work (or my life?) would cause me to stop seeking excellence, remove the chip on my shoulder, dull the edge, or whatever your metaphor of choice.

I’d heard the sayings, in print, from colleagues. In this world raised nails get pounded down. Compliments are arrows from the mediocre, meant to reduce your ambition. And with a 20something/30something’s amount of testosterone, I didn’t want to be pounded down. Didn’t want to be mediocre.

When I think about my career during those years there’s always a recognition that perhaps hearing some praise wouldn’t have killed me. These days I’m able to smile more and try to bring the ‘how lucky are we to be doing this work’ mentality to those around me. So present day Hunter is better.

That doesn’t make up for the way I treated my teams and colleagues though. I was the quintessential “don’t stop and smell the roses, do you know how much more there is to do until we win? Be happy then!” manager. Urging people forward towards a set of goalposts that would never get any closer.

Sounds like a recipe for burnout, feeling under-appreciated, and like I’d never be satisfied, right? Well, I’m sure some people experienced me that way and for that I’m sorry. I like to think the care for them came through in other ways but in hindsight, there was a level I never reached in terms of empathetic leadership.

Colleagues of mine, some in the product org, some outside of it, were much more attuned to these needs, and for that I’m really thankful. They knew when a happy hour, or t-shirt, or ‘send this email out to the team’ was needed and were able to extend our culture in ways I fell short.

So why write this? Because I work with a lot of CEOs where I recognize some of the same traits. They do care about their teams deeply as human beings but work to find their own balance of “let’s celebrate” and “push harder!” And as individuals there’s often the same desire to critique themselves without pausing to take a breath. In my experience it’s not about first time vs repeat entrepreneurs. Men vs women. Old or young. It’s not universal but it’s prevalent. And so I’m just hoping that my own reflections help set some of them at ease with their own struggles.

These Two Questions Are All You Need To Understand The Next Few Years of Venture & Startups

Why I’m Not Telling Every Startup To ‘Pull The Brakes’ Just Yet

Here’s how I’ve generally described what’s occurring in tech land over the last few months:

  • For a variety of reasons, technology companies were being rewarded with valuation multiples which far exceeded historical norms and the view on their growth rates, amount of capital they could/should spend to capture revenue/market share, etc were incredibly rosy.
  • Similarly, for a variety of reasons, the music stopped. Multiples dropped in public and private markets, growth expectations were cut, and business models with high spend for promise of future ROI became quite unfavorable.
  • The ‘valuation multiples’ reset also came with an increase in slope of the curve. ‘Great’ companies took 1–2 steps backward, ‘good’ companies 3–4 and ‘average’ companies 5–7 (symbolically). As a result, there’s a lot of incentive to remain a ‘great’ company, which is still venture investable, versus falling into a trough of uncertainty.
  • But you need to remain great and investable while also managing your costs, extending your runway, tightening your operating plan, and so on. Not buying low quality growth. This is challenging but definitely not impossible.
  • What’s the biggest open question for most companies in remaining ‘great?’ Top line growth and margin. Are you indispensable for customers? Do you understand your cost structure and can you manage to a forecastable growth rate. And so on.
  • Continually missing top line projections in this environment is DEATH. Your runway is impacted by the absence of projected revenue. A drop in growth rate turns into a drop in valuation multiple. And your investors start to worry that you don’t have a great handle on your business, which means any new capital infusion could be eaten up without getting to the next milestone successfully.

Let’s avoid giving overgeneralized advice such as “every company should have 36 months of runway” because it’s just not true (and sometimes destructive, per Sam Lessin’s tweet and David Sacks ‘default investable’ framing).

Instead I’ll suggest there are two specific questions that really matter, the answers to which will have the biggest impact on the next 1–5 years of startups and venture capital.

A. Is This a Tech Recession or a General Recession?

The former largely means the folks with operating risk are Series A and beyond tech startups selling to other tech companies. The latter means that every Series A+ startup has to reforecast. In either case, you gotta assume that the goalposts have moved a bit forward for the next round, especially if you’re trying to grow into and surpass your last valuation.

But one of the benefits of ‘software eating the world’ is that there are a ton of amazing companies selling into huge traditional industries: agriculture, health care, government services, hospitality, and so on. I’d argue that these are generally less exposed to a tech chill and more exposed to a general economic slowdown. While the ‘red hot economy’ days seem to be over, a soft bounce or mild growth US market won’t necessarily impact all startups the same. Unfortunately the risk of a 2023 recession seem to be increasing, although economic pundits are largely still in the 25–50% probability bucket.

Note: I don’t want to hear seed companies complain about “the market.” You literally just showed me a deck that said your TAM was 10,000 customers. If you can’t find 10, 20, 30 in 12–24 months it’s not the market, it’s you.

B. Will Categories Create Multiple $5b+ Startup Outcomes, or Back to Majority $1–5b Single Winners?

A few quarters back the CEO of a buzzy startup and I were DM’ing about the state of the market. He and I had grown up in a world where $1b valuation was rarified air and you assumed that most markets were winner take most. Instead we were seeing private investors accelerate companies to — and well past — the $1b threshold, and many of these valuations growing even further in the public markets. It seemed that the outcomes were bigger than we ever anticipated and each vertical could create multiple huge winners because of market size, massive global reach, and so on. Paraphrasing, he basically said this was “either what it looks like when ‘software eats the world’ or things had gotten overheated.”

Looking back now it’s easy to insist it’s just the latter, but I’m inclined to believe that both are true. There’s been a lot of chatter about how consumer habits were supercharged during peak pandemic and have now snapped back to normal. We forget that ‘normal’ was still pretty rapid movement to online connectivity, services and shopping. That’s not changing. At the same time, the back offices of SMBs/SMEs have started to SaaS’ify at an increasing rate. And they’re not going back either.

If I’m wrong and the markets are smaller than I think, and the multiples on these companies remain compressed, we’ll see fewer $5b+ exits. This will return us to a more linear capital model, where ownership percentages for investors matter and there’s fewer private growth rounds at escalating $1b -> $5b -> $10b+ valuations. A $1b outcome feeds some funds who are either smaller and early, midstage and ownership heavy, or later stage and underwriting to a 2.5x. A $10b+ outcome feeds *everyone* on the cap table and the collective belief that an extraordinary number of startups could reach and eclipse this milestone drove a lot of the momentum investing of 2019–2021. Fewer huge outcomes means less late stage private capital and continued power law returns among the best venture funds.

Note: Calling the hedge/crossover funds “tourists” is a misunderstanding of their model. They’re not tourists, they’re owners of multiple residences: a city home, a mountain home and a beach house. They reside in each house based on the season and vibes. That is, they invest in high growth private (venture), profitable growth private (more traditional PE) and public markets. And they bring capital to each of these markets (and take from the others) based upon the risk/reward. Right now there are a lot of public market stocks which look attractive compared to private startups. They’re not tourists, they’re optimizers.

Ok, so that’s what I believe at a macro level. The two questions that will have the greatest impact on startups and venture over the next few years, and potentially the rest of this decade.

50+ Free Guides To Startup HR, Recruiting, Leadership ++

We Wrote These For Our Portfolio Founders But Want Everyone To Have Them

When we started our venture fund Homebrew one of our goals was to help grow the startup pie, so to speak, not just get our slice. Writing up what we consider ‘best practices’ and sharing with the broader founder community is an attempt to live these values.

Thanks to our Beth Scheer, our Head of Talent, and the folks over at Coda (a portfolio company that’s evolved what docs can do), we’ve updated and reformatted these 50+ guides including topics such as:

How to Evaluate a Resume

Policy Against Discrimination, Harassment, Retaliation and Bullying

Best Practices for Remote Hiring

We’ll continue to write new guides, and update the current ones, based on your interest and feedback. You can always find us on twitter @homebrew and our individual emails are on the Homebrew website.

In This Market, It’s a Great Time for a Mutual “Try Before You Buy”

Why Some Smart Startups Are Putting (Paid) Projects Ahead of Employment Offers

80–90% of startups shouldn’t follow the advice I’m about to give. Instead these companies are better off just investing resources in improving their hiring via candidate flow/sourcing, interview process, offer communication/negotiation and closing experience. Being at least A- in those areas will put you way ahead of most of your competition.

But for the rest of you I’m going to suggest it’s a great time to put ‘try before you buy’ experiments into place to help potential candidates learn about you, and you about them, not through an interview slate but through actual work together. Yes, I’m talking about short-term paid projects ranging from a few days to a few weeks. Especially at early stage startups I’m convinced that while this is higher risk, it also sharpens the construction of the founding team, especially when you’re hiring people you haven’t worked with before.

Looking back I wrote something in 2012 about generally getting beyond the interview. In similarly titled, Try Before You Buy: Why Smart People & Smart Companies Are Ditching the Interview:

Once is a coincidence, twice is a trend? Increasingly I’m hearing about talented folks and sought after startups ditching the interview process as final arbiter of employment and instead opting for some sort of ‘try before you buy’ arrangement. If structured in a clear and respectful way, it makes perfect sense and can also serve to activate more passive candidates.

Some recent examples:

Startup pursuing executive from larger tech company. Mutual interest but exec just. can’t. make. that final decision to leave comfy environment. Company offers to bring him on as an advisor so they can get to know each other first.

Marketing manager tells startup that instead of discussing fulltime gig, she wants to pick a specific project she can work on for them over next few weeks and if it goes well, start the broader conversation about a job.

Product manager knows founders of a later-stage startup pretty well. He has an idea for a way to expand their product line and would join company if he can lead this particular effort. An engineer and designer from the company work with him to build a demo. Once done, the exec team and board will take a look and make a decision.

Some downsides to this sort of process:

It’s half-pregnant. No one is really committed but they’re trying to make themselves fall in love.

Candidate can be poached by another offer, or similarly the company can decide to hire someone else or go in a different direction.

Candidate needs job security if they’re going to give up current employment.

I know contractors get asked frequently to go full-time with clients. Are there other examples you’re seeing of “try before you buy?” As a founder or employee, would you be comfortable with these arrangements?

Looking back after a decade of startups I’m still a fan of these sorts of approaches. I’d emphasize that project work should be paid — don’t ask candidates to do free labor on your behalf. And how it’s structured should absolutely evolve based on company size, nature of role, and so on. But in the right situations it’s not just a way for the company to make sure it’s a good fit for them, but absolutely the opportunity to tap a type of candidate who isn’t going to jump to your startup without a higher degree of conviction.

I feel like some folks are going to TOTALLY DISAGREE WITH ME on this one ¯\_(ツ)_/¯

More New Hires Are Ghosting Before Their Start Date. Here’s How To Prevent That.

Some Recommendations For Startup CEOs to Help Make Sure Your Team Member Actually Shows Up

Most hiring processes start with an antiquated assumption that companies select people to work for them. In the world of technology startups we know that it’s usually the other way around: the best talent have plenty of optionality and the question is, how do you get *them* to choose you?

More recently though I’ve seen that signing an offer letter doesn’t always mean that person shows up on Day One. Counter offers and occasional ‘buyer’s regret’ have always been an issue, but a number of circumstances (including the shift to remote work) have anecdotally increased the renegs and no shows. As the Wall Street Journal reports maybe some of it is a byproduct of tight labor markets,

“The rise in no-shows “could be just an expression of job seekers having a lot more confidence in their ability to find a job,” said Nick Bunker, an economist at the job-search platform Indeed.”

Or from the same article, perhaps it’s a change in cultural norms.

“We have a generation of professionals who grew up on dating apps, where ghosting has been accepted as an annoying, but common, phenomenon,” he [Keith Wolf, a managing director, Murray Resources] said. “I believe that is leaking into the professional world.”

Regardless it’s become more common if not the new normal. So what are some ways that early stage startups can reduce the odds of a newly signed team member becoming regretted attrition before they’ve even signed into their corporate email? Here are a few tips we’ve been giving portfolio founders:

  1. Limit the Time Between The Offer and Start Date

Anything longer than a few weeks and chances of something going wrong start to increase. Obviously people often need to give notice and wind down the obligations. And sometimes they might seek a break or have a vacation already planned. But really press to get a start date on the calendar sooner, even if it’s just a week of listening/onboarding before they disappear for a two week trip.

And if there’s a reason that they need to start 2+ months down the road, consider making them an employee sooner. Get them on your benefits, start vesting their stock and so on. Treat them as a team member who just isn’t there quite yet versus someone who hasn’t yet started.

2. Involve Their Family/Partners

Don’t just onboard them, onboard their social circle. If it’s a family, set up a dinner for them (delivered to their home, out at a local restaurant, whatever they prefer) to celebrate the new job together. Send company swag to give to family and friends. Record videos from team members welcoming them. Basically help everyone get excited about the change. In a ‘normal’ office environment, you’d be inviting them to happy hours, etc. Recreate that virtually as needed.

3. Introduce Them To Your Investors/Advisors

Hopefully you have some wonderful investors and/or advisors involved with the company. Giving them the chance to also welcome the new hire to the company with brief notes of introduction and let the new team member know they matter and will be supported broadly. Does this also create some pressure because if you choose to not show up there’s a bunch of industry folks who know? Sure, but this isn’t only about creating pressure, that’ll always backfire. It’s about keeping morale high and momentum going.

So these are three relatively simple strategies to execute that I don’t see everyone doing. They don’t require an incredible amount of resources or even a full HR/PeopleOps team to execute. If you’ve got other strategies to help prevent new hire ghosting, reply here or tweet at me.

If You’re Interviewing With a Startup, Here Are Three Questions To Ask Their Investors

I’ve Spoken With Hundreds Of Potential Employees, Most Don’t Ask Everything They Could

The other day I was sitting in a New York City park, talking to a senior engineer who had an offer from an early stage startup we backed. His questions of me were pretty comprehensive — trying to understand our rationale for investing, getting a VC’s perspective on what they needed to accomplish for the next financing, and most importantly, gut-checking some important cultural attributes which mattered to him. Two days later, he accepted the offer to join!

I’ve written before about how much I enjoy participating in the hiring process and how I try to make it about the candidate picking the company, not the other way around. The candidate I mentioned above did one other thing, which I often employ when I’ve referencing an individual or doing diligence on a company. Finish up with the open-ended “is there anything I didn’t ask about but should have?” (another way of phrasing when trying to get smart about an industry, “If you were doing investor diligence on this company, what questions would you be asking that I failed to raise?”).

I paused for a moment, and verbally ran through the stuff the engineer *did* ask about, to make sure we both had a sense of what was covered. Then I suggested there were three questions that might be of use to him, that he didn’t ask, but which I’d offer up and answer.

  1. Has There Been Any Attrition At The Company?

Obviously the bigger and older the company, the more this question needs to be tuned for specifics, but at a young startup (say under 20 people), it’s fine to start with just “has anyone left” and see what the investor says. You’ll learn whether there have been any transitions, and whether they were ‘regretted’ or ‘unregretted.’ It will shine light on their hiring philosophy, how quickly they correct mistakes of fit (if applicable), and so on.

2. When They Raised Their Series A [or whatever their last round was], Did Any VCs Pass and If So, For What Reasons

Here you can understand whether there was a lot of competition and demand for their fundraise, and whether the investment community say it through the same lens. Or whether it was a polarizing deal with firms passing for similar (or different) reasons. This is an “outside-in” view of what the startup needs to accomplish, while similar questions of the exec team should provide you “inside-out” perspectives.

3. Do You Think The Current CEO Can ‘Go the Distance’

While it’s still quite early in the company lifecycle, you can get a sense of how the earliest investors project not just the current competency of the CEO, but their pace of growth and maturity as well.

You’ll notice I didn’t include a whole bunch of basic questions here about the company’s financial details. It’s my opinion that the founders should be the one to share company-specific data, and I trust they are doing so responsibly. I don’t want to erroneously contradict something they’ve said since they’re closer to the day-to-day numbers. One exception is that if a startup I’m repping has fewer than 9-12 months of cash on hand, I need to be able to convey the risk profile adequately to a candidate and share my perspective on how funding will go. From my perspective, it’s irresponsible to bring a team member on board if they don’t know the company will need to fundraise in the coming quarters, regardless of whether they ask directly or not. Many candidates are fine with this risk, especially when the company is doing well and insiders want to put more money in regardless.

Company Culture Is Really Important, But The Way We Talk About It Is Wrong

What Makes A Culture “Bad” Isn’t Just That You Don’t Like It

I won’t invest in a startup that doesn’t care about its culture. Because a culture is going to form regardless so you might as well be deliberate about it. And it’s with your first hires that your intended culture will be solidified, evolved, mutated, or challenged. So be thoughtful about the characteristics you seek out; the motivations of those individuals; the processes and practices you put into place at the startup; and the behaviors and outcomes you reward. But in talking about culture with founders, I’m very deliberate when I characterize what I believe is a “good” culture vs a “bad” one. And I think we as an industry are very sloppy when we say “oh, Company X has a bad culture” because more often we really mean it’s just one that doesn’t appeal to us and isn’t objectively bad.

“Good” cultures are clear, consistent, scalable, actionable, well-matched to the company’s business model, and legal. By this definition, there are lots of “good” cultures that aren’t attractive to me as a team member. Amazon, from the outside, is a company culture that has always been extremely intriguing to me but where I’ve never felt a gravitational pull. Coinbase, which has been quite aggressive in defining what’s expected of you, isn’t my cup of tea, but I can still appreciate the clarity they are providing for potential employees. Similarly, the ‘holacracy’ style that has been explored by some startups sounds like a nightmare. But that mere personal attraction or repulsion doesn’t make them good or bad.

Some of the most controversial cultures in our industry are kneejerk labeled bad, in my estimation because they aren’t broadly appealing (on the surface) to a majority of tech workers. But so long as they meet the criteria in the paragraph above I’d call them polarizing, not bad.

Bad should be reserved for:

  •           Inconsistency in how values are implemented into management practices, hiring strategies, reward and recognition
  •           Lack of self-awareness, which prevents potential employees from understanding what that company values, and prevents current team members from improving or codifying practices
  •           Incentivizing or permitting illegal or unethical behaviors on behalf of the company
  •           In conflict with one’s business strategy and objectives

Are there certain types of cultural traits which tend to increase the probability of ‘bad’ things occurring? Sure, I’m open to the idea that the more aggressive, less respectful, binary-outcome cultures can attract people willing to break rules to win and managers who are incentivized to look the other way, but that’s a risk factor, not a fundamental quality of these systems.

Whether I’m on an org chart or cap table, I’ve historically found that culture is the most difficult part of a company to refactor once matured. Code can be rewritten. Products can be built, modified, sunset. Investors can be bought out. But culture is like super cement that’s oozed into every nook and cranny, often beyond the reach of a jackhammer. This importance is why the categorizing, assessing, and discussion of culture has to be very specific. So that we can understand the difference between effective vs ineffective, good vs bad, and ‘for me’ vs ‘not for me.’