“Dead on arrival. I’m still waiting to see the first good Mastodon post. God help us.”

Casey Newton’s Deep Skepticism Of Twitter Replacements & Getting More Comfortable With Substack’s 10% Take Rate

My daughter knows Casey Newton as the ‘watch pro wrestling and eat chicken wings’ friend. She is not wrong. But beyond the bond of those shared pleasures, we also have a long — and mostly agreeable — relationship rooted in his coverage of the technology community and my participation in said industry. When I last interviewed Casey, back in 2017, he recognized there’s a “natural, & healthy, tension between myself & the people I write about.” So with that context, here’s another FIVE QUESTIONS with Casey Newton.

Hunter Walk: Hi Casey and welcome back. I think you’re the first person I’ve interviewed twice on this blog. The biggest personal change since our 2017 discussion is your founding of the tech newsletter Platformer (which everyone should subscribe to). Ahead of its launch we’d spoken quite a bit privately about going indie and I’m so glad you took that path. In hindsight what did you underestimate and what did you overestimate in terms of initial challenges?

Casey Newton: This is kind of a dodge, but the truth is that the launch went mostly to plan. I had the benefit of a big mailing list that I took with me, and so when I turned on payments Platformer was ramen-profitable basically from day one. It took me about six months to climb back to my old Verge salary, and right after that I launched my Discord with some other writers and that led to a big spike in revenue. Most of the discourse around independent journalism centers on how hard it is, and leaving my old perch was certainly scary, but in the end it worked out great.

I mean, there were many small annoyances along the way — finding a bookkeeper, and an accountant, and interacting with the California Franchise Tax Board, to which I always seem to owe some amount of money no matter how many times I’ve paid my bills. And I did find myself missing the feeling of being in a newsroom from time to time, though I continued to have access to The Verge’s slack as a contributor and that helped me feel less lonely.

Often when people ask me how Platformer going, there’s an edge of fear in their voice, as if they expect me to say that I’m barely holding on. But recently I hired my first employee, so I’m hoping some of that dissipates.

HW: In our previous discussion you talked about measuring journalistic success in two ways: impact and audience. Is that still how you think of your job?

CN: Those are still the two biggest ways. But increasingly I’m thinking about measuring success in terms of sustainability and expansion.

In recent weeks, we’ve seen layoffs at Gannett and the Washington Post, and Protocol shut down completely. Those journalists aren’t losing their jobs because their work isn’t valuable — it’s because they’re chained to unsustainable cost structures.

Platformer is designed to weather a lot of the storms that my previous employers got caught up in — downturns in the ad market, the rise of a buzzy new social app, or pressure from investors can’t really trip us up. (We don’t currently have ads or investors.) We just have several thousand paying customers who like what we do, and that number is up 50 percent year over year.

Our number of subscribers could stay flat or even decline precipitously and we could keep doing the journalism we’re doing indefinitely. And speaking for myself — I probably would!

Anyway, “continuing to operate” might sound like a low bar, but the longer I stay in media the prouder I am of the fact that we have.

The other measure I have now is my ability to fund more journalism through hiring. Earlier this year I brought on the great Zoe Schiffer as managing editor, and in just a couple months she has helped us break scoop after scoop.

I never want Platformer to grow bigger than a handful of people. But the fact that Platformer readers are now supporting multiple journalists in their work is a milestone I’m proud of.

HW: Substack, which you use for Platformer, says to not think of them as a newsletter company, but more broadly as part of a creator oriented shift in media. As one of their valued customers, what do you want from them in the future? Before you started Platformer we debated whether their 10% cut would force you at some point to seek cheaper alternatives. How do you think about that value prop now?

CN: I feel better about the 10 percent than I used to. In part this is because I write about platforms like Apple and Meta that insist on taking 30 percent; or YouTube, which takes 45. If nothing else Substack is cheap by comparison.

Another reason I feel better about it is because the company figured out an actual growth mechanism this year: when you subscribe to my newsletter, Substack will show you three of the other publications I recommend and invite you to subscribe to those as well.

When Substack introduced this feature on April 12, we had 57,135 free subs. As I write this eight months later, we’re about to hit 100K.

Platformer Subscriber Growth

So that’s the good news. The bad news is that these subscribers don’t really convert to paid. But still, lots of them do open the newsletter, and eventually I suspect Substack will start an ad network, split the ad revenue with us, and the 10 percent fee hurts even less.

All that said, it continues to be strange that the better you do for Substack, the more expensive it gets. There aren’t many businesses like that, and I would like to see them offer more perks to top writers over time.

HW: Let’s talk Twitter, with an old school Newsweek-style Conventional Wisdom, up down sideways

CN:

Twitter 2.0 ⬇️ This company generated $5 billion in revenue last year. Within two weeks Elon Musk was telling the new team the company might go bankrupt. Twitter has always had problems, but now it’s in crisis, and its CEO has consistently made the wrong decision after being presented with the right one.

Elon Musk ⬇️ I had basically no opinion about the guy before he took over the bird app. But then I started talking to all the people whose lives were suddenly in upheaval thanks to his various layoffs and purges, and my opinion of him lowered significantly.

Jack Dorsey ⬇️

‘Free Speech’ ⬆️ People mean a lot of different things by this, but at the very least I think we’re having a louder public conversation about the importance of free expression than we’ve had in a long while, and I do think that’s good for us in some ways.

Verification ⬆️ If you ever wondered why platforms should verify some users — and very much not verify others — boy have you gotten a great lesson in that over the past few weeks.

Mastodon/Post/Etc ⬇️ Dead on arrival. I’m still waiting to see the first good Mastodon post. God help us.

HW: One other update from the last five years is you’re part of an improv comedy troupe! Talk about that here and plug where people can see you perform.

CN: A few years back I realized that I didn’t have a good answer to the question “what’s going on outside work?” I am a giant ham, and so my roommate at the time suggested I try improv. I went to a class and never looked back.

We organize shows roughly every six weeks in San Francisco, and recently started performing with another troupe that’s scary good. (We bring in a stand-up as well, and something I’m really proud of is that we pay them for their work!) Some folks have come to see us a dozen or more times.

Before I moved to San Francisco I fell in love with the city because there was so much weird, fun, funny stuff in the city that you could just stumble across if you walked far enough. Doing these improv shows is my little way of building the San Francisco I want to live in.

The best way to find out what we’re up to is by following our Instagram!

Thanks Casey! If you’re not doing so already, please subscribe to Platformer.

Don’t Believe The Terminator Movies, Artificial Intelligence’s First Strike Against Humanity Is By Flattery, Not Force.

You’re Not As Attractive As Lensa’s Magic Avatars Suggests. And Why That’s a Problem.

Digital Plastic Surgery. Or maybe AR Beer Goggles. That’s what everyone’s Lensa Magic Avatars look like to me. If you’re VERY ONLINE™️ then you’ve certainly noticed these in your friends’ social feeds, passed them around by group chat, or perhaps even created your own. It’s the latest version of enhanced selfies, a Magic Mirror for Modern Times.

Now I haven’t made THIRST TRAP HUNTER yet (not out of privacy concerns about where my photos end up or unwillingness to pay — I just don’t have enough number of selfies on my phone they require), but I’ve seen a lot of yours. And sorry, you’re not that hot.

Why does this matter? Well, we’re kinda training AI to deceive us. A positive feedback loop where the phony best version of ourselves is what gets ‘rewarded’ in the Darwinian competition among Lensa’s training sandbox. And if over time, the biggest data set wins, what are the implications if the most explosively viral image models start with, essentially, ‘do you like this’ vs ‘is this true?’

(Hold aside the fact we’re also creating an even larger collection of beauty norms reinforcing classic aspirational definitions of attractiveness. We saw this in Second Life where big muscles and big busts are still desirable in the metaverse.)

Furthermore, it’s not crazy to think conversational AI say whatever it needs to close the sale. As I wrote in 2016, What Happens When Bots Learn to Lie:

Should a shopping bot provide positive affirmation about the clothing items I have in my virtual shopping cart? “Oh you’ll look hotter in this,” the bot coos as it pushes a $150 sweater as an alternative to the $25 sweatshirt I was considering. Is that a lie? Doesn’t a salesperson at a store do the same thing? Is it better or worse when it’s done by a computer simultaneously to 10,000 customers?

Will multivariate testing of our bot future contain ethical parameters in addition to performance measurement? Techniques like priming can be used to dramatically impact behaviors. For example, asking you if you are a “good person” and having you answer in the affirmative, before I request something of you, increases the likelihood you’ll do what I want, driven by a need to live up to the identity you created for yourself.

One of the ‘AI Destroys Humanity’ tropes is how eventually the computer programs created to protect us decide we’re so self-destructive that the only way to ‘save’ us is to kill us.

Wouldn’t it be the ultimate late stage capitalism irony if the path to a deceitful enslaver AI started not with self-awareness but with ecommerce conversion optimization?!? Turns out Al Pacino was right.

Why VCs Explaining “It Was Only 4% Of Our Fund” Is Misleading Minimization When a High Flying Startup Implodes.

When a High Flying Startup Implodes. As MultiBillion Dollar Private Companies Shrivel, What Their Investors Aren’t Saying About These Losses.

As more high-flyer private companies find their shine tarnished, investors (or adjacent VC-explainers) remind us that it’s unfortunate but actually a non-issue, so please, let’s move on and not rubberneck the pileup. Wait, what? Losing tens of millions of dollars (or more) is no big deal? Don’t people get fired for that?

The basic math suggests they’re, well, correct, at least if you’re just looking at first order impacts. In most cases, any single company represents a very small percentage of a venture fund’s total size (hold aside this is also because firms have been increasing their AUM at astonishing velocity). In fact, losing money on a meaningful percentage of startups isn’t just expected, it’s potentially evidence that you’re taking enough risk to hit some of the power law winners which will pay back your LPs many times over!

As cofounder of an early stage venture fund myself, I’m here to tell you that while these statements are accurate, they’re also misleading when trying to understand the broad impact these implosions may have upon a firm. Before you start tweeting ‘Man in the Arena’ quotations to me, my experience here isn’t limited to sideline punditry — although Homebrew has yet to be involved in any Unicorn->Zero events, I can think of two investments where we were “all in” across the seed, A and B rounds, only to see the companies ultimately return 0x, losing us almost $10m combined.

giant pink pencil eraser rubbing out a unicorn, digital art [DALL-E]

So when a venture firm tells you a previously high valued investment’s failure is NBD, here’s the checklist of implications that’s not always apparent to outsiders, ordered subjectively from least enduring to most calamitous.

Reputation Effect. Highly qualitative but a firm’s brand can be tarnished by their cheerleading and then awkward distancing from a deadicorn. Personally I believe these are great opportunities to ‘learn in public’ and distinguish oneself with how they might support impacted employees, and other bystanders. Others believe they’re moments to silently delete their Tweets.

Opportunity Cost of GP’s Time. At the average multistage fund, a GP might be making just a handful of investments per year (their ‘shots on goal’ so to speak). While across fund cycles and an entire partnership these sorts of issues normalize out, I can tell you for sure the lead partner might be wishing they had that ‘slot’ back, especially if they are early in their career.

Opportunity Cost of Follow-on Capital. Forget the initial investment being lost, and look more at whether there were subsequent follow-on checks written. Even with aggressive recycling, the average fund doesn’t have capital available to support every portfolio company through every round. That’s why some raise opportunity funds and/or stop doing their pro rata at some point. So the follow-on support that went into a later write-down came at the expense of other companies in the portfolio, some of whom would have been more accretive to the fund.

Opportunity Cost of Non-Investment in Competitors. When you pick your investment in a vertical you mostly have to steer clear of direct and adjacent competitors, especially if you were a lead check and/or a Board member. So if the failed company effectively blocked you from pursuing a startup that became a legitimate successful outcome, that’s doubly painful, again especially for the GP who is supposed to be picking winners in that sector. This is less of a problem when the entire vertical falls apart (think of the last generation of scooter startups).

Relationship Cost of SPVs/Direct Co-Investment and LP Credibility. Especially during the past decade bull run, when everything was up and to the right, venture investors loved to increase their exposure to companies by syndicating SPVs (or direct investment opportunities) to their LPs, friends and other industry luminaries. Those going to zero have some implicit (if not explicit) impact upon future enthusiasm for the VC firm.

Disappearing TVPI. “It was only 4% of the fund” could be true but you might have been carrying it at a current valuation of 100x that. You tend to make different sets of decisions when you feel like you’ve got an existing company that’s returning your fund multiple times over — maybe you don’t take money off the table in another investment, maybe you follow-on in other companies with more or less discipline, etc etc.
Going from showing your LPs quarterly reports suggesting your fund is top percentile to a new forecast is a relationship management challenge. Doubly hard if you’re in the midst of raising a new, larger fund (or recently closed one) on the back of the paper write-ups. The most impacted LPs maybe will ask questions about how much did you know or not know about the shenanigans, and why maybe it was in your best interest to be stay naive for a while? Modern version of the Upton Sinclair quote, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Look, I’m not picking on any specific company or firm, but rather this is what happens coming out of a pretty crazy few years. If a venture partnership is around for long enough they’ll end up experiencing all types of highs and lows, some self-induced and others almost nearly out of your control. It’s part of the business. But as an industry we’ve become experts at content marketing the shit out of our wins, the shiniest versions of what venture and startups can be. It’s my POV we learn much more together by sharing honestly and broadly as a community, even if the “why we invested” blog post from a few years ago sounds dumb in hindsight.

Now, Next, and At Exit: The Three Ways To Evaluate Compensation Before Accepting That New Startup Job. Salary Benchmarks Are Just a Single Piece of Data.

‘Sell calls.’ That’s what a conversation between a job candidate and a VC are called. We’re supposed to help seal the deal, get the person to sign on the line which is dotted [insert Glengarry Glen Ross gif]. Now, I LOVE these conversations with possible new team members, but take a very different approach. I don’t sell them. Instead I try to understand what they’re looking for in an opportunity and help confirm that this would be a great career move, if the match makes sense. But if it doesn’t, or they’re trying to understand the pros and cons of, say, starting their own company instead, I’ll talk to them about my POV, without trying to talk them into, or out of anything. [Now it just so happens we also have a very good close rate, but that’s because the startups in our portfolio are typically interesting, rewarding places to be and they are thoughtful in the candidates pursued].

Recently in speaking with an engineering manager candidate who had been working at later stage/public companies, we got to discussing compensation. Not the specifics of his offer — I don’t negotiate on behalf of the company, just provide advice to both sides — but more about how he should think about it vis a vis his previous employers. My framework was a sort of triangle, and here are the three sides:

a female computer scientist looking into a crystal ball, digital art [DALL-E]

Now

Use available benchmarks (public, from friends, etc) to understand whether your offer is generally ‘fair.’ Once you’ve established that, and especially if there’s an opportunity to trade off cash compensation for equity [some startups will present two offers for you to choose from, or be open to some negotiation], figure out what your floor is for near-term salary. And don’t go to the startup if they can’t get above it in some easy or creative way.

The reality is that most hires to early stage startups will be taking a near-term hit to cash compensation or at the very least, earning less than they could if they *only* prioritized salary (and not role, company, or equity upside). The ‘below market’ hit way smaller than it was 10–20 years ago for sure, but it still exists, especially at seed and Series A stage. I want candidates to earn above their stress level: they shouldn’t have to remain in a bad living situation, fall behind on student loan payments, and so on, just to join a promising startup. Because that startup needs 100% of their professional focus and distraction benefits neither party. It’s also a reminder why keeping your personal burn rate low is such a career expanding move. If your personal burn rate floor is high because you’ve been living off a Google salary and can’t imagine how you’d survive earning less, you won’t find most seed stage startup offers to be competitive in the near-term. And I’ll tell you that during our call.

Next

Most candidates aren’t thinking about ‘Next’ because it’s only conceptual, but I find it is important to discuss. Basically, do they think there’s room for promotion and ongoing recognition/retention compensation? They should have this conversation prospectively with the founder/hiring manager just to understand the startup’s emerging compensation philosophy. Sometimes a fair, but not bracket busting, initial offer grows more attractive when you realize there’s ability to get other bites at the apple as your role within the company (and the company itself) grows. Now, with very few exceptions (usually at the executive levels), these compensation reviews aren’t written into you offer letter, but if you don’t trust the company’s forward looking statements and the culture they hope to create, please don’t join in the first place!

At Exit

What do you want your equity to be worth at exit? Kind of a crazy question to ask, right? I mean, who knows, I just want it to be worth a lot! But think about it similar to the way a venture investor might. If I buy 10% of the startup at seed, with say, a $10m valuation, what do I think I’ll net if the company exits for $1b (rosy scenario!). Well, I’ll probably do my pro rata in the A, then take some dilution, so let’s figure I own 4% when it’s all said and done. Ok, I turned my $1m initial (plus let’s say another $1m in pro rata) into $40m. Nice!

As an employee you can do similar math with a little help from the company. You’re a senior engineer joining early, and get 1% (remember I believe in giving early team members meaningful upside). You don’t do pro rata per se, but you do get additional grants as you get promoted/retained, so not crazy to say you end up at exit (in the above scenario) with .4%, to use same dilution multiple. Ok, so if this company is worth $1b, then you walk away with $4m in equity (and $20m at $5b, etc). Or maybe the company is ‘only’ worth $500m at exit but raised less capital and you’re still at 1%, so $5m in equity. Whatever, it’s all ‘fake math’ until the exit occurs, but thinking in this way sort of gives you the answer to where “NOW” + “NEXT” can lead. And you can do your own scenario planning for what types of exit scenarios are interesting to you.

Compensation is a very personal situation based on your own situation, risk tolerance, and company philosophy. Some people are in a position to take on more risk than others. And some people are blindly given more or less than they deserve. Volumes have been written about these questions and I won’t address any of them here. Instead just take away this simple triangle to perhaps help you frame the compensation package from an early stage startup. And if I’m fortunate enough to be talking with you about a job at a Homebrew portfolio company, this is what I’d be telling you during our non-sell ‘sell call’ 🙂

“There is magic in the trying and learning and trying again.. but any unprocessed PTSD will come back to haunt you” Avni Patel Thompson on the Superpowers Of Second Time Founders

Sometimes you meet a founder during a startup pitch and you just know you’re going to be friends, regardless of whether they take your money or not. Avni Patel Thompson is one of those people. And I was right! So when writing about Second Time Founders, Avni came to the top of my list. We’ve talked often about this topic and a quick interview turned into the thoughts below (and you can get amazing essays on startup life from her free Substack newsletter).

I like being a second-time founder.

It’s like having your second kid. You don’t sweat the small stuff because you know what the small stuff actually is. You feel more confident in your instincts and rely on your gut more than your hyperactive mind and what other hyperactive minds around you tell you.

You have a general sense of the shape of things — the highs, the lows, the things to watch out for, the things to not stress about so desperately.

Being a second time founder is such a gift in so many ways.

But it can also be a danger. There is a unique flavor of paranoid confidence that is bestowed upon repeat founders — more confident in what’s possible and how to pursue it, but also constantly aware of all the ways you can fuck it up.

Beyond that, startup years are hard on a founder. The hours worked, the heart and soul consumed, the impossible decisions, the painful people calls. All buried deep down, in service of keeping the company alive.

All of this accumulates and unless it’s being processed by some high power therapy (which, let’s be honest, for most of us, it isn’t), it’s just pile on and piles up, a toxic carbon compressed under the highest of pressures into a deadly diamond that is what shines when others look at us.

But we know the truth. It’s dangerous if not handled correctly. Instead of the being the hardest substance that gives us superhuman strength, it can be the brittle kryptonite that crumbles with the wrong crack and leads to our downfall.

If you’ve been a founder and you’re considering getting back into the arena here’s what I would say are the 3 biggest superpowers you can count on and the 3 areas of danger to be aware of.

superwoman fighting miniature dragons, comic art [DALL-E]

The ‘upside’

You trust your gut more than any other input. This, I think is THE most important thing, and my guess for if second time founders are more successful, the reason why. That you even have a gut to trust. Over the months and years of the first company, we’ve all built up a sense of how to things and how to do it in a way that works for us. With Poppy, I would constantly be asking others how to think about hiring and giving equity; about raising money; about product sprints and growth. With Milo, I know how to do it, and how I can do it better and faster for me. Doesn’t make the doing of it any of any easier per se, but at least this time around I don’t have the weight of my newness weighing me down at each turn.

You can make bigger, bolder calls. Because you know the lay of the start-up game better, you can start being bolder on what you’re building, especially because it’s likely you’re able to raise more capital to do it with. You’re also building with all the hard fought learnings you gained from yes, your last startup, but also all the other experiences in your life. You’re able to connect more dots in more unique ways because you have more insight and instinct.

You can do more, because you can see more.

That said, this cuts both ways. Being a repeat founder carries the burden of knowing when a thing isn’t working and knowing that you have to make harsher calls, faster. You can’t claim ignorance. So you have to make the equally bigger, more brutal team and product calls.

You can out persist even your former self. This one stands to be really proven but, in my case, my first start-up was sort of accidental. I was curious more than anything and I found myself trying to do right by a product that just took off. To start Milo, I had to make the explicit call that I was going to do this again. That I was willing to devote the next decade of my life — of my girls’ lives — to this. That made me choose a problem and a space that I knew I could make my life’s work if I was lucky enough to keep it going. I started this one knowing that it was a marathon and have been pacing myself as such. It’s still at a sprint pace but one that I know how to maintain when and how I need to.

I could tell you more ways being a second time founder helps — established investor network, better hiring pool, focus on distribution vs. product — but in the end, all that matters, I think, is that it gives me the confidence to do a thing that requires endless boatloads of it, powered by my gut, which I trust above all. Even above my closest mentors and friends. That’s the ultimate superpower.

And the ‘downside’

And if those are the things you can count on as tailwinds, here’s what I think are the headwinds:

Any unprocessed PTSD will come back to haunt you. There’s a joke among founders that no matter what space you work in on the first, you vow to never do that again. Marketplace people jumping to saas software, saas people jumping to hardware, hardware people jumping to anything else. It’s one of those “if you don’t laugh, you’ll cry” kind of jokes.

Because what each of us works on is extraordinarily complex and we learn the hard way all the brick walls that exist in a category (by running head first into them, realizing it’s not one that can be bust through, and leading our battered bodies and teams around it). For Poppy, it was the relentlessness of building a marketplace — there was literally never rest. Fix one side, break the other and on and on you go, forever. That’s the game. Add on the labor law and trust and safety parts of a childcare marketplace and I vowed to myself to take a break from people and marketplaces and to go into “just” software.

That PTSD put blinders on me on how a true solution would work for what I’m building with Milo until I was willing to reconsider both people and a marketplace. Then, guess what? An unlock based on my ability to build with both.

The lesson? Rest. And then process that PTSD so you can build this next start-up without any of the bad baggage.

Your knowing too much can stay your hand and make you timid. There is power in the sheer naivety of a first-time founder. I was too clueless to know better, and in a lot of ways, it helped me keep going even in the face of stupid odds. This time around, I would get into my head before I could ever get going on a thing. The fear would roar louder, fuelled by the memory and pain and skepticism held by my body. I would hypothesize all the ways this thing wouldn’t work, or couldn’t make money or would just result in weeks wasted. Ironically, I wasted weeks because my “knowing too much” got in my own way.

In time, I had to learn to just focus on my best testable hypothesis. To use all my knowledge to craft that, and then to just get going. Knowing better can be a good thing — but let it power your gut, not cloud your mind.

It can keep you in the game too long. It almost doesn’t matter how your first startup went. The second go at it comes with higher stakes. If you knocked it out of the park, you’re being chased by the ghosts of a “one-hit-wonder”. If you failed and either ended up as an “acquihire” or a shut-down like Poppy, you’re been chased by the ghosts of “don’t actually have what it takes”. Either way, this point of ego and pride plays with your mind and how long you persist on a thing. I’ve found myself going longer on a product or a direction because “it had to work” and “I couldn’t fail” more than what actually served the company. I’ve had to honestly just get over this. To know that my worth as a founder isn’t wrapped up in the outcome of even this go at it, but rather how I go about building it. That even if this were to end again not how I wished, that I would still have a next chapter. This is really harder to do in practice than theory, especially when you have a family and bills to pay and a very real “opportunity cost”. And yet. Ironically, this can make you make the kind of bad calls that will sink you anyway. Stay in the game as long as it serves the purpose and serves you.


I love being a second time founder. But as you can see, the benefits come at a cost, as most things of value do.

Above all: I wake up with gratitude. That I’m one of the lucky few that gets to do this job. That gets to get up and try. Again and again and again. And if the cost is that I need to be as self-aware as I can, of my own limitations and fallibility, I’m okay with that.

Because breakthrough lies in the trying again and again. In the 10,000 ways that don’t work until you find the one that does.

So my hope is for the world to have countless second and third and fourth time founders, no matter the individual result.

There is magic in the trying and learning and trying again.

And I wouldn’t change that superpower, no matter all the kryptonite.

“Being a 2nd time founder is basically figuring out how to leverage all your hype without believing it”

Joe Fernandez (Klout, Joymode, NewCo) On What Changes After Your First Company

I’m currently obsessing on repeat founders, and what lessons they want to share with the startup community. Just like my earlier request of Sean Byrnes, it made sense to pub Joe Fernandez’s response in full (thanks Joe!). Joe is a good friend and someone I love working alongside (Homebrew invested in Joymode and his current unannounced company).

large dollars bills chasing a young man, digital art [DALL-E]

Yeah, this hits a bunch of different ways.

So on the funding there are a couple of interesting things. When I am pitching a new idea I don’t really want the benefit of the doubt. I want a reality check against something I am considering spending the next 10+ years of my life on. While it’s nice that people are more inclined to lean in, I often feel like I am missing the conversation I want to have. It also puts a lot of doubt in my mind of how valuable of a thought partner that investor might be down the road.

I see this happen the most with new funds. It’s not because I think these investors are any less talented at evaluating ideas but they are highly incentivized to close “hot” deals. They are unlikely to have real results when they go to raise their next fund so they want the story of x, y and z proven, successful, founders choosing to work with them.

Lots of stuff comes to mind around team. The first thing I’ve found happen is that when word gets out you’re working on something new a bunch of people will want to connect about joining. 95% of the time this isn’t the people you actually want or need at this stage. You end up with a lot of people who have no could care less about the mission but know employees at your last company cashed out so they want in. Then there is the people that are hungry to get behind a mission they care about but have a romantic idea of what the earliest days of a startup are like and are totally detached from reality. Then the biggest group (which usually overlaps with the first two) are people who just don’t have relevant skills for this stage of the company.

This ends up being a weird distraction. You have these inbound people that are from your network so it can be socially awkward to just blow them off. Then when you tell them it’s not a fit it can be painful. For example, I had a friend who wanted to get involved in Joymode. I told them no and then when they would see press about us and think we were doing well it would just dig at the wound. They felt like if I was really their friend I would have let them on the bus (no thank you for the pain I saved them in the end of course). Meanwhile, you still have to go out and recruit the actually people you need.

As a first time ceo at Klout I would often look at my board and think “these people were involved in some of the most important companies in our industry, I should probably listen to them”. I easily lost a year or two doing dumb shit my board told me was a good idea. That’s definitely not their fault. It took me too long to realize that world we are building in is dynamic and every company, market and moment in time is different. No one knows anything. It’s all just data points.

I see my team looking at me the same way I used to look at my board and it freaks me out. I tell the team I want them to push back on me, but it’s asking a lot. A debate or any conversation with the ceo is never on even terms but it’s way harder with a 2nd time founder. I just have way more experience than almost anyone I am working with at this point so the depth, pace and scope of the conversation can be overwhelming for someone not used to it. The problem with this is that I can request people to push back and then “win” debates without actually being right. It also just doesn’t make people feel good and motivate them to push back on future bad ideas.

Being a 2nd time founder is basically figuring out how to leverage all your hype without believing it

Women’s Health & Women’s Rights Are One In The Same

Satya and I signed Homebrew on to an effort called VCsForRepro alongside ~100+ other investors representing over $100b in AUM. The organizers did a great job pulling together a coalition of folks willing to say that the ability for women to make choices about their reproductive lives is pro-health, pro-business, and pro-innovation.

We may not all hold the same beliefs when it comes to this issue – I don’t even assume that my specific feelings here are shared across the other signees – but the autonomy of an individual and the rights previously granted under law are quite meaningful to me. It’s too bad more of the traditional top VCs didn’t join this effort. That’s one reason that we never wanted Homebrew to get large – you lose the ability to live your values cohesively and consistently.

Thanks as well for TechCrunch coverage to get the word out.

“You have to fight the urge to do everything the same way you did it the first time:” Pros and Cons of Being a Repeat Founder. Some guidance from an understudied segment of the startup ecosystem.

Our industry talks about ‘repeat founders’ with a lot of reverence and for good reason given the commitment required to build a startup. We also sometimes think of it as a single cohort, but there’s a probably more nuance. The ‘first startup failed but she learned on someone else’s dime and now is a killer CEO’ experience might be different than the ‘first one was a big success and now the question is whether she can top that’ in terms of what’s being built, how she’s building it, and the pressure she feels.

a very tired panda looking in the mirror, digital art [DALL-E]

I’m also guessing (does anyone have data?) that the number of repeat founders is increasing non-linearly as more and more entrepreneurs start earlier in their careers, so understanding patterns among this group has never been more relevant. With this in mind I asked a few ‘repeaters’ about their own experiences, largely to use as background to inform my own opinions. One person was my friend Sean Byrnes is a multiple time founder and writes about his experiences + advice for CEOs/founders in a free weekly newsletter called Breaking Point. His response to my question about pros and cons of ‘the second time’ was so good that I’m going to share it in full.

You’ve hit on a topic I could talk about for hours! Feel free to attribute any of the following to me, but I’m not sure if they fit exactly what you’re looking for:

Pros of being a 2nd time founder:

1. You can enjoy the ride a lot more. It’s like riding a roller coaster: the first time you ride a new coaster you are scared the entire time because you don’t know what to expect at every turn. The second time you can enjoy the ride, but when you know it’s time to be scared you are MORE scared than you were the first time.

2. Because of #1 it’s a lot easier to listen to everyone around you. Since you’re listening more, everyone around you feels heard and as a result they appreciate your leadership more. It creates a virtuous cycle of you as the “experienced founder” mostly because you’re calm and confident while listening to them.

3. You know how your decisions today are likely to play out over the coming years so you can have more confidence in them. You can also coach your team to think longer term for the same reason, leading to better decisions everywhere. That foresight again reinforces the idea of the “experienced founder” since it sounds like you have a crystal ball.

Cons of being a 2nd time founder:

1. You have to fight the urge to do everything the same way you did it the first time. Not only is the world a lot different than your first trip, it’s not entirely clear if what you did the first time was a cause of success or just noise. However, everyone around you WANTS you to do it the same way you did it the first time because that’s your experience. As a result, you’re fighting a lot of forces to do things in new ways and not be a prisoner of your history.

2. You have more to lose. As a first time founder you have nothing but upside, regardless of what happens with your company, since it’s a resume and experience builder. A 2nd time founder (especially one who has seen success) risks tarnishing their resume/reputation with a failure. That means you can be less ambitious and not as willing to take risks. It’s a daily struggle.

3. Expectations are higher. Even if it’s not true, people feel that second-time founders should be more successful. As a result, the people around you are less forgiving of massive mistakes, big pivots and other course corrections that are necessary on the startup path. Everyone starts out believing in this image of a second time founder as having “the formula” and everything that cracks that image wears away at their confidence.

You can, of course, overcome most of those Cons through transparency and honesty which is easier because of the Pros. Oddly, I don’t see many second time founders take that route as they enjoy the feeling of being seen as having the answers. It’s an addictive cocktail to have an easier time raising money and hiring your team, especially if you struggled in your first company.

I’m still digesting some of the other responses and trying to get their permission to share like I did Sean’s. Hopefully more to come!

Two Questions To Ask During Hiring Reference Checks Instead Of “Where Can They Improve?” Be Specific About Situations & Create a Permission Structure for Honesty

I LOVE doing reference checks — on founders we are hoping to support and key hires into their teams. On-sheet (provided by the individual) and back-channel are both valuable in their own ways. Don’t incorrectly write off the ‘candidate supplied references’ thinking that it’s worthless to speak with people who have been prepped or likely to be positive. Sometimes you just need to ask better questions. Here are two that I’ve found to be expecially useful.

businessman on a phone call writing notes on a pad, digital art [DALL-E]
  1. “If a colleague of [name] didn’t want to work with them again, what reasons could you imagine them giving for this decision?”

Rather than just ask generally about “strengths and opportunities” or “when are they at their best vs when do they struggle,” you want to always try and ground the reference in someone’s actual lived experiences. Additionally, creating a permission structure to talk about how *others* have reacted to the candidate gives the reference a chance to provide observations without having to own the opinions themselves.

You can use the answer to this question in two ways. First to identify behaviors and styles that might be situational and to consider whether the hiring org and new role are well-suited given these past experiences. Second, to test self-awareness by asking the candidate this same question and comparing the results. Are they aligned with what their on-sheet reference told you? If not, guide the discussion over to the specific feedback and gauge openness to hearing it, potential defensiveness and so on. In my mind a great reference call will not just assist in the hire/no hire decision, but aid you in making that person successful once they start by getting a sense of where and how they might need coaching.

2. “One of my responsibilities is to help [name] be a great CEO. Where do you think they might need some guidance or support? How do they like to receive feedback?”

Many of the founders we back are first-time CEOs, and some of these folks are stepping into that title as first-time managers. That doesn’t give us pause — we love ambitious people who take the responsibility of leadership seriously. Where they’ll need to develop to be successful — and how their natural instincts/previous work prepared them for this next step — is really valuable context for our relationship with them.

The tendency when probing on this area is to ask a version of “Do you think [name] will be a good CEO and why?” That’s fine, you’re likely to get a list of strengths that this individual has displayed in previous jobs. But again, similar to the example in #1, I believe in a more specific framing: where is this person going to need help and how can we provide this support in a way that’s effective for them? Armed with this information we’re going to be in this founder’s corner from Day One, trying to build trust, keeping an eye open for their blind spots, and getting them feedback in the manner they appreciate (the whole ‘effective communication is not about speaking but about being heard’).

Framing the question in this positive way also establishes advocacy and a growth mindset, not judgment and fixed notion of what the CEO may, or may not, be capable of. And it’s consistent with Homebrew’s mission/brand promise.