A few days ago I was eating lunch with Jonathan, my partner. If you still don’t know Jonathan’s blog, VCPOV, I highly recommend it – it’s full of insightful posts about interacting with VCs in general and fundraising specifically.
We were talking about a few companies we’ve met recently, and Jonathan made this clever observation that all of them shared the same characteristics: they all seemed to be stuck in seed stage for years (in some cases, 6-7 years) raising small rounds every year or so from new investors, mostly because the founders are impressive people, and more pertinently, very good sales people. Sadly, every time new money came into the company, the team just funneled it into the existing strategy, which, unsurprisingly, didn’t get the company to that next step.
These teams are in what I call founder purgatory: with an almost ideological zeal about their strategy, they’re bound to spend years and years executing on it without it working, wasting their time, talent, and potential personal growth: they will not experience scaling the company beyond its current stage, nor the challenges that follow.
That’s why critical thinking is so important: great founders know how to surround themselves with people who can be a conceptual red team for the founders’ plans and approach over time, ideally without the interpersonal friction that can naturally occur from recurring disagreement and challenges.
But the best founders have a decent amount of controlled skepticism about their own thinking. This keeps them open-minded to pivot away from a demonstrably non-performing strategy. The controlled part is particularly important because it enables these founders to communicate their strategy internally and externally in a confident and compelling manner.
Founders that don’t do either, and are skillful fundraisers, end up in founder purgatory.