Friday, September 25, 2015

Entrepreneurs who slack off after raising money aren't entrepreneurs

Paul Smith recently wrote about the phenomenon of entrepreneurs who slack off after raising their seed round:

"Here’s what I see three quarters of startups doing immediately after they raise a seed round: 
  • After months of working 60 hour weeks (and the rest, usually) to launch and demonstrate early growth to convince investors they’re worth it, the founders start working 9am til 5pm, five days a week — they’re taking it easy before the hard work starts;
  • Because raising money offers a financial opportunity to address their work/life balance, their Facebook feed slowly fills up over the following weeks and months with snaps from weekends away on city breaks, at parties and gigs;
  • They almost certainly find the time for a holiday, or a trip home to see the family, because they deserve it;
  • A new apartment or house is high on their priorities since they can now pay themselves proper wages;
  • There’s finally time to make amends to a long-suffering partner — perhaps they can finally plan that dream wedding they’ve talked about for months.
If this is still occurring in the weeks after the raise has happened, these startups will likely be dead before they raise Series A.
I agree with Paul that these are terrible signals.  What is mind-blowing to me is that this even needs to be said.

Personally, I always find that I work *harder* after raising money than when I bootstrap or self-finance.  My mentality is that once I raise money, a bunch of people have put their trust in me, and I am going to work like a maniac to avoid letting them down.

Yes, the investors are typically professionals who can afford to lose their investment, but that's not the point.  If it's not okay to discriminate against people for not having money, it's not okay to discriminate against people for having money.

As a founder, you've agreed to become a good steward of your investors' money.  If you don't treat it more carefully than you treat your own, you've abdicated your founder's responsibilities and become an employee.

I can still vividly remember the moment I realized this distinction.  Back at my very first startup, during the height of the Dot Com boom, I asked my employees to do some work to avoid wasting money.  One of my product managers said, "Why are we going through all of this hassle just to save $25K per month?"

It was all I could do to keep from launching myself at him.

Founders have a higher duty than employees.  In the book, "The Horse and his Boy" from the Chronicles of Narnia, King Lune of Archenland describes the duties of the king to his long-lost son, the crown prince:
"For this is what it means to be a king: to be first in every desperate attack and last in every desperate retreat, and when there’s hunger in the land (as must be now and then in bad years) to wear finer clothes and laugh louder over a scantier meal than any man in your land."
You could hardly come up with a better definition of what it means to be a true entrepreneur and leader.


Thursday, September 24, 2015

Extreme Altruism and You

This morning, I read a long profile of an extreme altruist, who believes in a) giving away as much as possible and b) focusing on whatever will provide the greatest benefit, regardless of whether that means helping loved ones or strangers.

In one passage, she worries that she'll have to give up her dream of becoming a mother:
"But once Julia opened herself up to the thought that children might not be necessary – once she moved them, as it were, to a different column in her moral spreadsheet, from essential to discretionary – she realised just how enormous a line item a child would be. Children would be the most expensive nonessential thing she could possibly possess, so by having children of her own she would be in effect killing other people’s children. Julia talked about this with Jeff and she grew very upset. Once the prospect of giving up children felt real to her, it felt terrifying and painful."
In the end, she agrees to her husband's logic:
"He calculated that if the child gave away around 10% of its income, then they would likely break even – that is, the money their child would donate would be equal to the money they did not donate because they spent it instead on raising the child. Of course, this did not take into account that it was better to give money now rather than later, especially to urgent causes such as global warming and Aids, so some discounting would have to be factored into the calculation. All this made Julia feel better for a while, and even though she realised that it would be pretty weird to tell a child that they expected it to pay for its existence in the world with a certain percentage of its income, she figured she was going to be a weird mother anyway, and her child would probably be weird, too, and so perhaps to a child of hers all this would seem perfectly sensible. Finally, Julia decided, sometime before her 28th birthday, that she would try to get pregnant. Their baby, Lily, was born in the early spring of 2014. The thought of leaving Lily in order to go back to work upset her, but she knew that she had to start earning again so she could keep donating. She felt that there were people in the world who needed her money as much as Lily needed her presence, even if their need did not move her as Lily’s did."
For people like me, who are wired with a "normal" level of altruism, this kind of thinking seems batty at best, and monstrous at worse.  I'm not ashamed to admit that I care a heck of a lot more for my kids than anyone else's, and that I pour a disproportionate amount of money into rendering their childhood safe, health, happy, and fulfilling.

My guess is that the instinctive revulsion most of us feel to the idea of extreme altruism is based on the basic principles of evolution.  Natural selection favors those who pass on their genes; people who agonize over whether or not to have children, and then refuse to care more for their children than strangers are pursuing a losing strategy as far as Darwin is concerned.

That revulsion I feel is billions of years of self-preservation taking one look and doing the cartoon "cuckoo" gesture.

But, our modern environment is radically different than what existed for most of human history.  The challenges that face most of us these days aren't figuring out how to scratch out enough food to avoid starvation.  It may be that extreme altruism, while individually maladaptive, is what our species needs to survive, since our own essential instincts will cause us to consumer more than our environment can support.

While it may be tempting to dismiss extreme altruists as wack jobs, I seem them as a useful experiment--an insurance policy that explores on way that human behavior may need to evolve to suit a new environment.

Just as long as they don't ask me to join them.  I'm running a different experiment!

UPDATE: Slate's Laura Miller did a great job of encapsulating most of my feelings in a single passage:
"Do-gooders take something we all want to believe is quintessentially human—the willingness to extend ourselves to strangers—and place it in direct conflict with something that is even more fundamentally human: caring for our own.
The result is a bit like a reverse version of the famed Uncanny Valley effect, in which a representation of a human being becomes more disturbing as its resemblance to an actual human being increases.
Do-gooders are already human, of course, but as they ratchet up their selflessness, they begin, ever so slightly, to depart from the fold. They look like us and talk like us, but they abide by rules that we understand we could only adopt were we to abandon something that feels essential to ourselves."