15 September 2023 | Link to podcast episode

Really candid episode where a founder Liz Zalman, and her investor Jerry Neumann discuss the challenges of being a startup founder, fundraising and venture capital from their distinct perspectives, as a founder and as a VC. Liz doesnt hold anything back, talking abt her investors who dont get into the nitty gritties with her, or dont really come prepared to board meetings, or are not able to connect with her at a personal level. There is a really interesting 15 secs where Jerry rips into Sequoia. Whoo!  

As a VC it gave me a really rich as well as nuanced take on the founder’s prism of the interactions they have with the VC. It also gave me a sense of the likely challenges and faultlines. I have ordered the book and can’t wait to dig into it.


“In this episode, Liz Zalman and Jerry Neumann (co-authors of book Founder vs Investor) debate venture capital and startup dynamics. Liz is a 2x founder who’s raised over $100 million, and Jerry has over 25 years of experience as a venture capitalist with successful bets on companies like Datadog and The Trade Desk.”

Not coaching / mentoring

LIZ:  So I think going back to this idea of a company actually being worth something and people being interested in seeing it all the way to a, uh, a big exit. Um, I as a founder have to transcend being a founder and become an operator if I’m gonna stay as CEO or even stay on as any C level executive that isn’t a chief strategy officer. Um, and so in order to do that, I need to grow and I need to grow in half a dozen ways. And speaking from personal experience, um, I love operating and I love doing things and I love doing a lot of things. And so I need to get out of micromanaging essentially and become a manager and let people do the things that I do that I’ve hired them to do.

And so who’s going to be able to tell me that? Is it my co founders? Probably not. Cause they’re also struggling with their own thing. Um, maybe it’s some executives that I’m hiring, but I don’t know that they’re going to have the guts to stand up to, you know, uh, a boisterous personality. And so I would hope in those instances that it would be my investors say, Hey, Liz, you’re, you’re really fallen down when it comes to operating metrics. And so what I’d like to do is, is coach you through. Whatever. Get this coach, get that coach, let’s bring in a CFO, whatever the solution is, and then help me through that in order to help me grow. But instead, what I’ve heard over the years is you’re doing a really shitty job or this thing is failing right now.

Um, I would like to see investors invest more in their founders to grow them similarly to how Employees often complain that we bring people in from the outside as opposed to growing and promoting from within. I feel the same way as a founder.


Dysfunctional board meetings

LIZ: Let me tell you two experiences. So in both of my companies, two separate boards, one in ad tech and one in infrastructure, not a single investor that ever sat on my board agreed to log into my product with me and see what it did. Why should I, as a founder, take anything that they’re saying seriously when they don’t care, they don’t seem to care about the product or the company enough to even look at it. So that’s just one experience.

So I, I advise for a seed, stage VC fund, and they’re invested in this company. So a completely distinct set of investors. And I’ve ever had this company raised at the froth of the market. Um, also in the infrastructure space.

And I’m observing these board meetings. And the investors have told the CEO exactly what they want to see. Young, young guy, uh, brought in as a co-founder later on. And he pulls this together. And he spends days pulling everything that they’ve asked for together. And this meeting is four hours long.

And I’ve heard the investors after the meeting complain about how long and tedious it is and how we’re getting mired in the details and this and that. And so he’s done exactly what they’ve asked. I can tell that the company is not doing well and he’s six to nine months away from getting fired just listening to what’s happening and not a single one of them, some of them career VCs, some of them former operators have turned into VCs, have gone to him and said, Hey, I think this could go better and told them how they’re actually feeling.


The ultra painful board deck and board meeting

LIZ: It once got to the point that I refused to allocate more than a few hours on the weekend to pulling together a deck that nobody would read ahead of time.

LOGAN: The challenge is that each board deck must be a work of art because it has to address all the egos and opinions in the room. Uh, I believe the only point of a board meeting is to get things approved like option grants or compensation adjustments. Try to take these meetings as infrequent and short as possible.

LIZ: because I don’t feel like the other side is bringing anything to the table. There’s just nothing on the other side of it. There’s ego or there’s falling asleep or there’s constantly checking a phone. Um, there’s no real thought going behind it. I had an observer once who was a seasoned operator. Public company CEO. And the only advice that this person could give me with respect to sales was like 10 years old. And it wasn’t appropriate for the moment that we were in with respect to maybe exploring a bottoms up motion or, or different ways of pricing or so on and so forth. Um, and so I don’t see them showing up with the same kind of preparedness that I show up.

but to your point, those two get highly conflated. Even Logan has spoken about, you know, helping the founder it’s if the board meeting is to get an update on the company, then that’s exactly what the meeting should be. And I can get that done in 30 minutes flat. If you want to give me advice or help me to grow things or figure out problems, then let’s do that separately. But all of that gets lumped into one giant meeting. That’s a major stress ball and takes weeks to prepare for.



JERRY: I told her not to take Sequoia’s money. I did. I think if the company is doing really well, Sequoia is a great partner. But the first hiccup, they’re an awful partner. That’s just been the experience that every founder I know who’s worked with in his head, I can say it, she can’t say. 


It is all personal!

LIZ: I want a relationship with somebody, somebody that can pick up the phone and say, Hey, I’m having a problem. I want to be able to cry on the phone to you. Um, and I want to be able to tell you what’s going on in my mind as directly as possible. Oftentimes, that’s not possible in the founder investor relationship, and I found folks get uncomfortable as a result.

And so there’s this tension for me, whereby it is a business relationship. And yet I’m yearning for something more because I am my company and my company is me and my company is my co founders. And so It is by definition personal. And so I need to get to know you personally in order to make this the most productive relationship possible.


On helping founders be psychologically prepared

LOGAN: One of the things I try to get my companies to do is actually org chart out by quarter, by half year, by year of like what it’s going to look like, Hey, here’s the number of AEs we’re going to need. If you say we’re going to do 15 million and 18 months or whatever, uh, that means we need this many people doing this many deals.

And that means we need this many customer support reps dealing with. That amount of business. And that means we’re probably going to need this amount of engineers. And that tends to serve as a forcing function for them to internalize. Holy shit. We need to hire, you know, another 85 people and, oh, sorry, we need to get to a hundred people.

Uh, that means we’re gonna have to hire 85. That means we’re probably gonna churn about 20 percent of that. So that actually means we’re hiring 105 or whatever. That means we’re gonna have to interview 1, 000 people or whatever it is over the course of the next 18 months. Are you equipped for that? And that’s usually a psychological preparedness that forces people into that.


The founder-investor dance

LIZ: in my defense, this, this goes back to the get to a yes or no quickly. So oftentimes if we’re having eight or nine or 10 conversations, I’m getting more and more requests for numbers to be crunched in this way or that way. Or can I get this screenshot or that screenshot in those instances, I find that investors are trying to convince themselves of something and giving you more information is not the answer. The answer is help me to understand why we’re looking for this. Because I’ve opened the kimono. Why aren’t we in a yes or a no yet?

LOGAN: Yeah, that’s interesting. Jerry, do you, uh, agree generally with…

JERRY: We argued about this point during the writing of the book, because I think the more that you can help the investor make a decision, the more likely they are to make a decision in your favor.