What do founders really need?

Whether you are an investor, a founder or anyone else in the start-up ecosystem, the first and most obvious answer to the question may not be completely true. Here’s why:

I was fortunate to be part of a conversation with a group of well-known investors sharing their perspective on the burgeoning start-up ecosystem in India, what it takes to spot a unicorn, how the next decade could be, and so on. Two themes stood out almost like opposing poles throughout the conversation: Potential and Uncertainty.

Let’s look at the same words from the other side.

For most start-up founders, getting funded or moving up the series letters is the rainbow on the horizon. It represents the fulfilment of a promise, the opening of new opportunities through the sudden availability of the world’s most valued asset – money. It means they were inspired, prepared and confident enough to tell a story that influenced someone to drop money into might still be a highly risky venture. Therefore, funding is also a great validation of self-esteem. So, it should be all good, right?

Not quite.

A raw social experiment

Among so many other things, a start-up is also a social experiment we are in the very nascent stages of learning to navigate. Besides the market and technology, it involves human beings and they don’t quite work the same way like a piece of expertly written code. We are complex and full of contradictions.

So what, you may ask.

An activity like funding represents a major transition for a start-up. Whenever we go through such events, our brain and our entire nervous system needs some time to reset to a new normal. Yesterday, the company was wondering how to pay the coffee vendor. Today, someone gave them a million dollars. That is a HUGE change. We can act cool and push forward, but the truth is, these things take time to settle in.

Why?

Knowing how the brain works

Our brain has three parts. The reptilian brain that controls our physiological needs (like food, rest, sex etc), the emotional brain that controls how we interact with our social environment and the rational brain, which watches over and does all the conscious, logical actions. If you are reading this, you are engaging the rational brain. When you are in a heated debate about your product-market fit, another part of your brain can easily take over.

A balance of these three is essential for us to be ‘normal’ in any set of circumstances. The influence of the older parts of the brain on our behaviour is far more than we realise. After all, as a species, we only got used to industrialization as a paradigm in the last hundred years of our nearly 300,000 year old evolution. Now, consider start-ups in that perspective; then start-ups in India, and now, an uncertain ‘post-pandemic’ era.

When founders are going through a major transition, they are working their way through quite a mess. One part of their brain tells them something, while they do something else. The research shows that under stress, the emotional part can overtake and overrule our conscious actions. This is why we get out of difficult conversations and realize five minutes later that we should have said or done something else. We had the answer, but it was unavailable at the time.

What is the mess about?

Simplified, it comes down to three basic human needs which get triggered in a major transition. They are Safety, Belonging and Contribution; usually in that order.

The most important assertion of this article is this:

When our basic needs are threatened, we can become incapable of logical, reasoned thinking and action. That doesn’t mean we are incapable. It simply means we need to slow down and look beyond the obvious.

What we’ll explore next is evidently not about every funded startup, but if uncertainty and pressure, cross their zone of tolerance, chances are some or all of these could show up, in varying levels of intensity. Knowing about them is useful to take action that can be empathic and impactful.

Safety

The emotional brain does not know the difference between psychological and physical safety. In other words, a serious social threat is responded to in the same way as the threat from a hungry tiger. As soon as the funds are in the bank, the unspoken fear every founder has is this:

Will I be replaced?

Will the investor manipulate us?

No one says this (or even admits to themselves), but it lingers at the edge of unfinished sentences. There is always a question of whether they are considered good enough to lead the company to the next stage, especially if they don’t have some prior skin (equity) in the game. Alongside, is the fear of the core ethos of what they birthed getting compromised in the interest of the next ‘exit’.

This may show up as different kinds of behaviours such as - saying yes when they mean no, not disclosing information transparently, resisting offers to help etc.

These are not tantrums – they are signs of a human being feeling threatened. We could argue that they are adults and that they should learn to handle it. Most often, they do but if safety continues to get threatened, the reptilian brain can kick in as more stress hormones enter the system. This means – disturbed sleep, eating disorders, manic episodes and other serious concerns which need professional care and help.

The human system can be as fragile as it can be resilient.

Belonging

Once a big chunk of funds come in, it can change the social dynamics between the co-founders and they need to be grounded again. Sensing what could be possible with the resources, people can go in different directions and consequently, find themselves asking:

Do I belong here?

Am I valued and respected for what I bring?

Here’s an example. One of the co-founders may suddenly insist on changing the technology stack in the long-term interest of having a robust product and make a passionate case for it. Let’s say that proposal gets over-ruled in the interest of shipping the product and entering the market at the right time – well done. If not addressed respectfully, that co-founder can become resentful and be the roadblock for everything else going forward. Politics, appeasement tactics, threat mongering, doomsday thinking – all of these could be signs of someone lashing out for feeling excluded. With continued neglect, it can lead to co-founders leaving or worse, litigation.

Knowing we belong to our ‘tribe’ is a fundamental human concern.

We are mammals first; everything else later.

This is why culture can eat strategy for breakfast.

Contribution

As the company grows and stabilizes, teams get larger, processes become reliable, technology settles down and the role of the entrepreneur starts to diminish. This is when the contribution questions can show up, such as:

What am I being of service to?

What does all this mean to me?

Some founders could feel a sense of alienation as things get more systematized and their direct involvement in day-to-day decision making is reduced. This is the time for them to have a rethink about what it means to lead in the present context of their company.

It is somewhat similar to a parent’s confusion when their toddler grows up and becomes a teenager. How do you care and support them when you no longer know what that means?

At this point, it is probably useful to remind ourselves that the same things apply on the other side of the table as well. Any new investment for an investor is also a transition for them and, they too can be perturbed by concerns related to their own safety, belonging and contribution.

However, with their previous experience and, the fact of working with a portfolio of companies ‘distributes’ this risk for them. Therefore, they can stay balanced and engage in the logic and numbers game for a lot longer.

What can be done?

For start-ups and especially those being funded for the first time, this transition is a major threshold. One where they need to be willing to embrace their vulnerability and trust those that have trusted them. That can only happen if their uniqueness is acknowledged and celebrated.

When that happens, a shared vision can emerge for the transition, that both parties could invest into. Safety would be restored, people would feel like they belong and are called upon to contribute.

Somajna offers interventions to start-ups and investors for precisely achieving this objective. It’s not an instant noodles recipe, but something we can see taking shape in front of us as a compass for the future.

So, at the end of the day, it may just turn out that the founders (and their investors) need the same things after all.