On Elevating our Founders
May 16, 2023
Re: Q1 2023 LP Update
On Elevating our Founders
This is an intense period for many of us and many of you; and our entrepreneurs are no different. Our team has dedicated immense time and energy this quarter in service of our founders. We got into this business because we believe by exercising Vine’s hands-on and bespoke approach to early-stage investing we can move companies further up the power law distribution curve and generate superior venture returns. Working closely with founders is something we have done since Vine’s inception. In the current business environment for startups – one defined by volatility in demand and uncertainty in financing – these conversations and the decisions being considered to create stability (by managing talent, finances, product breadth) and architect scalable growth (by managing customer acquisition, spending relative to milestones, fundraising) carry more urgency and importance.
It is our belief that founders, like all people (and perhaps even more so due to their passion), will ultimately do what they want to do. We have partnered with them because after a thorough process (albeit often in sprints of a dozen meetings in the span of two to three weeks) we have established sufficient belief in their vision, faith in their judgment, and confidence that the size (and risk) of the opportunity will yield an outsized return. Like in any partnership, we seek to be heard and (as fiduciaries) have agency in the direction of our shared investment. Relative to founders, our minority ownership places natural limitations on our agency. We believe we have at most ~10% influence (sometimes more, sometimes less) on a founder’s decisions.
We do not take this responsibility lightly. We devote substantial time to our entrepreneurs over the first 180 days of an investment because we want to set the tone for the relationship. The likelihood of our future recommendations being heard (and acted upon) goes up if from the outset we fulfill commitments, deliver on promises, and demonstrate reliability. This begins with monthly strategy calls, introductions to hires, advisors, and customer leads, and eventually evolves into coaching (sometimes in fleeting moments, sometimes routine).
When the latter happens, it means not only are we executing Vine’s hands-on approach, but we are doing it well. It means we have built sufficient mutuality to discuss the foundations of what makes a person who they are. It allows us to perceive how founders will respond to future stress and be better equipped to support them when the next issue arises (and it always does). If we can do this part of our job well, then we can help the highest agency stakeholders in our investments, the founders, perform at their best.
The good news is that, three years into Vine, by-and-large this is the relationship we have with our founders: exercising our agency constructively, helping individuals move their companies further up the power law distribution curve. The topics we address vary in criticality and duration; and even an action as simple as identifying and introducing a customer for an emerging product requires nuance. Few of these topics were as existential as cash trapped in an account at a closing bank two days before payday. During the March 13-15 SVB crisis, we were involved in many calls, texts, and zooms across the portfolio supporting our founders with cash recovery and management. Below we have listed (non-exhaustive to preserve confidentiality) examples of the work we did this quarter (and are still doing), typically in pairs.
