Being entrepreneurial about entrepreneurship

A conversation with David Booth of On Deck

TLDR: No one is ultimately more qualified than you to judge what particular path to take, or what advice to follow, or what institutions to accept or reject. Just stake awake to the fact that it’s your life on this earth you are building—and then choose accordingly.

David Booth is the quintessential “builder of builders” (BoB): as founder and CEO of On Deck, he is on a mission to “help more people start better startups”. And he’s doing pretty well so far, with 1,000+ companies founded and launched via On Deck programs and going on to raise upwards of $2 billion.

In this episode of the Founder’s Mindset, David joined me and Entrepreneur First (EF) cofounder Alice Bentinck—one of my other favorite BoBs!— for a wonderfully free-ranging conversation about the makings of successful builders, as informed both by his own personal experience and by the patterns he’s observed among the thousands of founders he’s brought together at On Deck:

Here are my biggest takeaways, with relevant snippets from the episode under each (paid subscribers can access the full transcript below).

1. You need the spark of agency

In reflecting on the start of his own personal founding journey, David recalled encountering “lots of little opportunities to… follow conventional wisdom within a system, or to break out and build something outside of that system.” He talked about how this choice shows up everywhere, if you look out for it—even in trivial decisions like “well, my friends and I are going to go to the same music festival as everyone else, or I'm going to organize a house for my friends, and we're going to go have a party there…” One such choice, which he now recognizes as pivotal, came in his first year of university studies:

“Going into university, I actually had like a little bit of a negative experience… and didn't really hit it off with people. And I remember a moment where I actually thought—maybe this is projecting in hindsight, but I distinctly remember saying—‘should I invest in fitting in here, and like joining and climbing the social hierarchy? Or should I go do something else?’ And I did the latter.”

So he went off and started a small clothing company and an events company during his studies, which resulted in making “a bigger, broader group of friends” and eventually “making friends with some of the folks in the hall anyway.”

Looking back on that and many subsequent decisions, David noted a common theme of asking himself, “what is the expected path? Graduate, be a lawyer, be a doctor? Or what is the opportunity to exit that expected path and do something different? And that's how I constantly prompt myself now, and those around me.”

David and Alice both spoke of this spark of agential initiative—this willingness to deviate from the well-charted or conventional path in pursuit of something more ambitious—as a prerequisite to benefiting from the kinds of resources that On Deck and EF provide. But they also spoke about how a lot more people probably have that latent capacity within them than would have been apparent prior to the advent of such communities and resources. Quoting David, “I don't have [the] magic bullet as to how to foster that spirit and drive, more than just to help to get the people who have the smallest spark of it together and help them realize that together.” Alice agreed that “ultimately, it is about bringing people together who can role model for each other what good looks like. I think that can support people who already have this as an intrinsic, but it might be a latent intrinsic. And so the group or the community is the catalyst for that.”

2. Culture is the kindling and fuel

It is no accident that so much of the technological innovation of the last half-century has been concentrated in Silicon Valley. This is not because people living in the Bay Area are somehow innately more agential; it’s because entrepreneurial culture is a massive multiplier of human agency.

How exactly does this multiplicative effect occur?

David shared one personal story from his teenage years that illustrated this effect very concretely:

“There was one moment that I do remember distinctly from, I think I was around 12 or 13. As a young go-getter I started importing iPods into New Zealand, where I was living at the time, buying on Amazon and reshipping to our local eBay equivalent. And it worked for a while, I imported batches of 5 and then 10. And then I got more ambitious and teamed up with a friend of mine, to raise a little bit of money from both of our parents, and buy a really big shipment of iPods on Alibaba. We promptly went to Western Union and sent a lot of cash to somewhere in China, we believe, [which] obviously never turned up again. 

And it was actually what happened next, which was one of the formative moments of my mindset, I believe: upon losing both the business I'd built and the capital I'd invested to go for it, [I] had a conversation with my parents, who took the opportunity to sort of convert it into a teachable moment and say, "this is how businesses can work. And there's this concept of limited liability; what you should really try to do is get back out there and build another one and try to make it back.

And I contrast that to my friend's story, [whose] parents said, "no, you can't lose money like that, you have to go and get a job and earn every dollar and pay us back."

Thus David’s parents had exposed him to a radically different narrative about the meaning of his failed venture—and, by implication, the range of future ventures that might be possible and worthwhile for him—than did his friend’s parents. Listening to this story, I couldn’t help but form a mental image of David’s entrepreneurial spirit burning brighter and hotter, while his friend’s slowly flickered and dimmed.

That said: what if we didn’t have the benefit of entrepreneurially minded parents? Or even if we did, what if we then find ourselves in a cultural environment where exemplars of ambitious entrepreneurship are few and far between? Quoting David again:

“The first chapter of my career was in New Zealand, [and] it's very isolated. And in particular, most of the ambitious people here figure out quite early on that they need to leave to go and capture the opportunity of their lifetime. They've moved to London, Singapore, New York, San Francisco. And so our, you know, the New Zealand diasphora is, around 25% of our population lives overseas. And often that is the most ambitious, you know, successful ones. Which is a problem when you think about people who are going through college and looking for mentors and role models locally and haven't yet had the opportunity to step outside of that fishbowl.

So this is a big part of the answer, and one that David has baked into the community-centered model of On Deck: go where you can be surrounded by inspiring mentors and role models. Speaking about this further, David reflected:

There's a writer I want to shout out, a friend of mine, Henrik Karlsson, in a blog called "first we shape our social graph, then it shapes us"... It just takes the idea of "you are the average of the five people you spend the most time with," and makes it more intentional…. How do you go out and seek out people who you want to draw from culturally? And this has always been something that has inspired me around On Deck; I've said, you know, the best way to get from A to B, is to go out and find a group of people who are all going from A to B, and get on that journey with them.”

What is it about having this community of fellow travelers that shapes your own success? The intuitive answer might be that you get more and better advice on how to do what you’re doing. And that is almost certainly part of it. But there is also a counter-narrative that being “high agency” should mean resisting advice. Shortly before recording this podcast conversation, I’d listened to Lex Friedman’s interview with Marc Andreessen, who, when asked what advice he’d give to aspiring founders, said something to the effect of “founders don’t ask for advice. If you’re asking for advice, you probably shouldn’t be a founder.”

When I quoted this back to Alice and David, they both offered some helpful perspective. I was especially compelled by Alice’s point that Andreessen’s statement best applies to founders already steeped in the Silicon Valley milieu:

“Mimesis is real; like, the idea that the people around you will influence your preferences, choices, desires. And this, I think, is particularly true around founding, and where, if you are based in Silicon Valley, and you're surrounded by the world's best founders, best VCs, knowledge, early startup employees, etc, you will probably learn, most of the time, the right things to do. I think there is a bigger challenge when your ecosystems are much more nascent… If you're in Silicon Valley, and you're like, oh, I don't know, should I become a founder? Should I not? Like, is there someone to hold my hand? You're probably not a founder. If you're in London, or Paris, or Singapore, or wherever it may be, going, ‘Oh, I don't know if I should be a founder or not,’ that's probably a viable question to ask. Because for the entirety of your life, you've had people telling you, ‘do not do that. Do not do that. Go become... an APM at Google, whatever it is, a legible career path. And so… I'm still very much in the same camp as David that the world is missing out on some of its most ambitious, high potential founders, purely because [of the] culture that they're in.”

David built on this further:

“Advice” is often this very explicit, "find the person who knows a thing and can tell you a thing." To me, [what founders need] is much more implicit; [it’s] surrounding yourself with others who have been on similar journeys, who are going on similar journeys. And it's the sort of feeling of being connected into that directional graph, which is actually what you need. And that's what, as Alice says, Silicon Valley has by default, [and] that's what most other ecosystems do not.”

The value of being connected to such a community, David went on, emerges out of every member’s active commitment to getting what they want from it:

“…[O]ur main job is to get the right people in the room, just create the conditions for you to support each other, and then get out of the way. You're not here to learn from us. You know, I'm no expert. We just think of operating within a community as: you need to be selfishly motivated; to the extent that you put value out there into the community, you contribute to it, you host a session, you teach people, because that's actually the best way for you to get the most value from it.”

Alice also eloquently described the “mirroring” function of mentors and community members:

“I would say advice nudges [the best cofounding teams]; it does not dictate their success. The most important advice we give actually is acting as a mirror. So particularly for a team that isn't particularly effective. One of the interesting things about co-founding teams is that, by the time someone gets married, they've usually had multiple romantic partners, and have formed some sort of mental model of what good looks like. Weirdly, with co-founders, most people find a co-founder and are like, "cool! Sign the co-founder agreement, we're all in." So largely, the role that EF is often playing from an advice perspective is saying, I've seen lots of teams, I've seen lots of co-founding teams. This one is not in my top quartile. These are the reasons why: you're not productive, you're talking over each other, you don't seem to have any respect for each other. And so it's more that sort of nearer and nudge of ‘let me give you the context I have, which is I know a lot about what co-founding teams look like, and let you use that information to make the decision for yourself.’ …And it's interesting, watching people who've been on the EF team who've given huge amounts of advice and mirrors and nudges, then found startups themselves: you can't be your own mirror.”

So in sum, what founders—and ambitious innovators generally—often need more than explicit advice is a certain kind of modeling, mirroring, and inspiration that only a community of inspiring exemplars can provide.

3. No substitute for your own judgment

By contrast to these various positive use cases of advice and community, we discussed what it looks like when, apropos of Andreessen’s comment, these resources come to serve more as crutch than catalyst. Here I shared an important difference I’ve observed in how very early-stage founders interact with whatever community or accelerator program is on offer:

There are these two very different approaches that they might be taking: where certain people, they leverage the network, and you see them kind of "turning on"; like, they hungrily take the advice and the resources, and they make it their own, and they do something with it that you didn't even expect. And they go and make these calls that are totally different from the calls that you've discussed having them make, but that actually make more sense than whatever you were originally suggesting. And you just see, okay, they've been activated, the fire has been fully lit within them. Like, maybe you saw the spark and you lit the fire, and now they're off to the races.

Versus, each step is like pulling teeth. Like, you're giving them another thing to do, and another thing to do, and they're coming to you for the next thing, right? That isn't going to work, at least if what you're trying to do is found a company.

We also talked about how this difference in approaches—let’s call them the “epistemically active” versus “epistemically passive” approach—manifests in people’s motivations for starting a company in the first place. For instance, David reflected on the phenomenon where people “seek external validation as a way of outsourcing their own judgment of readiness” to start a company. He continued:

One place this regularly shows up is in very talented people who [are] sort of seeking the next level of credentialism as they go, credibility or badge collecting, if you want to be cynical. I went to a great high school, and then I got into a great Ivy League university, and then I got a job at McKinsey. And then I got a job in investment banking. I went back and did an MBA, and then I went back and, you know, there's always a "next thing." And one thing that I don't have a very strong opinion on, but that I know that at some point, there's sort of... you climb ladders, and then you've learned enough where you need to get off that ladder and go build. Sometimes, in some industry, it actually makes sense to climb further; like, [if] you want to build a FinTech company and go into the depths of finance, maybe it does make sense to go and have a career in banking first. If you want to build something that's like a social app for Gen Z, maybe you should do that when you're 18 or 20. And try and fail a few times. So I don't think is a perfect answer. But there's definitely a connection between people who... don't trust their own judgment, don't put enough weight on their own judgment that "now is the time that I can take the leap and go build." So they'll look for an additional form of validation, additional credential, climb that ladder a bit higher. And for a lot of people, they get stuck there, they get trapped; the "golden handcuffs" are on, you're going to have some mortgage and everything else.”

Resonating with this, Alice recalled how becoming a founder meant having to unlearn her own prior tendency to outsource judgments of “success” to her managers and superiors:

I've always been very ambitious. And at McKinsey, it became clear that the way to succeed was to make your manager love you and get a really great performance review. And then you would get the top rating or whatever. And when I was leaving… I found it very hard that now I was going to be producing work that no one was going to look at. And it took me about a year—and Matt, my cofounder, used to literally just look at my work and be like, "well done, Alice, you've done a great job. This is great!", because I was so desperately missing that kind of external approval that I was doing the right stuff. You know, after about a year, I probably got over it. But, Gena, how much can you actually influence that internal intrinsic motivation?

My answer was that, of course, you can influence it a lot, since I don’t actually believe it is “intrinsic” but rather self-created. And the way you self-create it is by taking the epistemically active approach I mentioned above to whatever it is you’re doing, whether it’s working a job, or going to school, or running a company, or something else entirely. This brought us back full circle to the question of how someone processes advice, including the advice to “take the leap” and start a company:

Did you 1) take the leap because you judged it right? Maybe for terrible reasons; and maybe with a lot of input from a community, from a resource, from On Deck or from EF; but did you judge it based on reasons that now can go and be tested? Because now you're going to try, and you're going to check your hypothesis against the world? Like, you think that you can build it now, but maybe you can't, because there were unanticipated ways that the technology is more complicated, or you realize you need these skills first, so then maybe you go back to school, you course correct; but [whatever happens]: is your judgment ON?

[Likewise], do you take [your mentors’] advice and process it through [your] own very personal context, and say, "Yeah, you know what, I hear you, but like, I'm actually going to go ahead and try it anyway", or, "I hear you, but I'm actually going to stay in school for another two months, because I have a hunch that after I've taken this class, it'll open up this network"; and [you] might actually be wrong, but the fact that [you’re] doing that is a really good sign?

…OR, did you 2) [let the mentors or the accelerator programme do your thinking for you?] We've talked about this, Alice, [how some] people who go through your program, [they] are so excited that they've been accepted into this program; and now they have a stipend, and it's a sure thing for eight weeks where they just are going to be told how to be founders, and... they're going to be on a scoreboard, and they're gonna get their sticker at the end of it, and they'll win the investment committee hearing. And now they're just so completely departed from what it means to be a founder.”

3a. “Validation” versus its counterfeit

Exploring that difference in approaches also led us to revisit a theme that’s often come up on our podcast: the healthy and unhealthy forms of “validation-seeking.” For instance, David spoke of founders needing to be motivated by some mix of “external” and “internal” validation:

“Like, if you over-index for external validation, then you're just going to optimize for the flashy announcements and you're seeking hype over substance, you build this hype deficit that has to be paid down… [whereas] if you optimize for internal validation, like, ‘fuck the haters, I'm right, I don't care what anyone else thinks,’ then you just got your blinkers on and you're not listening to your team, you create a toxic environment…”

I took this as an opportunity to clarify what I’ve found to be a common and confusing equivocation between two very different senses of “validation”:

So I think validation is a term that's used equivocally. I think sometimes when we say "validation,” we mean proof; like, can you validate or invalidate this idea? Like, is there actually a market for this? Are there people who actually are going to pay you for this? Can you build this? Validation from reality, in effect. And sometimes when we use “validation,” we mean another person's impression as a substitute for your own judgment. We mean something that I think is actually a counterfeit of the first thing. We mean, like, well, I want to know that you think I can be a founder, so that I don't have to actually judge it for myself, because I don't trust my judgment, and I don't know how to decide. But you, because you're not me and you don't have my biases, like, somehow you'll be able to tell….

Those to me are fundamentally different sources of motivation... [where] the one easily mimics the other, but can be disastrous to the extent that we're not realizing the difference. And I think with it comes another axis... which is the extent to which you've formed your own authentic vision of something you really want to build. Like, the extent to which there's something that you can say, "I want this to be in the world." Like the kind of Steve Jobs, "I want everyone to have a bicycle for the mind. And I can just almost see, you know, it's going to be beautiful, and it's going to be symmetrical... and it's going to have this nice, lovely touchscreen." Like, "I want to make this thing exist," versus "I'm avoiding a bunch of stuff. I'm avoiding failure, I'm avoiding bankruptcy, I'm avoiding disappointment, in myself or in other people..." To me, that's [also] a fundamentally different motivation, [which is only possible to form if you’re consistently on the premise of seeking genuine validation from reality, not its counterfeit.]

And if… you can actually form your own judgments and trust them enough to act on them, to bet on them, and those judgments are pulling you toward a vision of something you want to make real—then you'll also be able to do the things you're talking about, David, where, like, sometimes you need to [gather more customer feedback], and sometimes you need to [tune everyone out.] Sometimes you need to be a wartime CEO, and sometimes you need to be a peacetime CEO. And sometimes you need to be vigilant because you're about to run out of money... but, like, all that will fall out of these fundamentals of, I'm looking at reality. I'm using my own judgment, and I'm doing whatever it takes to build this thing I really want.

4. Entrepreneurship is not for everyone—but thinking entrepreneurially is.

To the question of whether “everyone should be an entrepreneur”, David said:

“Absolutely everybody should be thinking about their own lives, their own decision trees, in terms of: should I do the thing inside the system? Or should I build the project outside? You know, should I do something different? …Like, every single person in the world should be approaching their lives from a position of, how should I uniquely break the conventional wisdom or the institutional status quo to do a thing that interests me or I find curious?”

As to whether this decisional process should specifically lead you to start a company, “it's a very personal decision, that's a very economic and circumstance-based decision, should I go and do that versus stay in a job?”

The specific decision to start a venture-backed company is one that makes sense for a only a relatively small number of people who find themselves in certain relatively specific circumstances. Quoting David:

“the people who choose to step up and take substantial amounts of venture capital money and take substantial swings, do need to [be able to say]: by taking this capital, I'm making a commitment to myself, to my team, to my investors, that I'm going to really step up and take a swing. And to be aware that that will come with pain, that will come with a long-term time horizon, that will come with a set of expectations of you, both internally and externally. And that that is not for everyone.”

By contrast, David also spoke of the increasing number of founders in his community who are starting their own companies by bootstrapping (i.e., using their own funds) instead of seeking external investor funding:

“A lot of those—and this is refreshingly more of a trend of late—a lot of those people who do go on to start companies are thinking more about bootstrapping them. And maybe they're a freelancer, maybe they're a creator, maybe they're building a small, vertical SAAS business online or a small tech-enabled service locally.”

…More common among repeat founders, people who have perhaps some of their own capital to start with, maybe they come from a position of privilege, others coming from a position of, well, I don't need to raise as much anymore because I've got AI at my disposal, I've got smaller, more highly leveraged teams, I've got, you know, a faster route to revenue coming in.

Alice elaborated on the tradeoffs involved in starting a venture-backed company, particularly with the changing economic landscape:

If you're taking venture capital money, you sort of have to increase your risk of failure. You know, VCs will only invest in a company where they believe that there is a small chance of a massive return. And for VCs who have a portfolio, they don't care if 90% of their portfolio fails. And I think often venture capital is seen as the glossy glamorous route. And we, we build venture backed companies; EF is venture backed. But it is a very different route to build companies. And we're recording this in 2023. I'm very curious to see what happens over the next couple of years. The venture capital market has changed, its contracted significantly. And the push now is to build businesses that can generate revenue and generate profit. Now, if you aren't used to work with VC-backed businesses, you might say, "Hang on a minute, isn't that what business is about?" For the last decade, it's been a push for growth, growth, growth at any cost. And I'm curious to see what will happen to the type of founders that start coming into founding high growth businesses where there's just a slightly different onus on what the business has to do: "I need to build something that people want pretty fast in a way that makes money."

This resonated with David, who reflected on how On Deck’s business model has positioned it to be more focused on supporting the individual and their journey than the company:

There's something which, more by accident than by design, when we reflect on the OnDeck journey, we've designed ourselves such that the individual and their journey is our focus, as opposed to the company. And what that allows us to do is take a cohort of people, say 100 people, and help them, or help build a community that helps them, rather, find the right outcome. Now the right outcome might be selling the company, but it might also be shutting down the work they've done so far and joining someone else's company, it might also be getting another job, it might also be being an angel investor, starting a not-for-profit; all of those things are deeply aligned with our interests.

Adding his own reflections on the changing economic landscape and how it is shaping startup culture, David observed of the most recent On Deck cohort:

“My quick take is that the need for very early stage ‘get off the couch’ capital increases, because most people don't have the ability to sustain themselves for 3 to 12 months, while they get that initial product-market fit; I think that the need for huge amounts of growth capital for a small number of frontier businesses increases; more companies that need to load up on GPUs, or do innovation in atoms, building things in the real world; but that is a decreasing segment of the total number of companies started. [And then] there'll be this huge increasing segment of companies that might need that initial capital, but don't need anything beyond that. And I'm really, really curious to see how the market evolves to respond to that, whether it's a new form of financing, [or] whether it's a new set of institutions and credentials that come along with it.”

In sum: entrepreneurship, in the narrow sense of running your own business (much less your own venture-backed business), is not for everyone. Indeed, the very meaning and standard model of “entrepreneurship” is a fast-moving target.

What is for everyone is thinking entrepreneurially—actively, deeply, rationally, from first principles—about whether and what kind of entrepreneur you want to be. For some people, in some circumstances, this might mean taking a job within a well-established institution like McKinsey; for others it might mean going outside established institutions and starting something new, with or without investor funding; for others it might mean going to school, or taking time off to raise kids, or waiting tables to make ends meet while learning to code or auditioning for acting roles or working on a novel. No one is ultimately more qualified than you to judge what particular path to take, or what advice to follow, or what institutions to accept or reject. Just stake awake to the fact that it’s your life on this earth you are building—and then choose accordingly.

Full episode transcript with timestamps (paid subscribers only):

Alice Bentinck  00:23

Welcome back to the founders mindset. The podcast where we deep dive into the psychology of founding a company through the personal stories of the founders themselves. I'm Alice Bentinck, co founder of entrepreneur first, where we invest in individuals to help them find a great co founder and divide their ideas into a successful startup. I'm joined by Dr. Gena Gorlin, a clinical psychologist, founder coach and faculty member at the University of Texas at Austin, who's been collaborating with us to better understand and support the psychological needs of early stage founders. Hi, Gena.

Gena Gorlin  00:54

Hi, Alice. In this episode, we had the pleasure of speaking with David Booth, the founder and CEO of OnDeck, a curated community designed to increase your odds of building a successful venture-backed company. Now, if you're thinking that sounds a bit similar to Entrepreneur First’s mission, you wouldn't be far wrong. Both organizations share a belief that the world is missing out on some of its best founders, and a passion for catalyzing globally important companies by reducing the barriers for the world's smartest and most ambitious people to go and found them. In this conversation, we talked about how David's parents raised him to be entrepreneurial from an early age, why founders need community before they need advice, the mistake of seeking external validation and credentialism as a way of outsourcing your own judgment of readiness, and a lot more besides. So without further ado, here's our conversation with David.

Gena Gorlin  01:47

Thank you so much, David, for joining us. I would love to just jump in with your personal story. Because, as we know, you're both a founder and in a sense a meta founder, right? As someone who—and I know Alice can really relate to this—as someone who founded a company for founders, we can learn from you at two levels: we can learn from your own personal story. And we can learn from just all the accumulated pattern recognition and what you've learned about your customer, in running your company. 

So could you just tell us first a little bit about how you ended up founding OnDeck, how you ended up as a founder yourself?

David Booth  02:25

I'd be happy to and thanks for having me. I agree, to start with, there is something very meta about building a company that builds companies, and hopefully that chain continues forevermore. I often describe OnDeck as my life's work. It's a culmination of a lot of different threads throughout my career, a lot of different early influences, a lot of sort of the "be the change you want to see in the world." For me, I had a lot of early influences that we discussed in the past that I think have sort of helped to set my mindset around building as opposed to “working,” from a very early day. 

There was one moment that I do remember distinctly from, I think I was around 12 or 13. As a young go-getter I started importing iPods into New Zealand, where I was living at the time, buying on Amazon and reshipping to our local eBay equivalent. And it worked for a while, I imported batches of 5 and then 10. And then I got more ambitious and teamed up with a friend of mine, to raise a little bit of money from both of our parents, and buy a really big shipment of iPods on Alibaba. We promptly went to Western Union and sent a lot of cash to somewhere in China, we believe, [which] obviously never turned up again. 

And it was actually what happened next, which was one of the formative moments of my mindset, I believe: upon losing both the business I'd built and the capital I'd invested to go for it, [I] had a conversation with my parents, who took the opportunity to sort of convert it into a teachable moment and say: "this is how businesses can work. And there's this concept of limited liability; what you should really try to do is get back out there and build another one and try to make it back."

David Booth  04:16

And I contrast that to my friend's story, [whose] parents said, "no, you can't lose money like that, you have to go and get a job and earn every dollar and pay us back." And I was actually reflecting [on that] story with my parents recently. I’d forgotten this entirely but my father reminded me of what my comeback business was, which was this idea that—apparently our house needed painting. And my father had had some quotes come in from contractors, [and] he gave me an offer to bid against the contractor. No favoritism, he said: the price has to be competitive, the quality has to be on par. I have to buy my own equipment, buy my own supplies, hire my friends. And [I] did that, and ended up making four or five times [more than] the friends who I was paying an hourly rate. And it was like, you know, to a 13-14-year-old, a very, very clear life lesson, certainly one that I've been reflecting a lot now as a parent and how to create the kinds of conditions that foster that kind of learning environment, without necessarily having to have the adversity (that's nothing, nothing that any parent wants to create). But it's a kind of position that I certainly think a lot about.

Alice Bentinck  05:27

I mean, kudos to your parents! I feel like we need, how can we encourage more parents to take that approach? 

One of the things that we talk a lot about is the founding career path. And this idea that so often people see founding as a moment in their lives, and they take that one attempt at being a founder, and it either goes brilliantly, and they become Mark Zuckerberg, or they fail, and they never do it again. Whereas actually, as you say, founding is something that you try multiple times over your life, and hopefully you get better at it, the more you try and [the] more experience you have. And your parents did use such a service to basically teach you that the founding career exists and is aspirational and a great thing to be part of, rather than your friend, who had his one moment as a founder [at] age, what were you 16-18?

David Booth  06:09

Earlier, I recall it being 13 or 14.

Alice Bentinck  06:12

Oh my goodness, that was just one founding moment. I think so many people see it that way. Whereas really you have shown it's a career path.

David Booth  06:21

So I think there's something to that. And the way I reflect on hindsight, [there] are lots of little opportunities to, what is more commonly known in the tech sphere as exit versus voice, or to sort of, to follow conventional wisdom within a system, or to break out and build something outside of that system. And when you really get into the details, there are so many opportunities, whether it's like, well, my friends and I are going to go to the same music festival as everyone else, or I'm going to organize a house for my friends, and we're going to go have a party there. Yeah, for the New Year's holidays, the classic thing in the southern hemisphere, anyway. I think that I had a few of those moments. And I've shared some of this with Gena in the past as well. But going into university, I actually had like a little bit of a negative experience. When I first landed there, at a University Hall, many others straight out of school, I'd taken a gap year, I thought I was better and different and didn't really hit it off with people. And I remember a moment where I actually thought—maybe this is projecting in hindsight, but I distinctly remember saying—"should I invest in fitting in here, and like joining and climbing the social hierarchy? Or should I go do something else?" And I did the latter. And I, I started a small clothing company and an events company while I was studying. And I made a bigger, broader group of friends as a result. And it all worked out: I wound up making friends with some of the folks in the hall anyway. But it was that moment of, like, what is the expected path? Graduate, be a lawyer, be a doctor? Or what is the opportunity to exit that expected path and do something different? And that's how I constantly prompt myself now, and those around me. And I don't think there's any one single answer, but I hope to see more of that.

Alice Bentinck  08:13

It's such an interesting thread, isn't it, of how hard it is to take the non-legible path, because you're not just doing something different, you're actually—as you say, and so beautifully articulated—you're rejecting your peers; like, you're basically rejecting the opportunity to make friends with them. And in some ways, commenting on their lives to some extent, as in by you not joining in with I don't know, whatever the boozing or party culture or whatever the university culture was, where you're at, you're slightly making a comment on that, and it does make it harder to fit in and have the normal peer structure that I suppose is expected. Harder for your parents, harder for... So it's just interesting how there are so many barriers to not taking the normal, legible career. And actually you need a reasonable amount of... well, I suppose what do you think it is? David, what do you think that you had that meant you were happy to push back on on the legible, normal, usual, whatever, you know, path?

David Booth  09:11

I mean, in many cases people don't have a choice; maybe I just wasn't cool enough [laughs]. So I had to take the other path. But more serious, more real examples [are] people who don't have the privilege of going within the existing system; they can't get into the right college, they don't have the right capital or backing or support system in their lives to follow the conventional wisdom, so they have to—you're a new immigrant to a new country, you've... dropped out, for whatever reason. So I do, and this is something where, Gena, I'm sure there's a more intellectual approach to it. But the idea of the outsider, the individual with a chip on their shoulder or something to prove. There is a thread I'd love to pull around the desire for acceptance, whether it's acceptance from your peers, or acceptance from your expectations of yourself, whether it's an internal or an external motivation that drives an individual to do something that could be seen externally as more ambitious than otherwise. But to them, it might have actually been, like, the only way.

Gena Gorlin  10:23

Yeah, I'd love to pull on a few things about that one. It's interesting to hear you describe it as a kind of almost forced choice for the misfits, for the outsiders, for the immigrants. Because the way I see it, there are many, many, many more misfits who don't become founders than who do. The vast majority of people who don't fit in college, who experience adversity, don't become entrepreneurs. Just as the vast majority of people generally don't become entrepreneurs. What's hard about becoming entrepreneur, like, it's never a default. Right? And I think there's a version of the story where we could almost see it as, well, if you can't do any of these conventional things, I guess, what you're left over with is go found venture backed startup. But, that's never the default. And I think part of what's so hard about it, is that, unlike all those conventional paths, where you could have been a doctor, you could have been a lawyer, you could have fit in in these ways, like, this path hasn't been charted for you. Now, you both, with your current ventures, are trying to chart a path to some extent; you're kind of creating playbooks, you're creating frameworks, you're creating a community to make it a little bit easier to kind of mimic the kinds of subcultures and standard progressions and even status hierarchies that we have in other fields that are already established, such that someone could decide, oh, I guess this is something I'll try. I'll try to be a founder. Right? But I think it's like, there's something about it that still doesn't fully describe the journey. And I can't help but think of, I was just listening to an interview with Marc Andreessen, mostly about AI. But he said in passing something that has kind of been haunting me ever since, especially given the work a lot of us are doing, which was in effect: Lex Friedman asked him, so what advice would you give to people out there who might want to be founders, or you know, like young aspiring founders? "Well," [Andreessen said], "if they need advice, they probably shouldn't be founders." Like, founders hate advice. They don't take advice. They don't care what I have to say; like they're doing it for reasons of their own, and they've got, they're on their path. And your story, David, reminds me of, like: what your parents in a way taught you was, don't assume that you have to do it this way. Like, there's this other way to do it, right? Like, go and try stuff.

David Booth  12:50

I love it. Yeah. And I mean, to your earliest question about, sort of, "why," I think EF and Alice and Matt deserve a lot of kudos for their work over the past decade. It's been inspiring to see. I mentioned On Deck, to me, is a combination of a lot of different threads. To me, like, the bulk of my career has been spent building products for founders to remove friction from their journeys. I landed at AngelList in early 2014, leading the syndicates product, helping scale what is now the funds product, and build the momentum around that ecosystem. I jumped to Carta as the head of international growth, helping founders manage their cap tables on the thesis, the principle that if they could bring, you know, have a record of ownership of truth of the company, then they could better incentivize employees, raise capital, bring liquidity into private markets. Along the way, there's been so many opportunities to... take founders, people who have already opted into this crazy journey, and help them accelerate their journey. But there was never really anything along that journey that was saying like, how do you solve getting more people in the funnel in the first place? And I do remember, so I'd moved to London in 2014-15. And I remember being very inspired by EF at the time, and thinking that for all of the incredible value you create, it still requires a huge commitment to take the leap to join. And meanwhile, my friend Erik Torenberg had announced On Deck and launched this community, where we were like, the specific problem we wanted to solve was just to create some magic at that moment of vulnerability when you're thinking about leaving your job to start something. You haven't quite taken a leap. And you're not quite sure if, I mean, maybe you do have very high conviction and the idea, but you're not quite sure about the people you're working with. You don't know where your first customers are coming from. Like, what is the community we can build right at that very moment that can help more people take the leap with the right initial founding team, the right initial group of advisors and investors, possible customers around them? And it was just that for, you know, two or three years: it was a community. It was no business, no fund, no anything else, just, like, different people like myself benevolently motivated to host these dinners every month. So a lot of, you know, what's flowed since then, and really, a lot of what we've brought everything back to today, comes back to that same idea of, you know: we (and I think we're very aligned in this) think that... startups are one of the highest leverage ways of creating an impact in the world, more people starting more companies is a good thing, but we want to make sure that they work... have the right community around them from the very early days when they get going, in part to solve, as you said, Gena, like: why aren't more people doing this? What was missing from their lives when they didn't take that leap?

Gena Gorlin  12:51

Yeah, and part of what I want to explore and maybe push on is, how many people should be doing this? Because, I've really resonated with both of your missions, right? I mean, I've done work with EF. And I'm just so thrilled at the fact that companies like yours exist, because I do think it ought to be easier than it is right. And I do think that a community and a set of supports and structured guidance can be extremely empowering. I want to see that in the world. And I'm often faced with this tension: that it's so easy for it to become school-ish, so easy for it to seem easy. And I know, I mean, we've talked about this, Alice, with people who go through your program, who are so excited that they've been accepted into this program. And now they have a stipend, and it's a sure thing for eight weeks where they just are going to be told how to be founders, and... they're going to be on a scoreboard, and they're gonna get their sticker at the end of it, and they'll win the, you know, investment committee hearing. And now they're just so completely departed from what it means to be a founder. And I think there's ways EF has been pushing back on that tendency. But I don't think it's EF's fault; I think it's inherent, it's just such a natural default. And, and I think we have to kind of think about that: like, how do we convey the ways in which this is hard and a choice? And perhaps help people make the choice in either direction, right? Like, are there people to whom we should be saying, maybe don't be a founder, because you're not in it for the right reasons?

Alice Bentinck  16:49

Well, just to link this to the Marc Andreessen comment that, you know, the best founders don't need advice: mimesis is real; like, the idea that the people around you will influence your preferences, choices, desires. And this, I think, is particularly true around founding, and where, if you are based in Silicon Valley, and you're surrounded by the world's best founders, best VCs, knowledge, early startup employees, etc, you will probably learn, most of the time, the right things to do. I think there is a bigger challenge when your ecosystems are much more nascent. And where there's a lot of information out there that probably isn't quite right about how you start a startup, a lot of what you absorb from people around you might not actually be best practice. So I think the kind of Marc Andreessen perspective is very, very Silicon Valley focused. 

Alice Bentinck  18:30

And I would say this is true for the comment around who becomes a founder. If you're in Silicon Valley, and you're like, oh, I don't know, should I become a founder? Should I not? Like, is there someone to hold my hand? You're probably not a founder. If you're in London, or Paris, or Singapore, or wherever it may be, going, "Oh, I don't know if I should be a founder or not," that's probably a viable question to ask. Because for the entirety of your life, you've had people telling you, "do not do that. Do not do that. Go become... an APM at Google, whatever it is, a legible career path. And so I do think, you know: I'm still very much in the same camp as David that the world is missing out on some of its most ambitious, high potential founders, purely because [of the] culture that they're in. Now, I do not think everyone should be a founder. And, David, I'm interested in your perspective on this as well. I think there's a very small number of people worldwide, who can be a globally important founder. But, still not enough of them are even trying.

Gena Gorlin  19:22

That's a really good point, Alice. And, just to connect the dots and then I want to hear from you, David: it's not an accident that you told us that story, David, of how one of your formative experiences was getting a certain message from your parents early on about what's possible and what's okay to try. So I think, speaking to your point, Alice, the messages that you internalize from your culture matter.

David Booth  19:51

There's a writer I want to shout out, a friend of mine, Henrik Karlsson, in a blog called "first we shape our social graph, then it shapes us"... It just takes the idea of "you are the average of the five people you spend the most time with," and makes it more intentional. And introduces this idea of a milieu, which, Gena, you are part of my extended parents milieu. It's like the word that internalizes... It's the particular set of cultural inputs that influence us, and makes it more intentional. How do you go out and seek out people who you want to draw from culturally? And this has always been something that has inspired me around On Deck; I've said, you know, the best way to get from A to B, is to go out and find a group of people who are all going from A to B, and get on that journey with them. And that was a thesis that guided our growth through 2020-21, mid-pandemic, [when] everyone is out there, locked down and sheltering in place, and lacking the opportunities to connect with others who are founders leaving their, starting their journeys, or scaling, or looking for new jobs, or looking to start angel investing, or all of these other journeys. And so when I look at—founders don't need advice; it's not like, advice is often this very explicit, "find the person who knows a thing and can tell you a thing." To me, it's much more implicit, [it’s] surrounding yourself with others who have been on similar journeys, who are going on similar journeys. And it's the sort of feeling of being connected into that directional graph, which is actually what you need. And that's what, as Alice says, Silicon Valley has by default, [and] that's what most other ecosystems do not. And I particularly feel that, having been from New Zealand, the first chapter of my career was in New Zealand, it's very isolated. And in particular, most of the ambitious people here figure out quite early on that they need to leave to go and capture the opportunity of their lifetime. They've moved to London, Singapore, New York, San Francisco. And so our, you know, the New Zealand diasphora is, around 25% of our population lives overseas. And often that is the most ambitious, you know, successful ones. Which is a problem when you think about people who are going through college and looking for mentors and role models locally and haven't yet had the opportunity to sort of to step outside of that fishbowl. So there's a real, real opportunity in that.

Gena Gorlin  22:20

I feel like, maybe a distinction to be made, is between a supportive environment, an ecosystem, that nurtures a certain kind of agency, versus a supportive environment of the sort that removes or creates the illusion that you don't need that agency; or that kind of creates a cheap substitute for agency. And I think I've seen both. And I think it's really subtle how a given person interfaces with an ecosystem. And you can kind of tell that there are these two very different approaches that they might be taking: where certain people, they leverage the network, and you see them kind of "turning on": like, you see them as like, they hungrily take the advice and the resources, and they make it their own, and they do something with it that you didn't even expect. And they go and make these calls that are totally different from the calls that you've discussed having them make, but like actually make more sense than whatever you were originally suggesting. Right? And you just see, okay, they've, like they've been activated, the fire has been fully lit within them. Like, maybe you saw the spark and you lit the fire, and like, now they're off to the races. Versus, like, each step is like pulling teeth. Like, you're giving them another thing to do, and another thing to do, and they're coming to you for the next thing, right? That isn't going to work, at least if what you're trying to do is found a company. I'm curious if the two of you have seen these two approaches? And you know, if you could just comment on the difference and maybe how you can tell?

David Booth  24:03

I mean, I've certainly seen it, I wish I had a better answer for how to foster it. I think that would be the the magic bullet, if there were one. The only thing I know that we can do for sure is identify it in every category, or at least make our best effort at identifying it in applications and qualification criteria. And also in setting the cultural values for people who may not even realize that they should be operating in a certain way, to sort of come out as a group. One of the things I say a lot is that our main job is to get the right people in the room, just create the conditions for you to support each other, and then get out of the way. You're not here to learn from us. You know, I'm no expert. We just think of operating within a community as: you need to be selfishly motivated, to the extent that you put value out there into the community, you contribute to it, you host a session, you teach people, because that's actually the best way for you to get the most value from it. It's one of the cultural components. So yeah, I'd love to hear from Alice on this as well, because I think this is a really critical, really core component to EF. I don't have, like I said, a magic bullet as to how to foster that spirit and drive, more than just to help to get the people who have the smallest spark of it together and help them realize that together.

Alice Bentinck  25:33

I love that point that, ultimately, it is about bringing people together who can role model for each other what good looks like. I think that can support people who already have this as an intrinsic, but it might be a latent intrinsic. And so the group or the community is the catalyst for that. Can you inspire people who don't have that? I mean, probably; now, and I say this as a parent—I think we've all got young young kids—probably goes back to parenting, right? And, like, how we were brought up. And that's pretty hard to fix when we meet them in their 20s.

David Booth  26:10

One way that, as I say, when you think about interviewing, qualifying, taking... and any investor, whether it's EF or YC or a fund, one of the things they've got to do is really try to get under the skin of the founder and understand what drives them. And I sort of had an epiphany, I suppose.... Around three or four months ago, I've been a part of this group called Leaders in Tech, which—shoutout to them, I'd recommend them for scaling stage founders who want to invest in their interpersonal skills, and understanding and managing group dynamics—and one of the things that sort of sitting there in this room and observing this group of 14 other late stage founders, all interacting, all sharing a lot of sort of the raw emotion of what drives them: there was actually this clear differentiation within the room; there was a couple of people that were clearly driven by more of an external validation or acceptance, like... "my family looks up to me and respects me, and my friends think I'm killing it; I need to keep killing it, because everyone thinks I am." We had another person who I distinctly remember having this, like, internal validation, drive for will power, "fuck-the-haters," "I'm just going to keep doing what I'm doing, because I think it's right." There was another one again, who was driven by this, I'd call it, external invalidation, or like this idea that people were out to get him and I need to squash them, like, squash that lawsuit. I'm gonna prove them wrong. But that coming from a sort of a place of pride as opposed to willpower. And then certainly I think, in other scenarios, I've seen almost like, a sense of, like, desperation, and not necessarily in this group, but, like, "I need this to work." Otherwise, my Visa isn't valid, I've got to move home, otherwise my family won't be s-. 

David Booth  28:13

So I plotted this on this 2 x 2 of external versus internal motivations, and validation or acceptance versus invalidation or fear. And I've started mapping a lot of that. And... it was actually that moment that I reflected on it myself and realized that a lot of founder burnout that I've experienced, I certainly have, and seen out there comes from over-indexing on any particular one of those. Like, if you over-index for external validation, then you're just going to optimize for the flashy announcements and you're seeking hype over substance, you build this hype deficit that has to be paid down. If you over-optimize for external invalidation or fear, then you wind up just watching your competitors and like you're living in fear of someone catching up, you're like the cyclist riding, you know, looking over their shoulder instead of the path ahead and going off a cliff. If you optimize for internal validation, like, "fuck the haters, I'm right, I don't care what anyone else thinks," then you just got your blinkers on and you're not listening to your team, you create a toxic environment, demotivating. If you're operating from a place of fear, or defensibility, then you end up optionality-maximizing: you're trying to come up with insurance plans, but before a plan is even figured itself out. You're trying to come up with Plan B. And I've experienced and lived all of those. And there was, there was actually the moment of just being aware and reflecting on them and being able to rebalance them and say, "Well, I've over-indexed on optionality here. So what does it look like to lean into willpower?" And for me, there was some degree of insight from that that led to helping in conversations, before you can give advice to somebody about a specific situation that might be in their life, trying to go a level deeper and understand what's actually motivating them to go into that decision. So not sure if that that feeds back into the question you had, Gena. But it's certainly been a useful framework for me.

Alice Bentinck  30:26

Just to comment on that, it feels like a big theme of this podcast has been validation seeking, and people trying to work out their true intention and motivation versus what is whoever or whomever they're trying to impress. I wonder if this is just thinking about like malleability of different founder characteristics. I'm interested to hear your thought on this. My feeling is that, I'm largely speaking from personal experience, this one feels more malleable, in that... when I was leaving McKinsey, I've always been very ambitious. And at McKinsey, it became clear that the way to succeed was to make your manager love you and get a really great performance review. And then you would be, like, you get the top rating or whatever. And, and when I was leaving, because I found it very hard that now I was going to be producing work that no one was going to look at. And it took me about a year to—and Matt, my cofounder, used to literally just look at my work and be like, "well done, Alice, you've done a great job. This is great!", because I so desperately missing that kind of external approval that I was doing the right stuff. You know, after about a year, I probably got over it. But, Gena, how much can you actually influence that internal intrinsic motivation?

Gena Gorlin  31:37

Yeah, so David, you and I have talked about this a little bit and could geek out about it forever, I know. As you know, I think a little bit differently about these axes. So I think validation is a term that's used equivocally: I think sometimes when we say "validation," especially in like a startup context, we mean, proof; like, can you validate or invalidate this idea? Like, is there actually a market for this? Are there people who actually are going to pay you for this? Can you build this? Validation from reality, in effect. And sometimes when we use validation, we mean, another person's impression as a substitute for your own judgment. We mean, something that I think is actually a counterfeit of the first thing. We mean, like, well, I want to know that you think I can be a founder, so that I don't have to actually judge it for myself, because I don't trust my judgment, and I don't know how to decide. But you, because you're not me and you don't have my biases, like, somehow you'll be able to tell. Or, like, the Twitter world will know somehow better than me based on how many likes they gave my post, or how many followers I've accrued. Those to me are fundamentally different sources of motivation... [where] the one easily mimics the other, but can be disastrous to the extent that we're not realizing the difference. And I think with it comes another axis... which is the extent to which you've formed your own authentic vision of something you really want to build. Like, the extent to which there's something that you can say, "I want this to be in the world." Like the kind of Steve Jobs, "I want to make a dent. And this is the dent I want to make... I want everyone to have a bicycle for the mind. And I can just almost see, you know, it's going to be beautiful, and it's going to be symmetrical... and it's going to have this nice, lovely touchscreen." Like, "I want to make this thing exist," versus "I'm avoiding a bunch of stuff. I'm avoiding failure, I'm avoiding bankruptcy, I'm avoiding disappointment, in myself or in other people..." To me, that's a fundamentally different motivation. 

Gena Gorlin  33:52

And if you have the first two—if you have the kind of first handed, if you can actually form your own judgments and trust them enough to act on them, to bet on them, and those judgments are pulling you toward a vision of something you want to make real—then you'll also be able to do the things you're talking about, David, where, like, sometimes you need to, like, get more focused, nose to the grindstone. Sometimes you need to be a wartime CEO, and sometimes you need to be a peacetime CEO. And sometimes you need to be vigilant because you're about to run out of money and sometimes... but, like, all that will fall out of these fundamentals of like, I'm looking at reality. I'm using my own judgment, and I'm doing whatever it takes to build this thing I really want.

David Booth  34:39

I like where this is going. And I mean, to me that just reinforces the idea of different sources of motivation that you need to draw on and be able to move between at different times based on where you're at in your journey. Based on what the needs are. Do you need to dig deep and draw your willpower? Do you need to pull that all nighter, but from the act of desperation? I love that comment. 

David Booth  35:04

One thing that you shared as well, [is], I think, an individual's desire to seek external validation as a way of outsourcing their own judgment of readiness. One place this regularly shows up is in very talented people who [are] sort of seeking the next level of credentialism as they go, credibility or badge collecting, if you want to be cynical. I went to a great high school, and then I got into a great Ivy League university, and then I got a job at McKinsey. And then I got a job in investment banking. I went back and did an MBA, and then I went back and, you know, there's always a "next thing." And one thing that I don't have a very strong opinion on, but that I know that at some point, there's sort of... you climb ladders, and then you've learned enough where you need to get off that ladder and go build. Sometimes, in some industry, it actually makes sense to climb further; like, [if] you want to build a FinTech company and go into the depths of finance, maybe it does make sense to go and have a career in banking first. If you want to build something that's like a social app for Gen Z, maybe you should do that when you're 18 or 20. And try and fail a few times. So I don't think is a perfect answer. But there's definitely a connection between people who... don't trust their own judgment, don't put enough weight on their own judgment that "now is the time that I can take the leap and go build." So they'll look for an additional form of validation, additional credential, climb that ladder a bit higher. And for a lot of people, they get stuck there, they get trapped; the "golden handcuffs" are on, you're going to have some mortgage and everything else. And the investment banking, salary is a necessity. So there's a sweet spot where organizations like EF, like what I'd love to build with OnDeck, can help people realize the right time to hop off that ladder for them. To help—I would never tell somebody that they should be a founder, but for somebody who is curious, I want to, you know, help them take the leap themselves off of that ladder at the right time.

Gena Gorlin  37:21

Yeah, for sure. And I think there are two very different processes that could lead you to take the leap that might look superficially similar. And you might be wrong on both processes. Or you might, like, accidentally luck in and this is the right time. But: did you take the leap because you judged it right? Maybe for terrible reasons; and maybe with a lot of input from a community, from a resource, from OnDeck or from EF; but did you judge it based on reasons that now can go and be tested? Because now you're going to try and you're going to check your hypothesis against the world, like you think that you can build it now, but maybe you can't, because there were unanticipated ways that the technology is more complicated, or you realize you need these skills first, so then maybe you go back to school, you course correct. But: is your judgment ON? Like when we were talking before about, there's that founder who takes what you give them and then they build on it. And clearly there's a fire that's been lit from within, versus there's the schoolish kind of, okay, tell me the next thing. Tell me the next thing. I think it's the same for, like, what do you what do they do with your advice? Like, do they take it and process it through their own very personal context, and say, "Yeah, you know what I hear you, but like, I'm actually going to go ahead and try it anyway", or, "I hear you, but I'm actually going to stay in school for another two months, because I have a hunch that after I've taken this class, it'll open up this network"; and they might actually be wrong, but the fact that they're doing that is a really good sign. The fact that sometimes they might disagree with you, and then go see the hard way that you were right, is a good sign.

Alice Bentinck  38:57

Which, all this brings us back to Marc Andreessen's comment again, about like, whether founders need advice or not. This, I love this framing, Gena, of the context filter. And, I think founders often feel overwhelmed with advice. Even pre-founders, you know, if you're thinking about quitting your job, the amount of advice you'll get from different very well-meaning very well-intentioned, often people who are highly interested in your life, as in your partner, or family or friends, you will get so much advice from them; but only you know what context filter you want to use. And I haven't thought about it as a context filter before, but I really think that framing is very, very useful. 

David Booth  39:32

I'd be curious if there is any learnings that you could share, Alice, around the structured sort of check-in moments... For example, I've heard in the past from Meta, I think, that one of the most promising signs of a team's future is actually their ability to move really quickly, even if it's not in the right direction. And it's the ability to work really well together, and to, like, they could be going the wrong direction, but they got a lot done. And I wonder if there's a correlation between, or anything you've learned from the advice given to teams that you've seen move really quickly, versus the advice given to teams that aren't moving quickly? Or maybe to correlate that to successful stories, or how you've evolved your interactions with these founders over time?

Alice Bentinck  40:26

Yeah, interesting. I mean, I think the reason why we are so obsessive about productivity for teams is because we build these inorganic teams. So you know, building a startup from scratch, finding a co-founder from a pool of selected individuals, we are obsessive about the quality of those co-founder connections. And the best teams move really fast. The bad teams don't. We were doing investment committee actually, yesterday and the day before. And we just funded a bunch of teams where the idea is definitely... not particularly good. But we think the team is really interesting, and they've moved very fast in a short amount of time. But to your point around the impact of advice, I would say advice nudges them; it does not dictate their success. The most important advice we give actually is acting as a mirror. So particularly for a team that isn't particularly effective. One of the interesting things about co-founding teams is that, by the time someone gets married, they've usually had multiple romantic partners, and have formed some sort of mental model of what good looks like. Weirdly, with co-founders, most people find a co-founder and are like, "cool! Sign the co-founder agreement, we're all in." So largely, the role that EF is often playing from an advice perspective is saying, I've seen lots of teams, I've seen lots of co-founding teams. This one is not in my top quartile. These are the reasons why: you're not productive, you're talking over each other, you don't seem to have any respect for each other. And so it's more that sort of nearer and nudge of "let me give you the context I have, which is I know a lot about what co-founding teams look like, and let you use that information to make the decision for yourself." And so it's often, I think, it is very hard. And it's interesting watching people who've been on the EF team who've given huge amounts of advice and mirrors and nudges then found startups themselves: you can't be your own mirror. And even if you know exactly what you're meant to be doing, you can't be your own mirror; you need somebody to be the person who provides the mirror, holds the mirror up.

David Booth  42:22

That's great. There's probably some law of diminishing returns, how, like, the more somebody proposes to give you specific advice versus, like, be the mirror, help you reflect your own motivations and come to your own realizations. And connected to that would be, founders need some degree of naivete to take on a really hard problem often; like, if you go and find all of the experts in the sector, and ask them about a problem to be solved, they'll tell you all the ways that can't be done. In fact, more helpful is to have somebody who hasn't been disillusioned by all the problems in the field, is willing to charge into it and can have a guide or a coach that can help them reflect and learn and iterate faster, as opposed to have traditional advice come in from an otherwise, you know, trusted, reputable source.

Gena Gorlin  43:10

Yeah, that's great. I mean, the naivete is really interesting. Because coming back to this theme of, what do you assume about the world, and particularly the social world? Like, these are the five careers that are allowed, or I have to be making this much money by this age, because that's what everyone does, or that's what everyone in my family expects; versus, like, the Steve Jobs spirit of realizing "everything you see around you... that you call life was made or made up by people no smarter than you, and you can make a dent, you can change it..." There's so much more that's changeable than you realize. And I think the naivete you're talking about is largely a kind of—like, sometimes in psychology, we'll call it "beginner's mind"; like, being able to strip back some of our default assumptions, and the kind of lenses through which we see the world some of which just may be limiting, may only give us part of the picture. I think it's really a wisdom we're accessing, when we pull back from our kind of dense structure of default assumptions about how things have to be, how this institution has to run. And just start thinking fresh, think from first principles. Okay, but how else could you build a rocket? Or, what if this was just a totally different kind of business?

Gena Gorlin  44:37

To pick up on another theme that feels connected to a bunch of stuff: on the point of that we can hold up mirrors, and we can use our knowledge of existing patterns to provide the accumulated wisdom, of experience and pattern recognition; and that that's really important for especially early stage or first time founders to take seriously. I'm remembering in Paul Graham's essay where he compiled a bunch of responses he got from prior YC alumni when he asked "what was surprising to you about running a company or about being a founder?" And the biggest surprise was that nothing they said should have been a surprise. Like, these were all things he had literally said to them during their run. So, the kind of the takeaway was, "Okay, so just having heard me say it once doesn't necessarily mean that it's sunk in." But I feel like, more so than just kind of hearing it, or more so than, like, the distilled takeaways, they're seeing a bunch of exemplars. I keep coming back to this as a major value that I can provide, and that I think EF provides and OnDeck provides to young, scrappy, hungry would-be founders. Just like: look at all these different ways that people have done it. Look at all these different ways they failed. Like, providing the data set; not just kind of telling them, okay, "I've noticed that, when a team isn't talking, when a team looks like the two of you, it's not going to last"; rather, like, "let me introduce you to Paul over here, who had a great run with his co-founder for five weeks, and then it all blew up. Listen to his story." That has an impact that's closer to the kind of vicarious learning that I think can almost substitute for personal experience. And I think even more importantly, hearing the stories of people who've taken their own weird, crazy, circuitous paths, and really done it. And like seeing the range—both seeing like, oh, every story is different. So mine is going to need to be different too. But also, every story, like at some point, the founder has a reckoning. And in every story, at some point they discover that this is a new low that they can survive, and they didn't think they could survive the last low. And now this is a new low and look, here they are, they're still in the game. Hmm. I can learn from that.

David Booth  47:24

That same learning can be through the creation, certainly, of various founder groups, and in the participation in many of those as an individual, as a founder myself. And I shared the anecdote earlier of the Leaders and Tech group; we had one called OnDeck Scale at a point, which was for individuals to come together. And, you know, in speaking with with them, I think everybody would share a similar sentiment of, you can read something on a blog, you can hear it on the podcast, but actually having a connection between a small group of people who have that moment of intimacy, of sharing, like, what the journey has really been like, of realizing that others are on that journey too or similar versions of that journey too, and to balance, like... one of the things I struggle with is support groups or therapy, some of them can become almost like therapy groups, and people are airing their, their grievances together. To me, it's balancing, how do you express the empathy of the journey that others are on, while also balancing the intellectual curiosity of the conditions that went into their journey, in order to get something out of it yourself? For me, this is one of the hardest things today. It was it was like, a really unsatisfying conclusion that I came to, which was based off of... remember, Gena, we were speaking about the Michael Jordan documentary, about how, like, basically, how really hard winning is? Like, if you want to be the best, you have to put in the work; like, really put in the work. And if you don't really put in the work, you don't win. Yeah, don't be disappointed about that. At times, I've sort of felt like there was a lot of people airing grievances of "it's really hard." And in fact, I've wanted to say, "yes, this journey is really hard. That's why you signed up for it." That was also sometimes very unsatisfying. It's like saying, "Do you want to have an easy life, or you want to have a lifetime of pain?" No, I... doesn't have to be like that. And seeing that through the eyes of others within groups has been really beneficial for sure.

Alice Bentinck  49:46

This sort of feeds into another theme that we've talked a lot about across the various podcast episodes that we've done around choice, and like it being a choice to start, it being a choice to continue. David, you said, you know—correct me if I'm wrong—you're not trying to "turn people into founders." It's kind of people that already sort of want to be founders. Do you think we should be doing more active pushing? Or, like, how do you think about this concept of choice, and whether we should be actively trying to persuade people?

David Booth  50:21

Almost anybody should... I'll rephrase that. Absolutely everybody should be thinking about their own lives, their own decision trees, in terms of: should I do the thing inside the system? Or should I build the project outside? You know, should I do something different? The number of those projects that deserve to be companies is limited. The number of those companies that should raise venture capital is limited. You know, the number of those companies that do raise venture capital that are going to go on to have substantial successes is limited. But I want to separate those two things. Like, every single person in the world should be approaching their lives from a position of, how do how should I uniquely break the conventional wisdom or the institutional status quo to do a thing that interests me or I find curious? 

David Booth  51:12

Separately, a lot of those—and this is refreshingly more of a trend of late—a lot of those people who do go on to start companies are thinking more about bootstrapping them. And maybe they're a freelancer, maybe they're a creator, maybe they're building a small, vertical SAAS business online or a small tech-enabled service locally. It's a very personal decision, that's a very economic and circumstance-based decision, should I go and do that versus stay in a job? Ultimately, they're going to have similar degrees of economic outcome, maybe similar or varying degrees of lifestyle changes and commitments. I do think that the people who choose to step up and take substantial amounts of venture capital money and take substantial swings, do need to ask them[selves] that Michael Jordan question of, like: by taking this capital, I'm making a commitment to myself, to my team, to my investors, that I'm going to really step up and take a swing. And to be aware that that will come with pain, that will come with a long term time horizon, that will come with a set of expectations of you, both internally and externally. And that that is not for everyone. 

Alice Bentinck  52:33

If you're taking venture capital money, you sort of have to increase your risk of failure. You know, VCs will only invest in a company where they believe that there is a small chance of a massive return. And for VCs who have a portfolio, they don't care if 90% of their portfolio fails. And I think often venture capital is seen as the glossy glamorous route. And we, we build venture backed companies; EF is venture backed. But it is a very different route to build companies. And we're recording this in 2023. I'm very curious to see what happens over the next couple of years. The venture capital market has changed, its contracted significantly. And the push now is to build businesses that can generate revenue and generate profit. Now, if you aren't used to work with VC-backed businesses, you might say, "Hang on a minute, isn't that what business is about?" For the last decade, it's been a push for growth, growth, growth at any cost. And I'm curious to see what will happen to the type of founders that start coming into founding high growth businesses where there's just a slightly different onus on what the business has to do: "I need to build something that people want pretty fast in a way that makes money."

David Booth  53:45

There's something which, more by accident than by design, when we reflect on the OnDeck journey, we've designed ourselves such that the individual and their journey is our focus, as opposed to the company. And what that allows us to do is take a cohort of people, say 100 people, and help them, or help build a community that helps them, rather, find the right outcome. Now the right outcome might be selling the company, but it might also be shutting down the work they've done so far and joining someone else's company, it might also be getting another job, it might also be being an angel investor, starting a not-for-profit; all of those things are deeply aligned with our interests. As opposed to, you know: one of the problems I have with venture is often, as you said, if you're not going to be the big swing outcome, then there is an obligation to serve LP interests, sometimes ahead of—not always—sometimes ahead of, or at least alongside the company and the founder interest. 

David Booth  54:47

Now, that doesn't always work out for us either. But the way it has shown up in early days was we had a couple of founders coming through working on not-for-profit projects. And that was great; you know, huge contributors of community. In more recent times, to your point about the trends in the 2023 market, we did in the most recent cohort kickoff, as a sort of an activity when we're all together, you know, "go and stand in that corner if you plan on raising capital; go and stand on that corner, if you plan on bootstrapping." And it was incredible to see: there's almost a 50-50 split. So the number of people not planning on raising external capital was high. More common among repeat founders, people who have perhaps some of their own capital to start with, maybe they come from a position of privilege, others coming from a position of, well, I don't need to raise as much anymore because I've got AI at my disposal, I've got smaller, more highly leveraged teams, I've got, you know, a faster route to revenue coming in. And you're right: my quick take is that the need for very early stage "get off the couch" capital increases, because most people don't have the ability to sustain themselves for three to 12 months, while they get that initial product-market fit; I think that the need for huge amounts of growth capital for a small number of frontier businesses increases; more companies that need to load up on GPUs, or do innovation in atoms, building things in the real world; but that is a decreasing segment of the total number of companies started. But there'll be this huge increasing segment of companies that might need that initial capital, but don't need anything beyond that. And I'm really, really curious to see how the market evolves to respond to that, whether it's a new form of financing, whether it's a new set of institutions and credentials that come along with it.

Gena Gorlin  56:49

It sounds like, to wrap us up, what I hear you both saying to your question, Alice, of like, what advice should we be giving to people? Sounds like you're saying, "We should be advising and pushing and inspiring people to think entrepreneurially about whether and what kind of entrepreneur they want to be. And that may look very different. In fact, there may be a whole different model emerging that isn't already the status quo, you know, within the startup ecosystem, but that might be the next big thing. So, think entrepreneurially, think from first principles, about "is this the model for me, given what I want and what I can bring."

Alice Bentinck  57:34

Thank you for joining us on this episode of the founders mindset. Make sure to subscribe, or follow us to be the first to get every new episode. And if you enjoyed the show, why don't leave us a rating and review to help us to reach even more people would hugely appreciate it. As always, you can find out more about Entrepreneur First by heading to joinef.com. And you'll get more of genius thoughts on founder psychology at builders.genagorlin.com. I've been Alice Bentinck.

Gena Gorlin 57:58

And I'm Gena Gorlin. See you next time!