Book: Burn Rate: Launching a Startup and Losing My Mind
Since Matt Levine is so effectively covering anything interesting in the world of the Twitter deal (and all kinds of bizarre, random, and complicated crypto, fraud, debt, and other financial stuff), I think I’ll stick with book reviews for the time being.
Andy Dunn, who I only know indirectly, wrote an important book titled Burn Rate: Launching a Startup and Losing My Mind. While it covers the story of Andy’s company, Bonobos, it’s really about mental health and entrepreneurship.
While there might be other entrepreneur autobiographies like Burn Rate, I can’t think of any. The closest is Tracy Kidder’s awesome book titled A Truck Full of Money about Paul English, an entrepreneur I do happen to know.
Tracy’s book is a mix of Paul’s entrepreneurial story combined with his experience being bipolar. Andy’s book is his entrepreneurial story combined with his experience of being bipolar. Both are remarkably brave books. Andy’s autobiography is particularly powerful since he is extremely detailed about several of the manic experiences that he had while running Bonobos.
While I don’t know Andy, I know several of his investors. His description of how they handled the situation of discovering Andy’s mental health diagnosis made me proud to know them. Andy decided to proactively hold a board meeting to describe what had happened that resulted in him ending up in the hospital and jail. One of his board members, Joel Peterson (who I don’t know), is remarkable.
“When I got out of the hospital, I walked straight into handcuffs. The City of New York charged me with misdemeanor assault and felony assault of a senior citizen.”
“Has there been a diagnosis?” Joel Peterson asked.
“The diagnosis is bipolar disorder type I. I was originally diagnosed when I was twenty, and I’ve been in denial about it for sixteen years.” A brief silence.
“I know a few folks who have dealt with what you’re dealing with, Andy,” Joel said calmly, holding true to his role as my professional father figure, “including more than a couple of entrepreneurs. It’s entirely manageable. I have full faith in you to take care of yourself, and I have full confidence in you as our CEO.”
Andy covers the rest of the board meeting discussion, including questions from board members about whether he was getting appropriate treatment, his legal situation, and the game plan for addressing any publicity around the situation.
A while ago, I was at a dinner with a bunch of VCs and entrepreneurs, including several very famous ones. One of the entrepreneurs stated clearly that if he ever talked openly about his struggle with depression, his board would immediately fire him. Fortunately, this was not the response of Andy’s board, as they took in the situation, asked questions about it, and made rational and deliberate decisions about what to do going forward. It’s worth noting that Andy was still the CEO of Bonobos when Walmart acquired it several years later.
I’m hopeful that Andy’s book will continue to help destigmatize mental health in entrepreneurship. Thanks, Andy, for being willing to write such an intimate story about your experience.
Steve Case’s new book, The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, is out. I read it on Sunday, and it is outstanding. If you are interested in understanding how high-tech entrepreneurship has evolved from a primarily coastal phenomenon to one that covers the entire US in the past decade, grab this book now.
Steve is a great storyteller. While he tells the entrepreneurs’ stories, he has been part of helping create them. He created Rise of Rest and did the first of many bus tours in 2014. I was part of the one in Denver, and my partner Chris Moody was part of the one in Birmingham. They were each awesome experiences.
This is the story of what happened on those bus tours, people who were connected, companies that were amplified, financings that happened, and cities that were energized around entrepreneurship.
For the past dozen years, I’ve spent plenty of energy on democratizing entrepreneurship. I’ve worked with Steve and his team on multiple initiatives, including Startup America and Up Global. Steve’s supported me on several things I’ve done, including writing the foreword to Startup Communities: Building an Entrepreneurial Ecosystem in Your City.
When I was a young entrepreneur in my 20s, Steve was a hero of mine. My AOL username was bfeld, which was where my Twitter handle (and everything else I signed up for on the web came from.) Now that I’m a middle-aged something or other at 56, Steve’s still a hero of mine. I expect this is true for many other entrepreneurs.
Talking About Entrepreneurship and Mental Health With David Cohen
David Cohen and I have co-hosted the Give First podcast for 71 episodes. I think our host ratio is 80/20 David/Brad, and he’s covered everything in 2021 because I was burned out on all things public-facing and needed a break.
He figured a good way to get me back in the mix would be to interview me about entrepreneurship and mental health, so that’s what Episode 71 is about.
I got the following email from Barry Schuler this morning. We’ve known each other for many years, and he’s one of my favorite VCs to work with.
He described exactly how I feel this morning. The fall is my favorite season of the year. By labor day, I’m ready for summer to end. The stretch until Thanksgiving is my most productive time of year.
I finally feel like writing again after a summer off (most of my books come out in the late spring / early summer, so I’m fried and uninterested in writing during the summer.)
My running is almost always great in the fall. I end the summer in solid shape and usually ramp up a lot in the fall. I like shorter days, later sunrises, and early sunsets. I like the colors of the leaves. The cool, crisp Colorado mornings.
Amy and I had a good summer, but I’m ready for cooler weather and a different pace.
There have been many different approaches to ranking VC Firms over the years I’ve been an entrepreneur and a VC. Each approach I’ve seen has issues. Most are easily gamed or have statistical bias issues.
We and a few other firms sponsored a “founders choice” version of the Midas List, with a legit (IMHO) rating methodology, built by two Penn students. No vitriol possible (unlike The Funded, etc.). We’ve wanted this to exist for a long time — NPS of us as a firm is too forgiving a metric, everyone scores well.
My first question was:
How are they dealing with sampling bias on this one? For example, we send to all our founders and say “please fill this out and give us high scores.” Mostly just curious on methodology.
Roy had a thoughtful answer that made me a believer after a few more questions.
You are literally the only one (and I’m relieved someone did) to ask on sampling bias. For context, the general way it works is founders auth with LinkedIn and then the product tosses away their identity (or, more accurately, only keeps a hash and disconnects it from their ratings). Then the founders get asked for pairwise comparisons of only the VC firms who have backed them (so this is about who founders like as investors, not who has sour grapes from a pitch). How this addresses, to a degree, sampling bias:
1. Dampens outliers: because it only asks for pairwise comparisons between firms (like an ELO rating in chess, if you’re familiar), one very un/happy respondent can only affect so much, and same for a sample. (As opposed to giving one firm a 10 and everyone else 2’s or something.)
2. At the same time, it forces comparisons. A firm can ask founders to rate them highly, but ultimately founders have to choose who gave them more value. Can’t rate everyone a 10.
3. This is why we’re looking for as broad participation as possible, because the sampling bias will actually probably most show up in which firms even have enough ratings to count. (Like ELO in chess, more ratings doesn’t necessarily help you — you get more “points” if a founder rates you as better than a highly-rated firm. More ratings can just as easily hurt as help.)
If you are a founder, go spend five minutes and anonymously rank your VCs on Founder’s Choice.
If interested, sign up now. I hope to see you there in one of the AMAs we will host for anyone who takes the course.
Registration is open for the 2022 Q4 Leadership Bootcamp, which is happening in Boulder, Colorado, on Nov 10-13, 2022.
Regular readers of this blog know about my long-time (back to 1996) friendship with Reboot co-founder and CEO Jerry Colonna. What you may not know is that several years ago, Jerry and his partner Ali Schultz moved exactly 0.8 miles away from me (there is one 40-acre parcel of land between us.) In the evening, when we are both in Boulder (well, Longmont), he sits under his Cottonwood Tree, I sit 0.8 miles away on my couch next to my pool, and we text and wave at each other.
I’ve been to several Reboot Leadership Bootcamps as a special guest. They are unique and powerful experiences for entrepreneurs. As a bonus, the Reboot Retreat Center is actually on my property in a building called “The Carriage House.” Amy and I don’t charge Reboot for the use of The Carriage House – it’s our gift to entrepreneurs and Reboot for this amazing experience.
If you’re looking to reboot and refresh your leadership, join Team Reboot this November 10-13, 2022, in Boulder, CO, for their fall Leadership Bootcamp.
Of all the business and technology writers out there, including bloggers, I think the best one, at this moment, is Matt Levine. He’s the only person currently writing on Planet Earth that I find myself reading every word of everything he writes.
For the last few months, he has been mostly writing about three topics:
- The Twitter Elon Musk Soap Opera
- Why (and How) Much of Crypto Is A Plain, Old, Ponzi Scheme
- Other Crazy and Fucked Up Things in Finance
For a flavor of his writing, read the following 11 chapters of Matt’s writing (listed in chronological order). Then, subscribe to his newsletter and get a magnificent medium-form article in your inbox every other day or so.
- Meme Stocks Were Too Good to Robinhood: Also Russian debt and crypto depositors.
- Don’t Cheat on the Ethics Exam: Also CoinFlex, Spirit and cheerleading for risk.
- Crypto Loves Its Shadow Banks: Also Archegos, CLOs and bond market liquidity.
- Say No to YES: Also 10b5-1 plans, crypto bailouts, Tether, MicroStrategy and ethics rules.
- Archegos Analyst Wants His Money Back: Also Russian assets, universal owners vs. labor and KYC/SOW.
- Voyager Has Some Tokens: Also vibes and Ben & Jerry’s.
- Nickel Big Shot Called the Shots: Also GameStop, SoftBank, Luna, Percent and index funds.
- Elon’s Out: Musk lost interest in pretending to buy Twitter.
- The Price of Not Buying Twitter: Also Twitter miscellanea, Celsius and Axie.
- I Was Told There’d Be a Cake Merger: Also a threatening letter, a toehold stock position, a venture-capital paper and a tweet from an undisclosed location.
- Twitter Still Wants Musk’s Money: Twitter sued Elon Musk for an outcome that no one wants.
Matt – thank you for making me snort or laugh out loud several times on the days you write.
In the last seven months, the venture / entrepreneurial world has gone from “the only thing that matters is massive growth” to “the world is going to end.” For perspective, all you need to do is look at a dozen high-flying IPOs from 2020 or 2021 to see that the peak happened just before Thanksgiving.
The private markets lag the public markets. That’s not new. This time around, the lag was about a quarter, as many VCs started to talk about what was happening around the beginning of Q2.
There is no doubt that we are in the middle of, well, whatever you want to call it. “Correction” and “Choppy Waters” is probably a generous phrase for what is going on.
Having lived through this as an entrepreneur in 1987, an entrepreneur and VC in 2001, a VC in 2008, and a VC today, I embrace that this is just part of the entrepreneurial and economic cycle. I also know that many people freak out at this moment. If you’ve never been through this (like I hadn’t in 1987), it can be terrifying. If you are experienced and suddenly find yourself caught flat-footed for any number of reasons, it can be equally terrifying.
I no longer believe in clichés or prognostications such as “make sure you have three years of money in the bank” or “do a RIF quickly and deeply regardless of the situation you are in.” Instead, I think it is crucial for each company to understand its current reality clearly and make rapid and appropriate adjustments. This could mean “do a RIF quickly and deeply or “make sure you have three years of money in the bank,” but there are many other things to consider and do.
I’ve been involved in companies that have used these moments to gain huge market share from failing competitors. I’ve also been in companies that, in these moments, simply failed. I’ve been involved in companies that made adjustments, soldiered through, and came out the other side stronger. And, I’ve invested in brand new companies founded during these periods that ended up creating entirely new categories and extremely successful companies.
I expect that’s the tone of what we will discuss on 7/14 as part of Bolster’s Speaker Series about the VC Perspective on Navigating Choppy Waters. Fred Wilson has been through this many times, and his post on Amy and my 29th anniversary in Staying Positive is a wonderful perspective. Martina Lauchengco and Heather Hiles are long-time operators turned VCs who have also been through many cycles.
Join us on 7/14 @ 3pm ET for a discussion on Navigating Choppy Waters that hopefully will not be full of the same old clichés currently making the rounds.