SPEAKER_02: Let's examine the facts.
SPEAKER_01: Yes. Fact, fact, fact, fact. Great. You're fine.
SPEAKER_02: Yes. However, sometimes we look at the facts and you're not fine. This is Michael Seibel with Dalton Caldwell.
SPEAKER_00: In our last video, we talked about the setbacks that make founders feel like shit when running their startups. And this time we're going to talk about how to prevent these punches to the face and how to take a punch and recover if you absolutely must.
SPEAKER_00: So Dalton, I think the cool way to think about this is a little bit like health care. There's preventative health care and then there's treatment. So let's start with the preventative. And let's set the framework here. A lot of times founders get punched in the face as almost unforced errors. It's like a result of magical thinking or other parts of their lives not being set up. And so here are things you can do to either reduce the number of punches that come or at least reduce their intensity because you have your other shit locked up. Does that make sense?
SPEAKER_02: Yeah, exactly. It's like as we spoke to last time, you can't think that you're not going to have any setbacks and you're not going to, again, take some punches. It's going to happen to you 100%. The highs are high and the lows are low. And so rather than assuming you can be so smart that you will never have low lows, instead plan ahead. Put the infrastructure in place so that when you do have these big challenges or these low moments, you have the infrastructure set up that you plan ahead for it. I think that's a very good idea.
SPEAKER_00: So we were joking when we were talking about what to talk about in this video. A lot of these things could be put in the category of adulting. And it might turn out that if you want to be a founder of a very successful company, you might have to adult harder than the people around you. In fact, it almost assuredly requires adulting harder than the people around you. Sometimes I think founders look at us and they're kind of like, well, my roommates don't do this, so why do I have to? And it's like, well, if your roommates aren't trying to build a billion dollar company, then they don't have to. But maybe you need to be better than the people around you to do something extraordinary.
SPEAKER_02: It's yet another thing that distances you from your peers. And if your whole thing in life is, I'm the same as my peers and I'm the same as my roommates that have jobs at big tech companies, this is yet another way that you're going to be isolated and different and have to learn to love that and not feel sad that when they're like, hey, we're going to go pull another all-nighter, we're going to go party Thursday, Friday, Saturday, you have to be cool with opting out of that.
SPEAKER_01: Right? Yep. But if you think you can have it all.
SPEAKER_02: You can't. I don't know if you can have it all.
SPEAKER_00: You can't. We're here to tell it. We're here to ruin that have it all dream. So where I like to start is audit how you live. Think about where you're waking up in the morning. Did you get enough sleep? Are you're in a place that's a home? Are you living in a place that makes you more powerful or less powerful? Are you sacrificing? Are you losing hit points at home? And if that's happening, man, that's unforced error. So that's who you're living with, what you're eating, do you have easy access to exercise? Are you living in a place with a bunch of alcohol and drugs everywhere? Not helping you? At the minimum, your home should be neutral. But I think for the most successful people, the home's actually a plus. The home is where they're making points, where they're winning points. And I think that a lot of founders in their early days don't understand how much they could be losing based on just how they're living.
SPEAKER_02: Yeah, I think almost from a clinician's perspective, when someone is having issues, the first thing you look at is sleep disruption, diet, and exercise. If you go look at research depression or anxiety and things, that's usually where the 80-20 solution is for a lot of folks that are struggling, is you look at their sleep patterns. Are they sleeping OK? Are they eating OK? Are they getting exercise? Are they getting sun? All these sorts of things. And so if you don't have your house in order on those fronts, you are not, even if you don't currently have depression, you are not well-situated to deal with really hard things that might happen to you. But Dalton, I went to an Ivy League school,
SPEAKER_00: and it was really hard. And I went to a really challenging high school. And I didn't have to change these things to get good grades or to get the good internship. I was able to work hard and play hard. Why do I have to change now? It's working. It's working for me, this lifestyle.
SPEAKER_02: I think it can work for people. You and I know people that certainly don't follow this advice, and they still did OK. I just think you and I also know the same people, where eventually you've got to pay the piper. Like at some point, no matter, it's almost like you're going into debt, like personal health debt or whatever you want to call it. And man, you can go pretty far into debt. You can go five years into debt. You can go 10 years into debt. I don't know. But at some point, the debt comes due where you can't
SPEAKER_02: hold it all in anymore. You can't hold the whole world on your shoulders. And I think what we're just trying to say is if you start off with good habits early, you're not going to incur this massive debt that one day causes you to have a breakdown or a meltdown. Again, whatever you want to call it.
SPEAKER_00: Well, to double down on that, I might argue that you probably can sacrifice these things for five years, like maybe even seven years. The tricky thing is that the best companies last multiple decades. The tricky thing is the shit that you can get away with in your 20s, you can't get away with in your 30s. And company running just gets harder. And so I think sometimes people are like, oh, this is going to be a relative sprint. But it's like what I like to talk to you about with YC founders a lot is like, what happens if this works? Like, are you set up for this to not work or are you set up for this to work? Because this works like, oh, you're going to be in it. Like you're going to be in it for a while. And I think sometimes people set their lives up for it to not work. And then, wow, self fulfilling prophecy. And when you think about it, this isn't an age thing.
SPEAKER_02: This is a lifestyle thing, because you'll see, like, 19 year olds with all the good habits, and you'll see folks that aren't 19 that like still live like 19 year olds. And so this isn't an age thing at all. This is a habits thing, man.
SPEAKER_00: Well, and you'll even see successful people with good habits lose them and then wonder why they can't succeed again. Right. It's like even just having these habits doesn't mean you keep them. So, okay, so that's your physical life style set up. You want to talk about this kind of social media piece, because I think that a lot of people don't understand how toxic social media is. Like, yeah, I think you just want to look at your information
SPEAKER_02: diet. The metaphor I think about this stuff with is the same way we have a food diet. And, like, of course, what we eat and drink affects our moods and how we feel. I actually think the information we consume affects us. And if you think about, again, like myself, all of us, you know, when it's a really heavy time in history, when there's a lot going on, when I'm doom scrolling all the time, reading about pandemic news or war news or whatever, of course, that affects my state of mind.
SPEAKER_02: Okay. And so to some extent, you can't completely stick your head in the ground about what's going on in the world. No one's saying to do that. But to the extent your social media habits make you feel bad or compare yourselves to people or say you follow a lot of, like, investors and everything they're talking about is the investment market and who's raising and all of that. And this is just every day you're bombarding your brain with stuff about investor shit. Why? Why is that good? How is that helping you actually run your startup reading what a bunch of investors say about the market all the time?
SPEAKER_00: And I think people are surprised that, like, successful founders like explicitly block social media. They do crazy things like, you know, they grayscale their phones. So it looks less interesting. They turn off notifications. They're aggressive users of, like, screen time, like tracking, like they actually pretty aggressively audit this stuff. So that illiquidity saved you all.
SPEAKER_02: And so again, so if you're consuming media every day and you're reassessing the value, like if you're too paying attention to this stuff, it doesn't make you make better financial decisions, does it?
SPEAKER_00: Isn't that wild? The next area I like to talk about is salary. Oftentimes, and this is more, of course, for companies that
SPEAKER_00: have raised funding, just a small incremental 5 or 10% salary bump can make a huge lifestyle difference. And it's almost always worth it. Like, I think people screw up. And this is where I say to founders, I'd love to hear your advice. If your startup salary is allowing you to save money, it's probably not good, right? You shouldn't be sitting here like with Google employee level savings running your startup. However, if your startup salary is giving you the lifestyle that allows you to be all in on your startup because the real world isn't distracting you negatively, then it is good. And what's interesting is that often for different founders, this is a different salary level. You know, perfect example. When I was starting, I had student loans in college. My co-founders did it. I made a little bit more money so that I wasn't like going into debt with my student loans. And that was perfectly reasonable. No one was like, oh, well, you need to take X percent less because you need to pay a $200 student loan every month. It's like, no. Like, so sometimes small changes in salary. Now, you know, if you have a co-founder where it's like, I need to make a half a million dollars a year and I'm 23. Yeah, that's probably different. But like sometimes people are sacrificing penny wise pound foolish, right? Like sometimes people are being penny wise pound foolish.
SPEAKER_02: I think this is one of those topics also like equity where what founders want to hear is here's the right answer. One size fits all for everyone. Or here's the formula. Here's a spreadsheet. Here we go, Michael. Here's how much to pay yourselves. Just fill out the spreadsheet and we're done. And sadly, like many things in life, anyone that tells you
SPEAKER_02: their simple answers is probably trying to sell you something. You know, like, right? They're like, yeah, it's probably snake oil. And so the subtlety that I agree with you on is
SPEAKER_02: you want to pay yourself enough that you don't get into debt. You want to pay yourself enough so that you're properly motivated. You also want to keep enough. You want to keep the money in the company. Like these are all variables that you have to turn. And, you know, if you're gonna be a successful founder, you have to have good judgment and you have to have opinions. And so when founders have no opinion about this stuff, it's not a great sign. So it's kind of like you need a philosophy of what you're solving for around compensation. You want to set everyone up for success. Yes. Align incentives well. And also realize that this looks different for every company, man. Like a lot of folks ask me, well, how much should I pay employee number one? I'm like, that's a nonsensical question. Who are they? What's, you know, do you see what I'm saying? Like, what they want is some answer. Oh, you should pay employee number one X. But like, no, man, that's like, that's not how this works.
SPEAKER_00: It was almost easier to come to these conclusions when I think back because we didn't have very much money. And so we kind of had to, you know, like whenever anything is scarce, you have to ration it more effectively. And I think that like our philosophy, because I like what you're saying, there's no formula, but we had a philosophy, which is like, salary is for living and equity is for upside. Like that's that was the kind of philosophy. And I think that served us that served us pretty well. The next area of prevention. You have to learn how to have hard conversations with your co-founders and for everyone to be OK afterwards. And everyone has to go through this and it's going to suck. But if you have some of those in the bag, when you get punched in the face, you all know a little bit more how to interact with each other. And to me, the biggest challenge that I've seen on this front, and we've talked about this at YC quite a bit, is this anxious personality type versus avoidant personality type. You know, when people are challenged, people are frustrated. And this is a way oversimplification, but sometimes people are anxious. They want to deal with the problem right now. They're leaning in. They want to talk for they've talked for two hours with you and they want to talk for another two hours with you. And sometimes people are avoidant. And, you know, after five minutes, they're done. They want to think about it for a long time. They'd rather talk asynchronously. And I actually see that most problems between co-founders, the root cause isn't whatever went wrong or whatever they're debating. It's actually their style of dealing with their frustration. And if you can have a little empathy, if the person who you're working with has a different style of dealing with frustration than you do, and you can just take a beat, right? I'm the anxious type. You know this, Dalton. Like I'm super. I want to like talk about it for six hours, then six more hours. I want to plan. I'm going to write it down right now. Go, go, go, go, go. And I always get into trouble when I'm interacting with someone who reacts negatively to that. And I always have to kind of be like, fuck, I got to take a beat. Like in this situation, I got to take a beat. And so in my experience, if you can figure out that dance with your co-founder, it's so much more helpful when you're dealing with these external challenges. The startup's going to present many opportunities for frustration with your co-founder. Infinite opportunities. It's like the whole topic today, which is eventually you're going to take punches.
SPEAKER_02: You're going to have setbacks with your startup. Eventually you're going to have conflict with the co-founder. 100%. Like in the thing that you're disagreeing about isn't even a thing. Like who cares? It's noise, right? It's like roommates. Oh, did you take, did you put the dishes away? Or like, it's not about the thing. And like, it's not about who's right or who's wrong. And it's funny because a lot of people want to ask us advice about co-founder stuff, but what they want to, what they want is us to agree that they were right. And their co-founders wrong. You love that. They're like, can I tell you about the situation? Basically, I'm smart. My co-founder is dumb. What do you think I should do about it? Like it's always, and it's like, no, no, no, no, no, no. I'm not going to take the bait on that. I'm sure like the actual thing that you need advice on a thing to work on is the meta conversation, which is like, how do you deal with conflict so that people feel good when it's over?
SPEAKER_01:
SPEAKER_02: Yeah. Otherwise, whatever the, you know, not cleaning up your dishes or taking the trash out, whatever the equivalent of that is in your co-founder relationship, eventually it's not going to work out, man. Right? You got to have tools because there's going to be more issues.
SPEAKER_00: Well, I think that's what's fun about this. What is that like early stage founders argue about the dumbest things that there's almost infinite opportunities to practice this dealing with frustration of your co-founder. Like it is like a roommate relationship. There's infinite opportunities before something that's a real whammy comes. So like take those opportunities, like, please take them. Do you have any more on the preventative side before we move to treatment?
SPEAKER_02: I think it's just this expectation setting. I think so much of life is expectation setting where setting expectations for yourself, setting expectations for people you work with about what to expect. If you are good at that, people can deal with all sorts of stuff. And when you get into the biggest trouble, both with yourself, managing your own brain, as well as working with other people is when you say a bunch of stuff that is, that turns out to be really not true and you set expectations poorly and you have to like dig yourself out of this deep hole that you dug yourself into because you promised a bunch of shit or you set expectations in such a way that just weren't true. And so expectation setting is key for prevention.
SPEAKER_00: And, you know, we talked about this in another video, but man, it's it helps to study the real story of companies, right? It helps just to just know how long this takes. Man, it really helps for you to not have stupid expectations. Oh, well, this company became a billion dollar company in two years. So that's clearly the average path. It's like, no, like, absolutely not. Absolutely not. And it's funny because in some ways you're saying sometimes these companies punch themselves out, right? Like they don't even need external forces. They set a stupid expectation. They don't hit their own unrealistic expectation. Then they feel like something's wrong and you're just like, holy crap, you just invented a crisis. Startups have enough crises without that. Well, we've talked about all the things you can do to prevent the injury. Let's say the punch happens, bam, and you need some treatment.
SPEAKER_00: Something really bad happens or you suspect something really bad happens. I think the first point that you brought up that I really love is this idea of like, do I have to do anything right now? Like talk about that a little bit more.
SPEAKER_02: Yeah, I think I learned this as a founder the hard way, which is when something bad happens, you want to immediately like make a move. You want to like call a meeting or you get an email with bad news in it. You want to hit respond. And like in the moment of fight or flight when your adrenaline's pumping, you're like, how dare you, sir? You know, you want to start writing emails with that tone? Dear sir, in response to your query about like if you're ever typing an email with that
SPEAKER_02: tone, like, you know, don't do it.
SPEAKER_02: And what I've noticed is you can just like not respond or like let stuff sit a little bit and sleeping on it is the minimum thing I would do. This is what I always tell founders is when they have something to happen to at least sleep on it.
SPEAKER_02: Because I just noticed the next day you have a whole new amount of clarity on the situation.
SPEAKER_00: And I often find myself in my best moments and my worst moments and exactly like you said, I'm like act now, go send that email, like punch back. In my best moments, I'm always like, if there's ever a decision that feels like it's action one or action two, there's always a third option, which is don't act. There's like and it's almost never presented to you. I find a lot of times lawyers fuck companies with this. It's like you got to do this or that. And it's like it's not like how about we don't respond? Nothing. What would happen? Yes. And then what's really funny is that like the best founders, no action becomes one of their like key plays. Like they use that play way more than you think. It's a great play. It's a great play. Such a good play. And it's amazing that like for the best founders, no action is like, you know, 20, 30, 40% of the time what they do, maybe more. But for other founders, they don't even know the play exists.
SPEAKER_00: Like they don't even know the play exists.
SPEAKER_02: Yeah. Maybe just archive the email, whatever the email says. Yeah, that's true.
SPEAKER_00: It's a really big deal. They'll probably reply back. I've noticed it's a really big deal. And of course, don't do this in the case where someone's health is on the line or someone's going to go to jail or whatever. That's different. Yeah, it's more of like the stuff where someone where it's like interpersonal or someone,
SPEAKER_02: I don't know. Yeah. Someone said something bad.
SPEAKER_00: That you can archive. You can wait till the weekend's over to reply to that Slack message. Like it's gonna, it'll survive. So the next one on the list is it's okay to take a day off. It's okay to go home. I think that, you know, there was one moment in my career where we were gonna get bought. Social cam was gonna get bought and we were two months into the diligence process. And we got a call that said the deal was off. And it was the only moment in my career where I was like, I'm not gonna react to this well in front of my co-founders. I just need to go home. At least home I can react in a way that won't be a bad example to them. You know, like, because they're gonna look at my reaction. They're gonna be like, are we fucked? And if I'm looking like we're fucked, like, that's not helping. You know, when the general's like pulling their hair being like, this looks horrible. We're gonna die. It's not good. It's not good. It's not good. And man, like going home, hanging out with, you know, at the time was my girlfriend, but then, you know, later became my wife. Like taking that day, the next day I could kind of bring a better Michael to the table. Yeah, right. You know, that was a big thing. That was a big thing. I was thinking about this in the context of like, when things go bad, there's a certain set of people you should probably be hanging out with and a certain set of people you probably shouldn't be hanging out with, right? Like, how do you think about that?
SPEAKER_02: Yeah, I mean, I have my personal experience and I have all the data points we have across YC founders and you just sometimes see people that are taking punches and having a hard
SPEAKER_02: time and there's some really amazing people that you can hang out with that support you and tell you you're okay and validate your experience and like, let you take space for yourself and like all this good stuff and like, these are great people to have in your life. And then we see other sorts of folks that are like, you know, oh, you should do tons of drugs or hey, like, let's go not sleep for a really long amount of time or let's hang out with celebrities or like, you know, like there's all these different crowds you can get into and it's depressing how predictive that is for how people will deal with like
SPEAKER_02: setbacks, you know, even and these are adults we're not even talking about these are adults.
SPEAKER_00: These are our grown people, our age people still struggle with this particular one.
SPEAKER_02: And so I think you just want to think about, yeah, who you're spending time with when you're
SPEAKER_02: when you're taking punches and what kind of habits that you're taking from the peer group. You know what, man, I really think that the best people, you know, I'll be explicit, right?
SPEAKER_00: The best people, shit goes wrong and they go take a hike or something and the worst people think shit goes wrong and they drink and do drugs and like, it tends to be that those friend groups, you know, for a lot of founders, you know, the friends who if you go out with them, you're going to drink and do drugs and you know, the other friends where if you go off, then you're going to go on a hike, like just explicit, you know, and, you know, pick the right group, you know, pick the right group. And it's weird because I don't think the friends are bad. They're not trying to harm you, you know, well, they're doing their own thing. Yeah. It's just that, you know, you have to choose the right therapy. You have to choose
SPEAKER_00: the right therapy for yourself. And actually, that's a good segue. Like, let's talk about real health care. Let's talk about mental health care for a second. Like, you know, this is becoming less of a controversial issue, but I still think that it's something that needs to be normed for, right? Yeah. I mean, therapy is good. Medication is good if you're prescribed it
SPEAKER_02: and it's not from your friend. Just kidding. You know, this stuff is de-stigmatized and it's important. And like a lot of founders struggle, I think it's the ups and the downs exacerbate this stuff. And again, the stuff I said earlier, sleep disruption, stress, all these other things exacerbate it. So, you know, sometimes that is the appropriate thing to do here. So, you should
SPEAKER_02: do it and not think you're too tough or whatever reason it would be that you wouldn't use these things as a crutch. I've noticed that people that aren't willing to use this stuff, they find other
SPEAKER_02: crutches that, again, I would not recommend. They do. Right? Well, and I think that most
SPEAKER_00: people don't realize, this isn't the kind of stuff that comes out in your favorite company's press release. Most people don't realize how the founders who they are impressed with actually take advantage of therapy, actually take advantage of medication. Most people don't realize, you know, there are founders I know who've sworn off drinking because like they are not good. You know, they're not the best version of themselves when they're drinking. Like this isn't the kind of stuff that people will talk about very publicly, but we know a lot of people and when someone's trying to squeeze every ounce of positive productivity out of themselves, sometimes like, you know, they need to use these tools and it's really helpful. Really, really helpful. So, you know, let's talk about the fatal punches. Right? You know, at YC we deal with a lot of failure. We deal with a lot of companies who fail. And you and I have to have a lot of conversations with founders who their company has failed and their first thought is I'm a failure. They personalize that failure. What are some of the things you tell those people when they're dealing with that fatal punch? Yeah, I think as per what we talked about here,
SPEAKER_02: a lot of the things that people think are game over aren't. And so our advice is don't give up. Like you actually have a bunch of customers, you have a bunch of money in the bank. Like, let's look at the facts. You're good. And so a lot of our office hours are let's examine the facts. Fact, fact, fact, fact. Great. You're fine. However, sometimes we look at the facts
SPEAKER_02: and you're not fine. And it doesn't help you. Like you don't need a pep talk to keep going.
SPEAKER_02: And it actually is probably the right thing for you to not keep going. Because at the end of the day, this is your life. You only have one of them and messing up your life in a permanent way, your savings, your family, your friends, whatever it is, you know, don't do that. And I know it can be confusing out there because we get bombarded with messages. Oh, but you say you never give up or you say, you know, like, yeah, it's confusing. It's not that easy. It's complicated. Yeah,
SPEAKER_02: complicated. So I think you need to actually with as clear objective ways as you can be able to know when it's not working. And that it was a fatal punch. And that, yeah, you should not do this
SPEAKER_02: anymore. Like sometimes you see people get into like debt where they owe a bunch of people a lot of money and then they shut down and they ripped off all their suppliers. Again, you know, you know I'm trying to say like, like you fail in such a way that you hurt a bunch of people, not just yourself. Okay, don't do that. What I think that this is what's tricky is that I think someone
SPEAKER_00: needs to be out there saying that these aren't the things you have to put on the table to win. Yes. When you're working hard, you're going to probably have to spend less time with your family or friends, but you don't have to put those relationships. You don't have to sacrifice those relationships to win. In fact, they're a source of strength. You're working hard. You're probably not saving as much money as you would be if you're working another job, but you don't have to sacrifice all your savings. You don't have to go into extreme debt. Like if you're working hard, like you might not be able to get the salary that allows you to live in the apartment of your dreams, but like if you have to crash on friends' couches, these things don't tend to have to be sacrificed
SPEAKER_00: to win. If you're taking these kind of one-way hard life hits, maybe the facts are set up.
SPEAKER_02: Yeah. Again, what's tough is when you're one of those folks, sometimes you can even be victimized by people that'll keep bleeding you because that's their racket. We see this a lot with struggling startups. All sorts of people will come out of the woodwork to sell you services or promise they'll connect you with the investors or they'll help you fundraise or you name it. It's kind of like moving to Hollywood to become an actor and it's not going well. All these people will... There's a whole underbelly of folks who exist to rip off the people who aren't doing well.
SPEAKER_00: To me, where I see this happen that's most tragic is with non-technical founders because it'll be some dev shop or some... If you give me your last dollar, I promise that I'll solve your problem. Yeah. You see people writing checks for 20, 30, 40,
SPEAKER_02: whatever, 50 grand out of their personal checking account, their life savings to some dev shop. Their whole business model is to rip... I shouldn't say rip off, but they're like, yeah, cool. Whatever. As long as the check clears, we'll do it. It's pretty depressing.
SPEAKER_00: It's really depressing. I think that those founders, when we have this conversation, be like, hey, your startup failed. That doesn't mean you failed. Sometimes they just need to hear someone say that. So often we'll talk about, look at this person, their startup failed and they have another one that does well. Look at this person, their startup failed and they're not working as an executive at this really cool company. These experiences you have are valuable to you, even if your company didn't work. You learned 10X more than you would have learned otherwise, even if your company didn't work. And sometimes when we explain that silver lining, people are like, oh, you're right. That's actually a fun part of the job. So there you go. Step one,
SPEAKER_00: how to try to avoid the punches. And step two, when they come, how to recover as fast as possible. Great chatting today, Dalton. Thanks, Ben.
