David Teten
More posts from David Teten
Hey, founders between gigs: What now?
If you exited your last company for airplane money and are now independently wealthy, congratulations! If you want to build another company, just self-fund. If you want outside capital, VCs will chase after you to invest.
Unfortunately, most founders are not in that position: nine out of 10 startups fail. Even if you achieve a high valuation, you might end up like FanDuel’s founders: Their investors got the benefit of a $465 million exit; the founders got zero.
As someone with “founder” on your resume, you face a greater challenge when trying to get a traditional salaried job. You’ve already shown that you really want to lead a company and not just rise up the ladder, which means some employers are less likely to hire you. One research paper found:
[F]ormer founders receive fewer callbacks than non-founders; however, all founders are not disadvantaged similarly. Former founders of successful ventures receive even fewer [emphasis added] callbacks than former founders of failed ventures. Through 20 interviews with technical recruiters, we highlight the mechanisms driving this founder-experience discount: concerns related to the applicant’s capability and ability to fit into and remain committed to the wage employment and the hiring firm.
At my prior firm, ff Venture Capital, we invested in a company co-founded by Nate Jenkins, who had a successful exit, but not quite enough to buy a private plane. He’s now researching his next opportunity and interviewing for some jobs. At the end of a recent interview, the interviewer summarized, “I’ll hire you, but is this what you really want to do?”
That said, Samuel Sabin, CEO of HireBlue, observed, “Some founders who work better with more resources at their disposal may be tapped for intrapreneurship roles. Also, some companies value a self-starter mentality.”
So what should you do? Especially if your life partner and/or bank account are burnt out on the income volatility of startups?
I’ve been in this situation myself when I shut down one startup and exited two others. I think you have six main options:
Full-time initiatives
- Launch a new company.
- Get a job.
Part-time activities
- Angel investing, venture capital and mentoring.
- Consulting.
- Sell information products.
- Education and self-improvement.
At Versatile VC, our new VC fund, we’re creating an online community just for founders who are in transition, Founders’ Next Move. We hope you will join us!
Full-time initiatives
Launch a new company
If you want to work on your startup idea, the bar for starting a company should always be very high. VCs have a diversified portfolio and most of their investments die. You don’t have a diverse portfolio and so you’re taking far more risk than the VCs. For free resources to help research your ideas, see What startup will you build? Identifying market white space.
To improve your search process, you can join a specialized community for founders in transition, such as Versatile VC’s Founders’ Next Move, CoFoundersLab, Founders Nation (Israeli focus), Reddit’s Co-founders community, FounderFit Lounge, On Deck Founders and Second Time Founders. Many generalist online communities also have verticals focused on entrepreneurship, like LunchClub or Meetup.
Make sure to talk with VCs in your space, as they tend to have lists of ideas they think have high potential. Versatile VC has a public list of startup ideas we want to fund.
The 5 biggest mistakes I made as a first-time startup founder
You could also work at a “talent investor.” Antler and Entrepreneur First both pay a small stipend (~$2,000/month) to iterate on and develop a fundable startup idea; they then invest in the most promising projects. According to Vegard Medbo, co-founder and chief commercial officer of Antler, 60% of those that join Antler are second-time or serial entrepreneurs, and many of the rest have been early employees at successful startups. “They are looking for strong, like-minded people to join them,” he says.
It’s also a good idea to partner with a VC that has a formal program to support individuals who have not yet founded a company, but are likely to do so. Although the role is constantly evolving, VC entrepreneurs in residence are usually previously successful entrepreneurs who are building a startup with the VC’s support. In addition, they may have responsibilities to support existing portfolio companies and/or evaluate potential deals.
Many EiRs are compensated with zero income until they found a company, but there are some who earn a retainer in the range of $90,000 to $150,000. Contrary Capital’s Talent program focuses on recent university graduates who are either founders or are likely talent for top tech companies.
NFX has a formal group for second-time founders, and Notation Moonlight is a community of tech leaders who are considering building a company. Afore Capital runs Zt1, and Human Capital runs Humans in the Wild, both accelerator programs with no equity or cash component. At Versatile VC, we currently host one entrepreneur in residence and are glad to hear from others.
You could also work as a VC scout. Some VCs have formal “scout” programs to compensate people for sourcing investments. Compensation for scouts generally involves a fixed fee and/or a percentage of returns for deals that go through, but no guaranteed compensation. For example, according to Jason Calacanis’ book “Angel,” the compensation structure for Sequoia’s scout program looks something like: 45% of returns go to the scout, 50% to Sequoia and the remaining 5% to a bonus pool for other scouts in the program.
Jai Malik, venture partner at Republic and ex-corporate scout for Tata Communications, shares advice on becoming a scout: “I think the most important thing they saw was that I was open to learning whatever it took to get the job done. I think that’s pretty standard with other positions. How well you can show that you are committed to what you want to achieve.”
Other firms with scout programs include Accel, Chapter One, Village Global, KPCB, Contrary Capital, University Growth Fund, New Stack Ventures, Lightspeed, Atento Capital, Backed VC, Harlem Capital and Index.
Another option is to pay a small fee to a neutral company like Day One, OnDeck or TackleBox to help you refine and validate your startup idea. Feedback.vc is a panel of VCs who will give you feedback.
Venture studios are a great avenue to work on your idea. Marco Franzoni, managing partner at Disruptive Labs, says, “If you are an early-stage founder looking to build a product or scale faster, venture studios can be a great option. For pre-seed companies, we invest and act as co-founders, while for post-seed companies, we act as early employees and specifically focus on company growth. That ensures you bring in experienced partners with vested interest and a huge network of mentors and investors that can help along the way.”
10.10.10, a project of Colorado Nonprofit Development Center, hosts programs that “bring 10 successful entrepreneurs together for 10 days to confront 10 Wicked Problems, with the goal of inspiring new ventures based on new products or services that can solve one or more of the Wicked Problems.” See: The 300* startups studios taking on the world.
Lastly, to get yourself off the ground, consider working with some of the software development shops that are willing to take equity as payment. See: Should you co-found your company with a software development shop?
Get a job
Ted Ko, lead of digital product at ROOM in Soho, went from being CEO of a startup that didn’t work out to getting a job. He says, “Having been in a founder role, it was difficult for me to surface conversations at first. I’ve had to really shift my resume/LinkedIn to go back to a specialized designer (not generalized) role. Once I did that, it seemed like conversations and intros were starting to stick.”
Joining an established enterprise isn’t a bad idea. Medbo observed, “We see that many of those that join large corporates (as the paychecks can be very attractive and corporates are desperately looking for entrepreneurial people to help them transform) quickly look for other alternatives. The pace is slower; they’re often restricted on what they can get through versus what they are used to; and there is often more politics, which can take the passion out of someone who is motivated by innovating and bringing change. So choose carefully which corporate you decide to join and do thorough diligence.”
If you’re more of a mind to drive change, consider joining a startup. I suggest starting by reviewing the portfolios of established VCs for portfolio companies that are hiring and value your entrepreneurial experience. A few people offer curated lists of companies that are likely particularly good places to build your career, such as the Wealthfront career-launching companies list.
To get into a company early, go to startup Demo Days, as they provide a convenient opportunity to learn about firms in your space that are actively hiring.
AngelList and Crunchbase are great hubs for information on teams working on issues that may be similar to your area of expertise. If you love the team and traction, you can pitch them to join them as an adviser or co-founder.
You could also hire a talent agent for business people like FreeAgency.com or Labtuit. These are the equivalent of CAAs for movie stars — you contract to pay them a percentage of your first year’s compensation, at no fixed cost to you, and they help you find the employer who will pay you the most.
Hiring a negotiating agent is a good idea if you have difficulty getting adequate compensation, as negotiating only gets more complex as your career path becomes more unusual. You may find Earner or RivaHQ to be helpful, as they help you optimize your compensation structure. GetRaised helps you find out if you’re underpaid and get the right raise, for free.
Another option is to join a community of people seeking their next role. Teal and Propel provide career services, community and tools to help professionals in their careers.
Consider working in politics or advising NGOs. Major policy/political organizations of all stripes are looking to become more digitally savvy. InclusiveAmerica is a database of underrepresented people interested in serving in politically appointed positions. If you tilt left, see The Democrats are hiring and the Biden administration’s openings. All Hands is a resume bank focused on tech talent that wants to work for progressive/liberal goals. Tech for Campaigns matches volunteers from the tech world — engineers, data scientists, product managers and marketing professionals — with Democratic campaigns in need of a winning digital strategy. If you tilt right, see ConservativeJobs.com.
Part-time activities
Angel investing, venture capital and mentoring
Will Stringer, CEO of Chisos, observes, “Talking with founders and doing diligence on companies from an investor point of view can be a great way to find your next problem to work on, or even network into a job at one of the companies you diligence.”
If you want to become an angel investor, platforms like Republic* allow both accredited and non-accredited investors to invest as little as $100 in early-stage startups. A number of VCs (like AngelList Spearhead) have formal programs to back your investments with capital. Abe Othman, head of data science at AngelList, says, “The data suggests that having started a company and having invested in companies are both indicators of future success — but the combination of having both experiences on the founding team has an even greater impact.”
If you’re leaning toward becoming a VC, study the industry. Becoming a VC is one of the few logical jobs one can take after having a successful exit. See: Microcredentials for the effective venture capital or private equity investor; Syllabus for how to launch, manage, and invest a VC fund; Reading list for analysts and associates in private equity/venture capital.
You could also get a job in venture capital. See Venture capital compensation data and recruiters list and How to negotiate a partner role at a VC or private equity firm.
Consulting
The simplest way to get an income while you research your next move is to do some part-time consulting. M13 found that the impact of relevant executive expertise on a startup may very well double the rate of return on a venture investment.
To get started, join the major expert networks, such as AlphaSights, GLG, Guidepoint and Third Bridge. These present an easy way to earn extra part-time income for consulting by the hour at no upfront cost, and effectively give you a put option to sell your time to thousands of investors and corporates. It is also a hyperefficient way to get paid to learn more about how large players see your space.
Want to double your rate of return? Seek counsel from experienced executives
Patrick Sullivan, CEO of Bonsai, emphasizes the importance of enriching your online biography with all possible relevant keywords to maximize your odds of receiving requests to consult. Almost none of the expert networks charge you money to join their network; I would be very wary about the firms that want to charge you money to join their network.
Consultant networks are great, too. Startups.com helps startups identify consultants with relevant domain expertise. Braintrust*, a user-controlled talent network, connects organizations with tech talent who keep 100% of their market rate. Bolster specializes in working with growth tech companies.
A few, well-known networks include Business Talent Group, Catalant, Eden McCallum (focus on U.K. and the Netherlands), EIM, Eleven Canterbury, Expert360 (Australia), ForteOne, HighPoint Associates, Alumni Global (U.K.), SMA, Talmix (U.K.), Umbrex and 10EQS. For additional, Europe-based interim service providers, see the Institute of Interim Management Interim Management survey.
You could also affiliate with a private equity or VC firm in your space as a board member, consultant, scout, EiR, operating partner or in a full-time capacity. At a minimum, it’s valuable to talk with leading VCs in your sector, as they are mostly well-networked in their space, and they’ll have ideas on jobs or advisory roles.
Consider becoming an adviser to one of the major consultancies. Some maintain a database of outside consultants (e.g., PwC’s Talent Exchange). Adham Abdelfattah, an adviser to the senior partners at McKinsey, said, “Familiarity with technology topics is extremely valuable to become an adviser for the top firms. Tech is their Achilles’ heel, and they’re always looking for seasoned talent that understands both technology and management to act as advisers. Basic networking (and even cold emails) with these firms can suffice if the person has relevant expertise. All it takes is one or two partners to want to onboard a person as an adviser once.”
You can also affiliate with a specialty consultancy in your niche. There is a huge world of smaller consultancies that work with outside, part-time consultants on an as-needed basis. It’s much easier to get on their “call list” than getting a full-time job. TheConsultingBench offers a database of over 600 consulting firms.
Or, start your own consulting practice. Increasing numbers of professionals are making a long-term career as independent consultants. See the Umbrex guide to setting up your own consulting practice by McKinsey alum Will Bachman.
Your experience matters, and you can leverage your knowledge to offer career advice. A number of companies such as Bonsai, Evisors and Rooftop Slushie will pay you to share guidance with early-career professionals.
Sell information products
Founders who are seeking extra income and/or visibility can productize their knowledge by converting their expertise into a course or an e-book.
Abdelfattah says, “I believe Gumroad and Teachable are the best, since they have low fees and allow the creator to own their audience relationship. The trade-off is doing your own marketing, which can be time-consuming but in itself is a learning experience. Udemy offers a platform with organic traffic, but the trade-off is you do not own your audience relationship. My recommendation is for the founder to focus on a topic they know well, cap the investment at a week or two of time, and publish something simple and unpolished. I have personally found decent success with a course summarizing the consulting problem-solving method, which has 381 students in 44 countries so far. Another very successful example is Daniel Vassallo, who left Amazon to start a new business and is funding himself through info products.”
You could even create a newsletter. Abdelfattah says, “One can opt for an off-the-shelf solution like Substack, or a combination of Ghost (has an entire membership + newsletter stack). A great example of a newsletter writer in transition who succeeded is Lenny’s Newsletter; a former Airbnb PM, he laid out his process here. Newsletters are also very useful for recruiting if the founder wants a job. For example, I just had a startup funded by A16Z and Marc Benioff ask me to join as their CPO/COO after their founder read my newsletter. Of course, we had a lot of conversations too, but the discovery came through the newsletter.”
Reflection, education and self-improvement
If you have time and can afford to set aside time to study, Columbia Business School’s Executive Ed program offers an expansive library of free, on-demand webinars. Fast Track is a mentorship program for First Round Capital team members that is now open. Many universities have special free programs for alumni. For more ideas, see Alternatives to college: Get paid to learn.
You may also join a university accelerator/entrepreneurship center as a mentor, EiR or guest lecturer. Most universities have such programs and are glad to work with people who didn’t happen to graduate from their particular program.
Suzanne Ley, lead business development manager at Lumen Digital Ventures, said, “I regularly tell people in transition to allocate some of their search time (~10%-20%) to something that they have always wanted to do, but may have been afraid to do or think is not ready for prime time. Many people will need to work for money now, but you never know what that small amount of time on your idea could result in over some period, and it may just give you the energy/motivation to live in the real world (and do the adulting thing like make money).”
Sullivan, of Bonsai, said, “Building a company is a slog, and often founders don’t allocate time to take care of themselves. When you have a chance, I really recommend you step back and make sure that you’re in good shape to take on your next challenge.”
One founder emphasized the importance of taking time to reflect on your long-term goals: “From my time building my startup, things moved so quickly that there was little time to think longer term about what motivates you, what stage(s) of the company you enjoyed the most, what working dynamics do you thrive in, what you learned after years on the grind. That amount of reflection I find is important to finding the next longer-term opportunity, as opposed to hopping into something just to keep yourself busy (since we are so used to going 100 mph seven days a week).”
Conclusion
Whichever path you pursue, it’s critical to fill out your LinkedIn profile in detail. If you worked as a product manager at Google, you don’t need details; the job is widely understood. But as CEO of an unknown company (even if you sold for $50 million), it’s hard for outsiders to evaluate what you actually did.
Michael Adler, senior managing partner at AC Lion Venture Partners, emphasizes that in the text box under your name, you should be as descriptive as possible, as it is the first thing people see when they look at your profile. People make quick decisions on who you are based on how you describe yourself. For more on writing your resume and LinkedIn, see How to sell your professional background.
Thanks to Katherine Boe Heuck for research help, and also Emily Campbell, Esq., of The Campbell Firm PLLC; Michael Adler, senior managing partner, ACLVP; Katie Weiss of SingleSprout; Will Bachman, CEO, Umbrex; Ha Duong; and Marco Franzoni, managing partner, Disruptive Labs, for feedback.
*Disclosure: I’m an investor in Braintrust and Republic via HOF Capital, where I was formerly a managing partner.
Founders who don’t properly vet VCs set up both parties for failure
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