Recognising and combatting founder burnout

TaxStartups

25 May 2022

It is a reality that within limited-equity and human resource constrained early-stage companies, the founder(s) inevitably need to fulfil a large number of roles. Unlike established corporates, which have a suite of folk covering many diverse roles and functions, a founder is often all of the visionary, the CEO, the CMO, the CPO, the CRO, the CTO, the CFO, investor-relations manager, PR-machine, fundraiser, and the list goes on. 

Throw on top of this evolving challenges in the early-stage company capital markets. Decreasing valuations, shortening runways as costs burgeon, and potentially shrinking enthusiasm from investors, who may be facing challenges across their own portfolios, has created a perfect storm, which puts enormous pressure on one or two sets of shoulders. 

Furthermore, founders are often so focused on their start-up, they get disconnected from the rest of humanity and can become very lonely. Despite outward confidence, most of what they are experiencing is often new to them, and that’s scary in of itself. Founder burnout and blowout are real issues.

But this is why they get paid the big bucks, right? Well, no, and they are possibly not even being paid at all (beyond sweat equity).

As stakeholders in the early-stage eco-system, it is important that the rest of us acknowledge the dual risks of capacity and capability shortfalls within our founders and the pressure this creates and reach out to support. 

Irrespective of whether you are an investor, governor, adviser, mentor, regional leader, EDU, eco-system driver/contributor, friend or family, you have a role to play. If you were in their shoes of obsessive application of all your energy to a single cause, notwithstanding what else may be happening in your world (and life happens), what would make a difference to you? It may be as simple as just reconnecting the founder to society when they are far down Alice’s rabbit hole, providing perspective, offering advice, connecting them to others who can assist, sharing experiences/knowledge,  or simply checking in, so they know they are not unusual nor alone.  

For investors and advisory boards/Directors, there is a heighted responsibility to be aware of, and to actively assist with, the founders’ emotional state. You can even dress this up as self-interest if that’s what motivates you, as everyone’s investment is at risk if this matter is not recognised and addressed on a timely basis. Despite the fairy-tales about Unicorns, the harsh reality is that the journey to success (or failure) is usually much longer than expected – there have been many ten-year overnight successes - so managing and maintaining requisite energy levels is an ongoing challenge. There are often long periods of grind without apparent gratification, which can eat away at the soul.

Like any sustainable deal, investing in a start-up also needs to be a balance between investor and founder needs, but extra cognisance must be given to the sustainability of the founder, especially if you are realistic about timeframes to success. 

For example, whilst sweat equity often supports a current overvaluation of the entity (as a trade-off), ensuring your founder can pay the mortgage and buy groceries is necessary to ensure they can perform sustainably. Having a clear pathway to more normalised terms is also important, as sacrifice is easiest when there is knowledge of the end point (be it time or milestones).

Thinking about founder wellbeing can help open our eyes to what is likely happening right in front of us. At the upcoming FoundX session in Dunedin on 8 June, we will canvas various perspectives from a founder, investors and governance, amongst others, on recognising and addressing the challenges founders face, outwardly and inwardly. In the meantime, let’s just remember that our founders are people too.

Register for the FoundX meetup

Join our next FoundX meetup at 5:30pm – 8:30pm on Wednesday 8 June 2022 where the spotlight is on Founder Wellbeing. We’ll be joined by guest speakers Debra Hall, Rob Partridge and Jonny Mirkin.

REGISTER NOW

Author: Scott Mason

Scott is a Senior Partner in the Specialist Tax Advisory team, having practiced in the owner managed/HNWI (High Net Wealth Individual) market for over 30 years. He also has a significant presence in the early-stage company eco-system as an advisor, governor and investor. Scott is an Independent Director of several companies, a trained mediator, and the deputy chair of the Chartered Accountants Australia and New Zealand (CAANZ) Tax Advisory Group.