← The Conscious Entrepreneur | Leadership, Self-Awareness & Mindset
The Conscious Entrepreneur | Leadership, Self-Awareness & Mindset
EP 112: Why HALF of Founders Want to Quit their Startups (Replay)
00:29:43
Loading summary
Transcript33 lines
- [00:00]
A
Welcome to the Conscious Entrepreneur. I'm your host, Alex Raymond. This is the only podcast that is 100% dedicated to the well being of entrepreneurs. Now, I know that being an entrepreneur is a long journey and it can be really tough. So on this show we won't be sharing generic hero stories or talking about mythical unicorns. Instead, we'll get straight to the heart of what matters most, giving you tools and resources to grow, thrive and succeed as an entrepreneur. Every week I'll be speaking with incredible founders, CEOs, coaches and authors to help you be more resilient and inspired as you build the business of your dreams. There's some brand new research about the current state of founder mental health, this time from Sifted, a media platform that has tons of great coverage on Europe's startup ecosystem. An article of theirs that came out in March 2024 is titled 49% of founders say they're Considering quitting their Startup this Year and the subtitle of that article is Startup Founders Tell Sifted they are overworked, exhausted and broken and I can tell you the statistics behind this are not pretty. Today we're joined by Amy Lewin, who is the editor at Sifted. She wrote that article and she shares more of her latest findings about the mental health challenges faced by founders shining a light on the often hidden struggles behind startup success. Amy's research illustrates the high level of stress, anxiety and even despair that many entrepreneurs endure. She and I also discuss the implications for our community and explore ways to foster a healthier, more sustainable approach to entrepreneurship. This is a really important topic and I'm so glad that journalists like Amy are sounding the alarm on some of these issues that are typically swept under the rug. I hope you enjoy this episode of the Conscious Entrepreneur Podcast. Amy Lewin, thanks so much for joining the Conscious Entrepreneur Podcast.
- [02:06]
B
I'm delighted to be here.
- [02:09]
A
Now, I came across your work recently because you published a really interesting piece in Sifted and it's about the current state of founder well being and founder mental health. And this is a big deal for those of us in the conscious entrepreneur community because we know that we need to spend more time talking about what's going on on the inside and making sure that as founders and CEOs, we're setting ourselves up for long term success. And that's something that is often overlooked. But your research that just came out, this came out March 10, 2024, really shed very interesting light on what's actually happening sort of behind the scenes or below the surface for a lot of founders, and so much so that it was kind of alarming statistics in there about the current state of founder well being. Can you share with us the highlights of what you learned? And then we're going to get into some specifics about what we might learn from this and what we can do about it.
- [03:07]
B
Yeah. So our readers are sifted. Lots of founders based all over Europe. We also have some readers in the us, but primarily startup founders in Europe. And I mean, I speak to a lot of VCs, I speak to a lot of founders. And we all know that the last, well, few years have been really tough. We obviously had the pandemic, then we had the crazy boom years, and now we're kind of back to perhaps worse than reality. Lots of founders have been asked by investors to increase their Runway. Lots of them have had to lay off staff. Lots of them realise that the fundraising environment is not especially easy. So we surveyed our readers to ask them about their mental health. And when I got the results through, I honestly had kind of tears coming to my eyes because some of the comments that people were sharing were just really sad. So the headline Results, we surveyed 156 founders. They were split pretty evenly between bootstrapped pre seed, seed, series A, series B, a few at the kind of later stages. And 49% told us that they were considering leaving their business this year. 85% said that they'd experienced high stress in the past year, 75% said they develop anxiety. And people said things like, I can't sustain this rhythm anymore. Solving problems seems the only purpose in my life, and while doing it, my mental and physical health is deteriorating. Another person told us that their personal life was suffering, that they weren't being paid enough or they weren't paying themselves enough to support their family. And then others kind of brought up how hard the fundraising environment was. But it was just a real sign of the personal toll, and not just even on the founders, on their family, on their friends, on their colleagues. And just, you know, another reminder that building startups is really tough.
- [05:03]
A
It certainly is. And we don't always need this kind of reminder, but we get them. We prefer, obviously, when things are going well for people, but it's important to highlight these, these types of stories. I think, you know, the people who are not in the game of entrepreneurship don't see what's going on. Right. You just see what's in the newspaper. Oh, such and such, you know, sold for so much money or they raised a big round or they built some fantastic product. You don't see what's actually going on for a lot of people. And your research is, is really helping to, to shed a light on that. What was the motivation, Amy, to go out and, and do this survey? Like, what piqued your interest in this area?
- [05:41]
B
Well, so at Sifted, we, we obviously cover the shiny stuff. We cover the big fundraisers, the, the high profile hires, the, you know, amazing launches. But we also like to speak to founders and people who work at startups a lot about what it really takes to build a company and an organization. And, and I was Sifted's first employee, so I'm not a founder, but I've been, I've been through the growing journey and I know how hard it is to hire, how hard it is to fire, how hard it is to go from 10 people to 20 people to 50 people. I've seen, you know, friends of mine as well, founders, what a kind of toll fundraising takes on people. And whenever we publish stories about that kind of personal side of company building at Sifted, we get the most amazing response. People, people love knowing, I guess, that they're not the only ones. And I think sometimes startup culture is so much that you, you know, you've got to be optimistic. You've got to believe that your company can be the one in a hundred that's going to really make it. You hear from so many people that your idea is never going to work and you have to believe in it yourself that I think sometimes when times are just really hard, it can be difficult for people to know who they can speak to about it. And we all know investors say, oh, you can talk to us about it. But it was quite interesting. We asked, we asked who, who founders talk to when they are, when they are under pressure. And investors were not, were not high up on the list.
- [07:19]
A
It was not high on that list.
- [07:20]
B
No, no, it was, it was family and it was friends. But obviously, you know, not all people's families and friends are necessarily in startups. So there's only a certain amount of, kind of understanding of this crazy world that they might have.
- [07:33]
A
Yeah, it really perpetuates this concept that it's lonely at the top, that it's tough to be an entrepreneur because you're not surrounded by peers who understand you and who have been through this journey themselves. And so what I see happen a lot is, is people won't open up, they won't talk, they won't share their challenges, you know, because maybe their family doesn't fully understand it or the, or the classic response is well, if it's so bad, just go get a job and you know, type of thing that you might, might hear somewhere. And so that perpetuates the problem. So not, not only do we live in a stressful state or have anxiety and depression and all the many things that, that your article is, is laying out, but then we don't really have the avenues. And there are some people who are trying to change the conversation between investors and founders around, you know, how can we make this a little bit more open, a little more supportive? There are, there are people who are having that conversation, but it's not a big wave yet, let me put it that way. Like it's a small number of investors who are really perceived as someone I trust, someone I can open up to on stuff like that. Did you have an occasion to talk to investors and get their point of view on this too?
- [08:41]
B
Not for this piece, but there's an investor called Cherry based in Berlin and they have recently launched a kind of scheme, they call it Copilot. But it's is a set amount of money for each of the companies that they invest in. They invest early stage for the founders to get a coach. And that's them saying, you know, we believe that it's very important for founders to have people to speak to. And some of that was kind of for sort of very personal coaching. They said for other people it might be more about leadership skills or it might be about pitching, you know, so it's not necessarily always to do with the kind of mental health side of things. There's another investor called Balderton. They used to be Benchmark in the US and then they kind of, when Benchmark set up in Europe, they became Auditon. And they also have mental health sort of support for their founders. I mean there are others as well. Those are just some names that spring to mind and I think it's, I think it's a good sign. I think it's, it's important that some well known investors are making these statements. But I don't know if that's always going to be quite the right solution. I think there's always going to be instances where a founder kind of doesn't want to rely on their invest where they sort of say, you know what, like I just want you to give me some money and introduce me to, you know, some later stage VCs and then I want you to kind of not tell me what time I should wake up or what I should have for breakfast and you know, how I should exercise more to help My mental health or whatever. So I think it really is very dependent on the person, isn't it? But I guess especially early stage VCs, they talk so much, don't they, about you're investing in a person really, because a company is just only really an idea at that stage and it might pivot. And if you're investing in that person, then, you know, you also want to invest in their well being because they're not going to be performing at their best if they are, you know, worried, anxious, not sleeping, you know, worried they're going to get a divorce because they spend so much time at work and their partner is frankly completely fed up of hearing them talk about their startup woes. Yeah. So I'm sure it's a conversation we're going to hear more about from VCs.
- [10:55]
A
And there's still a stigma broadly in society. There's a stigma about being perceived as weak if you're talking about this kind of stuff. And there is the idea that within the business culture you want to invest in people who are going to knock down walls to make their business successful. So the idea is especially for VCs. So VCs are, the typical company that VC invests in is going to be very different than an average small business or something that a person's going to found because they're expecting asymmetric returns, expecting, you know, an outside chance of success or a small chance of outside success. And so they really want you to sometimes be super aggressive, committed, dedicated, growth at all costs type of mindset. At least that was what everyone was talking about until the last 24 months. And so because of that there is sometimes still a stigma around, hey, you know, maybe I can't share this because I'm supposed to be the person who's just going to go out there and fight until I've got blood on my knuckles and you know, that sort of thing. And so opening it up can be, can be really, really difficult. And even when VCs want to support, by the way, it's not always an easy conversation. There's not always a great place to start around just making sure that you're there and available. Just even that could be an awkward conversation on its own. Right.
- [12:14]
B
Yeah. And I think on that point when I, when I posted the findings on LinkedIn, I had hundreds of responses and one comment stuck out. It was a guy, I can't remember his name, but he basically said, well, obviously all of the founders who took this survey are thinking about quitting because any successful founder doesn't have time to do surveys like this. And I thought that epitomized this kind of. I'm sure there is some bias towards people who are finding it tough are probably more likely to take a survey like this. But I think that idea that any successful founder could never possibly have had any, you know, mental health challenges, never had some sleepless nights, never been anxious about something, it's just absolute nonsense. But it kind of summed up that attitude that is going to be out there from some corners that if you are struggling in any way, then you are weak and you know you're not in it for the long term, which I obviously don't believe, but it's obviously what some people still think.
- [13:19]
A
Yeah, and that's certainly, that's kind of the, the whole point of what we're fighting against here is, is the hustle culture and the, and the idea that you need, you need to do this at the expense of yourself, that you have to grow your business and sacrifice yourself at the same time. Hey fellow entrepreneurs. Join us at the third annual Conscious Entrepreneur Summit in Boulder, Colorado on June 4th and 5th. This is not just another business event. It's a life changing experience to learn from super successful CEOs and leaders and people like bestselling author Ryan Holiday, who's going to be there to share how to use stoic philosophy for business success. More than learning, this event is about connecting with a community of entrepreneurs who are committed to their well being and growth. I'm hosting and I can't wait to share this journey with you. Check out the website consciousentrepreneur us for more details. Now your work in Sifted is a snapshot in time. So it happened at a current stage. But it's not like this is the first time we've heard this. There was a whole series of articles published last year from Startup Snapshot and that was talking about roughly the same thing around burnout and anxiety and so on. So their data said 37% of founders suffer from anxiety, 36% are experiencing burnout, 10% have panic attacks, 72% of founders broadly struggle with their own mental health. And so this also then kind of mirrors the work of someone like Michael Freeman, who wrote the sort of seminal paper in 2015 on founder mental health. Are entrepreneurs touched with fire? And all this is telling the same story. And it's telling the story that people don't understand when they're starting a business, especially when they're trying to create a scalable business, a significant business. The toll that it's going to take on them and the way that their body and nervous system and mind is designed, which is not to take all this stress all, all at once. And so I think it's interesting that we're seeing multiple data points come out about this right now. Like you said, coming out of Pandemic and frankly, really big changes happening in the VC and startup environment right now. I'm curious how this might evolve if it's different than it's been in the past. But in terms of 2024, it does seem really spot on based on what I've seen from other people.
- [15:52]
B
Yeah, and we're also speaking to investors, lawyers, bankers, founders. We're anticipating, at least in Europe. I'm sure it's the same in the like a lot of M and A and a lot of that won't be the ideal outcome. That will be founders kind of saying, you know, I've had enough and this is, this is the best I can do for this business without completely shutting it down. There's also obviously the teams to consider and lots of founders will have that on their mind. You know, what, what does it mean for their colleagues, this, these employees, they've worked so hard to recruit and to train and perhaps an M and A is best for them. So I think that will be one of the outcomes we see. Back to the point about what VCs can do. One of the things that founders did raise was that they were worried about their financial security and that one reason for wanting to kind of pack it all in was to just go and raise more money and have a more stable job. And that is something that VCs can easily impact. They can encourage founders to take bigger salaries, you know, to, if they're at a certain stage in life, you know, whatever, have enough money to pay for their kids nursery school, not have a crazy mortgage or rent.
- [17:11]
A
The point is that the VCs can show up and help to remove some of this, particularly by projecting and talking about how important it is to take care of yourself and to take care of your financial situation. You know, we've all read the stories about, oh, the people who started such and such business in the dorm room at college and they only ate $1 ramen for three months and then they all lived together in some other house to keep the cost low and so on. Yes, these are great stories. They're kind of myths that we gravitate toward. Reality is that many people, when they're building a business, they could be in their later career. So meaning they're not just starting out and therefore they have other responsibilities. And so the structure of a financing round or the way that VCs talk about a company needs to include. Here's what you need to do to take care of yourself, to meet your obligations, to make sure that you at least have a baseline. Because if we're all in threat and fight or flight mode all the time, worrying about our personal security, how are we going to put any energy into the business? Are we really going to do the best thing that we can for the business?
- [18:21]
B
Yeah, 100%. I think lots more investors should think like that and encourage, you know, encourage founders to go on holiday, encourage them to have a personal life. These things are important. You know, we all need to recharge our batteries and, you know, visionaries do too.
- [18:40]
A
Well, there's that famous saying that comes from the VC world of I've never seen a company go bust because the founder took a week off, but I have seen plenty of companies go bust because the founder didn't.
- [18:55]
B
Yeah. And I think it says something about the people you've hired and the organization you've built around you. If you are that terrified of taking a week off, you know, maybe you need to work on that and then take your time off when you've got some great trustworthy people around you and have, you know, learned the art of delegation a bit more.
- [19:13]
A
So you gathered all these stories, Amy, of essentially what's not working or the stressors out there. So just to remind everyone what you were saying, you said 49%. So basically half of founders that participated in your survey were saying that they were considering leaving their companies this year. 61% had just said generally speaking, they're considering leaving. So that means that their commitment may not as be as high as it used to be. 45% said that their mental health was bad, 85% said that they had experienced high stress, and 75% said they'd had anxiety, all within the last 12 months. So there's obviously a lot of things that are not working here. What did you hear about what is working?
- [20:02]
B
Well, we didn't specifically ask them that in this survey from just conversations I have with people. Having a support network is so important, whether that is your partner, your family, whether it's co founders, other founders. So many people I speak to talk about the importance of a kind of peer network, other founders, or even if you're not a founder, if you're a kind of senior person at a startup and you're the only or the only person in product or the only person in this to have people who you can go to in other companies and say like, hey, is this normal?
- [20:39]
A
Like yeah, there's groups like Entrepreneur Organization, Young ypo, Young Presidents Organization, vistage, Conscious Entrepreneur. I mean we don't, we don't have forums like that, but it's still that type of community. Yeah, those are really, really important.
- [20:53]
B
Coaches, therapists, obviously they are not cheap, but that's something a lot of people, people talk about. I guess there's some comfort in people feel like although times are hard at the moment, we're kind of back on a level almost we're back to normality. Valuations have come down from the kind of crazy amounts. The sort of inflation that we saw in 2021 and 2022. Funding rounds are happening more slowly. Investors are more focused on becoming profitable and sustainable businesses rather than growing crazily. Silicon Valley bank was a whole other scare, but that means plenty of startups are more kind of sensibly managing their finances and have things in money in various parts. I feel like there's been a few shocks to the ecosystem which actually are likely to lead to us building fundamentally better businesses and organizations as a result. More thoughtfully, less kind of hyperspeed. It's a bit clearer what's what for lots of founders and sometimes maybe that that isn't good, but it's kind of clear that it's not good. Whereas I think for the past year there's been just a lot of uncertainty about where the market was going to land. And I feel like this, this year it looks like we kind of know what's going to happen. We know that there's going to be a lot of insolvencies. Had some data in just today from PwC in the UK saying startup insolvencies are at an all time high.
- [22:37]
A
Yeah, There was similar data from carta in the US yesterday that we smashed. They thought Q4 of 2023 was bad and it had been the worst ever and we've smashed through that already. Not even through the first quarter of 2024 in terms of closing startups.
- [22:54]
B
Yeah, but it feels to me that last year was a year of real uncertainty and nothing concrete was really happening. It feels like this year is still not a great year for the market, but some concrete things are happening. So startups are going to shut down. VCs are going to have to start investing much more again because they also need to start returning money to their LPs and showing some activity. The IPO markets will open up this year in Europe and the US Perhaps not loads, but you know, bankers say there's like massive pent up demand. So you know, all these forces are going to mean that stuff does start moving again. And then there are, there are obviously areas like if you're in AI, then everything's great. And if you're in climate tech also still very, very buzzy. So there are pockets where we're seeing lots and lots going on and I'm sure it's great to be a founder in those sectors. I'm also pretty optimistic that something like climate technology is something the planet really, really needs. So I'm glad that so much attention is being paid to that for sure.
- [24:03]
A
You mentioned something there that reminded me of other pieces of yours that I've seen, which is about the VC cycle and how it can impact this situation that a lot of founders find themselves in. So VCs obviously they, they go through cycles just like the people building the businesses. And you know, I would, I would like to make sure you're, that I'm correct in saying this, but what I understood, the point being was, you know, if we've been in a period of relatively low activity, there's pressure on the investors to deploy their funds and as a result they're going to be putting probably money into new projects or, or backing their winners. I don't know whether that's going to exacerbate the problem that a lot of these people are talking about in your survey. Because if they're already not growing as fast as they want or maybe don't feel great about their situation today, you know, does this help to speed up the creative destruction in their business, so to speak, and then allow for new things to be happening? Because VCs are going to have to then make tough choices about are they continuing to support existing portfolio companies or are they starting new?
- [25:11]
B
Yeah, but maybe, maybe that's a good thing. You know, if, if this speeds up the fact that you know what, your company isn't quite going to work. VCs aren't going to fund it some more. Call it quits earlier. I mean this is what I hear from a lot of people. People generally don't regret sort of ending things sooner than they, than they, than they, they did, than they would otherwise. And take, I mean, let me find the stats. 39% of the people we spoke to said they would take a break if they left their startup. So take your break, recharge your batteries, come up with a new idea, inevitably the market conditions will be better if you want to go do another company and go out to raise. And VCs absolutely love serial founders, don't they? Take all of those learnings, all of those failures, package them up nicely, put them into the pitch and you know you've got a million more reasons why a VC should invest in you next time because you know all of the things not to do that you did the last time.
- [26:12]
A
Yeah, for sure. And as my wife and my coach like to remind me, I don't get a gold medal for suffering. So just because I'm doing something and banging my head against the wall and feeling miserable about it doesn't mean that that's actually helping the world get any better. And so for a founder who's at that situation, maybe the best thing is to do a conscious wind down or conscious transition for them. Maybe it's out of the CEO role or whatever it is, but that can be a more elegant and easy way to move on and go find something else that really gives you energy. So Amy, just last question here. How do we support the founders and entrepreneurs in our lives? What can we do to help them?
- [26:56]
B
Oh, very good question. I guess listen to them.
- [27:01]
A
Give an entrepreneur a hug. Do we need a global give an entrepreneur a hug day?
- [27:05]
B
Yeah, we could definitely do that. Yeah. I think non judgmental people who they can, who they can speak to, what else? I think talk more about mental health. Talk more about the personal pressures and strains we all have. Whether that's, you know, that your partner at home is just as fed up as you are about hearing about this. Whether it's your parents are getting older and you need to care for them. Whether it's, you've got small kids and they wake you up in the middle of the night and you're exhausted. Whether it's, you've got really demanding and quite horrible investors and you wish you'd never taken money from them. You know, whatever it is, you've got pain in the ass people you've hired and you need to somehow figure out how to edge them out, whatever the stresses are, just that everyone has them. No founder is, you know, some, some sort of God who never experiences any of these things. That every company goes through a million speed bumps and, and yeah, that you've got to absolutely look after yourself because you are such a key component of that business and that team. And if you're not looking out for yourself, then you're not going to do a very good job of looking out for other people or the company's interests either.
- [28:22]
A
Correct. You can't pour from an empty cup, as they say. Well, Amy Lewin, thanks so much for shedding a light on this. It's a really important conversation. We don't have it often enough, and founders need to understand what they're getting into when they start a company because often they also show up with too much optimism, rosy glasses, and don't fully prepare themselves for the long haul. I think with your work, we're now starting to have more color to this picture so that we can really help support founders for the long term. So thank you so much for everything you're doing to shed light on this. And thanks for joining us on the Conscious Entrepreneur podcast.
- [29:00]
B
Amazing. Thank you so much for having me. And if you want to follow us with www.sifted.eu and we'll be doing more of these surveys, send me ideas for the next ones we should do. Thank you for having me, Alex.
- [29:13]
A
Fantastic. Thank you. I hope you enjoyed this episode of the Conscious Entrepreneur. If you're ready to go deeper into working on yourself, check out the upcoming events, articles and resources on our website, which is consciousentrepreneur Us. I'd also really like to thank the team at hivecast for producing this episode. If you run a podcast and are looking for an awesome full service production company, make sure to check out hivecast.