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The Conscious Entrepreneur | Leadership, Self-Awareness & Mindset
EP 122: Startup Stress Isn’t Just a Founder Problem: Startup Culture and Employee Mental Health
00:24:36
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- [00:00]
A
Today we're examining new research from Startup Snapshot that highlights something most startup founders underestimate. Stress doesn't stay with the founder and co founder. It moves through the startup from day one. And employees often feel it more profoundly than the people at the top. In fact, the data we're looking at today shows that employees report higher levels of stress, anxiety and burnout than founders do themselves. And what's driving that experience, they say, is not compensation, workload or lack of resources, it's actually uncertainty. When clarity is missing, fear fills in the gaps. This is an empowering conversation about what founders can do with that insight. We'll talk about how being more intentional in everyday leadership choices, especially around communication and transparency, can reduce unnecessary strain and influence positively, how teams experience uncertainty and strengthen the long term viability of the companies we're working so hard to build. Let's get into it. You're listening to the Conscious Entrepreneur and I'm Sarah Lockwood. This is the only podcast completely dedicated to the well being of entrepreneurs. It's where we do the inner work to become the leaders our businesses truly need. A thriving business starts with a thriving you. Let's get into it. So we're here today to have a really important conversation about the inner world of a startup founder and how the thoughts and feelings that they have and the emotional challenges they may be facing actually impact the rest of the team and the viability of their enterprise in the long term. And we've got some great people here to talk to us on this topic who have done some really important research and I'd love for you guys to introduce yourself.
- [01:49]
B
So hi Sarah, I'm Yael Benjamin. I'm the founder of Startup Snapshot. We're a think tank that researches the hidden dynamics of startup building. So we're working to make the invisible visible and really put a number on those dynamics that are really, really hard to measure, but a lot of times really affect the success of the, you know, the founder, the startup team. So it could be the board dynamics, kind of the relationship between founders and investors, the mental health of the founders themselves, or the leadership dynamics. And over this past year we've been researching kind of the emotional toll of working in a startup. We had a report about two years ago on the founder perspective. And even though a lot of the data points were so obvious that there's an emotional toll to being a startup founder and that it affects family life and how it really affects the founder on a personal level, I think seeing those data points and bringing them to light Started a conversation in the ecosystem where which was amazing and really started the discussion and started raising awareness for this topic. So this year we were working on kind of the second edition of this report, the employee perspective and to always see how that affects the founder. Again to bring it back to the founder. So what the employees are going through and how the founder is affecting that. And we've worked with Anika on that and the Inner foundation for the past year and it's been a great collaboration. Happy to share the data around that.
- [03:12]
A
You're bringing a new lens on this conversation, more of the investor perspective. Could you share a little bit about your background?
- [03:19]
C
Absolutely. And thank you Sarah for having me in this super important conversation to have. I run the foundation called the Inner Foundation. So we are mental health investors in the space, both supporting entrepreneurs, developing solutions and value propositions for improving mental health. So we do that in a hybrid model. So we do it both for nonprofit organizations and for profit organizations. So when started three and a half year approximately ago, I did not really think about this topic as much, I have to be honest. We were looking for amazing entrepreneurs and we were supporting them as an investor. Right. But then starting to realize that even though we as specialized in entrepreneurs addressing mental health, you would think that they would be extraordinary sort of good at supporting their own well being and the team's well being. And it was clear as for all other founders, it was not really on the topic of their conversation. So seeing that firsthand with this lens of supporting again entrepreneurs addressing mental health, it became clear that this is an issue or an opportunity if you like, because it's not been addressed properly. So we have been supporting as a part of financing the study that's done by Yael and his team and her team and now continue to work on how we can also spread the word of how important this is.
- [04:47]
A
So I think that sounds like a great place to begin. Is actually talking about the very important study that you did. Maybe give us a little context for the number of companies and founders that were involved and perhaps we could hit on a few of the most important findings from your research.
- [05:06]
B
Definitely. So we really did kind of in depth research with around 300 startup employees from early stage startups globally. So it's across Europe, the US most of the respondents. And then we did about an additional 50 kind of deep dive interviews where we worked with experts from our network to analyze the data and to give their perspectives. And this year it was really interesting. We launched a new community that Nika's on the advisory Board as well, the inner circle. And it's a community for psychologists and coaches that work, you know, purely with entrepreneurs. So they're kind of sitting with those founders day in and day out and hearing what they're going through. And they took kind of crucial role in this research, helping us analyze the data and give some more color and insights to what it means.
- [05:52]
A
So in the study itself, which was again a part two of a series of research, this research focused specifically on the employees of startups. And you found some really interesting and surprising pieces of data when you looked at how these employees are feeling. Could you share maybe a couple of highlights from the research? Definitely.
- [06:15]
B
I think the main takeaway and the kind of overarching theme of this specific report was how the mental told emotional toll of startup building extends far beyond the founder. So it's now become a common conversation obviously how stressful it is to be a found how their family life, their emotional health is impacted, but it spreads far beyond that to the employees themselves as well. And we saw that 80% of the startup employees in our study reported that working in their current company really affected their emotional health. So we're seeing high rates of anxiety burnout over 50% of the respondents. And what's interesting is that only a really small percent, only 10% expected it, but 80% said that they're experiencing it. So really big kind of of difference over there. And the rates that they're reporting it, that they're reporting anxiety burnout, high stress, panic attacks are actually higher than the rates of the founders themselves. So again, important to remember we're talking about reporting self reporting, but those rates are higher than the founders.
- [07:18]
A
And that is a real shock to me as a listener and I suspect there are a number of reasons why that might be the case. Surely you can appreciate that it may not feel safe for a founder to report accurately all of the stress and anxiety and negative consequences they might be feeling. And that might be one reason for those numbers. But it, I guess it's surprising to me that employees of startups don't have a higher expectation for that outcome. Why do you think that is?
- [07:57]
B
I think a lot of times there's, you know, this perception that the stress or all the weight is on the founder's shoulders and the employees coming in, you know, maybe they have a very, very small ownership stake in terms of options, but we really see that, you know, they're reporting very high loyalty or identification in terms of their self with the company. A lot of times in the survey they would say, you Know, we think in terms of us or we are doing this them in the company. It's the same with the founders that their identity is overlapping in some way. I think this definitely the conversation really needs to shift over here and for founders to start appreciating that the early employees, and this isn't the first, you know, one or two employees, the first 20, 30, 40 employees are highly identified with the company and are really feeling that emotional toll.
- [08:43]
A
And I think this is really exciting that we can use this data to maybe shift the perspective on how a founder thinks about this reality. Because I think it is an opportunity to create change and use their intention to make this a more positive outcome for the long term viability of their company, the happiness of their employees, the retention of key talent within their organization. And I'm sure, Annika, that you might share as an investor a point of view that this is such an important skill set for a founder.
- [09:28]
C
Yes. And I think it all starts with sort of bringing, sort of destigmatize the situation and talk about it in an open and trustworthy way. Because it's not about that. A founder's journey will be sort of perfect life, you know, life, work, balance or, you know, whatever. So it's like an expectation of that it will be some, some, some really intense time. And how do we, how do we take that into consideration in things like what is my communication style as a founder towards my early team? And as Yael is saying, it's not the first two, it's actually the first 10, 20, while you still are in this sort of founder mood and make sure that to sort of, it's about awareness, understand that this actually matters how I communicate. And I think it's also important to understand as a founder, you might not be the perfect external communicator, but then aware that this is something that I might need to work on putting into practice. Because it's actually a way of how I want to perceive my business and I want to drive my business. Or you make sure that you have somebody else in your team that is really good at it and that can help you communicate. Because it's not about saying nothing or saying everything. It's about having a good balance depending on where you are in your sort of founder journey and creating trustworthiness spaces where this communication can happen. Being sort of my take here how important it is for the investor community to also understand that this is business. This is actually to make sure that you support the founder and make sure the founder understand to support the team. As this is a key driver for successful company long term. And that requires again, intentionality, awareness, probably some vulnerability and you should make sure that you have somebody to talk to, to work on it and make plans for it, I guess.
- [11:25]
A
I think a lot of startup founders might be surprised. One piece of the data that you shared was that many startup founders feel that they aren't sharing the stress, that they sort of keep it managed and contained and they think they're doing a really good job of this. But what the data in your report showed is that employees actually feel that stress frequently.
- [11:51]
B
You know, we saw this in our last study on founders and it comes up again over here. You know that founders are always in sales mode. So in early stage companies, you know, you're always selling the vision, the, the next stage, the next funding round, and you're selling that to your team as well. And only 10% of the founders report that they're open with, you know, the employees about their challenges, their stress, their worries in some way. But a large percent of the employees say that they feel that on a weekly basis that they're sensing that anx that stress from their founders and it really affects their performance or their well being in some way. So we found a direct correlation between the employees that pick up or report that they're feeling, you know, that their founders are really stressed and their burnout, their work well being, their psychological safety. So there is some correlation here between the stress that is unverbally or you know, being felt by the employees and is kind of spilling and contagious from the founder into the team. And I think a lot of times founders start thinking about their leadership capabilities or communication style, dealing with stress later on after they've already raised a lot of money and built a large team. But it's important for them to remember that from day one they're really setting the tone and their ability to regulate their emotions to talk about that stress in whatever way they decide to do it. There's no right or wrong here, but, but that really sets the tone for the whole team.
- [13:15]
A
The teams that feel that they're being communicated with openly. If I understand the data correctly, those teams report less of the negative impacts, right, because they do feel that there's more transparency. I mean, I'm reading into the data.
- [13:30]
B
But yeah, that's another interesting data point. So what we just talked about now was really about how the founder stress is contagious and how that affects the, you know, the performance, the KPIs of the employees. But another data point we also found was how transparency or lack of information in the organization is the number one stressor for employees. And when we kind of ranked all the different stressors, it was really surprising that compensation was in one of the last places. And startup employees are taking a huge hit on their salary. The fear of the startup running out of money was in last place. Kind of work life balance, workload, lack of staff, all those were ranked kind of farther down the line. But the number one stressor was lack of transparency. And that lack of transparency really affects KPIs. So that was the biggest kind of influencer into performance of employees. So employees that work under founders that are very transparent report 26% less leave intention. So that's very strong. Yeah, very strong number.
- [14:32]
A
Right. So if you're a startup founder or a leader on a startup environment, a key takeaway from this conversation is to create an atmosphere where people feel there is a great deal of transparency, where they feel that they have a line of sight into the information that's most important. And it seems that probably asking your team how transparent they feel you're being would be a really good indicator to help you manage their happiness and to retain your key employees.
- [15:07]
C
But I also think it's important again to be. It's not about telling everybody everything because that's not helpful either. So it's coming back to this. It's an intentionally strategic way of operating. As a leader, as a founder, what kind of communication style are you putting into your company? Yeah, using discernment coffee hours that you can ask whatever you want or this is. And also talk openly about everything is not. You don't need to share everything because actually as a founder you need to deal with ups and downs. It's not per definition the same that all the employees should have the same kind of up and down because they need to be feeling safe enough just focusing on what they're supposed to be focusing on. Having the trust in the leadership, saying that if there's something that I need to know, I will be informed properly. So it's not just transparency for the sake of transparency. That's not by definition equals the best leadership.
- [16:03]
A
So what I'm hearing you say is it's really about. It's not about the transparency so much as the belief that those employees have that if there's something they need to know, they will know it. It's really the transparency creating trust.
- [16:18]
C
It is because in the end of the day, it is actually about trust. And I think that's our also we and having what they call psychological safety or knowing that there are things happening in a startup, by definition, there is a lot of unknown things.
- [16:33]
B
I want to tie that back into also the data of what we just talked about. I think if employees are feeling the founder stress, but they're not getting transparency in some way into why the founder is stressed, they're going to kind of make up the worst case stories or they're going to take that in whatever direction their mind goes. It could be the company's failing. I'm going to lose my job. They don't know kind of what to make of it. And, and like Annika said, if you communicate it, it doesn't have to be everything but in the right way in order to build that trust and stability for them. Understanding that really the founder has maybe a capability to take a larger level or deal with a larger level of uncertainty than the employees. That's why they went to be a founder. They have that ability. So you do have to understand, you know, where employees are coming from and build that trust and stability in the right way.
- [17:20]
C
Addressing what you said in the beginning Eyel, how important it is to have a model of what kind of support system do you offer the employees? Is the founder sort of mature enough to realize I need some external support here? I think that's what's so lovely with this inner circle that Yelts now has put in place for making sure that they are actually specific coaches and therapists, addressing specifically and understanding the backdrop of life of a founder and make sure that they open up for getting support.
- [17:55]
A
Let's turn to that topic a little bit. Would you like to talk about the inner circle?
- [17:59]
B
Definitely. So it's a community for psychologists and executive coaches, well being experts that work specifically with entrepreneurs, people from around the world. We have today, you know, we just opened up a few months ago, so we have the first 30 founding members that we really hand selected. Each of them either that I've worked with them on my research or Michael Freeman from our advisory board has worked with them in different aspects of his work. But each of them brings a really unique perspective that some of them were ex founders and other coaches, some of them are psychologists, psychiatrists, and the whole goal is to get access to key research and experts in this field so that they're really able to support founders in the best way possible. And the conversations coming out of there have definitely enriched our research, but have really opened up a lot of interesting topics that need to change in the ecosystem and are really helping each of the practitioners kind of up Their game.
- [18:53]
A
So it's amazing. And how do you, how would a startup founder tap into the inner circle resource? What's available to them to take advantage of if they're listening today?
- [19:05]
B
So today, you know, step one, it's kind of a closed community for the practitioners themselves. We're releasing kind of a directory of all the coaches. So if founders investors want to recommend or use one of the coaches, there's kind of a vetted list of coaches that work only with founders. So that's going to be a resource. And we're starting to open up events to have more ecosystem events. We'll start inviting founders investors as well to see because like Anika said, you know, it's a, it's an ecosystem wide issue. There's a lot of relationships, those relationships and that stress is interconnected. We need to start seeing how we untangle all of that.
- [19:42]
C
Yeah. And of course I also think, which is now, I think in the making to really do a, you know, the part one, the part two and the part three is obviously to look into the, to the investor side, start to understand what, you know, what about their own well being, but also what's sort of hindering them and what are they to actually also be able to reach out and open up a conversation about the importance of well being as one of other KPIs that you very much follow through your business updates or your board sessions or whatever. So make sure that this becomes one of other important things to follow.
- [20:23]
A
And I like the idea of taking that information and using it in a really positive way to, you know, impact everyone. As you said, in this, in this ecosystem that is very interconnected. Yeah, it's great. Do you have any advice maybe that you've seen that was really transformative in a startup environment that really created the sense of safety and changed the dynamic. Do you have tips or tricks that you would share?
- [20:53]
C
I have one which is actually slightly. But it's a company that we have invested in which is in mental health space. Two or two co founders, the two of them and they from day one decided to have a coach working with couple or co founder therapy. Sort of constantly meeting regularly. And then two years in the situation happened that one of the founders co founders decided that it was not for her. So they decided to. Which happens a lot. Right. And there's also other studies coming out saying that 6 out of 10 co founders are splitting up due to interpersonal issues. Right. So this is a thing. But these two amazing women, their thanks to that couple co founder therapy were Able to, in a very, in an extraordinary good way I would say to be able to work it through the way sort of talk to the board in a way were able to address the investors and then they would never. And both of them are saying the same thing. That would not have happened if they from sort of preventative started to work on their co founder sort of well being throughout this journey of becoming co founders and on the stressful situation and whatnot. So for me that's always one of those examples firsthand, seeing how important it was for the business and for them as individuals.
- [22:21]
A
That's a great tip.
- [22:22]
B
Yeah. A lot of the coaches from the community also we have a couple that are focused on co founder conflict and they're saying that a lot of the kind of founders come to them either through the VCs or directly once they're already at a point of conflict and then at that point it's so difficult to deal with it. And I think it's, you know, if we widen that even a little bit, just the view of this preventative mindset of how I think a lot of times founders raise a lot of money, grow their team, you know, scale the product, go to market really quickly. And now in the age of AI, like all of that happens even at super speed, but they haven't developed their leadership capabilities or their interpersonal capabilities at that same rate. And a lot of times they think, okay, you know, once I have X employees, I'll hire a head of people or then I'll start to have leadership training. But it really happens from day one and it's not a weakness, it's a strength to set up those kind of support networks because it's a journey that everyone faces the same ups and downs and I think once they realize that everyone's going through the same journey, if you can put in those kind of risk mitigation strategies and see them as part of the business and crucial, then it's going to help you once you hit those roadblocks.
- [23:30]
A
That's right. Great advice. Thank you guys both so much for having the interest in, you know, looking at the startup ecosystem through these various lenses. I'm very happy that the funding is here for this kind of research and that there's an appetite for it and that the responsive nature of the inner circle is here to begin to bring change to the ecosystem and to resource people differently through education. So I hope we can help spread the word a little farther about this and I hope that people who are listening will take the time to really take a look at the first and second part of the studies, and then when the third part of the study comes out, perhaps we will revisit that and come back and have an ongoing conversation.
- [24:18]
C
Thank you.
- [24:20]
A
Thanks for listening to the Conscious Entrepreneur. Every episode here is meant to sharpen how you lead and how you live. If something landed for you, please share it founder to founder. I'll meet you here next week.