Of Scars and Knowing Failure

One of the aspects I'm loving about my journey raising and building a fund is how the conversations with and questions from LPs, a bunch of them founders and operators themselves, help me continually refine my thinking and build clarity.

That said - I'm being careful of not falling into the trap of drinking my own cool-aid, (can happen when you're pitching N times a week), and questioning the basis for my thinking. In that spirit - I intend to share parts of it publicly, for critique if nothing else (does the internet does love to correct a wrong opinion!).

As an early stage fund, founders and teams are the primary vector for any investment decision. And how we think about that vector is often a cornerstone of an LPs decision of whether to invest in us (or so I think).

Consequently, there's been a bunch of back and forth on our thought process on founders and founding teams. This is what I focus on today.

Out of suffering have emerged, the strongest souls, the most massive characters are seared with scars. - Khalil Gibran

Building a company almost necessarily means you will fail. Everyday.

At the simplest of things, at the most complex of things.

Companies are not successful because founders and teams don't fail.

Companies are successful when founders and teams consistently succeed at N+1 things, if they're failing at N. The failing at N is pretty consistent too.

Which is where I feel founders who have experienced failure in some capacity in life, are better equipped for the journey.

→ The inability to deal with failing, will often keen founders from the focus and clarity required to just succeed at the N+1th thing; bogging themselves down with the failures instead.

→ I posit that this may be correlated to governance related issues that the ecosystem has been seeing (and LPs + GPs are so wary about). A weaker muscle of dealing with failure means we're likely to want to gloss over the failures, brush them under the carpet, try get out of having them bubble up.

→ I strongly believe that when we start to fully embrace, accept, recognise our failures - only then can we work on them, move past them, and also focus on whatever is working more than obsessing over them. Needs a muscle, toned over failures in life.

There's analogies around us across domains, that might help contextualise this better.

Learning and improving at an musical instrument, levelling up on a sport, pushing for a sub 2 half marathon, a fitness journey, becoming a gym person, yoga - all of it; involves failing and falling (oft literally!), on a daily basis. Most people don't keep at it, and leave. Find excuses. Don't push themselves. Only if we keep at it - do we see any benefits down the line.

And yet, for those who are decent at dealing with failure on some of these fronts, that often doesn't extend to dealing well with failure on professional aspects. Which was weird to me, at first - until a ?? went off, about an unfortunate truth.

Most of us - our identity is deeply linked to our work.

Even if we're more accepting of failure, and better at dealing with in some domains in life , dealing with failure on what our self-identity, and self-worth is tied around, is another ball game entirely.

We at Appreciate Capital love founders who have spent time in the trenches (where failing is just another Tuesday), who have context on the glass-chewing pain they're signing up for by choosing to build a company.

We also seek to do deeper on the vectors of self-identity and self-worth that founders have, what they attach it to, and how secure it is.

Founders and (early stage) investors reading this I'd love to hear your take on this. DM if you'd rather, not trying to engagement farm.