Do Good Ideas Matter More Than Good Founders?

I think the thing that's missing sometimes from this pivot conversation is sometimes the best thing to do when you realize the thing that you're working on isn't working is to actually take a pause, take a beat, step back and say, hey, we tried something. It didn't work. What are we going to do? Are we going to try to build for the same customer with a different product? Are we going to try to redeploy the same product to a different customer? Are we going to, like, change markets? I find these wild pivots are really.

Hard it's the week of December 8th. Welcome to the Learning Corner, a Precursor Ventures podcast. Welcome to the Learning Corner by Precursor. I'm Mia Farnam and I'm joined by our GP and managing partner Charles Hudson, and also one of our graduate interns, Yousef Benoor, to talk through this week's goodreads and articles. Welcome Yousef.

Thank you Mia. Thank you Charles. This is a dream come true. So thank you so much for having me. I always enjoy these conversations. So super excited to dive deep into it.

We're excited for you to be here. Our first topic is a LinkedIn post from Ben Kuznoka, co founder and GP of Village Global, who reflects on how his has shifted after backing hundreds of startups. Conventional venture wisdom suggests you should back exceptional founders even if their initial idea is weak, assuming they'll eventually pivot into something better. Ben says quote the popularity of the concept of the pivot in startup lore exceeds the rate of success in practice, and even great founders often fail when starting in bad markets. Ben observes that the strongest companies typically had compelling day one ideas while teams with weak initial theses struggled to build. He breaks down the dilemma investors face when encountering a great founder working on a questionable idea, highlighting four things he evaluates 1 the founder's openness to iterating their version 1 idea 2 whether entry valuation reflects the risk, 3 whether the round size avoids early over hiring that makes pivoting harder and 4 whether the founding structure allows flexibility in future decision making. The conclusion is that founder quality matters, but idea quality matters more than investors like to admit. Strong companies usually start with strong ideas, not weak ones that somehow get transformed later. Before we go deeper, Charles, how do you personally weigh founder quality against ideal quality? Specifically at pre seed where we spend time since it is so early and we think that pivots will inevitably happen. So how has your view shifted as you've seen more companies try to master the pivot?

I get this question a lot, especially from LPs. It's all about the people, right? I'm like, yeah, but a couple things I've observed. Most really good founders I know don't pick bad ideas. They simply don't because they can usually sniff out what makes a good idea. Market size, market opportunity, market structure. All these things I find in theory. Oftentimes, if I find somebody who's a smart person who's working on a bad idea, sometimes they know it's just a starting point, too. But I would say for a long time, I would tell people the idea matters. They're like, why? This founder is awesome. I was like, but in a pre seed round, you're not raising that much money. You're raising money for, we'll call it 12 to 24 months. And if you start off with a terrible idea, you don't have a lot of time. Unless you instantly realize the day the money hits the bank that the thing that you pitched all those people on was a terrible idea, which. Which has happened to me, but not that often. You're going to spend some amount of that money going in the wrong direction. Then the question's like, how much money and time do you waste going the wrong direction? So I tell people, you need to be in the zip code of a good idea. I don't expect the original idea to be perfect, but you do need to be in the zip code of a good idea. And when I look at our best portfolio companies, there are very, very few examples of pivots. Almost all of them are essentially doing the thing that they said they would do. Maybe not in the exact same way, but they're generally building in the same market for the same customer archetype that they pitched us on. And I think that's part of the process. Ironically, I think there are two ways you can do this. One is you can do kind of more like what South Park Commons does. And you can just say, we're going to find people before they have an idea, and we're going to take no opinion on the idea because the idea doesn't exist. And we're going to work with them through the iteration with the belief that they will come out the other end with a good idea. I think that model works. The other model is you assume that the person has spent some amount of time thinking about the thing that they want to build, and it's come to this conclusion. The other thing that Ben said that I agree with is I care less about the initial idea. If the company's raising a 5 million round, that's kind of like two shots on goal in one. And as long as you don't over hire or overscale the company, you can, you can explore and try things. The challenge is those rounds often come at high valuations, and so the thing that comes out the other end has to be worthy of it. So I tell people it's like 60, 40, 70, 30 team to idea. And so the last thing I'll say is I think there's like a spectrum of ideas. There's like amazing, incredible ideas. You hear them like, that's such a good idea for a startup. And then there are truly terrible ideas. I don't think most people have truly terrible ideas. I do think there's like, for me, some minimum threshold where I tell people I have to, like, not hate the thing. I have to think it has, like, a reasonable chance of succeeding. I don't have to love it because there have been things I didn't love that I didn't understand that turned out to be very good ideas, and we didn't invest in them. So I don't think you want to overweight the idea either.

Charles the other flip side of the $5 million round, too, is that there's probably this belief that there is enough resources to probably deploy heavily in one direction, and then if we need a pivot, we can. So there has to be a little bit of striking a balance there, right?

Yeah. I mean, we've, we've had companies in our portfolio that have raised larger rounds that have started in one direction and pivoted, and they were resourced to do it. And I think that's great. Now, I think it still means the pressure is high to build something of consequence when you do that. But, like, it's possible.

Do you agree that pivots rarely succeed? And if so, what distinguishes the rare pivots that do work from the many that don't?

Elad Gill's book has a really good framework for pivots that I really like. And, you know, most of the time when our portfolio companies, yousef come to us and they tell me how to pivot, I'm like, are we pivoting or are we flailing? I think the thing that's missing sometimes from this pivot conversation is sometimes the best thing to do when you realize the thing that you're working on isn't working, is to actually take a pause, take a beat, step back and say, hey, we tried something, it didn't work. What are we going to do? Are we going to try to build for the same customer with a different product? Are we going to try to redeploy the same product to a different customer? Are we going to like change markets? I find these wild pivots are really hard and oftentimes they're not well thought out. And sometimes you have a team that doesn't make sense for that new company. I don't know that every founder takes pivots seriously, but I understand the desire like, hey, the thing we were working on isn't working. We got to find something else and fast. But I'm like, the worst thing you can do is go from one bad idea to immediately pivoting into something else that's equally poorly thought out. Give yourself time to make sure that the new thing is good. Or in some cases just say, hey, we don't and this is happening more and more in our portfolio. We don't have a really good new idea. This is what used to happen back in the day. You would just say, hey, the thing we were going to build didn't work. We're going to send the money back, we're going to wind the company down. The hypothesis was wrong and I think like Slack and a few other and genie.com pivoting into yammer. I think we have enough lore stories now that people are like, I could be one of those, but most people aren't.

That's a good segue into our next piece, which comes from investor Aaron Harris from Magic & Co. Titled Missionary Accountants, harris challenges one of the venture capital most persistent cliches that the best founders must be missionaries deeply and personally passionate about the problem they're solving. Harris argues that this narrative is overstated and often unfair. Many great companies are built by highly capable founders who are motivated by opportunity, craftsmanship or entrepreneurial skill rather than emotional or morale attacks attachment to the problem. He uses the idea of a missionary accountant to highlight the demanding passion in every category. In reality, most successful accounting or infrastructure founders weren't spiritually called to those industry they were simply excellent builders who understood the market need. Harris warns that placing too much emphasis on mission can become a subtle form of gatekeeping, dismissing founders who don't fit the archetype. So his core point was what matters is whether a founder can understand the market, execute well, strong economics, and iterate with clarity, not whether they profess deep personal love for the domain. How do you distinguish between genuine founder conviction and a narrative crafted to appeal to investors who over index on.

Mission? Yeah, I also want to hear what Mia has the thing on this one too. I mean for Me, I've always thought like nobody wakes up passionate. No one says at, at 8 I want to build a CRM or you know in high school my dream was always to build an ERP system. Like nobody says that but what matters are the things that Aaron mentioned like are you good at building? Do you have attention to detail, do you care about your customer's problem? And I think it's okay to say like hey this problem's interesting to me because this customer's interesting to me or because I find it intellectually stimulating not because my grand, you know, I'm a third generation ERP develop. We've talked in the past about a few things in venture that people wish were true and I think the flip side is I've met a lot of really passionate mission oriented people who are working on music related startups and that is a domain and there are a lot of things in consumer that attract people that have like real mission attachment to those problems and in many cases the economics of those businesses are more powerful than people's missionary attachment to the problem. And so I don't know, I think a lot of VCs would love to believe that this is true but what I will say is when you do find someone who has deep mission attachment to a problem it usually means they're going to fight harder and work harder to make it happen than the average person and that is usually a good skill. I don't know what you.

Think. I'd agree. I think specifically when I think about healthcare, it's funny, I think there's so much passion that comes into a lot of digital health and tech enabled services companies that come up. They're built through a lived experience of not having the support they needed in the care. There's tremendous amount of opportunity in the back end infrastructure, data interoperability side of healthcare which is the least sexy area to go. But we can't even start offering new capabilities for truly personalized care unless the rails of healthcare are rewritten. And so that's why there's been a wave of really wonderful companies that have come up to really be like what's the root cause of the reason why I can't deliver end healthcare? It's because EHR CRMs, all of that is completely broken. The fact that you can't control any part of your data when you move from one practice to the next. I felt this a lot looking at women's health for a long time and so I think we still have lots to go but I don't think any person to your exact point woke up and was like, oh, I'm so passionate about EHR and CRM capabilities, which is why I want to build here. But I do like a balance. I do like when you hear the stories from the founders of knowing like, I acknowledge that this is the least sexy area, but we can't even start scratching the surface on delivering better care unless we start here.

First. I think there's one other dimension. I've just worked with some people who are just very competitive and they just like winning and if you put them in any game, they're gonna wanna figure out how to win. And I think for some of these markets, I think at the end of the day startups are hard. So something has to get you through the hard days. It can be attachment to the problem and the mission. It can be the people you work with. It can also just be your inner desire to win and meet other people. And we have some people in our portfolio where I just think like I could put them in charge of a chicken coop. They'd want that chicken coop to be the most productive chicken coop and they'd want to beat every other chicken coop on the block. And it's more this is a vehicle for exercising some inner desire to win than it is about like the specifics of that.

Business. And I guess my last question here is how do we balance that with. I think these missionary founders are usually pretty good storytellers too, if that's what you want to lead. And so I think goes back to the first topic that we had. I think this is something that venture would like to believe to be true, that these are the types of founders that we fund early on. But to your chicken coop analogy, that execution skill set is so important when you have limited amounts of cash to work with. So I mean, does this missionary founder ism cause investors to overlook the pragmatic, operationally excellent founders who might execute.

Better? Yeah. And I've met some mission oriented founders who just couldn't execute. To your point, Mia, they had all the passion and attachment to the problem, but they couldn't figure out how to connect the dots. And so I think there is a danger in like over indexing on mission. Whenever we meet a founder, I always ask myself, why is this person working on this problem? Why does it matter to them? And sometimes it's hey, I tried to build this at my old company and they wouldn't let me. And I have chip on my shoulder. We have all these like chip on the shoulder and mission at the end of the day. Like it's important to understand what's this person's internal motivation for doing this. And I find it very hard to invest in companies where I don't have some sense. It doesn't mean I'm right every time, but I find it very hard to invest in companies where I don't have some sense of like what's motivating this person to do this as opposed to go do something far easier and far less.

Risky. Not to tie it back to the first piece, but right now with all the pivots tied to moving into something AI, I feel like that question is coming up so much of like maybe this wasn't the time for a pivot into an AI. Maybe it was return the money back and then let's pause and breathe and start something completely fresh, a rebrand. I don't know if it's going to save face.

Here. That's a really good segue into our next and last topic of the day, which is a piece by Jonathan Reddy. And this topic actually hits close to heart because I actually come from Seattle and I was one of the engineers that Jonathan will be talking about. So Jonathan Reddy, founder of Wonderful in his piece titled Everyone in Seattle Hates AI, Jonathan describes a surprising pattern in conversation with Seattle based engineers. Many of them are angry and exhausted towards anything labeled AI ready expected curiosity when mentioned in his AI startup, but instead he was encountered with frustration tied to broken internal tools, horse AI mandates layoffs justified by AI efficiency and assessed that being on an AI team now function as a protected status inside Big Tech. He notes that this negativity wasn't directed at him personally. It reflects a broader cultural mood in Seattle where AI is increasingly associated with corporate dysfunction rather than innovation. What struck him is the contracts. While engineers in other cities respond to AI with excitement, Seattle engineer often respond with resentment. The issue isn't the technology, is the way AI has been deployed and messaged inside legacy tech environment. I'm just curious Charles, from your perspective, how should investors interpret growing skepticism toward AI within legacy tech hubs? And what does the internal culture pushback signal about the ecosystem future.

Direction? I think this has been a fascinating first of all, like there were like five people in Seattle who sent me this article. So I don't know if all of Seattle hates AI, but a lot of my friends were like this. This is it resonated with them. There's a couple things I don't know if either of you have had this experience. I have friends at Microsoft and I've talked to them I was like, oh, let's do it, let's do a meeting. I'm sorry, I'm gonna have to send you a teams invite. And I'm like, I don't like, I'm not a big team guy. And I don't know, I've worked at not a lot of time in big tech. What I have found is sometimes the company has a product and the desire to push that product. You end up saying, no one can use Cursor, you gotta use GitHub, Copilot, because that's our thing. And I think there are fewer things that are more frustrating at work than being told to use a tool that you know is inferior. It's really demoralizing and degrading. And in particular if you're just like not in a position to help improve or fix that tool. And the thing that really resonated with me is I think I've worked when I was at Google there were some like protected classes, there were like high profile projects where if you were on that project you were in this elevated status and you got a lot of resources and if you were in a low status project, you didn't get the resources. And part of being in a big tech corporate environment is understanding how to migrate away from low status, low importance projects and try to get closer to whatever the center of gravity is that the organization. And I also think this is something I underestimated at the beginning of this AI revolution is that like there were a lot of incumbent and are a lot of incumbent companies that have tremendous assets that they can put to use and should give them a huge. Anything about, you know, Copilot should be amazing because it's tied into GitHub, but it's not as amazing as it could be. And so I think it's easy, like, oh well, big tech sucks. That I'm like, well, explain Gemini 3. I think people who work in tech are smart and I think it feels disingenuous when you're like, why am I being forced to use this crappy tool when I could be doing my job better to heap insults upon injury. I'm being judged on my usage of a tool that stinks in my mind as a basis of my promotion. And I, I can't imagine how this doesn't just generate tons of.

Resentment. I was trying to read this article and had the question in mind of like, how much do you think this just has to do with working at a big large tech company where every time a new project is brought down from the higher ups and you're like six, seven levels in between. It really is just another thing that interrupts your day to day projects because it's not like you're working at a startup where it's you and the CEO or it's not like you do and Mark at Meta sitting at the table together ideating on what the future looks like. It's you and your manager and you probably communicated via teams or whatever internal tool you use. And yeah, and you're thinking about oh this is so annoying. I have to somehow put this project into slides, share it with the rest of the team and it interrupts everything else that I do. It's just another job when you're working at a big company. Now obviously layer in what you mentioned if Microsoft has other issues of just needing to ship stronger product that's more competitive and that's difficult to convince your internal employees to do. But I have to believe the sentiment goes broader than just Seattle when you're working at a company that just has hundreds of thousands of.

Employees. Also like the idea that only the AI team has the answers to fixing the AI product. It's funny, if those people were users outside of Microsoft, they might actually have more power and influence to shape the product than an internal.

User.

Right. Like a very.

Bizarre. Right? Yeah. It'll be interesting. I think about all my friends who work at their respective tech companies and how little they know about other tools and like maybe they're using it personally because they're usually not on the internal AI team. Maybe like PMs themselves. And so by the time they to their normal day to day life, they're not excited to fire up Claude in the way that we do as investors because we live in a bubble. It'll be interesting to see how it all fakes out. Well, we are all out of time today. Thank you Charles for stopping in. Always. Thank you Yousef for being my co host today. Thank you to our listeners for popping in. Please like and subscribe and we will talk with you all next week. Thank you.

Bye.