Ep#15: Why Founders Follow the Crowd — What VCs Look For Instead with Mike MacCombie

Welcome to Startups Decoded, where we uncover what it really takes to build and scale startups. I'm Andy Walsh, founder and strategist. Each week we will bring you actionable insights and real stories. Let's dive in. Hello and welcome back to Startups Decoded. Today we're jumping into behavior of founders. It's very interesting. In 2025, we're starting to see a lot of conversation around different ways to approach startups. It makes sense today to have Mike McCombey on the call with me. Mike, welcome.

Thank you so much for having me on. It's good to be here.

A pleasure, A pleasure. And I like that your background straddles quite a few different areas and I think it will be great for the conversation today. And you're very passionate about human psychology, as am I. I've not studied it, but I definitely read a lot and I think it's been really important for my own career growth and also trying to understand consumers and, and use it to be smart with what I do day to day. So digging in to give you some context, tell us a little bit about your background from study into your first job. What sort of things for you laid the foundations.

Yeah, I would say it even started far before my studying background or anything of that sort. I am the child of two child developmental psychologists. So growing up I was learning about the limbic system and the prefrontal cortex and childhood development theories before I'd even progressed to the next stages. So I had a geekiness about why we were the way we were in childhood. My dad combined that teaching with also giving me old computers and fax machines and pieces of electronics to take apart back in the day. So there's this sense of me, of this deep curiosity about the circuitry, of how we operate, how the things we make operate, how society operates. Everything feels kind of like an anthill or a circuit board. And I love seeing the intersections of all those things together. Long story short is I feel like I have a higher degree of agency in society when I feel like I understand the world around me. In college I studied economics, public policy, and the history of education. So again, finance, government, and learning. What are those circuits of life? How do we get built together? What are the things that work to make us who we are in the lives that we lead without maybe knowing that context. In my summers I worked for a startup, I worked for a politician and I worked for a school. So I did the whole sort of educational flight. In terms of my experiences. In my first career, I was a Middle school teacher to students with special needs in the Bronx and Harlem, which what I can say is that makes every job afterwards feel even easier. A lot of hours I had 6,000 lesson plans where I got immediate feedback whether the thing I told and conveyed was compelling and memorable and interesting or not. So a lot of guttural, intuitive sense of they didn't care about that lesson. What changes in the story? This one got them beyond engaged. What was true about that? So sor I learned it's like going to a country and learning words before you understand the structure of the sentences. So you just sort of have a little bit of a working knowledge. My career after that, I got into behavior science based consulting, which means I was working with somebody who was helping companies make their products instead of lessons more compelling, more memorable, more interesting. So that was everything from loyalty programs and referral programs, events, communities, experience, design, narrative, storytelling, thinking about, oh, this dating app. What emotion do we want people to feel when they open it? Or how do we get more influential people to go to this kind of sports league? All those questions I was hankering with every day, figuring out once you put on those colored glasses, looking at the world from motivation and priming and memory and novelty and how our brain gets that it really is tempting to try to reverse engineer the limbic system in anything that I do. Maybe limbic system plus the cortex, but you get really into. If I can understand what motivates people at the base, how does that give me a toolbox for how to go? I took that sort of mindset. I joined a VC firm in New York City where I was their head of ecosystem, which meant instead of lessons, instead of products and experiences, I was thinking, how does our story, how do our events, how do our communities, how do our content help build a brand for us and one that founders want to go to and one that investors want to share with. So all that was a lot of practice, you know, in that. In that fund, I was quintupling our open rates on newsletters and moving from a quarterly to a weekly I was running. I think My record was 188 in person events in 2019 and 311 in Covid 2020, virtually. So a lot of experience. And then after that, I got a very geeky curiosity of saying all these things that have taken on behavior design. What happens if we infuse a venture capital fund with that thinking in the companies we invest in on the fundamental principles of behavior as it relates to them achieving their goals, not gamification and mental health Tech and ed tech more at the fundamental principles. And then what does it look like if we have a behaviorally designed fund to make an experience optimized for the LPs that get involved. So that's a lot of the geeky background that leads me to being really passionate about behavior these days.

It's such a fascinating story and I'm not surprised at all. We were talking just before and I feel like that you're. That I don't think I've had one that hasn't. But every guest having these patterns of a broad range of skills. And I'm always fascinated by childhood too. I was listening to a podcast just the other day about a public speaker who works specifically with kids and inspiring kids. And he grew up with parents as anthropologists and was in Borneo living with a headhunter tribe. And it's that contrast to living in the middle of a big city and the two different lifestyles living concurrently at the same time. And for him was really important from a foundational perspective to learn to be grateful for certain things and see the world through different eyes. And it sounds like that you've had a fascinating childhood that sparked a lot of curiosity in different fields. But just fast forward to where you're at today and today's topic, we're looking around behavioral science in founders and you're obviously from a deal flow perspective, analyzing a lot of information. You're very active on LinkedIn and I love it. And I don't know how you managed to go through all the things that you do from a connection perspective, but in one sentence, like what you're doing right now, you covered it a little bit as far as behavioral science. But what sort of companies are you working with and at what stage are they.

Yeah, so the way I backed into the companies I do is I think about from a behavioral perspective, what do I think is going to give them leverage? It comes through a company that has a very sticky story, it has a very sticky product, it has a very clear leverage point for distribution that doesn't require them to spend a ton on ad dollars or to hire a bunch of SDRs. And do they have a business model that just makes sense? Are they charging for something that people will pay for? Because I think a lot of people say it's wonderful as a free product, but I'm not gonna pay for it. And how do you get to that clarity? What I ended up backing into was I can get the best signal compared to what everybody else knows in companies that are at the pre seed stage. And at the seed stage if they're early on revenue. So if I can understand the mechanics of why a contract is going to execute, whereas people might not invest in contracted ARR, I can because I can see the mechanisms of how they get there. And in terms of sector, I focus on companies where there is a very clear similarity among customers and they can get a lot of leverage because there's a lot of social proof, a lot of trust or a lot of velocity in their customer networks. So somebody who sells to every different type of Fortune 500 doesn't really make it easy to transfer. But if it's every company in food production, they have similar motivations. It's every boating company in maritime emissions, that's similarity and so those leverage points. So I do a lot of vertical specific software, everything from radiology to food safety to maritime emissions to waste hauling. I do B2B marketplaces where if you're buying, there's a clear reason. I do supply chain and logistics companies where to properly affect your world as a business, you need to have what you need to have in the right places at the right times. And then I do compliance tech because there is no bigger motivation for somebody to pay than a rule that says they pay if they don't and then paying in orders of magnitude more. So each of those realms I backed into because I said behaviorally that's where there's the, what I call the of course decision. It's not, it's a, it's equivalent to a painkiller but it might not even be a pain that they feel right now. Just saying, oh, this is coming up. I really need to solve that.

Yeah, it's great. And I had Jeff Becker from Antler on a recent episode and he was talking about their approach where they're spending two, three months with founders to get a real feel for who they are if their product's going to be sticky or not. It sounds like you're doing a little bit of the same. But are you separating founder and product in that assessment as far as validation? But also the founders ability to be, I guess have strength and conviction and being able to do what they need to do.

I think they intertwine. So I believe there are sort of top down expertise founders and there are bottoms up expertise founders. Top down is somebody who had a background as LinkedIn's product manager. So they know enterprise software and they're building a new product in enterprise software that's top down. You think there's a general applicability. I tend to focus on founders who have a bottoms up perspective. The waste hauling software founder was a fourth generation waste hauler who literally, that is his entire life professionally. The founder of a radiology company was a former radiologist and worked at a radiology company. They have earned their perspective, they know the customers and usually what that means is if you know your customers, you know how to build the product that is going to be one they want to use. So if they know the customer, if they are solving and passionate about the customer more than the solution, I believe the product falls in line. If it's a consumer facing product, which I do on occasion, I do have to look at the problem, I have to look at the app. Because if I don't feel the right alignment of behavior and dopamine or other endorphins or motivation sets are there, it won't matter. I invested in a company called Pogo Founder didn't have a clear absolute background in building consumer financial technology companies. But when I opened the app I said, oh, this motivation set and this incentive makes absolute sense.

Yeah. And I think for me there's, and I think you kind of summarized it there. There's two distinct people, right? There's people that are objective enough to be able to get enough information to see a problem and build a solution for that, or the people that are literally living and breathing the subject matter expertise that you touch on that go like there's a better way to do this and no one's thinking about it. And I'm in the front row seat to be able to do that as well in both of those, like digging into the behaviour part of that in each one, the objectivity versus subjectivity in behavior. Because as a founder you need to move at pace and make quick decisions. But are there differences in those two types of founders as far as how they think about problem solving day to day and then how they make decisions to be able to move forward?

Yeah. I'm trying to avoid bringing out all my psychology speak from the Myers, Briggs and the big five ways of being, but I do think I've seen a few different prototypes of or prototypical founders. There are those who say I purely follow the data and they may end up sniffing out the right problem, but you kind of have to have a little bit of intuition as well about the directionality of what you want to do. So I remember there was a friend who showed me a founder that had worked at a big company before. He was like, he follows the data so close. And I said, that's great. This product simply does not behaviorally make sense to me or it's going to be a real challenge to get distribution. I ended up not investing, that founder, ended up moving on, not following through with that company simply because the data didn't point them. So I think it's the data helps you hone, but you still need a general direction of where you're going to go. You know, if you have a GPS in the middle of the ocean and you don't have any sense of the coastline or the stars, you're going to have a hard time navigating which direction is the right one. But if you have a sense of, you know, the stars above you, you can navigate your way to that as long as you're logical in how you get there and data driven. So I think it's a guttural sensibility guided by data rather than purely data driven or going purely with the gut.

Yeah. And right now there's obviously a lot of noise out there and we've never had more information as a founder and as an investor, as you can get right now from courses on YouTube, from the likes of YC into like founders sharing their journeys and insights, exited founders reflecting back. And there's so much content. Do you think that that kind of information is valuable to founders or potentially clouding their decision making? As far as following too much, what trends are happening within the startup world?

I think it depends on what you think is the highest leverage learning. I think we can get away from a macro view and just say literally, is there a better way to get leverage from your time to learn as fast as you can? If you believe that a podcast that takes you an hour to get a couple good nuggets helps you get more leverage than three customer calls, great. If your customer calls are going to give you much more leverage, great. But if you're making the wrong customer calls, you're talking to the wrong people and that one article could have gotten you to talking to the right people at the right time that are a better fit for your product development life cycle. Sure. So I'm not going to say watching videos is a waste. I do believe generally do is better than learn because you will learn faster. I learned very quickly running my own fund in the first decisions to the point where even the evolution within the fund has been dramatic. Between the companies I've done, I could have studied every article that comes out in every newsletter and said, oh, here are the things to look for. What I've learned is go with my first principles, intuitive guttural sense guide it with data, make sure the customers want what they want and then go from there. So I think again you can learn stuff. Is it just the highest leverage per value unit of time? Maybe not.

And I look back at 2024 and to set up the next question, in 2024 there were less deals done by VCs but at a higher investment level as an average. So you could interpret from that that people are interrogating deals more but it means that less founders are getting funding from VCs which was coming through and a lot of the social noise like today. The trend that I see popping up now is the bootstrapping part and the ability for people to get to revenue and having a little bit more control in their words as far as making decisions on what they're doing. Are you seeing that as well as far as day to day with your portfolio?

Oh for sure. When you look at the macro trend, yes, there was a flight to safety. I don't think it always means that they did diligence on the biggest investments. It just meant that they felt that if there was enough social proof that was the one to pile money into. And so people said instead of taking a risk on anything because it's going to go up into the right, a lot of people are dying. I'm going to go behind the one that looks like it is and then we're all going to pile money in at an inflated valuation that messes up your portfolio math. And yeah, and I think founders reacted by one, we have better technology now. But two, I don't like what I'm being held to for the bar. It used to be if I have a million in revenue I can raise a Series a. Now it's 5 to 6 million and high velocity to even have a shot. So there's a movement I think within my portfolio. I have a lot of founder. I mean most of them are targeting profitability this year if they're doing well. I mean obviously everybody has a range of their outcomes they're going for. I think you've also seen two ends of the spectrum founders that are at the mega round. I am building my third company. I have a background in this. I can raise 20 on 100 for my pre seed. And then you have founders that one person shops that have found a good AI tool and they're building something forward. Now the difference is that AI tool is good enough to get to a lifestyle business or a very good small exit. But you have a lot of curiosity revenue going out right now. I mean that's A common trend. You see if there's annual curiosity revenue, whether it's from consumers who might attrit and have 30% churn after a few months to enterprises that may have a small budget but they're not looking to expand. And those founders could get Aqua hired, they could build something good, but that doesn't necessarily mean that's going to be a venture scaled outcome. I think when you're looking at companies it should be we have a path to getting to a large amount of revenue, we're building up a distribution leverage point, we're building up a competitive advantage, we're building up technological depth that allows us to compete and win. I think there's still a middle guard place. Most of my companies that have done that are either building up technology or distribution and the capital will follow, but they need to cover in terms of the cash flow until then. That said, I've invested in some companies that were already profitable because they wanted more strategic direction. And I've invested in companies that were very far along in terms of contracted revenue, but they wanted to make sure they could implement on it properly to get to the point. So I think that Bootstrap founder one end of the spectrum, mega rounds one end, there's still a number in the middle if they actually have customer demand, which may still be a small percentage of all the startups.

What I've observed on LinkedIn and having conversation with founders is the ability to be able to get investment at a point where it's very specific on what you're doing. It seems to be this default mode that I've got to fundraise, get as much as I can, get my valuation up and I'll work out what I do with that money and it changes behavior. Right. As far as how you make decisions. Whereas if you're like, I need to spend $100,000 on my product to get from A to B, I need to do a little bit of paid marketing to get a bit more growth in revenue. And you're very particular about that amount of money. Then you can go to market with more confidence knowing that that's all you need to grow and dilution remains less. And that seems to be something that I'm seeing a lot more of too.

Yeah, I mean, I think what you have is what I call DSF syndrome where somebody has a friend who raised a round at a $50 million post but pre revenue and they say, well, that's what I should be able to do. It's like, no, that's one point in A market of a wide spectrum. Just because you bought one stock at a penny stock and another at a thousand dollars does not mean you should try to match the trading strategies. The biggest thing I think a lot of founders and a lot of VCs make the mistake of is everyone has their own game. There is not one game to win. But you need to know your games very specifically and very well. Yeah, I think frankly right now it's definitely the era of the cockroach startups in the sense of they're not bugs, but in the sense of they know how to survive and they know how to build and get to that point and then they can inflect from there. So I think much more financial discipline. I think there's fewer startups that can raise on hype and can raise on momentum. They still will. There's a number that will, but I think it's gone down. So, yeah, there's an increase for sure in the lean founder and the I'm going to marginally grow.

What about this innate desire where founders seem to be motivated purely on the press release almost of fundraising, where it's like we raised $5 million at a $20 million valuation and using that as a validation metric within their own journey. For me, it seems superficial and is not why you're doing what you're doing. And if it helps get attention from other investors for follow on rounds, are there anything, Is there something that I'm missing there as far as why people feel so like, obliged to share that?

I mean, let's go back to the fundamentals of human behavior. These are people that have wrapped their entire life and sometimes their identity into what they're building. Some people were raised on having internal affirmation and internal validation. Some people were raised on having external. Those who thrive on external validation, that is a form. It does not mean that they're going to be successful. It just means that they got validated in some way by some measure of people believing in you. I think it still happens too much. I can tell you my top five performing companies, none of them want a headline because they're doing so well that they just want to keep operating and grow. I don't really care if somebody had a TechCrunch headline. If anything, I think the more that somebody promotes that they're Forbes 30 into 30 or they were featured in TechCrunch, the less I think that they're compelling because it means they're not focused on their business. Unless your business involves you hiring a rockstar team that you need the social proof to get the validity to say, hey, we're solid enough that you can leave your cushy job at Meta, which might not be a fit anyways, or you might leave your job at a larger startup to join us because we are getting that momentum. That's the only time I think it makes sense of getting momentum. I think if it's get a headline so you can raise more money, I'd say one does that mean your business is not compelling enough as it is? Because if you have a compelling business, you will raise. So headlines are good for other people who don't know your business or can't find out without doing it. So it's like top of funnel awareness I get. But again, my best companies are never going to care about a headline because they don't need to.

Yeah. And it's. And I get the hiring piece within my own startup. I remember when we got to 10 employees, those first 10 was really hard work. Like they really have to buy into the purpose what you're doing. Be happy to work in probably pretty stressed and intense conditions with what you're doing. But ultimately they're a certain type of personality I think that comes through at that point. And for them chaos feels like controlled in a strange way. And they're more comfortable with it in my personal experience. But digging into that, as far as a behavioral principle, we talked before around anchoring. Can you talk us through internal and external anchoring and sort of how they function within humans?

Are we thinking in terms of decisions on the company? Are we thinking in terms of fundraising?

What decisions within the company? Yeah. So it's like how do you as a founder, if you're like moving forward, you're looking for references or validation or feedback loops, whatever it is. How do founders make progress and how do they understand both of those sort of foundational ways of thinking?

I mean, when it comes to anchoring internally and externally, it comes to what is most important about your startup. People will anchor to a normal valuation for my fundraise is at 15 million. If I have experience. What I would tell founders is think about the last raise and think about the next two raises. Where are the metrics expected? Where do you need to be in terms of when you get there? If you're raising on a 15 million valuation with 100k in revenue and you might get to a million revenue by the next raise cycle, you will not have an up round, most likely because people are going to hold you to a very strong metric unless you're in a very hypey sector and you need to say, okay, if I need to be at a 10x revenue multiple or even as low as like a 5x revenue multiple, what raises allow me the time to get to that. I think what I, I would call this like a. Depending on where you're in geographically, I'd say in New York there's a $10 million safe harbor. And I would say in SF there's probably like a $15 million safe harbor of the valuation at which you can raise even if you're early on revenue. Once you get past that safe harbor, you're going into the storm of valuation expectations based on revenue multiples or based on revenue traction. And it just becomes increasingly more difficult. So if you raise a round on a 5 million valuation, you could raise another round on a 10 post and people are still probably open to it. You try to raise on a 20, you're not going to get what you want. And so I think people anchor to, oh, here's what the median is. And those things I'm like the number one thing actually from your last question in this is people need to understand what game they need to play based on the context they're in and what they are requiring for leverage. And if you're not aware of yourself and what drives you and what you need, you're going to follow the external influence. I think the more that somebody's anchored to their own self awareness, their own self determined anchors of here's what I need, here's what I'm willing to do, here's what it'll take to get there. External doesn't matter. It's like if somebody is in New York City and they're dating and they meet somebody and they move on to the next person who's slightly better. I would say they don't actually know what they want. I am somebody who is still in my seeking a relationship phase rather than the having found stage. And I don't worry about meeting somebody better than somebody I'm in a relationship with. If they're in a relationship with me, my bar is extremely high. And I know it because it's very clear. And I also clear it myself. I'm not trying to be imbalanced. I'm not worried about optimizing. If somebody's not anchored to what they know for themselves as a startup founder, they're going to be more swayed by influence. So you can either be anchored by your anchor or you can be anchored by the tides. And if you have no anchor down, the tides will guide you and so I think it's really self reflection sounds a little woo woo for founders, but it really in terms of getting to that depthful knowledge of this is where I'm at, this is what my cash flow looks like. My P and L, here's where I want to get, here's the kind of outcome I'm searching for. You'll be able to reverse engineer yourself into the right phrasing cycle if you're going by external data points. Data points, you're gonna go by the whims of what's around you. And you can't predict the weather as much as you can predict the floor.

Yeah, I feel like it goes back to what you were saying earlier with the way that you look at founders as far as that intuition versus data and having a little bit of like a foot in both camps to be able to move at pace. Because if you listen to noise more often than not, you're probably gonna be in an echo chamber and start making decisions that self validate with no real rationale as far as why they exist. So I think it's being able to identify what you know and what you don't know, but also being confident and comfortable to be proven wrong if you are testing. And the biggest mistake that I see there too is when people on the customer side as well, not just other founders and benchmarks around that. But if you take all customer feedback on board like creating this sort of zombie of a product that doesn't serve anyone's need because you're trying to be everything for everybody.

Yeah, I think people have to master the dance between the two. They have to be able to be And I was having a conversation with someone earlier today about the sense of non dualistic awareness, holding two things in the same level of I need customer data and I need intuition. I'm not going to be swayed by one or the other and allow the dance to be between the two. And dancing is an art. There's no science of how to perfectly balance something. So I would not dare tell somebody, here's how you do it. But you have to get comfortable on your feet, you have to get your balance, you have to get your agility and then allow the moves and the motions and the leanings of something, your data, your gut. You have to be comfortable with this interstitial interplay between the two.

When I'm working with any founder in my own experience, and I probably learned this more towards the back end of my own journey, but within that the ability to understand consequences of outcomes, I find really empowering too. So in a decision making process, if you're able to go scenario A versus scenario B, here's probably worst case scenario of each one and then how do you deal with that? It doesn't feel like a failure or it doesn't feel like stress. You're already semi prepared for what's going to happen and you just keep on moving forward with what you kind of thought about before. Which I think when you're making decisions allows you to be much sharper and focused and not get stuck on major things that happen as well.

Oh yeah, you gotta master the fear. A lot of people get held up by their fear of failure. I mean, entrepreneurial folks that are going in the right direction are just deeply curious. A failure is a lesson learned, a success is a lesson learned. But if they're afraid of learning more in whatever direction, that's what holds them back. So I think you have to love the idea of ongoing learning. You know, if you're gonna email somebody cold, if you're gonna approach somebody in a romantic way, be willing to learn. You don't need to be attached to an outcome, but you need to be attached to getting better in the process. I think it's a. There's a framework that my friend Keenan once brought up of. There's a difference between excellence and greatness. Greatness means you are recognized. It's that award, it's that fundraising round and you love the outcome. Guess what? There's going to be kind of this malaise feeling when you get it because there's not much after that. There's a whole thing about hedonic adaptation we could get into where if you have people that get paralyzed and people that win in lottery after a number of months, they end up at a similar level of general day to day happiness. We adapt a lot. And so the thing is actually being in love with excellence of the getting better every day in the process, because that doesn't get old. You don't hit a goal where you kind of run out of new stimulation because it's an ongoing dynamic evolution for yourself. So I think a lot of people get anchored to the. I just want to hit the peak. It's like, no, just love the steps you take to get there.

Yeah, I love that. And it's a great way to be able to take pressure off yourself, which most of the time is external. When you try to compare yourself to other people around you. When everyone's running at a different timeline, in different contexts, whatever their situation is. And then another version I'VE heard of that which I love is the human being and human doing. It's like being known for who you are in the human being side and not focusing on the human doing what you do is just your job. It's not what you should be known for. So being able to separate who you are as a human versus what you do allows you to be able to take on things that you can't control and be prepared for whatever the consequence is. Because you've got no ability to influence that versus things within yourself as a human being that you can test and learn and be the best version of yourself because it's the only thing in life you kind of control. Aside from default emotional responses that are sometimes hard to keep a lid on for sure.

And I'm a work in progress on that side as well. But I think there's also one thing I wouldn't want to overly compartmentalize. We are who, what we do as well. Our actions do have an impact on our own self identity and affirm who we are. If you're somebody who wants to get in shape, you going to the gym affirms to yourself that you are someone who works out. If you are trying to do something, I think it still matters. But I think it's widening the perspective of what we do for work versus how we live our lives. So I think there's a holistic sense of being and doing. But it's like, what do you do versus like what do you love to do? What do you love to spend your time on? Just, just to broaden that definition a little bit. Because we are still a product of our actions and our ways of being.

Yeah. And the classic psychology piece there is like loving the journey and not the outcome. If you focus too much on the outcome, you'll. You'll have these dopamine hits but fall off a cliff just as quickly.

Oh yeah. And also frankly, the outcome isn't that fun. It's a nice marker. You will get thirsty for the next one. That's why you see all these people that win the lottery that end up being depressed because there's not much more. I don't want to win the lottery. Because that sense of winning the lottery, you have a lot of choices available but you feel like you've hit that peak dopamine, you've run out of process. Like if someone told me tomorrow you can wake up and you will have run the marathon, it's like, no, I want to run the marathon and know the experience of running the marathon. I don't want to just be told I ran it and then I passed out and I have no memory of it.

I did London Marathon and it was the most amazing experience ever of that last probably three to four miles. You feel like a star even though you're coming down the line a little bit as far as places which the achievement for me was amazing and the experience was the best. So yeah, highly encourage anyone to have a go at that.

Yeah. And oftentimes it really is not the outcomes you get, but who you become in the process of achieving those outcomes. If you focus on that side, then it's much more effective.

Yeah. And I'm sure there's a ton of metaphors we could apply from marathon training to a startup as far as what you're doing in advance, running the distance, like little intervals, little sprints, all those things as well. But let's not go on to that tangent for now. But going back to decision making, you've talked to me before around the one way door versus the two way door and decision making and understanding consequences. And we kind of touched a little bit before. But I think it's a. Is it a Jeff Bezos framework?

I think it may be, I don't know the proper attribution. It's just a framework that I use. I will not claim that I own it. It's just one that feels true. There's a lot of decisions that we fret about in life and I think people often think it's irreversible, it's marked in stone, there's nothing else we can do. Understand what decisions are permanent and what are not. Oh, I'm afraid to move to San Francisco because then I'll be stuck there. Well, guess what? You might have to find a new apartment in New York, but you can move back. It may be more expensive, it may cost you money, but it is not a permanent decision in that sense. I mean I'm not somebody who plans to get married and get divorced. But like you can theoretically get out of a marriage but that's also a very long term decision you should get. Right. So I think the one way decisions that can have a non changeable impact on your business, think a lot more. If it's a one way door and you can't go back, do that. If you raise venture capital money, it's very hard to come back from the pattern that they expect you to be on. But if you have a two way door of hire somebody quickly, fire them fast or hire slowly and fire fast, understand those ones and be Willing to take the calculated risks. I think a lot of people think every decision is a one way decision and that it limits them from the experimentation and the curiosity that could help them learn faster. So I think again, get clear on what the actual context is.

Yeah, that's really important as far as being pragmatic and objective and understanding that framework, as far as how you move forward and understanding consequence again, but you need to be empowered and back yourself. But for instance, you just touched on something there and I think it'd be great to look at if you close a funding round, there's a flow on effect of that. And quite often founders put so much energy and attention and brain power into fundraising and it can be a six month process. Sometimes I've heard it take a year for people to get to that stage. So within that, once you come through that, the other side and the money hits the bank, like there seems to be a pattern where people get a little bit stuck and don't know what to do next. Is that something that you see happen where you fight so hard to get somewhere and then you get there and you're like, okay, what do we do now?

Yeah, I think it's again, we let the tides gather us away from where we put the anchor. It's like, yeah, understand the motivation of the fundraise. People will have it. Like, I've raised now what do I do? It's like raising wasn't the point. That was an enabling factor. The best founders I've seen always say, I want to raise so I can get back to the business. I love working on the business and they're itching and scratching. It's like seeing an entrepreneur go to business school and all they want to do is build and they're in classes every day. That's very different than somebody's like, I want to go to business school and they graduate and they say, I want to figure out why I went to business school. And it's very different. So it's easy to get caught up. But again, that's grounding yourself in why am I raising? Getting to the why every time allows you to not get thrown about by that. You're raising to do the things for the business and you're doing things for the business because that's what you want to spend many years of emotional labor on to build something that you want to see put in the world. If we forget that, if we get anchored to the outcome of a fundraise, it doesn't matter. Like, yeah, I fundraise for my Fund. I didn't really care about the fundraising itself because that doesn't matter. I want to generate returns, I want to invest in great companies and I want to frankly grow a lot. Supporting people that grow a lot of that's what I get to get back to. So I think a lot of people lack that check in sense or lack that anchoring amidst a very turbulent time. But it's about the keep the thing. The thing. It's very easy to get distracted by shiny objects, physically, intellectually, existentially, whatever it may be.

Yeah. And I think looking at that too, sometimes it can identify a lack of understanding of their own business too, that they've been so focused on one thing that being able to do something else. It's like, okay, once I've got this money, what do I actually spend it on? And I've seen, I know a company and they did a series A, I think they raised 35 million and they spent an obscene amount of money on a new brand and rollout of that piece. And it's like just because you have that money, it doesn't mean that you should spend it on that. And they're the kind of things that you see happen all the time. Right. It feels like you've got this endless supply of money, but if that runs out and you don't and you're not cash positive, then you're back in the trenches, fundraising again. And that's, that's worse because you have got nothing to show for your last raise.

Yeah. And it's again, this is why I focus on bottoms up founders, they like to focus on their company and the problem they're solving. If they love the process of being a founder, but it's not about the customers. I don't invest. We've seen companies that have gotten very hypey that raised at billion dollar valuations and then we find out they were burning $10 million a month on 500k annual revenue. I have seen a company that raised millions of dollars and spending 30k a month on PR and I'm thinking, unless you are only driven by PR and you know, it's the only channel where you get customers. What are we doing? I think again, I don't like hype. I very much avoid it. I tell my LPs the worst news first and I never say something unless I truly believe it's a thing. I would much rather be living on hype. So when they hear good news, they know it's true. And I'm never thriving on the dopamine of Untrue news. It's about building in the fundamental. Yeah, there's a lot of founders that will raise and be like, I've raised. I can do whatever I want. It's like, no, that means you want to get into a social club. I actually know of a founder of a company that many people know. I won't say who, but they have options to sell their company at 800 million and make everybody money. But they refuse to sell because they have to have exited a billion dollar company. They need to be a unicorn founder. I'm not kidd. I cannot say the company anything about it. But I know for a fact there's a founder of a company that everybody in tech has heard of. And they're like, I have to be a unicorn founder. Like, what the hell are we anchoring to? Does that matter? Maybe for you to get in the right social clubs to own a basketball team or whatever yacht you want to go to a party on, but really, is that what we're grounded on? Come on. Wow.

Yeah. And it's. And it's crazy and it's probably a whole nother conversation, but I think that the noise that I referenced before that people see in here and they somehow attach themselves to things that are completely arbitrary in the sense of long term success. And why are you doing it? Like if you're really creating a business to make lots of money or you're doing it because you care and you're passionate about the topic, there's a lot more riding on that. Right. As far as some valuation, I mean.

Yeah. And also I think I would love to do sessions with founders if I don't get a good sense of them early on and understand what are their traumas and what are the narratives in their mind that drive them where they are. I think I was talking with these two guys at a fund called Water Bear Ventures and they sort of specifically look at founders that have gone through a major trauma in their life. Either a risk of death, a near death experience, a loss of somebody that they loved, and whether they came out of that with seeing it as a point of resilience and a lesson learned, or they saw it as something else. It's like how the only difference between heroes and villains is heroes have gone through massive pain and they want no one else to suffer and villains want everybody else to suffer. So I think if you understand somebody's psychology and what drives them, using all these indicators that we get, we frankly understand what motivates them. So if a founder doesn't know themselves and their own motivations. They're not going to know the game that they should play and they're not going to know how to operate to the outcome that they want. Self awareness is a very. It's like one of those things where it's like, duh, everybody sells self awareness and you could mean a lot or mean nothing, but when you understand the context behind it and how it interplays in so much of our lives and our decisions that we make, having that deeper sensibility allows you to navigate when you have people advising you to do the complete opposite thing. Like I raised a small fund where I refused to pay myself management fees until everyone got it. People said, oh, you need to raise a bigger fund, you need to do this. I'm like, no, that's not my game. I'm playing long term game. Get a lot of trust from my LPs and it's very easy to get them to coming into my second fund because that's the game I played. That level of awareness is what I think takes a lot of people to be successful in life, in work, in relationships, in family, in existential happiness. Is that self understanding and being true to it and staying on the anchor and not the tide?

Yes. So much great advice for founders today and circling back to yourself as far as Generous Ventures, which is your fund, if people want to reach out, like you will say before you're very active on LinkedIn, your email address is everywhere and for good reason because like you've got this amazing purpose and energy. I would say as far as driving deal flow, but the type of businesses you're looking at, people reaching out to you, what's some advice you can give.

There in terms of reaching out to me or what they're.

Yeah, like if they're reaching out to you, what's the best way to do it? Any sort of like big picture tips?

Oh man. Well, there's three different ways. I have given out my number at events and it's really a good filter of who's reaching out for the right reasons versus who's not. Because I immediately will not reply if somebody's like, hey, I know you don't care anything about this kind of company, but I just want to get your help. Can you find me 50 investors? I'm like, I'm sorry, you're not playing this game in an aware way. The easiest way is probably my email which is mikemcombe.comm A C C O M B I E. If they want to follow me on Twitter or LinkedIn, I tend to put a lot of things out there for the investors. I shared a company Yesterday that was at 1 million revenue in 23, 7 million revenue in 24 and 35 million revenue run rate this year. I put a post out, people have asked for intros and I make it so a lot of good things to corral. People are on Twitter and LinkedIn. It's Mike McCombee on Twitter and if you just look up Mike McCombee online for LinkedIn you'll find my profile and yeah, if they really want to join. I also run 146 different WhatsApp groups across different sectors, stages, GEOs, entities, functions for founders and for investors. So if you're a New York City founder who's raised around for funding, I've got a community. If you're an angel investor, I've got a community. If you are a deep tech investor, I have a community. If you have certain criteria of who you are or what you focus on. If you want to geek out about go to market strategy or customer success, I have communities for those kinds of things. I'd say reach out, let me know the kind of serendipity you are enjoying in life and we can find it. Also founders always feel free to send me a deal if it's not for me. I will put it in the community of the people that I think it would be relevant for if it's something that I think would be worthy of their attention. So again Mike McCombee share a blurb, a deck, a few bullet points, terms you're raising on or terms you're raising trying to raise on the raise. If it's worthwhile it would be that one of my best performing companies came from a cold email. Two other ones that people have loved came from cold emails. So I'm very open to that stuff. Just again have self awareness that this is a company people would want to look at or not.

Amazing. And I think and I can say to anyone listening like Mike has this efficiency that is like I've not seen before and his ability to support founders and investors is really important in the in the industry. So I tip my hat to you my friend and I appreciate you joining me today. Thank you very much Mike, thanks for.

The time, I appreciate it. Great questions.

Amazing listening to startups decoded. My name's Andy, we're back every Wednesday follow like Share 5 stars. Look forward to seeing you next time.

Having that deeper sensibility allows you to navigate when you have people advising you to do a complete opposite thing. Like I raised A small fund where I refused to pay myself management fees till everyone got it. People said, oh, you need to raise a bigger fund, you need to do this. I'm like no, that's not my game. I'm playing long term game. Get a lot of trust from my LPs and it's very easy to get them to coming into my second fund because that's the game I played. That level of awareness is what I think takes a lot of people to be successful in life, in work, in relationships, in family, in existential happiness. Is that self understanding and being true to it and staying on the anchor and not the tide?

Yes. So much great advice for founders today and circling back to yourself as far as Generous Ventures, which is your fund. If people want to reach out like you're will say before, you're very active on LinkedIn, your email address is everywhere and for good reason because like you've got this amazing purpose and energy. I would say as far as driving deal flow, but the type of businesses you're looking at, people reaching out to you. What's some advice you can give there.

In terms of reaching out to me.

Or what they're yeah, like if they're reaching out to you, what's the best way to do it? Any sort of like big picture tips?

Oh man. Well, there's three different ways. I have given out my number at events and it's really a good filter of who's reaching out for the right reasons versus who's not. Because I immediately will not reply if somebody's like, hey, I know you don't care anything about this kind of company, but I just want to get your help. Can you find me 50 investors? I'm like, I'm sorry you're not playing this game in an aware way. The easiest way is probably my email which is mikemcombe.comm A C C O M B I E if they want to follow me on Twitter or LinkedIn, I tend to put a lot of things out there for the investors. I shared a company Yesterday that was at 1 million revenue in 23, 7 million revenue in 24 and 35 million revenue run rate this year I put a post up, people have asked for intros and I make it so a lot of good things to corral. People are on Twitter and LinkedIn. It's Mike McCombee on Twitter and if you just look up Mike McCombey online for LinkedIn, you'll find my profile and yeah, if they really want to join, I have, I also run 146 different WhatsApp groups across different sectors, stages, geos, entities, functions for founders and for investors. So if you're a New York City founder who's raised around for funding, I've got a community. If you're an angel investor, I've got a community. If you are a deep tech investor, I have a community. If you have certain criteria of who you are or what you focus on. If you want to geek out about go to market strategy or customer success, I have communities for those kinds of things. I'd say reach out. Let me know the kind of serendipity you are enjoying in life and we can find it. Also founders always feel free to send me a deal if it's not for me. I will put it in the community of the people that I think it would be relevant for if it's something that I think would be worthy of their attention. So again Mike McCombee share a blurb, a deck, a few bullet points, terms you're raising on or terms you're raising trying to raise on the raise. If it's worthwhile it would be that one of my best performing companies came from a cold email. Two other ones that people have loved came from cold emails. So I'm very open to that stuff. Just again have self awareness that this is a company people would want to look at or not.

Amazing. And I think and I can say to anyone listening like Mike has this efficiency that is like I've not seen before and his ability to support founders and investors is really important in the in the industry. So I tip my hat to you my friend and I appreciate you joining me today. Thank you very much Mike, thanks for the time.

I appreciate it.

Great questions, amazing listening to startups decoded My name's Andy, we're back every Wednesday follow like Share 5 stars. Look forward to seeing you next time.