EP#87: Founders Obsess Over the Raise. Investors Care About This More. — Carina Cunha

And I think that a lot of people, they first go with the solution rather than the problem, and they get married and in love with the solution. And then when the solution is a little bit problematic, they just keep on adding babies, you know, like more and more features. So it just becomes like a terrible marriage that they perpetuate instead of like, hey, let's, let's go back to the drawing board and maybe like start something new. Yeah.

Welcome to Startups Decoded, the show that gets real about what it takes to build a successful startup. I'm Andy Walsh, 2x exited founder, advisor, and your host. Each week I talk with great founders and top investors. We unpack the plays that drive real traction. If you're building something bold, this is where you'll get earned insights to scale with confidence. Let's keep growing together. Hit subscribe and share with your community. It would mean the world to me. Hello and welcome to Startup Decoded. My name is Andy Walsh. For most founders, fundraising becomes a rite of passage, and there are a lot of things that go into it. There's business structure, there's the capital itself, but then there's also who you are as a human and your state of mind through that. And we're going to explore that today. And I'm so excited to have Karina Kuhnert with me. Karina, welcome.

Thank you. It's a pleasure.

I managed to grab you in the one week you're in New York City. What you're doing now is fascinating. I feel like you're someone who perpetually is challenging yourself in new ways and you don't seem to sit still is my take.

I haven't told you about the fact that I'm, I just booked myself for learning kung fu with monk warriors in China for 3 months this fall, right?

I love it. And there's so many psychological things around challenging yourself outside other disciplines because you learn something else, but that gives you purpose and pride, but it also allows you to reframe and rethink the way that you treat everything else in your life as well. I love that with new passions and hobbies. So I'm not surprised. So let's paint a picture for you. You're working a lot with founders in helping fundraise, the structure around the deal, and there's a lot goes behind it, but how did you end up in that place?

Oof. The long, short, medium-sized version. What do you want?

Let's do the medium version.

Okay. So, uh, I was born and raised in Brazil until I was 13. I lived there and then I got a scholarship for a science and technology school in San Francisco. I skipped a couple of grades, graduated early, and then I ended up going to Columbia University in New York and, um, I had, let's say like just a tad bit fucked up childhood. One of the reasons why I was graduating early, I also graduated Columbia early, like in 3 years, because I wanted to be financially independent from my parents as soon as possible. And I looked at, you know, like what could pay the most, like I'll search for jobs. And, you know, I actually liked, uh, economics a lot because for me, economics is your understanding of society, but measured with money. And then we can talk more about like how I ended up actually going to psychology. later, but it's kind of like the same philosophy. You are able to understand the structures and then capital is what shows it. So I have that degree in economics and political science, and I love that investment banking, you are able to work with a number of different transactions. And my thought is that I always wanted to do something that would support the world. I'm specifically interested in climate, the protection of planet Earth. You know, being Brazilian, I'm quite attached to the Amazon and animal welfare. And I realized that I didn't want to be the scientist, you know, like I don't want to be like the one person working on the same problem like for 20 years. I wanted to have enough money to pay the scientists to do that for me. And also the original thought is that I also wanted to work with politics, but then doing my econo— my political science degree as well, I realized that I could never handle the bureaucracy. I'm also not the person to be able to do politics. I just don't have the personality. I could not even act if I wanted to. I cannot change the tone of my voice, that accent exists forever. So yeah, anyway, but so I got a job, uh, at Credit Suisse, uh, investment bank when Steve was around. Uh, so you can see how old I am. And I hated it. It was an absolute nightmare. It was everything that you can imagine from that culture of working 100-hour weeks, sleeping under your desk, uh, hazing, et cetera. So I quit and then I went into The most logical job after that when you're trying to get a better culture, which was management consulting. Anyway, so I started my career with management consulting. I was with Accenture, then a company that got bought out by Accenture, and then later in my career I also got, I was in a company later bought out by Accenture, so they chased me around.

Yeah.

But the point is that I, I did that. It was a great experience, but I felt that I wasn't that fulfilled. So I decided to do a master's in psychology, specifically the science of how people are different from each other. A lot of it has to do with, you know, personality, behavior, where like biology, neuroscience, and who you are actually intersect. So I got into a PhD for that, but I decided I also didn't want to be an academic. So I was still, I was lost, you know, trying to find myself and Uh, so I did a postgrad there instead, and then I went and did corporate strategy at JP Morgan because I needed to pay the bills. And then finally I started finding something that I liked, which it was this company called Crimson Education. They came to me to help launch the operations across Europe, and they are an edtech company. I was first handed Scotland, did well, gave me Ireland, did well. Then they gave me the rest of the UK, did well, and then they gave me Switzerland, Spain, and then I became the managing director of Europe and it was kind of like having my own startup. And that's where I learned I was really good with sales and marketing. So, you know, like, yeah, I, I don't even remember, like I 5 times their revenue in like a couple of years with the same resources. And it was just all about learning how people think, really understanding who to target and how to target them because so much time and resources are wasted on People are just doing things because they want to feel like they are doing something rather than actually doing something accurately. So that started my journey. I then had a couple of startups myself. Uh, one of them I actually fundraised and won Dragon's Den. And it's funny because Dragon's Den actually came to me to ask me to be in the show and my product malfunctioned. And by the way, still a genius idea. I just didn't have the right tools. So now with AI and 3D printing, I will make a version of that in a few years and it's gonna be much better. But the point being is that I moved from that corporate into startups to then having startups and realizing that I didn't really enjoy being a startup founder. I really liked to be able to be working across a number of different projects and be that advisor role, to then joining an investment bank and realizing that I also don't like to work for other people. So I missed the time when I was advising companies. And so I created my own investment bank. And so like in, I'm in the process right now of finalizing the like end staffs of Carta Meridian. And it's called Carta Meridian because we are connecting the Atlantic and Gulf capital corridors. There is just so much innovation in Europe, in the US that just don't have the right access to capital or the infrastructure. of projects that you can have in the Middle East. So, uh, yeah, I'm really excited about this because it's bringing back what I thought I would do, but in a different form. So it's like, I wasn't supposed to be a startup founder. I wasn't supposed to be an investment banker. I was supposed to be an investment banker founder. So that is kind of like maybe medium to long story.

Oh, it's great. And it's fascinating. I've known you for a while now and we've had many conversations and there's details there that I don't know. It's one of the privileges that I get with this show to sit down with great people and learn more about them as well. So I can actually get to the heart of it because I'm a curious person by nature and some of the details. And you are still young and that is a lot jammed into a short space of time. And the pattern from high school and skipping and being ahead of the curve is always a thing. And to launch an investment bank is no mean feat either because there's a lot of things from a compliance perspective that go behind it. And I don't think a lot of people realize that.

Yeah. And that's why we haven't been public with it. And so I have been building in stealth, uh, for a while. And so it's going to be open in public once everything is already done. And the really cool thing about it is that, you know, with my startups, it felt like a struggle fundraising for it.

Mm-hmm.

Right now I have a line of people asking to be advisors, investors, et cetera. So that's when you really feel that. You are like in your ikigai that you actually found what you were supposed to do. Because I was just circling around something. I felt that it was there, but it wasn't right. Whereas like now with Carta Meridian is, yeah, it, it's being able to help founders get access to the capital that is going to help change the world. And when you have your own vehicle rather than working for other people's investment bank, the decisions are yours of how you're going to be allocating the resources to what project. And one of the things that is really important to me is that we are not just focusing capital on, on raising capital itself. My main focus with each business is to make them into a good business because right now with a lot of the Silicon Valley, you know, let's say propaganda, it's like, and how VCs are structured, they make you, they create a system that makes you dependent on them. And I was part of that system and I went against everything that I knew as a business strategist when I was part of an incubator because I was told to ignore that. Don't, don't care about profitability. And I disagree with that model and things have been changing and you saw the, the fall of like Silicon Valley Bank and a lot of these structures. So people are going back to Yeah, we need to create profitable businesses that actually make sense. And so we spend a long time with our clients really making sure that the business fundamentals for them are correct, that they have built attraction, and that they have commercial partnerships to scale at a magnitude that they would not have otherwise because they do not have the geographical footprint that we have with our network.

We talked about your experience in the breads and like there's a personal story there for you in circling around things. You describe it and the ability to then hone in on what is right for you from a passion perspective.

Yeah.

But the other side of that same coin, what I love too though, is that what you've learned is a lot of insights. There's empathy involved. You're seeing the potential outcome of investment, what it can do, not just from founders and investors on a commercial return, but actually the impact of that business has on the wider community as well. And I feel that that is at the heart of what you're creating right now.

Yeah. I mean, for me, I am like working with founders the way that I wish somebody worked with me because I would say it was one of the worst years of my life when I had been part of an incubator and, and then things were not working with a company that I had and I just felt so dumb, like, but dumb in a way that is just like, why am I not getting what they are saying? Because I'm, I'm like, the numbers, the math is not mathing for me, you know? And then I had to actually gaslight myself to go with processes that I was being asked to do that didn't make sense. And I then also wasn't my best self. When I was part of that program, because I was like, well, they are telling me crazy stuff, then let's now believe in some crazy magic and think that things are going to work out like this. But if I wasn't actually part of the program, I would have seen that the business model that we had was not profitable, uh, because we were just pumping money into it and we would have pivoted and continue pivoting until you actually find something that Is solving the problem of the customer. And I think that a lot of people, they first go with the solution rather than the problem, and they get married and in love with a solution. And then when the solution is a little bit problematic, they just keep on adding babies, you know, like more and more features. So it just becomes like a terrible marriage that they perpetuate instead of like, hey, let's, let's go back to the drawing board and maybe like start something new.

Yeah.

Yeah.

And it's fascinating because I see and hear that a lot where founders come up with an idea and it is so solution-focused and they're not even checking in on the problem to start with, let alone customer feedback. And it's continuing to evolve this version of the same thing without knowing what's actually driving that. And that level of awareness, there's 2 things there that I'd love to click on a little bit more is one is the founder themselves. And I want to start with that, the noise you talked about it a little bit. All the rhetoric in the sense of what comes from a VC into what their peers are talking about who are founders as well. This thing about the fundraising process and what it means and why they want the headline versus the actual real justification for how will the money help and where's it going to get you to. There's all this stuff out there, but it's worse than ever is my observation. How do you start to rewire your brain as a founder? To understand basics around your business and you as a person and where you want to get to and what that path looks like.

There are so many levels to this question. So let me just address on the superficial level about what is out actually out there as a founder. So the amount of garbage that is on the news for startup founders is insane. And especially for AI-driven companies. You know, like the people that are going to be raising crazy Series A and you see all of the money on the news, that's nepotism. These people are friends with each other. They already have, you know, parents or they have made companies themselves. Like you're not usually going to find a first-time founder with like no network that is going to have that access to capital and talent. Then what, and I'm not saying that Doesn't exist, but it's just not the majority of the case. In fact, there is this, this founder that this is such a good example of this. The guy had 10 MRR, uh, monthly recurring revenue of like from this retreat thing, that retreat club that he had in Mexico. And now he wanted my help to raise a round where The ticket size was going to be around $6 to $7 million to create a retreat center in LA and like a dating app. I know, I know. And then when I started like deconstructing how many things about this are wrong, like I, I apparently offended a lot of people, but like the point is like, one, first let's like just break this down. You don't have any equivalencies, you know, like $10, uh, monthly recurring, $10K monthly recurring revenue in Mexico, that doesn't actually, is not the equivalent of you doing the same thing in LA with that market of LA. So like, already false equivalency. Then just like the amount, like that's insane, right? But then his logic is that Remedy Place, which is a place in LA that was created by the celebrity doctor whose investors are A number of very famous musicians who have been his patients for years had been able to raise a round like that, and therefore he should be able to raise a round like that. And the logic. And then I'm like, do you have celebrity patients? Are they giving you checks right now? Like, well, like if they are, you know, like please bring them out and then we can start talking. But no, no. Like, you know, that guy. He may appear that he had, had like a really big ticket size, but that ticket size is coming from years and years of having built that relationship. This is why people with my investment bank right now, they are coming to invest and they don't, you know, like at whatever valuation we want because it's, I, I have 17 years of working with this person's strategy. And so this is not A new startup when you're thinking about my investment bank is just a continuation of my work that has already been successful, which is the case with that guy. So yeah, like how people think about the mechanics is just so fundamentally wrong. And you shouldn't be doing comparisons like this. You shouldn't be like, oh yeah, I see a seed round raising for this, therefore I should raise for this. No, like what basis do you have that? One of the slides that bothers me the most is TAM, SAM, and SOM. So total addressable market, total serviceable addressable market, serviceable operational market, or something like that. And guys, I'm dyslexic, so please, uh, you know, like I, I'm very good at under— remembering concepts, not details. But, uh, the thing is that People say, oh, I'm just going to grab 1% of that market. And it's just like, okay, so you, you're going to grab 1% of that market. That's great. With what marketing money? Because you can only reach people that your marketing allows. So if you don't have the marketing money to be going to those customers, there is no way that You're going to be able to get that 1%. Even if the marketing is word of mouth, you still are going to need people to service it. So there is a constraint on like, on what you can achieve that is dependent on the resources that are inside of the company. So it cannot be externally validated in that way. So anyway, the entire system doesn't actually make sense and it's convenient to be perpetuating this system that doesn't make sense because It ha— a lot of people have some power or illusion of power because if you actually look at most VCs, they don't have funding. Uh, so like, I don't remember the statistics right now, but just ChatGPT and you're going to see that a num— like the large majority of VCs, they don't raise a sec— a second fund. So you're going to be speaking to a lot of people that like to be in the position of investors that are just wasting your time as well. So you shouldn't be taking every meeting. Like you should know if the person has dry powder, which is capital, and if they are investing in your company. There are a lot of people that like to say invest, that they are investors just for that ego. So anyway, the industry is not honest. Let's put it that way. And you need to learn to navigate it with discernment. And that's the biggest thing. And every word, I have a year that I want to focus on, uh, on the word. This word, this year has been discipline. Next year is going to be discernment. But I say that for every startup founder, you should do that.

I love it. And there's structure in that in the sense of how you think about your own network. And one of the things you touched on there, so how do you build relationships? Because if you can have a conversation with an investor, you may not be raising at that point in time, but at least, you know, are they fund one? Have they done 3 funds and have they had stickiness? Have they had return on their fund? What's their thesis? And all the little things that mean when you get to a point where you're fundraising, that becomes so much more effective. And people just do the shortcut blanket approach, hit everyone with no context and wonder why they're not getting meetings and just human relationships, right? It's very simple of what you're saying there, but also the second part, I don't wanna go too into the weeds on this part, but it's also the economics of your business model, actually understanding the market size, how you're getting from A to B and having the plan for How are you going to approach it that's rational rather than just taking the biggest number on the TAM and the classic line of, oh yeah, we'll be in China or India and these massive population bases and just not thinking rationally about it.

Do you even understand how the Chinese market operates? You know, like, do you have the political relationships in India to enter? Like, please.

Yeah, it's very, very different market. So understanding that's important, but What I want to focus on there too is you working with founders and you use the word nepotism, which I love as a way to summarize that, the little backslapping alumni Ivy League type situation. And I talk a lot of this show because I'm a skeptic and it frustrates me where good people aren't getting funding because they use this completely subjective measure of internal nepo baby type thing of this connection and the ability to help change the world. The founder has to have some genuine purpose and mission around what they're doing.

Yeah.

But 2, they need access to the right network resources and everyone starts at different stages of that, right? So from an investment banking standpoint, how do you start to identify some of those folks and help elevate them outside of just capital? Yeah.

So for me, I always work with the founder first. So it's really about seeing the individual. Underneath it, they can, I mean, just recently there was a company really liked, really, really appreciated the product. And I thought that it could be the next Canva, but for something else. But yeah, it was just really difficult interacting with the founder. And I just thought, hey, I cannot actually have that energy on my day to day. And so I'm not going to interact with them. And so. What the reverse is, is like the one you see those people that they just have the drive, the passion. And I think that one of the things that is really important is the humility as a founder, which I didn't have, by the way, when I, when I began it. And I, I need a life to slap me on the face multiple times, uh, to, to learn how to have that. And there is a distinction of being humble and having humility. Humble is thinking less of yourself and putting yourself purposefully down. Having humility is knowing that You don't know everything and there is more to learn. And that, that's actually a rare quality sometimes, especially of the tech bro male stereotype. But I think that that's some— something that is really, really key for me is people's ability to learn and change and adapt. Because what startups are is you're going to be getting everything wrong all the time, but it's just a bunch of hypotheses that you need to learn how to test. As soon, as fast as possible. And what you're trying to do is shorten your time to failure. It's not to actually be correct, but create a methodology that you can test as many hypotheses as often as possible. And so you have just as much data into creating something that eventually it will work. So you need that flex— cognitive flexibility as well. And comfort with discomfort. So yeah, I would say that is a very, very important personal attribute that I like to tell people. And one of the keys for me that I personally really like is actually stoicism. I didn't know, but before I went into stoicism, before stoicism, I already realized that I followed those principles. But I think that that's a really great package of you understanding that the only thing that you can control is yourself. And nothing outside of that. And so if you have that perspective, then you realize that if you can be 1% better every day, mathematically speaking, it's going to be the biggest improvement that you can do in your life because it's going to impact everything else downstream. So for me, the way that I would think if I was a a founder in this scenario is how can I become the best version of myself? And I have done that through multiple times in my life, and I continuously do that right now. I spend so much time, pretty much 70% of my free time, which is very little at night. I'm learning some new concept around philosophy, psychology, you know, neuroscience, et cetera. I, I'm never going to be, let's say, just randomly watching a movie or a TV show or something. I always try to think, okay, so like, how can, yes, how can I be a better version of Karina? And so that, that's the start. That's at the human level. And once you become a better version of yourself, people will also get magnetized to you and opportunities start showing up. And that's like pretty much what has happened in my life is that as I empowered myself, more people are like, come to you and they're like, hey, I want some more of that energy. I want you in my life. How can we work together? And the opportunities that come are beyond anything that I could have imagined myself because you don't really know the limits of your own potential and you kind of need to let the universe Show you, but first you need to become the best version of yourself to meet it.

So much good stuff in that that I could go on for ages. And one of the ones there, the first one is I just had an episode with Eoin Fitzpatrick, who's just launched a book called Inner Propaganda. Yeah. A really fascinating look at basically the stories that hurt us the most are the ones that are embedded inside of us that we tell ourselves to rationalize things. But we talked about a lot of things within that, and one was thinking like a scientist, which is that hypothesis. test-learn mindset that's iterative all the time and being happy to be proven wrong. And that takes a lot of humility, stoicism, things that you're talking about there as a mindset to have confidence and conviction. Sure. But it's not always going to be that and being pragmatic enough to be able to do it. And I love some of that thinking. So to be able to be self-aware to do that's really important because it gives you a much better chance of success because you're taking in different signals. Rather than being myopic based on your own internal bias.

Yeah, 100%. And I speak about that in my book, uh, First Principles of Persuasion. So my entire, I'm digesting the entire philosophy of persuasion and synthesizing it to the first, the first principles of physics, which is E= mc². So everything is energy. And when you think about persuasion and all of the choices, whether you're going to understand what you're going to say, Even if you're going to be listening to me, you pay with your attention. It's fundamentally a problem of energy allocation. So thermodynamics as well. If you create friction, you're going to have things slow down, which is having too many random things in a slide, like too many objects. Like for example, that's friction. But jokes aside, you should buy the book. But the point here is you— oh my God, I created friction for myself because I forgot, I forgot the point that I was going to say. Remind me.

You were talking about your friends thinking like a scientist, Tesla, and happy to be proved.

Oh yes, yes, yes. You get a dopamine kick when you close a loop because keeping open loops is metabolically expensive. And so back in the day, if you were hunting, let's say you saw some, something moving in the bush, the people that got that, our ancestors were the ones that would be running away whenever they saw something on the bush. They were not the ones that were over there pondering like, hey, it's, why would the bush move this way? What is the speed of the wind? Could there be like something else versus, you know, like a snake or something? So that's the, those are the genes that we inherited. So our systems are designed to close loops and not to be accurate. So we are rewarded To be making bad and short-sighted decisions or, and not to actually analyze ourselves. So the skill of metacognition is something that you have to build just like going to the gym because it's counterintuitive. And what I like to think of, and I was speaking with my readers about, is that instead of rewarding yourself For being right, which your body already does, try to shift that reward for learning something new. So then you tie that experience of like, okay, so there is some, some improvement or something new. And it's a, it's a different mindset altogether, which is to start with curiosity because nothing, there is no way that you can, can ever say that something is completely true. just dissect any topic from any angle. Like if you look at, uh, from a bird's eye, it's going to be completely different than if you go at a microscope and you're looking at under the microscope, the same thing can look entirely different. So you could technically have everything be wrong and everything be right just by the way that you're actually looking at it.

I love it. And I have a real issue with the word failing. And I replace it with learning.

Yeah.

Every time, because failing feels finite and it feels like that's the end of the world. And like, for me, even death is not failing if you've lived a full life. But for me, the, the learning part is coming back to going through motions, learning, which is what we do in life actively. We don't realize it a lot of the time is that our bodies in various layers from a capacity with our brains to physiological response throughout our body, there's things that are dynamically working and learning and growing, but It takes intervention sometimes, which requires knowledge to understand that you have to be able to mess with yourself actively to a certain degree to be able to unplug some of those circuits that you have and rewire.

Yeah, 100%. So I'm neurodivergent, if it's not already obvious, but I don't know exactly what, whatever I have is called. I have some dyslexia, but I have a form of synesthesia where I see Or I see shapes, spatial distances, hierarchies as concepts. And sometimes it can have texture too. So for me, the concept of belief is actually clay. And so if you think about a person's belief, it's malleable once you are creating that belief, but as soon as it hardens, You can only replace that belief by breaking it. And so it's really, yeah, it's really critical for you to, I mean, yeah, it's really critical for you to try to maintain yourself malleable. So be a person that is questioning your beliefs. And I think that there is, with metacognition, you can do that. You can ask yourself, why do I actually believe what I believe? And And what are the circumstances that may be making me think about that? So that's, that's something you can train yourself. But the other thing is that if you don't do that yourself, life is going to do that for you. So that's why you see people have very traumatic or dramatic experiences and then completely change who they were because they were overdue for a belief change. And because They didn't have the activation energy to actually break that hardened clay. It needed something that was of a magnitude much greater than if they stayed flexible.

So fascinating. I was reading something about adversity the other day and people overcoming it, and a lot of people have used it as a word to try and position themselves in a certain way. And I was playing around with terms of what I could use for my own story. I went through a lot of challenges and I'm from a tiny island called Tasmania, 500,000 people, very isolated part of the world. And to be doing what I'm doing now in New York City, it's not lost on me, but I did overcome adversity. And part of that was self-belief, knowledge, but also not thinking about failure as the endpoint. So there's things that I did natively and I reflect on that a lot. And I don't know what the answer is, but it's hardwired in me somehow because I never stopped being curious. And that's always been for me, the thing that I would encourage any founder to be is to be actively curious. Because if you're doing that, it's a state of mind and people will gravitate to you. Helps build relationships. It helps you be more vulnerable in the sense of storytelling, ways that can discover things in yourself as well, because you're actively learning around people in front of you. It's just such a good value and it's part of my mix of values that I have. So I, I love those moments and like you've just articulated that so well. So thank you.

Thank you. Yeah. For me, I really enjoy being wrong, which, because when I'm wrong, it's an opportunity to see the world from a completely new lens that I hadn't considered before. And I devour information. You know, like I say that one of my favorite things is learning, which it is. And I know it like is like super cheesy, but knowing, learning about something that it's not just like a detail here or there because Yeah, details, you can remember them incorrectly, but when you learn about something that can change the infrastructure of your thinking and allow you to develop a more sophisticated version of it, that's such a gift because you just upgraded yourself in life. And I love those moments. I mean, obviously, like if it has some consequences, sequence, it's hard at that very moment, but afterwards when you're running now the upgraded hardware, it's— you, you are now playing life at a different level, and I enjoy it.

Amazing. Karina Kania, thank you so much for joining me today. I, I love this conversation, and I know we'll keep talking about it ongoing. So thank you.

It's such a pleasure. Thank you for having me here.

Thanks for listening to Startups Decoded. If today's conversation helped you think differently, share it with a founder in your network. And don't forget to subscribe for real-world startup insights every week. We really value your support. If you're interested in sponsoring the show, email hello@startupsdecoded.com. I'm Andy Walsh. I'll see you next week.