E522 | Mike Reiner, 432 Legacy: Venture Beyond: Coaching Founders, VCs & the Inner Work of Building Well

29:23And interestingly, in this business, one thing, they feel like they've been communicating a lot, but they're actually very diligent in doing sort of engagement surveys with their employees. And in reality, the engagement surveys suggest that really that whatever message they're trying to get into the business isn't getting through. And so they essentially come back to thinking, well, actually, we need to reduce the amount that we're trying to communicate. We need to make it more clear and we need to make it more of a dialogue with the organization rather than just standing up and rolling off some PowerPoints and expecting that a message has kind of been embedded in the organization.

30:03the more change is occurring within a business and the faster that's occurring the more you need to be absolutely on it when it comes to the way you are engaging and communicating with the team otherwise there'll be misalignment otherwise probably organization will be running behind where you need them to be and i think the difficulty is that communication is seen as a sort of necessary evil as opposed to a really positive lever for accelerating change within the business it's almost seen as okay we've got we've made some decisions we need to go and tell people about them you know uh roll of the eyes rather than actually we haven't done anything until we've engaged the organization around the things that we've just talked about and that's That's the task.

31:01That's the 95 % of the task. Sitting in a room and coming to some conclusions about some stuff is fine, but it counts for nothing. I'd love to ask you, because you also have VC clients, I'd love to ask you just one quick question about team dynamics in VCs inside the firms. Anything that you have noted in particular tends to be what's causing issues and how, if you should give some broad sweeping advice to VCs here. what do you see VCs falling into again and again and again as bad practices or malpractices, even when it comes to managing their own organizations? Well, I think I start off by saying, you know, be wary of my sample.

31:49I have a very biased sample of VC clients. And it's worthwhile acknowledging that. And that is to say that the clients that want to work with me as VCs are VCs who genuinely want and believe that if they work together as a team, they'll get better returns for their LPs. And by the way, I'm not a VC expert and there are different models of VCs. And I'm not therefore trying to suggest that what those clients believe is necessarily the truth, but it's what they believe. you know I'm sure there are there are VCs who operate as what I would call a loose affiliation of of learning wolves who believe that that's the way to get the best return so I'm really saying be wary of my experience because it is with a very biased sample I think the the biggest challenge that that is faced even within that rarefied group if you like is To be able to sort of put their egos aside, you know, most VCs are extremely high functioning, successful.

32:59And if you are in that camp, it's hard to put your ego aside. And it's hard to say that actually, I genuinely believe that we're going to be better if we have a good team dynamic and if we collaborate, if we listen to each other, you know, etc. etc and i think that that's it's tough i think it's also quite tough because i think there is quite an individual culture within vc and certainly my clients at times again their narrative is is actually that they're trying to build something which is atypical and that can breed a level of uncertainty about whether they're right you know it's actually should we just go all in with the kind of, no, no, we're just lone wolves.

33:48And, you know, all this team stuff is just for the birds. You know, that is a constant question. When it comes to learning how to put your ego aside, I think it's safe to say that spending some time here is not wasted. I'm sure someone in the audience will relate to that problem. So let's unpack that. How do you help someone who comes to you either in their self-recognition that there's an ego problem here or you spotted? And I guess it's sometimes oftentimes not very well hidden. How do you help work through ego issues? There's no substitute for candor and quality of discussion in the room. um i mean really in a way that's sort of part of my personal brand the first vc i ever engaged with i met the the individuals i had a particular issue they wanted help with i met the individuals and i came away thinking well they're kind of causing this issue themselves and why do they need a coach that was my that was my spontaneous kind of response and when you're a coach one of the things that you try and learn to do is not to put your spontaneous response aside so having had that spontaneous response I then meant went and met if the two out of the four individuals who were kind of uh interested in finding a coach and essentially I've said that to them you know I sort of said straight up I said I don't know why you need a coach you're causing these issues yourself um why do you want somebody else to come and bail you out the nice thing about being a coaches actually you're not being paid to be liked you know you're being paid to help people be effective in their professional journey in my case and therefore you're paid to to if you like say things that other people don't necessarily want to hear and the consequence of that conversation was that they engaged with me because actually that's what they liked they said we need somebody who's prepared to actually tell us what they observe.

35:56And what that meant was that we built a way of working, which meant that I did some individual work with them, but a lot of the work we did was with the four of them in the room together. And my observation was to help them actually get the candor that they were prepared to express one-to-one to me into the room, the way they felt about each other, the good, the bad, and the ugly, and to have the conversation about that together in the room and then ask the question, because this is always the thing with any team, is the way we are conducting ourselves together in the best interest of what it is we're trying to breathe life into?

36:37If it is, great. If it's not, it needs to change. And it has to be, you have to kind of go inside, but you have to go outside as well, because the danger with going inside is it can become very self-serving, you know, and the relationships become the end in itself. You need to go outside because the relationships are the means. The quality relationships are the way by which actually you're going to be more successful professionally. But actually what you're wanting to do in the case of VCs is you want better returns for your LPs. Ultimately, that's what your job is. And in order to do that, yeah, you need to have the best possible relationships.

37:20And you need, if you want to be a team, to put your ego aside. Mike, I am sure you have had your fair share of founders, at least, that you work with that have had some sort of ego issue. Could you tell me how you experienced that as a VC and how you helped founders work through that? Many people who are successful have a unique drive. Often that drive comes from some level of trauma. Let's just not label that term too much because trauma can be also relatively small things. Whether that's being bullied at school, whether that is like father wound, whatever it is, doesn't matter. Also, of the trauma, you mentioned VC.

38:05If you look at ego, the problem with VCs is you get so much people pitching you that it's so easy to have an inflated ego because everybody wants something from you. If you're a successful founder, it's the same thing. Everybody wants something from you, right? So the thing that we pay attention to the most in selecting founders is their willingness to work on themselves. Because at the end of the day, I think that's the biggest criteria also for success. As the markets and everything is continuously changing, their obsession with improving themselves as people and thereby leaders in the company is the most important thing right so it's already in this election where we pay attention to that we want to work with founders who are driven to do this and then to your question on how we help them is a combination of one really calling each other out both ways like you build a relationship where you really like encourage calling each other out where the human factor comes first where it's also like you do the check-in, you also ask how they're feeling.

39:07It's not just transactional. We help with external coaches like Colin and others to further develop their own journey. And in this, I think it's continuously just realizing that many assumptions that you have, like everybody has a different way to look at things. And that nuances a lot. Let's peel another layer of the onion. Let's go to roll. We all play roles. We all have them in our personal life. We definitely also all have them in our business life. The role of a founder is ever changing. Colin, how do you think about roles? Where are the most important things to be focusing both as a coach, as a VC, and as a founder?

39:52Well, I think one of the questions I often ask potential clients before I engage is how they think their role is going to be different in the next six months as compared with the previous six months. and how equipped they feel to be able to fulfill the role that's going to be needed from them. And that in itself is an interesting window into how people see the dynamic and the shifting of their role. My observation is that founders, they know their role is changing, they want to make changes, but often they can get stuck. They get stuck into a particular way of working. that maybe because there are particular things that they like doing and things they don't like doing, you know, and we're all like that as human beings.

40:38But somehow putting aside your own likes and dislikes and being able to focus on what does the business need of me now and in the next coming months or so is a way of getting people to think about their role today. I think it's extremely hard sometimes to be able to let go of things that give you security as an individual. You know, I mean, a simple example, you know, particularly in very, very early stage, often with founders and co-founders, you know, one of their things that they do is they code. You know, I mean, it's kind of, it gets them into the business. They probably even built the first prototype of the product themselves, you know, and in tech startups.

41:23And the danger is they get good at it. And then coding becomes kind of the thing they do, part of their identity. And letting go of that is extremely difficult. And they can build all sorts of justifications to continue to do it a little bit from time to time, you know, about, oh, well, then I can appear credible, et cetera, et cetera. But, you know, that's just an example of how difficult it can be to let go of things that we're very competent at or let go of things that brought us joy when actually they become not relevant anymore for what the business kind of does need from us. And how much attachment do you see there?

42:06Actually, let's take CEOs, attachment to keep people. you see attachment in a variety of different things but it's it's endemic i mean we're all like that i mean let's be honest it's easy for me as a coach to sit outside a little bit of a system and sort of see what's going on and that's part of the part of the benefit of a coach if you like but we're all to a certain extent want some things to stay the same and the things that we want to stay the same the most are our ability to do everything that we're good at we want our own self-image to stay the same you know we'll come we'll come on and talk about that in a minute but that's the challenge and therefore that attachment shows up a lot in what is in people's diaries you don't really have to talk to them you just say well show me your diary for the next uh three four weeks and you can see what they're attached to and you can then say well is this the stuff that actually meets your purpose the needs of your right now or is this stuff that was relevant six months ago or 12 months ago and actually now needs to be ditched or changed so the the best way of seeing a hatchment is to look at what people do on a day-by-day basis and it leaks it's the same as language the words that people use they leak people's intentions and motivations i'm fascinated by language you know again we can have a whole podcast about that but our language itself can become stuck um the way we describe ourselves can become stuck you know most interesting things i do with clients sometimes is to take them to the national gallery and i ask them to find a picture which represents a particular thing that they're they're working on the one i was working with a father and son who were both working in the same business that's another podcast you know do you really want family members you know within the same business but but but it was a very challenging relationship.

44:05And I took the son to the National Gathering. I said, well, just find a picture that represents your dad. And he found a picture and he talked about it. And I said, well, go and find a picture that represents your dad as you would like to see him. You know, and then what's the change that you want? But the purpose of using art is to find a different language around the challenge. Because often in finding a different language, you can find a way forward because we just play out the same words It's about the same issues time and time again, and therefore don't really get any change. You have described to me earlier, Colin, two core takeaways when it comes to roles that I just want to state, and then you can maybe unpack them a little bit.

44:49We're running late on time, but I think it's really two strong ones. One is the advice to ask the question, what's the purpose of my role now, and what will it be in three to six months? it's an obvious one i think everyone can imagine how powerful and important it is to remember to do that but then you have another one which i thought was a little bit less obvious which was align what you do to that purpose add a column of why am i doing this to your to-do list for a month and use it to change what you expect of yourself and others yeah this is a reasonably common And sort of piece of homework, if you like, I encourage founders to do.

45:29And it's extremely powerful. The reality is that with time-poor individuals, they transact a lot of the time. One of the core benefits of coaching that my clients report to me is it forces me to slow down and think about what I'm doing. you know it's an hour and a half or two hours in my diary where actually i don't have to just run from one thing to another and therefore what they do is they just fill their diary like in a sort of relatively thoughtless way with all sorts of stuff um and they do the same with their to-do list stuff comes on to their to-do list um and they just okay i need i need i need and i sort of just put a column of why you're doing that.

46:13The end point, if you ask why enough, is often that they actually just don't trust other people in the organization enough. They're doing it because they don't trust the capability in the organization to deliver it. And the advantage of asking that question is you can then say, well, okay, what would it take for your trust to change? what would it take for the organization's capability to be greater so that you don't have to do it but until you get to asking why why are you doing this you don't get to ask the real question which is okay what really needs to shift here and is it you're trusting an individual you're trusting the team is it actually just the way you're planning to bring capability into the business and build it and then of course there are some things on your to-do list where there's some very legitimate reason why you as the founder should still be doing those things.

47:07And you need to do them and you need to do them really well. So get rid of the other stuff. So actually the things which are yours and your unique value, you can focus your time and effort on and do fantastically well. I'll dub this column the Colin column and put it on my own. Let's go to the fourth and final level of the onion here, the self. I'll kind of tee it up with another one of those questions that I asked founders or VCs actually when I'm starting to engage which is that people often come with a sort of list or a notion of something that wants to change and one of the questions I often ask them is like well what's the price you're prepared to pay to achieve that change and the common answer is oh well I'm really committed and yes I can give my time I can give you know etc etc and I said what about if you had to change your self-image.

48:05It's a basic human nature to want to be right about ourselves. It's one of the reasons why we often reject feedback. It's one of the reasons why we feel uncomfortable experimenting around the edges of who we think we are. But the need to be right about ourselves is incredibly powerful. It's very, very disconcerting for somebody to say, you know what, actually, most of what I thought I knew about myself is not right and so it's in a way you know paying for a coach in a way giving time to a coach in a way committing to do certain things that's not an expensive thing but the idea that i may go into conversations i need to come out realizing that actually i need to change what i think about myself and my capability you know that's a big price to pay i may have to change what i think about somebody else when I've actually formed a very strong opinion about that.

49:05And it may be me that needs to change my opinion rather than change that. That's tough. If you look at the founders you're coaching, Colin, how many of those founders are happy? How many of those founders do you think are focused on the journey actually versus the outcome? I'm asking this because interestingly enough, when you continuously focus on the outcome, there's very little room to be happy because the outcome and the goal is always something in the future, right? So you're continuously chasing something that changes all the time until you die, right? And it's such an obvious statement, yet most of us keep doing it.

49:46And I think for me, a key turnaround was to really look into what are the daily things I do, right? And for instance, as a VC, it's fucking note-taking. Big part of my time is making notes. And I actually took more pleasure out of selecting the right CRM, taking notes in an efficient way, connecting it in a good way, and taking joy out of the boring small stuff. Taking joy in the moments, being fully present with someone to really, really enjoy the journey. And this relates to the role, but there's less attachment to the role. This relates to your energy level, getting more energy out of things.

50:26This relates to, I think, being effective. So to so many things, yet it's so unaddressed, I feel. I'm curious how you see this. I mean, I think it's absolutely critical. I mean, one of the saddest moments of the last 10 years for me was when I went to meet potential clients. And this person, they'd grown a great business. I know seven or eight years. And I met them and they said to me, I just have a real problem. And that's that I've got this business. By any real measure, it's been very successful. But I wake up every morning and I come into work and I just see right through it. I can't see it anymore.

51:13One of the I mean, in the end, and frankly, with that individual, we decided that actually they needed therapy. They were in a burnout state. and I'm not a burnout expert, but the reality is they got there because actually they hadn't every day been grateful for what was happening. I have a friend of mine, again, he just sold his business. It was a convenience store. By the standard, VCs, like nothing. 20 years of building a business from scratch and the sale process, like any business sale, is always traumatic. diplomatic you never get what you imagined you were going to get and there's always problems and he was devastated really by the ending and I I wrote him a note because I felt really sad for him and one of the things I said is you've got to look back and see what this gave you over the last 20 years you know it gave you a great income it gave you stability for your family it gave you an outlook for your entrepreneurial spirit through the trade association you went and you spent time with other business people, you help them grow their businesses.

52:20All of those things happen day by day by day by day. So the idea that you can assess the value of this by the amount of money that came into the bank when this completed three days ago is completely nonsensical. The encouragement, you know, exactly what you've said, Mike, is to say to founders, co-founders, to investors, it'd be great for every day for what you're getting from what you're doing because you know that's far far more valuable than what might be a load of money in the bank or what might be relatively relatively little money in the bank or nothing in the bank at some future point in time over which you have some control but frankly not an enormous amount and probably not as much as you think you have you know i mean there is there's well known and proven cycle like data from psycho psychology experiments that says that if you daily practice like what's called gratefulness you know if you write down at the end of each day what are the three things i'm grateful for you will feel better you will you will have a better a more robust mental state if you do that because actually it's about observation more than anything else.

53:39It's what do I observe in my daily life, in my daily work? And, you know, as Mike said, is my eye fixed on some sort of notional, in a verticomus exit at some point in the future? Or is it fixed on what's great happening in front of me? Another relevant story is, you know, a client of mine who had an amazing exit. And, you know, she goes and does talks now and that kind of thing. But when she's asked about, you know, how do you get such a great exit? She said, it's really very simple. You just spend each day trying to build a great business. And the rest will happen. In some form or other, good, bad or indifferent.

54:25But just spend each day trying to build a great business and enjoy that. I think there's one thing that I haven't really heard people talk about, which I feel is really fundamental and closely related to this, which is energy, the equation of energy. What I mean by this is every single activity and every single interaction either gives or drains energy. And it's incredible how little attention we pay to it because in business, energy is everything, right? The way we convince people, the energy like a VC feels when the founder comes in and like talks with passion, or you convincing like someone to join the company or just energy to work on a task.

55:04So paying attention to that is huge. So it's essentially three steps. One, to be aware of every single piece, like a conversation or an activity, whether it drains energy or gives you energy to start with. Two, to see how you can change it to give you more things that give energy versus draining and three, with also personal development and working on it, actually changing that things that previously drained energy give you energy, change that equation. I'm just curious how you think about it because I think so little disgust, yet it's at the core of everything we do as humans. I think it's fundamental to individual success and to personal success and to business success.

55:49managing individual energy is is is just critical and the reason for that is because i think if you are energized i would also use the term resourced personally you are much more capable of leading well in a business context and much more capable of leading leading a meaningful life because it means that you have a resource within you from which you can draw to get the very best out of yourself and others the moment you run that energy down to whatever means you're going to end up in a position where you just become extremely just reactive you just react all the time you've got no way of choosing uh the response that you want to make and i think part of that maintaining that energy and building it is choosing what you do what you don't do it's about also finding being grateful i think also it's about finding a place of inner peace it's about uh you know for some people they use meditation for some people that you know they're very spiritual but whatever it is you need to find a place of inner peace everything else is changing so much around you if there isn't somewhere you can go where you can just pause and think you know the world's mad but in this place in this place i can breathe and i can just pause then then i think it's extremely difficult so you know to to whoever's out there listening if you don't have a place of inner peace, spend some time finding it because it will help your energy.

57:37It will help your resourcefulness. It will mean you can deal with the ups and downs of building a business far better than if you don't have that place. Let's close the podcast on the note of being able to recognize that the world is mad, but still saying I'm good. Thank you so much for joining me for the podcast, Colin and Mike. I enjoyed it very, very much. I really hope that everyone else did. Thank you. Thank you. Before we start the show, a quick note. If you're building or running a fund, you know it takes the right partners. At EUVC, we only work with sponsors we truly believe should be part of your tech stack.

58:15Please do take a moment to hear about them. And if you do, reach out, mention EUVC. It's the best way you can support what we do. Thank you so much. Starting off, HSBC Innovation Banking. If you're a founder, a scale-up, or a VC, you need a bank that actually understands your world. HSBC Innovation Banking backs innovation globally from seed to IPO. And if you ask me, a strong banking partner like HSBC belongs in your stack. If your portfolio companies are scaling, they need infrastructure that won't slow them down. Google Cloud Starter Program offers$2 ,000 to$350 ,000 in credits, plus technical support to build better and faster.

58:52It's a key boost every fund should bring into their ecosystem. and oh my god are we thankful to be partnering with them. Now legal is a space you cannot lag on. Legal needs to move at the speed of venture. Goodwin's team has decades of experience with startups and funds. They're trusted at every stage from formation to exit. Goodwin definitely is a legal partner every serious manager should have in their stack. For Luxembourg-based VCPE and funnel fund managers, modern funds means going digital. Funcrafts gives you a full service digital native platform built for today's European managers. It's a must have if you're scaling smart.

59:28So we all hear about the Middle East. How about you go there? From AI to deep tech to sovereign funds, Gaitex in Dubai is where global future of tech gets negotiated. It's not just a conference. It's where East meets West, capital meets innovation, and the bold set the agenda. If you're playing on the global stage, join us going to Gaitex this year. If you're gearing up for your next fundraiser and want a placement agent who truly understands emerging managers, reach out to CFunds. their boutique placement agency that has helped GPs across here, raise capital from top tier LPs. We've been on the other side of the table here.

59:59They are actually good ones to work with. So I do urge you to go to cfunds.io to go and check them out. And hey, before you go, if you're looking to discover startups, raise capital, or connect with innovation leaders, do check out dealflow.eu, the EU backed platform, bridging founders, VCs, and corporates. There's no better place to find the startups that have received significant funding from the European innovation ecosystem.