Itxaso del Palacio (Notion Capital): The founder health paradox

0:00Itxaso del Palacio:And as investors, we get into that boardroom and we pride ourselves from looking at numbers. We love to look at the spreadsheets, the revenue growth. We are obsessed with growth, run rate, gross margins. We love to do that. And we treat founders as they will be elite, high-performing machines. But the problem is that they are not machines. They are people. The thing is that when we ask those founders how do they rate their health, they rate it as a 7 out of 10. So pretty good. They feel that they are, in fact, pretty healthy. And not only that, the ones that work the most, the ones that are working more than 80 hours a week, are the ones that are telling us they have a better health and they feel better.

0:48Itxaso del Palacio:And so there is a little paradox here. In reality, if those founders and CEOs burn out, who cares about the strategy? Who cares about the numbers? There is no growth. Companies will completely stop. And that is when we will be completely panicking. It is not longer enough that we look at the strategy, but we need to understand the intrinsic motivation of those founders and how are they feeling to be able to support them in the long term. We are live. We are live. We are live. We are live. We are live. We are live. We are live. We are live. We are live.

1:34Itxaso del Palacio:Take a moment to look around to perceive this amazing place of energies. Tomorrowland is full of music, rhythm and euphoria. A place built absolutely to enjoy every single minute.

1:56Itxaso del Palacio:And when the bus drops, everybody feels completely unestappable. And in many ways, that's how founders feel when they want to start a business. They feel unestappable. They have an idea, they have a little bit of money, and they're just a big drive to change the world. Is this intoxicating adrenaline that gives them the drive to build a big business and to be able to get very far. But today, I'm going to be talking about what happens when that music stops. And even better, when the music keeps playing and playing, plays for two years, five years, eight years, and ten years, and you are supposed to be dancing every single day, non-stop, without a single break.

2:48Itxaso del Palacio:Hello, my name is Ichazo. And apart from being a venture capitalist, I am also a very keen athlete. I love exercising. I love going running. And when I go running, I love to listen to my favorite music. It keeps me energized. It keeps me going. And I can run much faster for a much longer time. It's that second half of the race where I feel more tired and I want to quit. when the music helps the most. In a marathon, that second half is called the second split. And listen to this. The best runners run that second half faster than the first. Yes, that's what happens. They run the second half faster than the first.

3:40Itxaso del Palacio:How do they do that? That sounds like crazy. So they do that by pacing themselves, by knowing when they can push and when they need to pull back a little bit to reserve the energies so that they can smash it at the end. If you ask anybody why does that happen, people will tell you this is effort. But in reality, this is a strategy. I think I'm losing my microphone.

4:13Itxaso del Palacio:I don't know. I have a small head. Maybe. But anyway, I'll keep it as it is. So it's understanding how to recover. Elite athletes really know this. And they pace themselves so they can finish the races stronger. Today, I sit in more than 10 business boards, in more than 10 corporate boards. I'm pretty sure you do. Day in and day out, I work with the most ambitious founders, people who want to change the world. They are full of energy. They work day in and day out, in fact. And as investors, we get into that boardroom, we get into that boardroom and we pride ourselves from looking at numbers. We love to look at the spreadsheets, the revenue growth, we are obsessed with growth, grant rate, gross margins, we love to do that.

5:12Itxaso del Palacio:and we treat founders as they will be elite, high-performing machines. But the problem is that they are not machines. They are people. They are human. They have a heart. And they also feel. And so based on this, recently, myself and my team, we wrote a report called the Negative Split, which is exactly that phenomenon that I told you about. The goal of the report was to bring science into this belief that if founders don't take care of themselves, they end up hitting a wall and burning out. We went out to collect data and we got an overwhelming number of answers. It was unbelievable. Founders really wanted to talk about it.

6:01Itxaso del Palacio:We sent anonymized questioners and everybody wrote their name at the end because they wanted to really express themselves and speak about it. We collected very quickly more than 100 answers from founders. And what we found, in fact, it was not very surprising. We found out that 40 % of founders work more than 60 hours a week. and in fact that is not the most critical part. The thing is that when we ask those founders how do they rate their health, they rate it as a 7 out of 10. So pretty good. They feel that they are in fact pretty healthy and not only that, the ones that work the most, the ones that are working more than 80 hours a week are the ones that are telling us they have a better health and they feel better.

6:57Itxaso del Palacio:And so there is a little paradox here because if we look at the growth of those companies, as the companies grow, they have more pressure from investors. They keep hiring more people. They start telling their people what they need to do and they get a little bit detached from the operations. However, the founders from bigger companies seem to be less stressed than the founders of smaller companies, even though they have more pressure. For many people, this might be resilience. They are developing resilience. For other people, this is, in fact, a perception gap. So there is a perception gap that happens, and it happens many times when I go running, and I'm listening to my music, and I push myself more and more and more and more, and I get home, and the next day, my calves are hurting.

7:52Itxaso del Palacio:I pushed too much yesterday. What happens if I go running today? I will listen to my music, I love my music, and I push myself again. And there is a perception gap at that moment when I push myself. But the next day, I feel short until the moment my body breaks down. And that is exactly what is happening in many of those founders. In elite sports, this is something that has been already understood. If anybody will be working, will be training 365 days a year, they will definitely burn out. So there is no athlete, there is no runner that wouldn't try to do that. And in fact, their coaches will bench them if they will try to train every day during the year.

8:45Itxaso del Palacio:Still, in the startup community, we go into social media and we celebrate that people sleep at the office and they build dormitories next to their offices so that their employees don't need to walk too far and they don't have a real life outside of work, which is pretty much a paradigm. So endurance is basically not celebrated within the startup community. So our report showed that the founders, in fact, that take care of that negative split are the ones that take into account two things. One is they look for intrinsic motivations, they forget pure numbers, and they look at much bigger picture and looking at the goals.

9:33Itxaso del Palacio:And two, and more importantly, they look for a network of support. They have a network of support, and that means they have coaches, and they rely also on their teams. They have realized that building a big company is not a one-man job. They need very good teams around them, and we have just seen it. In the World Cup, in fact, big teams end up winning and working together. So this brings me back to my peers, to the investors, to everybody in this room, in fact, that works with those founders and those CEOs. In reality, if those founders and CEOs burn out, who cares about the strategy? Who cares about the numbers?

10:20Itxaso del Palacio:There is no growth. Companies will completely stop. And that is when we will be completely panicking. It is not longer enough that we look at the strategy. But we need to understand the intrinsic motivation of those founders and how are they feeling to be able to support them in the long term. So next time we go into the boardroom, what about we ask them, hey, how are you doing outside the business? Do you have a mentor? Do you have a network of peers to go to? I'm not expecting my founders to come to me to tell me how they feel. But they should have a certain network and they should take their time outside their businesses.

11:01Itxaso del Palacio:So Love Tomorrow is an amazing name for a conference. But in order to love tomorrow, we need to love the people who are building that tomorrow today. As investors and board members, we are really, really privileged to be sitting on those boards. And to be honest, founders like athletes will not be remembered on how they started, but they will be remembered on how they finished the race. Let's try to build an ecosystem when we're talking about your health and your performance goes completely together. And let's take care of the human capital because at the end of the day, it is the most valuable capital that we have in our businesses.

11:46Itxaso del Palacio:Thank you.