Itxaso del Palacio: General Partner at Notion Capital on how founders avoid burnout

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0:32Thank you very much. Hello and welcome back to the Scaling Europe show. I'm Seb Johnson. I'm here with Achaso. So Ocheso is a partner at Notion, but we're on the show to specifically talk about a brand new report that you have just released. Can you tell me a bit about what the report is and why you wrote it?

0:48Itxaso del Palacio:Yeah, so it's great to be with you, Seb. In fact, I listened and watched some of the conversations with some of the people that you interviewed who are amazing. And I really love them. So it's great to be here with you. So, yeah, as you just said, I'm a GP at Notion. And as such, I do investments in B2B software businesses. So some of my investments, you might recognize them, like Ulife, Naboo in France, Kobe in Spain, Nelly in Germany. So we cover Europe prior to that. In fact, I was running Microsoft Ventures, M12 in Europe. But I'm very, why did I write this report now and why did I work on this, the negative split?

1:37Itxaso del Palacio:The name of the report is the negative split. I'm very passionate about health and fitness, in fact. Everybody who knows me absolutely knows that because I have my own probably three-hour routine a day on health and fitness. And this all started because I'm obsessed with performance, absolutely obsessed with performance. And over the years, we realized that when we drink, we can't perform. We go to events and we don't remember even what happened at that event. Who do I need to follow up with just because I had one or two glasses of wine, right? It's something that happens to everyone. And if we don't sleep well, we don't think fast enough.

2:22Itxaso del Palacio:and obviously exercising in the morning or getting to a cold plunge, which is what I do, wakes you up and really brings you the energy to think faster, to move faster, and to perform at your best. So that has been for me a realization, but I definitely realized that investors don't talk enough about founders' health and well-being, and founders have a long journey to go through. and I think it is important for founders and investors to start talking much more about this topic and make it much more of an open discussion because it is very much needed. And can you tell me what are some of the, maybe tell me a bit about what does the report really go into?

3:11There are some really amazing insights and stats and also some opinion pieces as well. So can you give a bit of an overview on what does the report talk about and then maybe some of the key findings from it. Yes.

3:23Itxaso del Palacio:So the report is based on a survey, is based on data. So it has three different elements, I would say. It has a survey with over 100 founders from VC-backed businesses. The second part is that there are some one-to-one deep dive interviews with those founders, with some of those founders who wanted to talk a little bit more about their experiences. And finally, we have some experts' interviews. Particularly, we partner with one of the best well-known worldwide sports performance individual. And his name is Wayne Diesel. He has worked for over 20 years with the NFL, with NBA, with the Premier League teams, and he has been helping those teams perform at their best for a long period of time.

4:26Itxaso del Palacio:And so the report draws a parallel between the life of those elite athletes and the founders who need to perform really well over time, right? and it has pretty much similarities. And so based on that analysis, we found three or four main things that I will mention here. Obviously, there is much more data on the report and we should deep dive on it. But one, I would probably say that this is not true, but founders operate under extreme intensity and still they really adapt to it. I think that's an amazing finding. 40 % of founders in the survey reported to work more than 60 to 80 hours a week, 40%.

5:23Itxaso del Palacio:And yet, they still report they have good physical and mental health. So that's definitely an interesting insight. The second point that we found is that burnout and well-being coexist. So they go hand in hand. You think most of the founders or even half of the founders experience burnout throughout their journey, which is like 50 % of the founders experience burnout. But even those who experience burnout, they also talk about their routines to recover, to stay healthy. and it is a little bit like a roller coaster, like a recurring feature that comes in and out, and that's the way they talk about it, right?

6:11Itxaso del Palacio:The third point that I want to mention maybe is that the pressure increases with the scale, but so does the capacity to cope with it. So bigger companies or founders with bigger teams seem to be coping better with the stress and with the burnout. are the ones who experience less burnout, which is interesting too. And finally, maybe a fourth one, that recovery differs from one person to another one. It's very different from one person to another one, and it's often, unfortunately, undervalued. It's being seen as a response rather than as a prevention in many cases. And then that response triggers the long-term behavioral change.

7:02Itxaso del Palacio:uh and the founders but uh i would mention these four but obviously there is much more data in the report yeah no the report is great you know i always love having guests on who have produced something like this because you have you have such a good conversation you can go straight to the data um but what are they let's get into one of those bits because you said yeah i think 40 percent of founders working more than 60 to 80 hours a week uh and they report good physical health these founders are often working a lot a lot of them are also exercising a lot i saw a stat i think a bunch of them are doing over five hours of exercise a week so they are both working intensely they're exercising intensely and yet they're still able to sort of they're reporting being in good physical and mental health is there something do you think around you know it's the fact that being both intense physically and intense in the workplace sort of helps a founder to manage because like on the paper you may say like actually going really hard on exercise and going really hard on work may actually just lead to burnout but it seems to that seems to not be the case and i'm curious to hear why you think that is yeah that's a very good point the reality is that if we think about it obviously um founders are incredibly driven goal-oriented ambitious i mean everything that you said i can see totally a founder doing it i'm fitting in on that day right because they are they are definitely obsessed uh with building that business, solving that problem they are trying to solve, right?

8:31Itxaso del Palacio:But the important nuance here is that that motivation and drive buys you time, but it doesn't make you immune. So it gets a moment where your body and your brain and start asking for a break, right? So the reality is that the best founders end up paying attention to how they feel, how they treat themselves, and particularly how do they recover as part of their job. The reality is that, and I go back to talking about that so obsessed with solving that problem. If you think about it, people who get stressed are usually getting stressed because they are doing something that they don't like to do.

9:26Itxaso del Palacio:They don't enjoy doing. And so when founders are really enjoying what they do, they think they can do that forever and they are enthusiastic about it. And it will take them probably for a longer time that somebody else that is doing something that they don't like. But at the same time, it's definitely that paying attention to themselves and setting up the routines and the the um the protocols i would probably say to take care of those and to recover i think needs to be for them part of the job almost yeah interesting i guess sometimes that exercise can always act as recovery you know that that's sort of like the downtime away from the work it's not just an intense activity in itself it's an opportunity to switch off and recover and maybe your mind even if you're not resting your body um yeah i always want to touch on the point that you talked about how companies scale and i think i think the the line that you use is like series a and that as they get past series a uh there's better mental health better physical health um but also interestingly a greater degree of loneliness i saw as well and i thought that was really interesting is that actually it seems like there's a greater overall level of resilience and slightly less burnout as companies get bigger, but also more loneliness.

10:49I thought that was quite an interesting dynamic. Why do you think it is that founders are able to cope better at the later stages? Do you think, despite being lonelier or more isolated?

11:03Itxaso del Palacio:Yeah, it is a very good point. And definitely this has been a very interesting finding. And in fact, we supported this finding with a research developed at UCL by a professor at UCL with 400 interviews. And they had some data points that also were confirming those insights. But yes, you are absolutely right. As companies scaled, the complexity of the business grows, right? We have more pressure from investors. We have more employees to manage. the targets to hit and so on, right? And over time, we keep, as founders, keep growing their teams. So they have less impact and probably the proximity to that execution goes down.

11:55Itxaso del Palacio:They have less access to be hands-on on the job, right? Yet we found that those founders of bigger companies cope better with stress. So why do we think is that? So two main things. One is founders develop endurance over time. Remember when I mentioned earlier that the well-being and the burnout coexist and it goes hand in hand. And I think founders very much learn how to put in place some mechanism to move from that part now that they are experiencing at a certain point of time to that high performing element. And that helps them develop the endurance of the long overtime. And also, if we think about it, Seb, there is certain natural selection because founders that are getting to later stage businesses are in fact the ones who cope better and also are able to deal better with this uncertain pressure situation.

13:05Itxaso del Palacio:And so there is also a little bit of that natural selection, let's put it this way, on those results. No, that was going to be my next question, whether there is that sort of selection bias that only the most resilient make it through. I want to talk about endurance as a skill. What kind of things can anybody, founders, investors, anybody who's working in an intense environment, how can they hone in or practice developing endurance as a skill? Yeah, that's a very good question. And I think definitely one of the findings of the report is that there is not a magic formula. So don't try to get to the report thinking, I'm going to get here the bullet points I need to basically perform at my best for a longer period of time.

13:52Itxaso del Palacio:So I don't think, in fact, myself, there is a single way to develop endurance. The report includes the input from many founders giving advice from founder to founders on what are the critical three to four things that work for them, trying to help other founder readers. So it's not as giving advice to other founders, but rather some of the most experienced founders going there and giving advice to other founders. But overall, I would say, as I mentioned before, one is those are the founders that develop that endurance pay attention to it and pay attention to themselves. You cannot develop this by not paying attention.

14:41Itxaso del Palacio:It comes. No, it doesn't come. They treat recovery not as a reward, but as part of the job. How many founders do you know? I've been through all of this. I really need a couple of days of rest. Yes, you can do that several times. You should be thinking of your rest in a recurring basis, right? They evolve as the company evolves, meaning they start delegating much more to their teams. They start doing things differently. They start relying on external advisors and external mentors, right? And finally, also related to this, they build trusted support systems. And that means peers, founders that they talk consistently with and they are very helpful, partners, coaches.

15:36Itxaso del Palacio:And I would like to put in this list investors, but unfortunately, I'm not sure if I'm there yet. Right. So what basically the data and the conversation show up there is that endurance is in a formula or a trait. It's something that you build over time. Got it. No, that makes total sense. What kind of, are there ways to sort of, even if it's not like a trick or a shortcut, I mean, I think you talk a lot about motivations in there as well. what sort of motivations kind of push people towards endurance as a as an activity whether it's endurance sport or endurance um in business like what kind of motivations are the ones that are healthy like i think i think i can't remember i think i saw something about the stats to do with like fear of losing is was it something to do with that yes there are some some stats about uh yeah fear of losing.

16:37Itxaso del Palacio:But I think there are a couple of the stats coming from the UCL report, and those are some of those. In the report, basically, we look into things that, or founders point over and over again, that choosing or doing things that make you feel good is what helps you with coping this stress. So ultimately, it is about helping you think of, okay, is it this exercise? Or is it in a week I'm going with my partner and my kids and setting up some expectations for them and goals that really make you feel good and you are looking forward to doing, right? That's something that some of the founders, I think it comes to mind, Abacar, founder of Bimery, he mentioned one of these points, and I think it was Debbie Busco, also founder of a couple of businesses, a serial entrepreneur, pointed to some of those things.

17:54And it's about getting pleasure

17:57Itxaso del Palacio:out of those activities that you do outside work doesn't mean that because your friend runs five or ten kilometers a day that is going to make you happy and it's going to help you recover mentally and even physically you see what i mean yeah needs something pleasant for you got it and i thought there's an interesting stat which is i don't remember how many it was but people were working over 80 hours, not experiencing burnout at all, which I thought was particularly interesting. I kind of had a question on when you're working at that level of intensity, how do you know that you're operating at a healthy level of endurance as opposed to sort of like normalized dysfunction?

18:42Itxaso del Palacio:That's a great question. And in fact, it's almost, I think it's at 8.5. I don't have the number exact. It's around 8.5 % of founders reported that they work more than 80 hours a week, and still the majority of those have not experienced burnout, which is absolutely incredible. I do think there is a little bit of a gap between perception and reality. And we talk about this in the report because we do think founders naturally cope better because of their motivation. They cope better with this burnout and stress. Now, it gets a moment where your results are not being as good as other companies, when you have huge attrition in your business because people can't work around you.

19:45Itxaso del Palacio:You become rumpy. You are tired all the time. You cannot drive a vision. So I think those are clear signs and they're very worrying signs. And unfortunately, investors, we tend to create even more pressure because, hey, we are not at the level where we should be. Hey, what are we doing that people are leaving the business? What is it happening here? And in many cases, we need to realize that there might be some background issues that we need to solve in order to start performing better. So I think it's definitely a wake-up call for VCs to work a little bit into this, for sure. Yeah, and that was going to be my final question, actually, was, you know, you're an investor yourself.

20:36You work with a lot of great investors as well as founders to pull this report together. If there was one thing that you could get investors, board members to take on board as a result of this report, what would it be?

20:47Itxaso del Palacio:Yeah, definitely. Honestly, we wrote the report from founders to founders. We wanted to gather the data from the founders. We included the feedback from the founders on how to help founders to founders and add the expert voice of people in the performance elite athlete space. But this is for founders. However, it's definitely a wake up call for VCs. Burnout and unwell being is taboo. And we think that we can continue to focus on the performance on the business. I mean, revenue, gross margins and so on without paying any attention at the personal elements and at what surrounds the founders. which is not only themselves but their families too and I think it's definitely a wake up call for the VCs to start talking a little bit more about it.

21:51Itxaso del Palacio:Just I'm not expecting my founders to come to me when they are not feeling well. I'm really not expecting that. Not because I don't want to help them. In fact, I talk a lot about this topic so maybe they even will come because I am particularly passionate about it. But still, I'm not expecting to come to me I'm expecting VCs to be able to talk about it and to proactively provide ideas and resources to the founders, even on a one-to-many with their portfolios basis on how to cope with the stress and what are the things that other founders are doing to be able to perform at their best for a longer period of time.

22:37got it well look thank you so much for joining me it's a great report absolutely recommend that anybody checks it out and reads it and thank you for putting it together it's great to have stuff like this in the ecosystem shining a light on underspoken about or under analyzed topics so thank you for the report and thank you for taking the time to chat to me

22:52Itxaso del Palacio:thank you and I'm very glad you enjoyed it for sure I hope other founders and investors do too I'm sure they will well look let's stay in touch thank you very much thank you bye bye bye bye bye

23:06Thank you.