Deep Dive with Jerry Neumann & Elizabeth Zalman

Intro: Welcome to The Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster. And I am here today with Jerry Neumann and Liz Zalman. They are respectively a venture investor and a multi- time founder. And they're authors of the brand new book, which is called Founder Vs. Investor. I really enjoyed reading the book, it presents lots of topics with sort of a back and forth in the book, and I think we'll do some of that today here. So Liz and Jerry, welcome.

Jerry Neumann: Thanks Matt. Glad to be here.

Matt Blumberg: All right. I think that the first question I have is, you talked a lot in the book about trust, and I probably have a couple of questions about trust upfront. But the one I want to start with is, if you work backwards from the end of a company, and let's call it the successful end of a company, some sort of liquidity event, the best founder and investor relationships are ones that have a tremendous amount of trust that have been built up over a lot of time. The challenge, of course, is at the beginning of a founder investor relationship, it's the beginning of a relationship, unless the two have worked together on multiple companies before. And most business relationships, most relationships are based on trust. How have you both found the process of creating that trust essentially overnight? Most deal processes take a month or two, maybe a few months. And if you think about it in the scheme of a 10 year relationship or a 20 year relationship, how do you do your level best to build that trust so quickly so early on? Why don't we start with Liz?

Liz Zalman : So I'll actually tell you one that was essentially overnight. So at my last company for my series B, it was led by Tiger. And we raised in the froth of 2021. And so as you know, things were moving incredibly quickly, and I think it was 23 hours from first contact with Tiger to close. Yeah, it was incredible. And we signed the term sheet, and I remember saying to John Curtius, I was like, " I can't close this deal unless I meet you in person." So the way that I create that trust is in person I need to quote, unquote, " feel somebody." I need to see what they're like. I need to watch the body language. It completes it for me. So I'm a big, big, big in- person person as the basis for that trust.

Matt Blumberg: I'm with you on that 100%. And yet 23 hours, how much trust can you have?

Liz Zalman : But yeah, he flew up to New York, to his credit, maybe I think within a week or two. So I had no intention of backing out at that point because it's crappy to sign a term sheet and then back out if you don't like somebody in person. But perfectly lovely. But he made the effort and that to me meant the world, especially in that climate.

Matt Blumberg: And Jerry, what about your perspective? What signals do you look for in founders that they are trusting, or how do you figure out if you trust them, or how do you make sure they trust you?

Jerry Neumann: Right. Well, I mean I think there's the before you invest part and I think part of the reason investors try to make that part longer than it has to be perhaps is to get to know the person a bit better. I know founders are always complaining that it takes forever to get somebody just to put an offer on the table, but you want to get to know somebody. And I think making sure if somebody is trustworthy is important. And also making sure that they're trusting, that they can trust you or have the ability to trust you. People who are overly negative about the whole venture process, it's hard to believe they're going to trust you later on when things get more difficult. So there's that part, which I think is very human, that's why we want to sit in front of each other. And then there's the part afterwards where you actually have to be the kind of person that they can trust. You have to tell them what you're going to do and then do those things. Not surprise them with doing things that you didn't say you were going to do or they didn't think you were going to do. Make sure you stick to your word. I mean, there's a story in the book about me and Liz, actually when I was investing in our first company and she was talking about well... Her lawyer called me and had all these terms that we hadn't agreed to, and I got all pissed off because that's not the kind of trusting relationship I wanted. So I called her up on the phone and she didn't answer. And so I called the lawyer and yelled at him for a while. And then the lawyer must've called her because she called me back immediately, and she's whispering to me, " Look, don't worry. I do what I say I'm going to do. The lawyer was just out making things up trying to help, but you're going to get the terms that we agreed to." And I said, " Well, why are you whispering?" She says, " Well, I'm at a shiva." But yeah. No, I think it's both things. It has to be somebody you can trust or think you can trust, and then you have to make sure as you go forward that you're building that relationship.

Matt Blumberg: I mean, I guess most of these things are a complete and equal two- way street, I think. So each of you gave an example of how the other one demonstrated trust, if not you two specifically, right? Liz, you gave an example of an investor gaining your trust. How do you think about signaling on behalf of you? How do you demonstrate that you are trustworthy in this case to the other side?

Liz Zalman : So for me, and I think that we touch on this in the book, I am open honestly to a fault. So if I'm messing up, I'm going to tell you I'm messing up. I can't even count the number of times I've called Jerry crying in the middle of the night or not during the day. So if I'm having a problem, or we need to talk about something, you're going to know right away. And so I'm an open book. And that has been both very helpful in cultivating relationships with investors or employees, or whomever it is, but also it can be harmful because that can be taken advantage of and has been. But I don't know that I want to operate any other way because that's how I want people to operate with me.

Matt Blumberg: I mean, certainly the best way to demonstrate trust is to be you.

Liz Zalman : Yeah. It is.

Matt Blumberg: So Jerry, how do you think about that when you're talking to founders, particularly founders maybe who've never gone through a financing before, they're super young. How do you signal trust?

Jerry Neumann: I think I try to be present in the world so they can always go back and check me out. So I think the reason a lot of venture investors are on Twitter, or they're out broadcasting their presence and talking at conferences is not just because they want people to come to them when they need money, but also because that kind of ambient presence allows people to start to understand how you are, what kind of person you are. So you can look at some investor's Twitter and be like, all right, this guy's a jerk, or not. So I think it's you have to be who you are. There's not much separation in my life between my work and the rest of my life, as I think for most people these days. And people can just look at what I say over the years and see who I am. I also say, " Look, here's a list of who I invested in. Call any of them. Some of these people hate me, but you can talk to them and see what they say.

Matt Blumberg: That's actually-

Jerry Neumann: See if I was doing the right thing or not."

Matt Blumberg: I think that's great. The first institutional investor that I had at Return Path was Fred Wilson, and he did that. He gave me a list of every CEO he had worked with and phone numbers. And he said, " Call any single one of them, even the ones I fired." So I like that. All right. So I want to keep on the theme of trust for a second, but ask a very different question, which is something that I think both of you brought up in the book, which is the tension between trust and bias. So much easier to trust people you know, people with whom you have a track record, with whom you've worked in the past. I've certainly found this, right? Bolster has eight co- founders. We all worked together at the prior company, and all of our cap table worked with us at our prior company. So there's sort of instant trust. But one of the challenges I think that all of us face around bias is around bringing new people into the inner circle and bringing people in who have different experience sets. Maybe they look different than we do, et cetera. So how do you think about the tension between trust and bias, whether it's about picking an executive team, picking a founder, picking an investor, picking new partners at your fund?

Jerry Neumann: You want to go first, Liz, or you want me to go?

Liz Zalman : No, I'm going to go second on this one.

Jerry Neumann: All right. I think it's hard. I say so in the book. And I don't want it to be hard, but it's hard. Part of it is getting to know people over a longer period of time. But the problem is, with people who are more like me, who might know people that I know or have worked for people that I know, I can call them and say, " What do you think of this person?" And I do this with everybody I invest in. I'm like, all right, who do I know that knows this person that they worked for in the past? So it's a lot easier to get somebody to talk about that person if they're part of the same whatever. It's a hard thing. And I think it's sort of incumbent on the investors to take the risk on people who you might not be able to vet as well because it's the right thing to do. And because it probably bolsters your returns. I mean people keep saying this, right? But it is a little bit more of a risk.

Liz Zalman : So I think trust for me, it's an interesting word, Matt. If I were in your situation for example, and I were starting a company right now with people that I worked with, and it's the same people on my cap table, I wonder if I would use the word trust or if I would use the word familiarity. Because I have worked with them for so long and have operated next to them for so long, I know exactly what to expect. I know exactly how they're going to behave. I know when it's going to be frothy waves and when it's going to be peaceful, calm waters. And they know the same of me. They know the situations in which I'm going to get up in front of the company and probably cry because of good news or bad news. And they know when I'm going to be happy and inaudible. And so for me it's choosing to operate within the known as opposed to the unknown. That's hard. I guess with respect to investors, I mean the investors with whom I've worked with on both my first company and second company are only the early stage pre- seed investor. I think it's Jerry, it's another one named Jeffrey Silverman. I think that's it that was on both cap tables. And it's also unfortunately easier, I think to Jerry's point, to network that way within our circle. But I will say, touching on the point of diligence, I think that most founders today do a really poor job of diligencing who they're getting into business with. The number who call me and they're like, " Well, I've got this term sheet I've got to sign." I'm like, " Dude, how many people have you spoken with who have worked with these people? Push pause, and pick up the phone and dial." And I don't know why it is that this current cohort of folks is fearful of doing that, or doesn't think that they have the power to, or doesn't want to. I don't know. But it is to their detriment that they don't figure out who they're hiring, who they're signing that 10 year marriage certificate with.

Matt Blumberg: Yeah, I think that's a good point. That matches a lot of the conversations I've had with first time and early stage founders at the moment.

Jerry Neumann: I mean I think it's important to remember that the networks we build over time, and especially I've been in this business for a while now, they're not where I went to school or where I grew up, or the people I hang out with in my spare time. My networks are people that I've worked with in the industries I've worked in. So if you've ever worked in ad tech, I know somebody who knows you. The bias can be weird. But it is, if you want to get into somebody's inner circle, I think that's the way to do it, is to go work in the industry that they're interested in. And that's the kind of thing you look for anyway as an investor, somebody who has a little bit of experience in your industry.

Matt Blumberg: Right. Okay.

Liz Zalman : Jerry and I just agreeing on everything today. Every single thing.

Matt Blumberg: Okay. We'll see what we can do about that. All right, my next topic is I want to dig into the topic of boards and board meetings. And I've written a lot about boards, we talk a lot about boards, and building boards, and managing effective boards on The Daily Bolster and at Bolster in general. And I was blown away by how dim a view,, quite frankly, both of you have of boards and board meetings. Liz, a dimmer view than Jerry, but Jerry, you weren't like, go, go, go. So first of all, let me just make sure I got that right. That was the vibe I got from the book. Is that right? It just seems like both of you hate boards, you don't see a lot of value in them.

Jerry Neumann: I don't think that's true for me. I think there's a lot of value. I mean I insist that companies I invest in have a board when I have the power to insist because I think boards are necessary. I just think that people don't understand what a board is for. So a lot of founders think the board is there to come give them their monthly advice on how to run the company. And that's not what the board is for. The board is for the investors to make sure their investment is doing well and that they know how it's doing. And then also to understand whether or not this is the right team to run the company. I think founders need to understand that. There may also be an element of them giving some help, but you have to be careful about that because that's not what the board meeting is for. Investors do that. And I just think that founders should get that help outside of a board meeting, not in a board meeting.

Matt Blumberg: That's an interesting view. And that doesn't actually match the experience I've had in my career where I think you can accomplish both in a board meeting. But let me ask you again, Jerry, as someone who has sat on dozens of boards, hundreds of boards, which is one of the things that separates the founder and the investor, the founder's on their board, maybe they're on an outside board, maybe in their career, they've been on a couple, and investors have been on many, what do you do to help mentor a founder or teach a founder about how to get the most out of a board, or how to lead a board effectively? Do you encourage strong independent directors? Do you discourage them? What role do you play in functioning of the board?

Jerry Neumann: So for the past 15 years, I've been usually one of the very first investors in a company. That's just what I've decided to do. So I'm often, when I'm on a board, the first person on the board, and sometimes the only person on the board beside the founder for the first year of the company's life. And then they bring on later stage investors who come onto the board. And at some point, probably after two years, I'll leave the board because they've got other people on the board who can do the job and I don't have to do it anymore. And in that first year, I try to get the founder to follow a certain type of board meeting template. Where every month you come in and tell them the same things. Not the same things, but the same types of things. These are the metrics we're going to focus on because this is the stage of the company, et cetera. So that you can go in there and everybody knows what's going to happen. You have a short meeting, maybe an hour once a month, they know what's going to be in there. And then if you have problems that you want help with, there's a certain way to approach it. I think it's similar to if you have a boss, that you work in a big company, you have a boss, you don't walk into your boss's office in your Friday meeting with these open- ended problems, and expect him to sit there and solve them with you. This is your job to solve these problems. So you walk in, you say, " Here's my problem. Here's what I'm thinking of doing. What do you think of that?" It's just a different way of doing it. I think I have been on, not hundreds, but dozens of boards. And the times when there's been trouble, founders have come in and said, " I don't know what to do." And then the board starts to think, well, okay, but maybe somebody else does.

Matt Blumberg: All right. So Liz, over to you. The quote that I wrote down from the book was-

Liz Zalman : Oh no.

Matt Blumberg: ... "Boards suck and nothing you do matters." So why are you so down on them? Have you ever had a good one or been an independent director on a really good one? I mean I get even the best boards have their moments, but nothing you do matters?

Liz Zalman : I don't think that anything you do matters. No, I stand by those words. And it is entirely possible, Matt, for the rest of the industry listening, that my experience is a crazy outlier, and most have an experience somewhere closer to the middle. But having spoken to a lot of founders, I don't know that that's the case. And I think for two reasons. So my experience with board meetings, they're just absolutely useless. I either have them with an early stage seed investor and we're walking around and we're just shooting the shit, and there's no real board meeting. Or there's a whole bunch of loud voices in the room and we're talking about why things aren't better, even when they're going great. Why aren't they better? Why aren't they better? They could be better. You can be better. Everything can be better.

Jerry Neumann: But useless for whom, right? That's the question.

Liz Zalman : Useless for me.

Matt Blumberg: So let me press on that for a second. And you wrote something else that I noted too, which is something to the effect that a board book has to be a work of art that caters to all the egos in the room. And I guess the question, and maybe this is a question for both of you, is do you feel like a founder or CEO can shape the conversation of a board meeting? Can effectively come into a board meeting, both with the materials and with meeting facilitation skills, to say, " Here is what I need to get out of this meeting," and run the conversation around it?

Jerry Neumann: Yeah, absolutely. And I think that's their job. It is their job and their job alone to shape that meeting.

Liz Zalman : Matt, if I'm sitting from the outside for a second, so as a non- operating founder right now, how would I shape a board meeting and how have I shaped a board meeting? The first thing I'd do is I sit with my co- founders or my co- founder and I look at how the business is doing, which is something we're doing anyways. And I was am like, we're going to pull out the things that we want to talk about. What did we talk about last meeting? What do we need to talk about this meeting? How does the future look? Where do we need to focus?

Matt Blumberg: Okay, I'm tracking. I'm tracking with you so far.

Liz Zalman : Then I pick up the phone, and I call every single board member and board observer and Joe Schmoe who's going to be sitting in the meeting, and I walk through the meeting with them. And I say, " What would you like to hear? What are you concerned about? What would you like me to focus on? Oh, that's so interesting. Thank you so much for sharing that." And then we hang up the phone. We get all these opinions. Then we create the deck to make sure that it addresses all of these points. We walk in and we talk about them in the way Jerry presented, and then meetings always blow up. And then everybody goes around the table and shares their opinion again. So there's nothing unknown about how this meeting's going to go. What I struggle with is the uselessness and the utility of it. The utility of it for me at this point is sign off on my option pool grants, sign off on my comp adjustments. Do we need to approve a 409A evaluation? Thank you very much. The rest is just pomp and circumstance. And I'll pause for a second. Is there anything that I just described in my preparation for the meeting that you might change or you'd do differently? I think I've checked the major boxes.

Jerry Neumann: But let me ask, do you think FTX should have had a stronger board? I mean, there are times where the board actually does keep the company on the straight and narrow, which is part of their job.

Matt Blumberg: Right. So Jerry, it's certainly true that when you look at all the examples of companies that have blown up, that the board wasn't doing their job from an accountability perspective. Founders don't crave the accountability of the board that is part of the dynamic and part of the relationship. I've always found that I get value out of the conversation that the board has around things that I am kind of rolling around in my head. That the team, maybe we're not quite sure about what to do. That doesn't mean, Jerry, to your point, that we show up and say, " What do we do?" But it means you prepare some thoughtful materials that say, " Hey, here's something that's bugging us right now. We're trying to figure out is it X or is it Y? Should we do A or should we do B?" And I've always gotten a lot of value out of that interaction and conversation. Now I don't typically do, Liz, what you said, which is call each board member before the meeting and say, " What do you want us to cover and put that in the book?" But I have always gotten a lot of value out of the interaction between board members over topics.

Liz Zalman : I think the value that I've gotten has been one- on- one, and when I'm asking them about the very specific thing that I believe they're good at. Some VCs are really good at helping with politics. Some are good with introductions to customers. Whatever that thing is. But that happens on a phone call and not in this group setting. I do think though that the... Yes, I'll pause there.

Matt Blumberg: Well, I want to come back to something you said at the beginning when we were talking about trust, which is the value of in- person meetings. And one of the things that the pandemic broke was the in- person board meeting. And I don't think, other than large public companies, I'm not sure that's coming back four times a year. I'm starting to insist that my board show up twice a year, and then we do two on Zoom. And maybe if my board was all in New York, it would be different. But what do you think the right balance is of that, and how do you think that's going to shake out? Start with you, Jerry.

Jerry Neumann: Yeah. No, I think it's absolutely essential you get them together in person. And if you can't do all your board meetings in person, you should have a weekend or a couple of days where you all go away and get to know each other better. Because I think the group dynamic going wrong is you're always at this kind of like you say something somebody doesn't agree with, they start a conversation, other people join in. You need to control the group dynamic or at least have a good group dynamic. So you can either control it by talking to everybody beforehand, or you can believe in the group you have and the fact that they will forgive small missteps, they will come to your aid versus somebody else's aid. You need to form a more level playing field. The investors probably already know each other, they probably already owe each other something. And you as the founder might not, right? So you need to get them to gel and you can only do that in person.

Matt Blumberg: Any last thoughts on this topic?

Liz Zalman : Yeah, I was thinking back to actually the first board meeting that I had post- pandemic where... Maybe it was pre, actually. I don't remember. But it was a hybrid. One was in person and one was on Zoom. And I hadn't met the person who was in- person before. And we walked into the office. And this person looked around, I think I put this in the book, and said, " This place is a shithole. Spend my money and get yourself a better office." And I didn't want to because I didn't want to spend the money on frills and stuff. But similar to Tiger flying up to New York with me being able to see him in person, this enabled me to get a much better perspective on that person. How they looked at things, what their inaudible is. And so I completely agree with Jerry. If I could do all of them in person all the time, I actually might insist on it in my next one. And the dinner beforehand where everybody gets drinking a little bit and going out, it's just critical.

Matt Blumberg: Yeah, I mean I think the thing that VCs figured out during the pandemic is VCs are limited basically on how many boards they sit on. It's how many investments they make, how many boards they sit on, particularly once you get into the series A, B, C, not necessarily pre- seed or seed. And I think one of the things they figured out in the pandemic is they could be on more boards if they didn't have to travel to board meetings. So it was better economics for them. And I think that's something that the whole ecosystem's going to have to figure out how to walk back slowly.

Jerry Neumann: Yeah. I don't think every board meeting has to be in person.

Matt Blumberg: But you got to see each other a couple times a year.

Jerry Neumann: Definitely.

Matt Blumberg: Yeah. All right, I'd love to do a few quick topics of point counterpoint. And either these weren't in the book or they weren't overly emphasized in the book. So I'd love to hear for each one of these, what is the most important thing that you can do as a founder or investor to lower the temperature? So the first one I'm going to talk about is the down round. So down rounds happen. There are probably a lot of them happening right now. They're super painful. They're super painful for everybody. What's the most important thing, Liz, that founders can do around a down round?

Liz Zalman : During the round?

Matt Blumberg: Well, sure.

Liz Zalman : I've never been part of a down road before. I would think that if I were sitting in the founder's shoes that I would be feeling incredibly resentful and unhappy. And why? Because these board members, your preferred has to sign off on a funding round. And so if I'm in a position where I'm probably doing a down round, and possibly an inside round at this point, or an aggressively capped note. I know that my preferred has signed off on the prior round. And so they have done so in a fashion, again, from a perspective governance because they're probably sitting on the board. Hey, this is a good deal for this company at this point in time based upon their prospects and the market and the growth trajectory. And now these same investors are probably saying to me, " Yo, we're going to give you some money. Of course we're going to give you a lifeline. We're in this together. But we're going to do it at half the valuation or two thirds of the valuation." And that to me is like, well, shit. You said that this was okay and we agreed, and we chose this term sheet together, and now you're going to take advantage of it. That to me feels like it would build up a ton of resentment. And so I would do the best that I could to get through that round with limited emotion. I'd be probably speaking to my therapist two times a week and hitting my pillows with a bat. But at the end of it, I can imagine myself going in person to this investor, flying or walking to New York City, and saying, " Hey, this is how I felt about this thing, and can we have a conversation?" I don't know how that conversation would be received because my experience has been most investors are a little uncomfortable with being uncomfortable, like human beings are.

Matt Blumberg: That's for sure. Yeah.

Liz Zalman : But my suspicion is that's how I would try to manage that.

Matt Blumberg: Yeah. I mean, look, unfortunately markets go up and markets go down, and the universal view of one's prospects is allowed to change. But how about you Jerry? What's something you would do to kind of lower the temperature on a down round?

Jerry Neumann: Yeah, it's easier for me because I usually don't lead anything except the very first round, if I lead that. So I'm not the one driving the lower valuation. I think, though, when I try to work with founders to say, what are our options? Let's go through all of the options. Because they can see that it's not necessarily that I don't believe in their company anymore, right? Because if I don't believe in their company anymore, I'm just not going to invest. It's that the market just generally has gone down, and there's nothing I can do about that. But there are options, right? Maybe we could raise a smaller round as a bridge, and here's the difference in your economics. You can help them work through the different ways they can do this. And in the end, I think it's they have to understand that it's not about them, it's not a judgment on them, it just is what it is. And venture investors hate down rounds as much as anybody. It hurts them in their investors' eyes. So I don't know, it's just something you just need to be able to talk it through. There's no great answer to that question.

Matt Blumberg: Right. However-

Liz Zalman : Oh, sorry, Matt.

Matt Blumberg: Yeah, go ahead.

Liz Zalman : Jerry, can I just touch on that point? I actually, thinking of all the founders I know who are experiencing a down round right now, or an inside round, I don't know that I've heard of a single investor saying to the founder in a way to maybe get them to feel a little bit better about it, because of course, as a founder, how can I not take it personally saying, " I hate this as much as you do." That would neutralize so much emotion. Now I wish we had put this in the book. Here are the optics of what it looks like for my LPs in order to do something like this. And maybe you feel like I'm being a shark, but in actuality, here's the reality on the ground from my perspective, I wish that somebody would share that with me or another founder.

Jerry Neumann: All right, here I am sharing it with you, Liz.

Liz Zalman : Thanks, Jerry.

Matt Blumberg: Look, I think the topic of empathy for VCs and empathy for founders is a pretty important one in building and maintaining that trusting relationship. And that's one in which the two ways I think are pretty different. VCs may or may not have more empathy for founders, but should be able to get there pretty easily. I think it's a lot harder for a founder to have empathy for a VC. But founders do have to understand, hey, VCs have jobs too. They have accountability too. They have limited partners too. When they start a new fund, sometimes they don't make money for years. And I think there are a lot of founders that don't even really understand how VC economics work. So it's one of the things we actually do at our company is we teach a class to the whole company on what VC firms look like, how they're structured, who their customers are, who they're accountable to, to try to bring some of that empathy in.

Jerry Neumann: That's really interesting. That's a good idea.

Matt Blumberg: All right. So here's the next question. The so- so exit. It's not great, it's not terrible. It's fine. Or even the good exit where a bunch of investors are in the company at radically different cost bases. So you've got the pre- seed, you've got the A, and then you have the D that came in at the stratospheric valuation. That's one of the most contentious situations that a board has to deal with. How do you each think about, again, sort of lowering the temperature and sort of getting through that, if you have a really a cantankerous late stage investor that's just not making their hurdle on a deal that's great for the early stage guys? So Jerry, we'll start with you on this as an early stage guy.

Jerry Neumann: So I've never been in the boardroom for that discussion. I've talked to a lot of founders about that discussion because I'll stay involved with the founder after I'm off the board. What do you do? I mean, I think in the end it depends on why they're exiting. If they're exiting because they want to exit, like, oh, this is a good deal and I can make some money, and I've been working for below market pay for eight years, and now I can walk away with several to many millions of dollars, which makes a huge difference in the founder's life, that's one thing. If this is the best deal we're ever going to get, then it's something different. And I think in those situations you have to approach it very differently. If the late stage founder is simply being unreasonable saying, " This may be the best deal you'll ever get, but I don't want to have to report this to my LPs," that's something you need to just push through. If it's this is a good deal and let's just all walk away and start over, that's harder. And I'm not sure there's a good way, other than just you need over time to just wear them down or get the other investors to convince them. It almost has to be an investor to investor conversation, I think.

Matt Blumberg: What do you think, Liz?

Liz Zalman : I've never been in that situation. I think we're talking about the difference between the investor hat and the founder hat versus the governance hat of sitting on the board. The difference of what is the best thing for me, as opposed to what is the best thing for the company at this point in time? And I think it's critical to make that the obvious focal point. And if it turns out that the best thing for the company, for example, is to keep going, but the best thing for the founder is that they get some liquidity and they're tired, then I think that needs to become the conversation. Which is how can we affect the change over here while enabling the company to reach its full potential.

Matt Blumberg: Yeah, I think that's a good point. Because that probably is a driver in that conversation quite a bit, and doesn't need to be.

Liz Zalman : It doesn't need to be. There are ways of giving founders liquidity. Yeah.

Matt Blumberg: Yeah. Okay. One last question for each of you. We'll start with Jerry. You had a chart in the book and a section talking about fund returns. And basically the chart and some of the wording around it. And the conventional wisdom is like fund returns are driven by one or two deals. You can have a portfolio of 50 companies, and you got one unicorn in there and there it is. That's the long bar on the right side of the bar chart. And I think you said in the book, and certainly conventional wisdom is like, well, the VC didn't create that. They invested at the right time. They were probably supportive, but that wasn't because of the VC. The flip side is the rest of the chart, all those other little bars, every single other investment you have is that sort of long tail of either companies that go out of business or companies that return 1X or 1. 2X or 0. 6X. That's where all the friction in your life is, right? That's where all the friction is between the founder and the investor. And the question is, how do you reconcile that? If the fund driver is the one where you wrote the right check at the right time to the right person, you made the right bet, and all the friction is in the part that doesn't produce a ton of value, how do you just think about those things next to each other?

Jerry Neumann: Well, I think there's two things, right? A lot of venture investors will say, " You can always tell the character of a venture investor by how they treat the companies that aren't performing." What do they do? And it's true that those are the companies that need your help the most. When the trade desk, which is the big bar all the way on the right of that chart, was doing really well, the founder didn't call me every week. He didn't need to call me every week, and I didn't need to talk to him every week. I could see the company was doing well. He was doing a good job. And I was just go, just do it. Before that though, and this is the key difference, there was a couple of years before it started doing really well, the company, where it wasn't doing well yet. And everybody around the table was saying, " Is this company going to succeed or not?" And there's no way of knowing. So back then, Jeff and I would talk every week. He'd call me on a Friday, and we'd have a little chat about whatever he was thinking about. Then he would go off and do his job. But until that company took off, we didn't know if it was going to take off or not. So was it a good idea for me to spend the time talking to him every week? Well, absolutely. I mean, I enjoyed talking to him. I liked Jeff. But it was also, I think, good for the company and good for my investment.

Matt Blumberg: All right. Last question for Liz. I talk to a lot of founders and I talk to a lot of founders around boards and financing. Same topics you all cover in the book. And most founders are a little bit paranoid and freaked out about control and control issues. And eventually they have to make peace with them, or you raise enough funds. Unless you're Mark Zuckerberg and you've created two classes of shares and gotten everyone to agree to that, you end up in a place where you don't have control. But in that zone where you either do have control, you're starting to lose control, control is diminishing, why do you think that the freakout occurs, other than natural human nature around that? If you're not doing a good job as a CEO, shouldn't you be held accountable to that?

Liz Zalman : I think those are two different things. So again, we're talking about personal desires. So if I sit on the board and I'm a co- founder and I'm the CEO, I am a founder, and I am also theoretically a governor of the company, and I also have a job. And so, to your point, my natural instinct is to safeguard my job because why do I want to give up the power of the CEO, right? But as a founder, what I actually need to remember is what is the right thing for the company at this point in time? The perspectives that I and every co- founder with whom I've ever worked and I think spoken to have had, is that we are the best stewards for the company and making decisions about the direction of the company, irrespective of who us as a founding team might put in the CEO chair. And sometimes those two decisions absolutely do get conflated. But I see so often when the preferred is in control of the company, the decisions, they're just not the right ones. I don't know if that answers your question, but that's how I think about it. And I think there is no more important term than safeguarding control through every single round. I nitpick the hell out of language, as you saw in the terms chapter which is, I think, maybe the longest chapter in the book.

Matt Blumberg: It's a very long chapter, but a very important one. So Liz and Jerry, thank you so much for being here today. This is a pretty important book for founders to read and for investors to read. Founder Versus Investor. And happy to have a chance to talk to you about it.

Jerry Neumann: Thanks, Matt.

Liz Zalman : Thank you, Matt.