3563: Vijay Rajendran on Why Startup Advice Fails When Reality Kicks In

[00:00:04] Today's conversation is for anyone who has ever wondered why building a startup feels much harder than the advice they see online make it sound. And my guest today, he has earned his stripes in the field. He has spent years working with founders at the sharp end of company building. Everything from fundraising conversations to the personal shifts that leadership demands.

[00:00:30] So today we're going to talk about the moments founders are rarely prepared for. The hidden dynamics behind investor relationships and why scaling a business so often means confronting your own limits first. Here at the Tech Talks network, we now have nine podcasts and approaching 4000 interviews. And that is only possible with some of the great friendships that I've developed over 10 years of podcasting.

[00:00:58] And a company that I'm proud to call friends of the show is Denodo. Because not only have they been on this podcast multiple times, they also help make sense of the AI data chaos that we're seeing now. Because the data world is louder than ever. AI hype, lake house complexity and pressure to deliver more with less. These are things that I talk about every day on this show. But Denodo is helping businesses make sense of it all.

[00:01:22] Because they provide a unified data foundation for trustworthy AI, lake house optimization and data products to finally bring service to life. So if you're ready to unlock real outcomes, simply visit denodo.com today. But now it's time for today's interview. Let me introduce you to today's guest. So a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do?

[00:01:52] So my name is Vijay Rajendra. And I'm based in the San Francisco area where, you know, I have been a founder and worked in venture capital for a number of years. And I'm also an instructor at UC Berkeley, where I focus on leadership and change management, specifically for startups. And I'm also the author of The Funding Framework, which is this book here, which came out in March.

[00:02:18] And The Funding Framework is a guide for founders based on the hundreds I've worked with in my time to help them to raise capital in a programmatic and systematic way and not, you know, based on just serendipity. Oh, wow. Incredible. We'll talk about more about the book and your work in a moment.

[00:02:40] I'm curious, though, if we look back at some of the founders that you have worked with, what is the hardest reality check that most people are unprepared for once they move from idea to execution? You've probably seen so many examples, but anything spring to mind there? There are dozens of things I can think of. But a consistent theme is how quickly you focus on building something that people want. And that sounds like such an easy thing to say, but it's actually very hard to do in practice.

[00:03:10] Because perhaps you built the company and you built the product with an initial idea of what it should be based on your own experiences. Maybe you have some stubborn vision. Maybe you have, you know, read the biography of some famous founder and you think, well, I just need to pound the table and the world will change. I need this reality distortion feel, right?

[00:03:32] And the folks that really focus on what it is that the market needs and what it needs now and understand that success is a product of timing. But timing is not just a random phenomenon of luck. It is, as Seneca said, when preparation meets opportunity. And so that is why the people who get that what the customer wants might not be what I had in mind. I'm going to pivot. I'm going to adapt.

[00:04:00] I'm going to have a highly accelerated rate of learning that allows me to build something that people want. Creates momentum. It creates traction. It creates the things that make, you know, hiring a great team and funding your business with top investors possible. And I think for many people listening, when they think about investor conversations, they're often framed as a numbers game of sorts.

[00:04:26] But I'm curious what emotional or maybe even psychological dynamics do founders tend to maybe underestimate when negotiating funding and control? Because I would imagine they play a big part in it too, right? Yeah. Even before that, you know, the really important thing is that you don't feel like you're there defending a thesis. You don't feel like you're in an interrogation. You're not there to just answer their questions. You're there to evaluate them too.

[00:04:53] And so that's a really important psychological or mental difference and shift from the idea that, well, I just need to go in there and answer all their questions and get through my slides and then it'll be fine. And so that continues into the type of relationship you set when you're discussing funding, when you're perhaps negotiating a term sheet or talking about later on what the company should look like.

[00:05:18] Because this is a partnership and a long-term relationship that you want to have with these investors that goes well beyond just the cash in your bank account. And I think many founders, they talk about resilience a lot, but a few of them talk about identity shifts. So how does leadership actually change someone and what inner work is required to grow into that role?

[00:05:45] Because I think we're all work in progress and we're evolving and growing, but for founders, it's more important than most. It's a learning curve that is especially steep, more than in many other fields, as you rightly point out. So what that means is you start off with everything on your shoulders. And we tell people, play to your strengths and focus on what you can do. That's not practical on day one, right?

[00:06:13] So you start off as, you call yourself the CEO, but what that really means is chief everything officer. And you go from being the chief everything officer to then one day the chief executive officer, but nobody really explains what happens in the middle. There's this like very messy process. And so with time, I figured that the in-between step is that of the chief enablement officer, that you get to a point where it feels like the wheels are going to come off the car. You're going so fast.

[00:06:43] So you bring more people on or you create new systems or you use more software. You find a channel partner. And when you're doing that, the cardinal mistake, and I've done this myself, is to just like drop things on people and be like, oh yeah, hey, we're throwing you in the deep end. You know, we're very entrepreneurial here. You're going to just like jump in and figure it out. When in fact, what they need is to be set up for success.

[00:07:08] And so that is what I call the process of becoming the chief enablement officer. Your job is to make other people successful in building towards the company mission. So you can do that so that eventually you're managing managers and managing managers and managers and executives who manage managers, right?

[00:07:30] Like that happens eventually, but it doesn't happen unless you create this culture of high quality communication, of enabling people, of basically going back to the basics. So people like Andy Grove wrote about in high impact management, because like this is where you can't just assume people get it or that they see the world the way you've thought about it all these years.

[00:07:58] You've got to set them up to see and to do all those things successfully. And you've worked with so many founders throughout your career, and your book is filled with so many different examples. And you must have seen so many different telltale signs, certain signals that happen at certain stages. And I'm curious at what stage the founders usually realize that their biggest bottleneck is not actually the product or the market, but very often themselves. How should they respond in that moment?

[00:08:28] That's probably going to happen between a team size, depending on what the company does, between like 12 and 30 people. Like that's when people are learning to work in teams and maybe you're not in every room.

[00:08:43] That's a point where people are making decisions and you either set them up and empower them to make the right decision and given them the structure and discipline about how you want to think and plan so that those decisions they can make are good. And so those are the times when it's really hard because we know instinctively, oh yeah, you've got to let go.

[00:09:13] You've got to let people do this stuff. But then it's not happening. It's probably not happening for that reason. There are people who get to around $10 million in revenues and plateau. This isn't just for startups. This is for all kinds of businesses. There's something about getting to around $10 million in plateauing because that's where you have to then build more scale and build more specialization in your business.

[00:09:36] And oftentimes that's something that people aren't willing to do or are struggling to imagine what that looks like. Their team doesn't want to make the shift.

[00:09:46] There's all kinds of actually reasonable and predictable reasons why you plateau when, in fact, the idea when you're a startup is that you're going to triple and triple and triple your revenues and double and double it again such that you can get to, let's say, $100 million in revenue a year and be venture scale.

[00:10:13] So perhaps that venture scale now is a multiple of that, like two or three times. But using that rubric, it takes a lot. And it takes a lot of building out into the future and imagining different roles for yourself in order to get that tripling effect on the top line.

[00:10:35] And I suspect for many business leaders and startup founders listening, we're at that time of the year where they're scrolling through their news feeds and they are full of self-proclaimed gurus, futurists, ninjas, and so many people with so much advice to give. And how much of that is their own and earned advice and how much is from an AI agent is up for debate.

[00:10:57] But from your experience, which pieces of widely shared generic startup advice sound good on social media in those little boxes that we see, but quietly cause more harm than good when they're followed too literally? Any signs or anything you've seen there that maybe we can later ask today? Yeah. So, you know, I've been a founder of a couple of businesses myself and then I've invested in them.

[00:11:23] And I, as responsible for the portfolio of a large global VC firm, I've supported a lot of people, particularly through fundraising, making customer connections and sometimes hiring decisions and things like that. And so I think there are so many opinions and you've got to understand how to operate and manage in a way that is authentic to yourself and what your business needs right now.

[00:11:53] So let's say take fundraising. A lot of people say it's about shots on goal. You just have to like, you know, have a hundred meetings or 200 meetings. And let me tell you the story of how that, you know, the founder of Canva met with a hundred VCs and they all said no. And they didn't understand how this, you know, founder from Perth, Australia. And where is that anyway? You know, is going to like build a valuable business.

[00:12:20] And of course she did. And my old firm and that happened to invest in the company. But like there are these stories and then you extrapolate like things that therefore you should do. It's just like, oh, well, I haven't talked to a hundred people yet. It's like a hundred. It's about quality, not quantity, I would suggest. And one of the things in the funding framework is that you approach funding first as like an enterprise sales activity in that you understand the investors whose thesis aligns with the future that you are building.

[00:12:48] They are waiting to meet you, but it's your job to go find them just like you would a customer. You wouldn't, you know, start a business and expect the customers to all come to you. Like you've got to get out there and connect with them. That's your responsibility. And the same applies with identifying the right founders, which is why, you know, outreach as opposed to just pitching and networking and randomly meeting people is one of the things above all I encourage.

[00:13:19] The second thing that I think there's perhaps some, I don't want to say bad advice, but misnomers about is around the pitch. And I think the way that people are taught to pitch is sometimes a little robotic.

[00:13:35] And I actually encourage people to stop pitching and start listening, to engage in a conversation because you have people's attention and you have their interest much more than if you're just trying to get through your two minute elevator pitch. Quick thank you to the sponsor supporting all of the shows on the Tech Talks network. And this month I've partnered with Alcor.

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[00:14:59] And I think that kind of clarity is why so many high-growth companies in Silicon Valley are working with them right now. So you can find out more details at alcor.com slash podcast, or simply use the link in the show notes. And we are at that time of the year where many founders are going to be thinking about life in 2026, what they're going to do differently, how they're going to grow as a person, etc. And for those founders, I think they're often overwhelmed.

[00:15:26] So how should they think about personal growth alongside their company's growth, especially when the pressure to scale leaves so little space for reflection sometimes, doesn't it? It's very hard. And this is for anyone running a business. It doesn't matter whether you have a two or three-person services company or you're running a startup that's going to double its revenue next year.

[00:15:53] I think we're living in a time of uncertainty. And so the most important thing is to ask yourself, you know, what are the things I need? You know, if I were on this team, I would need to like here. And then I want my leadership to know.

[00:16:13] And I think the thing that founders, you know, try and do is they say, well, we set these expectations for investors or so forth. So I guess that's what I'm going to do. But the world has probably changed in some way. And so it's taking a step back and asking, you know, the usual retrospective questions. What went well? What could have been better? What, you know, what do we want to start and stop doing? You know, those things are important to do with your team.

[00:16:41] But on your own, I think you want to like ask, you know, what are my blind spots first? Secondly, what are the things that a company needs of me that perhaps I need to go into? And then third, who are the people around me who support that? And that can be a trusted member of the board. That can be a peer group of perhaps fellow founders or others.

[00:17:09] There's groups like YPO and so forth that are very popular post-exit founders. Or it could be some kind of coach or mentor. The difference being a coach is someone who helps you focus on your answers. And a mentor is going to perhaps share how they did it, having walked in your shoes some perhaps years ago. So those are the things that I think, you know, everyone can do, even if they're short on time,

[00:17:38] even if they're short on runway and cash, because it's going to help them find clarity. Not just to recharge, not just to like get away for a couple of days on some vacation, but to like get clarity as much as they need to get rest at this time of year. And you've got the gift of hindsight on your side here.

[00:18:02] So is there any way to stop founders from making mistakes so they can get ahead quicker? Are there any conversations that you sometimes wish founders were having earlier, maybe with their co-founders, investors or indeed themselves that would just prevent those avoidable mistakes? As I think about that, I'm reminded how co-founder disagreements are according to, I think it's Noam Wasserman at Harvard Business School.

[00:18:29] Co-founder disagreements are responsible for something like 65% of startup failures. I mean, we say things like, oh, the company ran out of money or sales slowed or something like that. But it's because people aren't working on the right thing. And that's because there's a business misalignment. And usually that's happening on the co-founder level first, before it happens to, you know, run down to your head of sales or something like that. Like maybe it's happening between, you know, you and your co-founder.

[00:18:59] And I think co-founder relationships, like other very close human relationships, because you probably spend more time during the day with your co-founder than you do your own spouse or something, right? Or a significant other. Yeah. Like any other human relationship, it requires work. I think that's a really hard thing is it requires work to create a really awesome relationship. And that means taking time to say like, hey, what's the state of how we're working? What's going well? Where are we perhaps getting frustrated?

[00:19:28] And we can create space for healthy conflict. I'm saying like, you know, when you did this, I'm really mad. Or, you know, I feel like I'm not a part of these decisions. Or, you know, there's so much that is tied up into how people feel about what's happening more than what is happening matters in that moment.

[00:19:53] And so if there's no opportunity to surface that, if everyone's just like, heads down, I can't really talk to Neil about this because you know how he gets or, you know, I'm just being like petty or, you know, like that's not really a big deal. Just like any other type of really intimate and close relationship. That's just going to explode at some point. And does it explode in a way that is debilitating or deadly to your start?

[00:20:23] And if there are any founders listening who maybe feel stuck or just overwhelmed with the pressure to do things differently next year, or maybe think that they should have it all figured out already. What would you want them to hear right now? I would imagine throughout your career, you've not only seen other people, but probably been there yourself. So what would you say to that person? What I think founders are good at is atomizing what the next like big step is.

[00:20:52] So at any one time, don't worry about, hey, nine months from now, we're going to do this or that. Or, you know, it's like, what's the one really important thing everyone on our team needs to know? What's that one metric that matters? Not like, oh, these three or four things would be helpful in fundraising or in growing. But it's like, what's this like one thing? Right. And if it is installs right now, if it is this thing, like, let's do that. Right. Let's focus on this like one thing.

[00:21:19] So I really encourage people to dial into that because that's clarifying because there's a million things and there will always be a million things that could possibly be on the table. But sometimes they need to just like clear that off the slate and just like focus on one. So that's a that's a thing everyone can do when it comes to organizing everything else and putting together a roadmap and planning and and asking, do we have the right people?

[00:21:46] There's a lot of different different frameworks. You know, there's there's a book called Traction, which, you know, uses the I think so the entrepreneurial operating system. That's one thing that people like. There are other tools that I encourage people to think about, you know, from a customer lens like product planning and so forth. And these are exercises that that you can do and they can renew and refresh your team.

[00:22:11] And that's like super important right now to to do that at the beginning of the year or if you're at another major inflection point. And then a final thing is how you bring the best out of people on your team. And that doesn't mean just like, hey, we we we socialize or we did a retreat or something like that. It really requires you to see them and for them to like see you.

[00:22:34] And one of the tools I've used in my my my own past with my my own teams and that I've worked on with founders who I've coached co-founders that I've coached on issues is an assessment called working genius.

[00:22:49] And the six types of working genius developed by Patrick Lencioni are fantastic in terms of looking at your productivity, not your personality, because my personality might say, oh, I like to spend time on these problems or I like to do this type of work and so forth. But, you know, you would look at that as either my co-founder or boss or something and say, well, I don't know what to do with that personality.

[00:23:12] Either I like it or I don't like it or I'm not sure if it's working, perhaps, as opposed to thinking about, hey, these are his areas of genius and these are areas of frustration. And this is not a rating. It's like a ranking of like things where you really light up and you're successful in areas where you're frustrated. And the the the result is to not give people things to do that are in their areas of frustration.

[00:23:38] They're actually we all have to work on things that we don't like to do. But the key is how do we partner as a team so that those things happen and they are successful? And the things that, you know, I'm good at and you're frustrated by are we can collaborate on and vice versa so that we're more productive as a result. Love that.

[00:24:01] And we've covered so much in 30 minutes, but excuse me, we covered so much in 30 minutes and much of what we talked about is also available in much more depth in your book. And for anyone listening that maybe want to continue this conversation you started today, can you tell me a little bit more about where they can find you work with you, contact you and indeed find that book that you mentioned at the very beginning?

[00:24:24] Oh, thank you. So you can follow more about what I'm writing, thinking and sharing at startup system dot sub stack dot com. And then also my website, my startup system dot com, where I do great fundraising, but also go to market and building teams. And the book, the funding framework is available where great books are are sold online. Amazon, Barnes and Noble, places like that. Spark as well.

[00:24:52] Well, I'll add links to everything that you mentioned there. And I urge anybody listening, if anything resonated with you, please go check out some of those links in the show notes and also report back to me. What will you take away from the conversation today? And are there any experiences that you would like to share with the startup community? But more than anything, just thank you for sparing your time today to sit down with me and share your story and so many invaluable insights that could prevent startup founders from making similar mistakes. Thank you so much.

[00:25:21] My pleasure, Neil. Thank you for having me. I think if this conversation resonated with you is because so many of the hardest challenges that founders and leaders face. They never show up on pitch decks or social feeds. Today, we talked about leadership identity, co-founder dynamics, fundraising realities and the personal work that is required to grow alongside a company. So, yep.

[00:25:48] I will add links to the show notes for anyone who wants to continue this conversation and explore my guesswork or dive deeper into the ideas we touched today. And if you are a founder navigating similar pressures right now, I would love to hear what stood out for you and what questions you are still wrestling with. TechTalksNetwork.com. And as always, remember, you can go there and you can leave a voice message or you can send me a quick message there or even DM me on socials just at Neil C. Hughes.

[00:26:18] But that is it for today. I will speak with you all again very soon. Thank you as always. Bye for now.