If you wake up with your heart pounding out of your chest— do this.

When an employee unexpectedly quits, an investor backs out, or a big customer churns— fear of failure takes over. When you close a new round, land a big customer, or make a big hire— you feel pure excitement. 

Every founder is on a fear-excitement spectrum. There's no way to prevent yourself from feeling the two extremes. But I've seen great founders use several tactics to help themselves operate out of excitement more often than out of fear. 

Those founders also feel fear— but they use these tactics to spend more time closer to excitement. Because operating out of failure is playing not to lose—whereas operating out of excitement is playing to win. 

Here are 3 ways to do just that.

Why you should listen

• How to use multiple plans to operate more freely and objectively
• Why runway and low burn are the keys to lower founder stress
• Why working with the right investors is more important than raising big rounds
• What Tobi Lutke (founder of Shopify) did to change his employees' mindsets 

Keywords
founders, fear, fear of failure, excitement, validation, runway, partners, mindset, expectations

Transcript

Pablo Srugo (00:00.078)

I was talking to this founder earlier today who he's gone on to raise like $450 million, but he told me that in the really early days, like when he was just starting his company and he was kind of in that customer discovery phase where he was meeting with potential customers and asking them questions, he told me that he didn't have just one idea. He had many different startup ideas at any given time. And sure, there was like a priority and there was always one idea that was at the top, but he had many different ideas.

underneath that. It made me think because when I was starting my last startup, we had different startup ideas, but we kind of went at it serially. Like as soon as we had an idea that we thought was good, we'd go out and try to validate it. The challenge is that once we did that two or three times, like by the time we had the idea that we ended up running with, which became GymTrack, we were so desperate to make it work. We needed that idea to be legitimate. And that's a problem because ultimately what happens is you're basically operating out of fear. And when you operate,

a startup out of fear, just like anything else, you tend to make a lot of mistakes specifically in that early phase when you're validating. If you know that if this specific idea doesn't work out, you go back to the drawing board, then you're so much more likely to look for signs that validate your idea and ignore signs that don't. Because the last thing anybody wants, and I remember this specifically, the last thing I wanted was to go back to being a wannabe founder who didn't know what they were going to build. And so we just desperately wanted this idea to be right.

But what this founder told me is that when he was going and talking to customers, because he had a list of ideas, because he had things he could fall back on, he cared, but he didn't really live or die on this specific idea. And because of that, he was able to be a lot more open in his discussions. And so he could operate more freely. And so the broader point for me is like, if you actually think about it, founders are always operating on this spectrum, where on one end of the spectrum, you have fear. And on the other end of the spectrum, you have excitement.

And no matter what you do as a founder, you're always going to be, startups are volatile, you're always going to be going like from one end to the spectrum, to the other end of the spectrum. One day, like a very key employee quits on you. All of a sudden you move to the fear side of the spectrum. The next day, some important investor comes inbound out of nowhere. And all of a sudden you're on the excitement end of the spectrum. And that's just the reality of startups. But I still think as a founder, there's actually quite a few things you can do to put yourself in a position where most of the

Pablo Srugo (02:22.104)

you're closer to the excitement side of the spectrum. Because the reality is, if you spend too much time on the fear side of the spectrum, you're guaranteed to quit. You're guaranteed to give up because every single startup is hard. And the only reason to keep going, frankly, is the excitement of what could happen. So the first thing you could do is doing one thing at a time, because you should always be focused, but have the next thing ready. This is the example that we just talked about, which is around having multiple ideas. Like when you're going out and validating an idea, you're going one idea at a time, but you have a bank of ideas that you know could come

The other example I remember of this is when I spoke with Scott, the founder of Spellbook. He told me that they always had a long list of potential features, messaging, landing pages, positioning that they could test out. And they were constantly running a test. They would run a test every two weeks, but they didn't live or die on the next test because they knew that they could be objective about every single test, every single experiment, and really see if what they were trying to validate was truly validated instead of just relying on kind

hopes and dreams and just ignoring all the bad data because you need it to work. Because he knew that after that experiment, had another one and then he had another one and another one and another one. And that let him operate much more on the excitement side than the fear side. Now, of course, to be able to do this, to be able to not operate out of fear, the key ingredient, frankly, is time. It's runway. That's probably the most important thing that you can do as a founder is to have a longer runway. And there's two runways. There's company runway and personal runway.

On the company runway side, mean, the obvious thing is the more months that you have, the better. That's just a no brainer. But, you know, I was thinking that not all runways are made equal. And what I mean by that is imagine two, two kind of seat stage founders, right? One of them has 1 .2 million in the bank and they're burning a hundred thousand dollars a month. The other one has $3 .6 million in the bank and they're burning $300 ,000 a month. They both have a 12 month runway. You would think that all else equal,

because they have a similar amount of runway, they'd be on the same kind of place of that fear to excitement spectrum. The reality is the founder who is burning more and has more money is much more likely to be fearful than the other founder. And there's a bunch of reasons for this. One of them is psychological. The fact is that if you know as a founder that you're spending $300 ,000 a month, and especially if you know you're a seed stage company and let's say the average seed stage company spends $150 ,000 a month. If you know you're spending a lot relative to where you are,

Pablo Srugo (04:46.606)

That alone is going to make you stressful and that alone is going to make you more fearful than excited. The second piece is a bit more objective. See, the first founder knows that let's say in six months, revenue doesn't necessarily increase all that much, but burn doesn't increase either. They're still burning a hundred K a month. If they just raise another million dollars, they get about one more year of runway. But the other founder who's burning $300 ,000 a month needs to raise $3 million to get another year of runway. That's a much higher bar. And they know that if they can't do that, they're going to have to go through layoffs.

which is another reason to be fearful. The final piece obviously is that by burning less money, the first founder is that much closer to cashflow break even, which is the pinnacle of runway because it means infinite runway, infinite time. And that alone is a huge de -stressor. And so when you know you need to add a hundred thousand dollars in monthly revenue to get to cashflow break even, that's going to make you a lot less fearful than the founder who needs to add another $300 ,000 a month to get to cashflow break even. The other piece of runway though is your personal runway.

One thing is for your company to have the right amount of runway. But the other thing is, you know, I think back to myself, like when I started Jim track, I remember I was living off like minimum wage. was like 22 years old and frankly, he was totally fine back then. I could make it happen. I recall that when we raised our first round, we submitted like a budget to our investors and all in that budget was our proposed new salary. And this is 2013. I'm like 23 years old. My new salary was proposed to be $60 ,000 a

And I remember kind of as we got the comments back from our investors on the budget and different pieces, founder salary was kind of circled. So at first I was like, what the hell, like $60 ,000, it's not a lot of money. I can't believe they're going to push back on that. And when we get on the call, turns out they didn't want to push back on that to lower it. They wanted to push back on that to increase it. They thought we should make a hundred thousand dollars a year. And I, for me, a hundred thousand dollars was way too much money. couldn't believe it. So believe it or not, I negotiate myself down to $85 ,000 a year. I tell all that because

That's what the mindset and the ability of a 20 something year old is because I had no responsibilities and not just that, I was used to living a certain lifestyle, very close to a student lifestyle. So I just didn't need that much money. And I remember even $85 ,000 and just doing the math on it. And I was like, my God, like I could spend so much money, so much more money than I currently spend. can't believe it. Well, that changes, right? Like the person at 22, whatever you can live on is a lot less than at 32 is a lot less than at 42.

Pablo Srugo (07:12.886)

wherever you're at when you're starting your business, you've really got to think to yourself, how long can I actually do this for and earn nothing or at least way lower than a market salary for? Because the last thing you want is to be in a situation where you can't keep going because your personal runway is the other runway that's running in the background. And if that gets too short, that's another reason why you're going to end up operating out of fear instead of excitement. The third piece is people. Like you have to choose your partners wisely. That goes

Co -founders, investors, or customers. The wrong co -founders, investors, or customers can add so much stress and make you operate way more out of fear than excitement. On the co -founder side, it's pretty obvious. mean, if you have a co -founder who's constantly stressed, who's constantly looking at worst case scenarios, who's constantly being pessimistic, that's just gonna drag you to that fear side. The investor side's a little bit more nuanced, but you know, there's a few kind of elements here. mean, one of the elements actually that I think about sometimes is, you know, they often tell founders to raise some money from friends and family.

And it's okay advice, right? Like sometimes it's the easiest money to get. And also sometimes it's bit of a proof point, especially if you're a first time founder for other investors to see that the people that know you best back you. But always remember like whose money you're taking because I remember I did raise some money from my parents and it was a huge stressor at the end of the day because my parents are not rich. And there's a huge difference, frankly, from failing and losing the money of angel investors who are, you know, investing in many different startups who understand the risk and who frankly can totally weather

than failing and losing the money from your own parents. And that alone, again, can dial you closer to the fear side and make you operate more out of fear than out of excitement, out of a desire not to lose instead of a desire to win. Because the flip side is when I invested as an angel, yes, I thought that company was going to be successful, but I understood exactly what I was getting myself into. And I told myself, like, I'm investing in a amount that if I lose it, I lose it and it's fine. And frankly, that's how most great angels think. And those are the sort of angels you want to work

I've also seen, and I remember Kozla saying something like 90 % of investors at negative value or something like that. And so that's the other thing you got to watch out for is who do you partner with on the investment side? Cause it's often not just dollars. There's a lot of power that gets shifted as a result of that transaction. And if the person on the other side is going to make your life a lot worse, then that's going to make you less likely to succeed and make you operate more out of fear than excitement. The final thing is like, honestly, at the end of the day, it starts our heart and they're a roller coaster, no matter what you

Pablo Srugo (09:37.202)

And so a lot of this really is your mindset. And I was talking to a founder the other day who, when he started his startup, he literally just quit his job and he gave himself six months to launch a new startup. And when I asked him why he quit so suddenly, he said that he discussed it with his wife. And the thing that made him at peace with the decision was what's the worst case scenario? Like what happens worst case scenario in six months, nothing happened, nothing worked. Well, guess what? I just go and I get a job very similar to the one I had, if anything.

I have a new experience that might even make me more employable. And I think that question, asking yourself often when you're stressed, when you're fearful, what is the worst case scenario really is a great exercise because oftentimes, and I do myself, oftentimes it turns out that worst case scenario, it's not really that bad. And the last example, of course, from Toby at Shopify, I think what this example shows is like, try to find a way to lower the highs and raise the lows, right? Like, tighten how much volatility there really

maybe not in reality, but at least in your mind. I remember when Shopify was absolutely crushing it. This is like peak COVID. They were worth like $200 billion. And Toby sent a Slack message to the entire company, thousands of employees. And he said, listen, our stock price is high today, but it'll be low tomorrow. So like, don't celebrate this stuff. Like this is just a number. It doesn't mean anything. And the reality is if you celebrate this, then you're going to be sad the day goes down. So you're better off more or less ignoring it and just letting it be so

if and when it drops, you don't have to suffer either. And I think that's a great mindset is like, when things are going extremely well, just remember like, this is a delicate balance, what you're doing. You're starting a startup from scratch. isn't very strong deep foundation under this. So just remember when things are going very well, instead of being overly excited and assuming everything's gonna work out because the mind does that, it'll start thinking 10 steps ahead, okay, this works and that works and that works and that works. And frankly, you're just setting yourself up for disappointment. The flip side of that is when things are not working

and I've seen people that are so good at this because they're such optimists, is finding a way to realize something's going to turn around. And it often does. And maybe it's next week, maybe it's next month, maybe it's next quarter. And that's obviously the hardest part of all this, is somehow picking yourself up when things aren't going as planned. But one of the key jobs as a founder is to be aware of the spectrum that you're inherently on. Fear on one side, excitement on the other, and finding ways, doing everything possible.

Pablo Srugo (12:03.682)

to stay closer to excitement because that's the main reason why you're going to keep going, why you're going to not give up and why you're going to get to the other side. I just gave you content that you liked so much. You actually listened to the end and guess what? You didn't pay a single dollar. Not only that, I didn't even put any ads in your face. So you just got a bunch of content for free. And now that I've delivered that value, I'm asking for something in return. Open your app, open Apple podcasts, open Spotify.

Open whatever app you use to listen to this and hit that follow button. It's actually going to help you because it's going to help you make sure you don't miss out on the next episode, which you liked so much that you listened to the whole thing.