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Founder vs Investor: The Honest Truth About Venture Capital from Startup to IPO
How many world-changing startups will fail because the founders and investors never figure out how to work together? Founder Elizabeth Zalman and Investor Jerry Neumann square off in this one-of-a-kind book, exposing how startups are built, broken, and fought over. Every iconic tech company was once a startup. And while these companies like to paint an origin story full of surefooted confidence, the truth is usually something the early life of most startups is pure chaos. This chaos comes from the vastly different motivations and incentives between those with the vision and those with the money. From fundraising paranoia to boardroom coups, Zalman and Neumann train their inimitable voices on the gulf between what founders and investors promise to do and what they end up actually doing. Founder vs Investor is the brutal truth, from each side’s perspective, of the pitfalls of this tenuous relationship—where bad blood can turn sure things into shattered dreams. It is the only book written by insiders with the temerity to pull back the curtain on the world of high growth venture-backed startups.
288 pages, Hardcover
Published September 12, 2023
82 people are currently reading
2793 people want to read
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Displaying 1 - 30 of 32 reviews
September 18, 2023
I've been a founder of two tech startups and a part of two others (one as individual contributor, one as management). All were venture-backed, and in each one, lots of stuff went down that was the result of friction between founders and investors.
I was recommended and read all of the usual suspects - Crossing the Chasm, the Hard Thing About Hard Things, From Zero to One, Venture Deals - and they were all excellent. They covered sales and lawyers and what it feels like to start a company, but one topic was missing: the relationship itself. Nobody talks about the points of friction. Nobody talks about what happens behind closed doors, unless you're talking to someone who's been through it (and that's going to be behind a closed door). And NOBODY talks about the decisions and terms and arguments and meetings that can make or break a startup... and those happen only between the two most important groups: founders and investors.
This book is that book. And in the interests of full transparency, I'm also one of the co-authors :)
I was recommended and read all of the usual suspects - Crossing the Chasm, the Hard Thing About Hard Things, From Zero to One, Venture Deals - and they were all excellent. They covered sales and lawyers and what it feels like to start a company, but one topic was missing: the relationship itself. Nobody talks about the points of friction. Nobody talks about what happens behind closed doors, unless you're talking to someone who's been through it (and that's going to be behind a closed door). And NOBODY talks about the decisions and terms and arguments and meetings that can make or break a startup... and those happen only between the two most important groups: founders and investors.
This book is that book. And in the interests of full transparency, I'm also one of the co-authors :)
November 30, 2023
I wanted to read this book because I know so little about business and about entrepreneurship. I was nervous that I wouldn’t understand it, but I was completely captivated It is incredibly well written, clear, and engaging. it was tremendous fun to be completely sold by the argument of the investor only to turn around and be completely sold by the very different argument of the entrepreneur. I listened to the audiobook, and the narration is also superb These are people that I would like to get to know and have a beer with.
I particularly enjoyed that there were aspects of the book that were applicable far outside the world of entrepreneurship There are a lot of lessons in this book. I highly recommend it.
I particularly enjoyed that there were aspects of the book that were applicable far outside the world of entrepreneurship There are a lot of lessons in this book. I highly recommend it.
October 10, 2023
Ridiculously good; Elizabeth reads like the Joker and Jerry like the Batman. The dynamic leaps off the page. A must read for everyone who even tangentially deals with startups.
May 24, 2025
Review of Founder vs Investor
Board likely to fire founder - viral blog post by Jerry.
Use crunchbase database to find investors who write dozens of checks per year for your stage of company.
Find VCs who can help the business and not just a money giver.
VCs get pitched millions of times
Reverse engineer which investors invested in customers who use your product.
Fundraising is just a sales job that needs to close as quickly as possible. You need to create a pitch deck/demo and create FOMO and you need to be in control.
Don’t put competitors and TAM in slides. Product demo should be deferred to future calls and partner meeting. Need to get to the next step.
Slide deck template:
The world is ending.
In the worst possible way.
What you think you know to prevent world explosion, you are wrong.
We are your savior
We are already on a rocket ship.
Here’s what we look and credibility
Here’s the money we want
Pitch in waves. First pitch the tier 4 investors to learn and iterate. Schedule each wave each Monday. Silicon Valley partner meetings are on Monday mornings.
When you fundraise, it starts immediately and gossip. Don’t fundraise until you have something to show for it. It can cost several months to get fundraising.
Build it and they will come never works that way.
People, idea, market.
VCs usually want to return the fund with a single company. For example, the usually take 20%, $2 mil per company for 100 companies. It has to be potential for at least a billion dollar company to return the fund. Must be very big market and no company cannot take 100% of it.
Do customers want it and is it possible to build? Market of one isn’t enough, need to talk to potential customers and ask them to pay for it. Is the product shipped? Some products never ship, perfectionism. Demo alone could be a great product.
Product can be easy, but connecting to legacy banking system can be hard. Connections to other vendors could be very hard. Powerful and successful hate innovation.
Can this product be built by this team?
Take on hard problems.
Founders need to solve problematic cofounders before.
Fundraise with cofounder. 6-8 calls a day to get term sheet, full time job. Can finish fundraise in a month.
Never talk to associates, only empowered to say no. Only partners can say yes. Make associates do grunt work with data room and drop just a few files in the Dropbox folder.
Never send pitch in an email except for 3 sentences. Only video or in person. Do pitch with deck.
Investors are sheep, so shepherd them. Call out the objection and reframe them.
Get rejections over with quickly.
Picking well and operating badly can still make money in VC. It’s all about picking wisely.
VCs will continue to delay. Never wait for them and mistake indecision for a yes.
So due diligence with VCs with other investors and on your executives.
VCs will fire founders, steal decks, and have short memories for subsequent funds.
Stock purchase agreement, reps and warranties and truth of financial statements so other side can sue to void the sale.
Voting agreement and the board. Drag along provisions. Pro rata to invest to keep equity percentage and information rights.
Pull out of fundraising and build for 6 months if term sheet gets pulled.
Focus on price per share before and after at IPO/sale. Equity dilution based on new shares.
SAFEs are in between convertible notes and equity contracts.
Dividends accruing don’t make a difference.
All VCs want preferred stock and as much stock and as low valuation as possible.
New rounds require new contracts. Early stage investors have to get protected by the founder.
Paul Graham - none of valuation matters because it’s binary and either it works or doesn’t.
Co sale right exempt from the rofor.5-15%.
Also set 4-1 vesting schedule for reinvest or option top up. Ask for this every round.
At first close, you want pool to be just big enough because dilute only founders. Don’t go up to 12%. Can go next round when diluting everyone.
Ask VCs to pay for legal fees.
Boards are in odd numbers. Preferred vs common seats. Common seats are weaker if founder ceo is gone. Majority of common doesn’t really matter because of other rights. Independent board members and hired CEO are hired guns.
A founder can introduce a common board seat for every round and doesn’t have to appoint. Investors can block stuff even if they don’t have board control.
Cofounders will fight but always better together.
Prefer divided preferred class because no lead investor has control. Smaller investors can be leveraged. Supermajority class or just one preferred seat can only be done by powerful founders.
Use it or leave it right for pro rata rule.
Can use employee option holder rights for leverage for ceo.
Employment contract - cannot be fired with and without good reason, accelerated trigger and reimbursement of legal fees. Severance and cobra and keeping.
Investors and board members should also sign code of conducts in legalese.
Dataroom for due diligence: stock option, articles of incorporation, board meetings, leases
Close on Tuesday, Wednesday, Thursday. Close in 4 weeks or less because time kills all deals.
Beware of law firms that are friendly and beholden to investors and work for parties simultaneously. Don’t use top 6. Go with top litigators. Make the contract as founder friendly as possible, don’t start halfway in negotiation.
Read all the legalese and know every cap table down cold. QA your contracts until your eyes bleed, could be millions off.
DNO is standard. Cede things you don’t care about to see how investor react.
There’s a huge power imbalance after the term sheet and before closing because founders cash might be running low. Must treat founder fairly.
Push the boundaries as much as possible and fundraise from top names. Very good at making people like me quickly, genuine authenticity, straightforward approach, treats you like old friend.
What’s the best thing that could happen? Everything is an implementation detail.
Most investors and boards aren’t helpful and prepared, don’t care about demos. board meetings are not places to solve problems.
Engineer founders need to ship, business founders need to build.
Later stage investors will always screw over earlier stage investors, and earlier stage investors are dependent on later stage to fund the company. VCs will always stick together.
Hired CEOs are mercenaries and usually only get 10% because founder has 30-70%. Early stage CEOs are hard to find talent and seek easy revenue
CEO should run the company, not the board.
Create a shadow board. Treat the board as transactional relationship.
VC wants to triple investment in 5 years. For a 1 billion company, need to have $200 million in revenue. Hiring will need to grow. Rent an executive and consultants are generally useless. Need to fire if necessary.
If found product market fit, need to scale. Gone from zero to one, then one to two.
Startups = growth. Different from hair salons. Startups have to grow. Everything falls from this. Competitors steal growth if you don’t do it.
3 stages: slow growth as product market fit, rapid growth, and mature growth.
There’s never multiple winners. There’s one winner and everyone else. Okta is worth 94x than one login because Okta raised and deployed more capital more quickly. It’s a race to IPO. Fundraising is a way to stifle competition.
Any enterprise SAS company is based one winner of a category. Have to grow fast if take venture capital. Founders might want to spend slowly, but investors want to spend aggressively and swing for the fences. Need high growth or lose in sectors where high growth is possible.
If grow slowly without losing, don’t take VC. This is preferable.
Build a company and a machine that can take money and produce it, not a product.
Founders tell the story of useful and inevitable. A brand is a story that people already know.
Hiring vs joining a company, make a company worth joining. Get superstar talent to join proactively by getting news articles. They believe in the vision.
Founders are afraid of running out of money, but if growing fast, need to spend to grow. Don’t need ramen days thinking. Quickly invest and deploy to get a return.
Need to build an executive team to scale.
Need to find good executive recruiter, not retained search firm.
If VP of sales asked for 3 points fully diluted on a series A, it’s absurd.
Executive search used to ask for $100K per hire. Now trying to get on cap table. Push back and happy to consider in next round or say board don’t allow it. Just say no.
Brand name investors can help hire and recruit a candidate.
If hiring an executive, make sure your exec is bringing a team with them because it means they are a leader.
Sales people are good with an existing playbook, can’t make a new playbook. Hire the infrastructure and plumbing before adding personnel. Education first, then hire Account salespeople.
When company gets above 40 people, then founder has to let go of knowing everyone.
Good startup CEO should Set the vision, raise capital, hire employees.
Technical writing is good marketing and SEO.
VCs are not operators, focused only on high growth companies. VCs can help keep founder focused on growth by hiring and delegating.
Exits of VC outcomes are based on power law. Biggest is twice value of next biggest, which is twice of third biggest. Largest exit is worth more than all the others combined. Handful of big wins makes a career.
VCs can only help by raising money and exits, not by operating.
Every founder should have an exit number ( F U a number). Don’t get warped and expanded golden handcuffs.
Beware of earn outs of being indentured servant.
VCs will hate early exits ($50M between seed and series A) because carry is small and get rid of an opportunity to return the fund. Usually sell 20% in each round, so founders have 60% after series A.
Gauge a founder on Scrappy startup, mid sized private, and large company.
If go for series A, investors will write return thresholds. $50M valuation will require $150M exit.
How tired are the founders when evaluating exits? And how does this affect team cohesion?
No one wants to buy a company that someone wants to sell. Good to sell a company if it’s about to fail.
Head of Product or CEO relationships needed to get acquirers, not CSO or corp dev.
If proven value and stole deals from big companies, they will be interested in acquiring.
Will never get escrow from acquihire.
Taking money off the table as a founder as part of a seed round can de risk the stress of overall exit. VCs are already rich and already incentivized differently.
Co sale rights are great.
IPO or bust, other exits are not ideal.
Money changes people.
Always back channel and call people about VCs and founders.
Only take vc money if need to grow fast and win the market.
Board likely to fire founder - viral blog post by Jerry.
Use crunchbase database to find investors who write dozens of checks per year for your stage of company.
Find VCs who can help the business and not just a money giver.
VCs get pitched millions of times
Reverse engineer which investors invested in customers who use your product.
Fundraising is just a sales job that needs to close as quickly as possible. You need to create a pitch deck/demo and create FOMO and you need to be in control.
Don’t put competitors and TAM in slides. Product demo should be deferred to future calls and partner meeting. Need to get to the next step.
Slide deck template:
The world is ending.
In the worst possible way.
What you think you know to prevent world explosion, you are wrong.
We are your savior
We are already on a rocket ship.
Here’s what we look and credibility
Here’s the money we want
Pitch in waves. First pitch the tier 4 investors to learn and iterate. Schedule each wave each Monday. Silicon Valley partner meetings are on Monday mornings.
When you fundraise, it starts immediately and gossip. Don’t fundraise until you have something to show for it. It can cost several months to get fundraising.
Build it and they will come never works that way.
People, idea, market.
VCs usually want to return the fund with a single company. For example, the usually take 20%, $2 mil per company for 100 companies. It has to be potential for at least a billion dollar company to return the fund. Must be very big market and no company cannot take 100% of it.
Do customers want it and is it possible to build? Market of one isn’t enough, need to talk to potential customers and ask them to pay for it. Is the product shipped? Some products never ship, perfectionism. Demo alone could be a great product.
Product can be easy, but connecting to legacy banking system can be hard. Connections to other vendors could be very hard. Powerful and successful hate innovation.
Can this product be built by this team?
Take on hard problems.
Founders need to solve problematic cofounders before.
Fundraise with cofounder. 6-8 calls a day to get term sheet, full time job. Can finish fundraise in a month.
Never talk to associates, only empowered to say no. Only partners can say yes. Make associates do grunt work with data room and drop just a few files in the Dropbox folder.
Never send pitch in an email except for 3 sentences. Only video or in person. Do pitch with deck.
Investors are sheep, so shepherd them. Call out the objection and reframe them.
Get rejections over with quickly.
Picking well and operating badly can still make money in VC. It’s all about picking wisely.
VCs will continue to delay. Never wait for them and mistake indecision for a yes.
So due diligence with VCs with other investors and on your executives.
VCs will fire founders, steal decks, and have short memories for subsequent funds.
Stock purchase agreement, reps and warranties and truth of financial statements so other side can sue to void the sale.
Voting agreement and the board. Drag along provisions. Pro rata to invest to keep equity percentage and information rights.
Pull out of fundraising and build for 6 months if term sheet gets pulled.
Focus on price per share before and after at IPO/sale. Equity dilution based on new shares.
SAFEs are in between convertible notes and equity contracts.
Dividends accruing don’t make a difference.
All VCs want preferred stock and as much stock and as low valuation as possible.
New rounds require new contracts. Early stage investors have to get protected by the founder.
Paul Graham - none of valuation matters because it’s binary and either it works or doesn’t.
Co sale right exempt from the rofor.5-15%.
Also set 4-1 vesting schedule for reinvest or option top up. Ask for this every round.
At first close, you want pool to be just big enough because dilute only founders. Don’t go up to 12%. Can go next round when diluting everyone.
Ask VCs to pay for legal fees.
Boards are in odd numbers. Preferred vs common seats. Common seats are weaker if founder ceo is gone. Majority of common doesn’t really matter because of other rights. Independent board members and hired CEO are hired guns.
A founder can introduce a common board seat for every round and doesn’t have to appoint. Investors can block stuff even if they don’t have board control.
Cofounders will fight but always better together.
Prefer divided preferred class because no lead investor has control. Smaller investors can be leveraged. Supermajority class or just one preferred seat can only be done by powerful founders.
Use it or leave it right for pro rata rule.
Can use employee option holder rights for leverage for ceo.
Employment contract - cannot be fired with and without good reason, accelerated trigger and reimbursement of legal fees. Severance and cobra and keeping.
Investors and board members should also sign code of conducts in legalese.
Dataroom for due diligence: stock option, articles of incorporation, board meetings, leases
Close on Tuesday, Wednesday, Thursday. Close in 4 weeks or less because time kills all deals.
Beware of law firms that are friendly and beholden to investors and work for parties simultaneously. Don’t use top 6. Go with top litigators. Make the contract as founder friendly as possible, don’t start halfway in negotiation.
Read all the legalese and know every cap table down cold. QA your contracts until your eyes bleed, could be millions off.
DNO is standard. Cede things you don’t care about to see how investor react.
There’s a huge power imbalance after the term sheet and before closing because founders cash might be running low. Must treat founder fairly.
Push the boundaries as much as possible and fundraise from top names. Very good at making people like me quickly, genuine authenticity, straightforward approach, treats you like old friend.
What’s the best thing that could happen? Everything is an implementation detail.
Most investors and boards aren’t helpful and prepared, don’t care about demos. board meetings are not places to solve problems.
Engineer founders need to ship, business founders need to build.
Later stage investors will always screw over earlier stage investors, and earlier stage investors are dependent on later stage to fund the company. VCs will always stick together.
Hired CEOs are mercenaries and usually only get 10% because founder has 30-70%. Early stage CEOs are hard to find talent and seek easy revenue
CEO should run the company, not the board.
Create a shadow board. Treat the board as transactional relationship.
VC wants to triple investment in 5 years. For a 1 billion company, need to have $200 million in revenue. Hiring will need to grow. Rent an executive and consultants are generally useless. Need to fire if necessary.
If found product market fit, need to scale. Gone from zero to one, then one to two.
Startups = growth. Different from hair salons. Startups have to grow. Everything falls from this. Competitors steal growth if you don’t do it.
3 stages: slow growth as product market fit, rapid growth, and mature growth.
There’s never multiple winners. There’s one winner and everyone else. Okta is worth 94x than one login because Okta raised and deployed more capital more quickly. It’s a race to IPO. Fundraising is a way to stifle competition.
Any enterprise SAS company is based one winner of a category. Have to grow fast if take venture capital. Founders might want to spend slowly, but investors want to spend aggressively and swing for the fences. Need high growth or lose in sectors where high growth is possible.
If grow slowly without losing, don’t take VC. This is preferable.
Build a company and a machine that can take money and produce it, not a product.
Founders tell the story of useful and inevitable. A brand is a story that people already know.
Hiring vs joining a company, make a company worth joining. Get superstar talent to join proactively by getting news articles. They believe in the vision.
Founders are afraid of running out of money, but if growing fast, need to spend to grow. Don’t need ramen days thinking. Quickly invest and deploy to get a return.
Need to build an executive team to scale.
Need to find good executive recruiter, not retained search firm.
If VP of sales asked for 3 points fully diluted on a series A, it’s absurd.
Executive search used to ask for $100K per hire. Now trying to get on cap table. Push back and happy to consider in next round or say board don’t allow it. Just say no.
Brand name investors can help hire and recruit a candidate.
If hiring an executive, make sure your exec is bringing a team with them because it means they are a leader.
Sales people are good with an existing playbook, can’t make a new playbook. Hire the infrastructure and plumbing before adding personnel. Education first, then hire Account salespeople.
When company gets above 40 people, then founder has to let go of knowing everyone.
Good startup CEO should Set the vision, raise capital, hire employees.
Technical writing is good marketing and SEO.
VCs are not operators, focused only on high growth companies. VCs can help keep founder focused on growth by hiring and delegating.
Exits of VC outcomes are based on power law. Biggest is twice value of next biggest, which is twice of third biggest. Largest exit is worth more than all the others combined. Handful of big wins makes a career.
VCs can only help by raising money and exits, not by operating.
Every founder should have an exit number ( F U a number). Don’t get warped and expanded golden handcuffs.
Beware of earn outs of being indentured servant.
VCs will hate early exits ($50M between seed and series A) because carry is small and get rid of an opportunity to return the fund. Usually sell 20% in each round, so founders have 60% after series A.
Gauge a founder on Scrappy startup, mid sized private, and large company.
If go for series A, investors will write return thresholds. $50M valuation will require $150M exit.
How tired are the founders when evaluating exits? And how does this affect team cohesion?
No one wants to buy a company that someone wants to sell. Good to sell a company if it’s about to fail.
Head of Product or CEO relationships needed to get acquirers, not CSO or corp dev.
If proven value and stole deals from big companies, they will be interested in acquiring.
Will never get escrow from acquihire.
Taking money off the table as a founder as part of a seed round can de risk the stress of overall exit. VCs are already rich and already incentivized differently.
Co sale rights are great.
IPO or bust, other exits are not ideal.
Money changes people.
Always back channel and call people about VCs and founders.
Only take vc money if need to grow fast and win the market.
January 20, 2024
Founders vs. Investors” by Elizabeth Zalman and Jerry Neumann is a great book for the first time founding CEOs. Zalman shares a lot of real stories and gives clear advice about dealing with investors and the board. She talks about what investors want and how founders can work with them. Her clear and detailed stories make it easier to understand these relationships. This book is really helpful if you want to know how to work with investors and keep control of your business. Definitely worth reading!
October 20, 2023
Perhaps the greatest summary of this book comes from co-author Jerry Neumann's afterword, whose first paragraph I'll just quote here in its entirety: This book isn't new knowledge. No one who has been in the startup world for more than a few years will think, "Gee golly, I didn't know that." It's just knowledge that no one likes to say out loud. The not-new truths that Neumann (the investor side of the house in the authorship of the book) alludes to are actually more bluntly articulated by Zalman (the founder), to wit:
1. No founder who is not completely insane would take venture capital, because it is essentially like taking a loan from the Mafia. The Mafia will kneecap you or make you swim with the fishes if you can't pay them back at a 200% interest rate, and although no physical harm will come to you if you're a founder who exits short of being the single investment that returns the fund, a VC's behavior towards you will not be dissimilar to the Godfather.
2. Notwithstanding point #1, without many other options for raising capital for risky investments, founders -- even though they are not actually insane -- still take money from VCs, even though they know (or should know) that 99.999% of the time, they are going to proverbially end up at the bottom of the ocean.
Of the two co-authors, Zalman comes across as the one who is more nihilistic, unhinged, and scarred from her experience as a VC-taking founder. Who can blame her? The VC-founder relationship is just like any other one in modern capitalism: it's a question of who can out-sociopath the other person (CEO vs. C-level operating executives, managers to employees, etc.) The issue is that with such an imbalanced power dynamic, the founder is always going to lose. As both Zalman and Neumann correctly state, the founder has at stake his/her entire company, as well as probably some modicum of personal financial well-being, not to mention their mental health. Whereas to the investor, their conflict with a founder is just one of 50 or 100 in their fund, so they have far less to lose. In the game of who has the most iron testicles, of course the VC is going to win.
As Zalman states early on (and to paraphrase a well-worn trope), funding risky ventures by venture capital is the worst possible way to get them off the ground, except for all the other methods already tried. And for the founder and anyone else on board the ship, it is a completely crazy emotional roller-coaster. Working for a startup was one of the most exhilarating experiences of my life, and I'm not sure that, unless I go on to work for another one (or God forbid, become a founder), I will experience anything like that again. At the same time, when things were bad -- and I say this with the utmost seriousness and gravitas, not just to make a point in a flippant way -- if I'd owned a gun, and certain co-workers or founders of the startup had been within firing range, I absolutely could have murdered them in cold blood with no regret. Perhaps it marks me as the kind of sociopath that is perfect for being the co-founder of a future VC-funded startup.
Which leads me to my final point, and where I think Zalman -- who has primarily spent her career as a startup co-founder, rather than working as a leader in large enterprises -- has a blind spot. It's not like a lot of the fundamental incentive structures, or even behaviors exhibited by folks who hold power vs. those who don't, don't exist inside established companies! Many readers would probably be horrified by some of the sociopathic behavior that I exhibit on a day-to-day business as an operating executive inside a large, non-startup company. Playing politics, building an empire, throwing "friends" under the bus, outright lying (only a very small proportion of the time -- mostly it's just deception-by-omission or other less obvious tactics), and many other highly unsavory activities are just another day at the office and necessary survival skills in any kind of corporate environment. In our current economic system, the biggest fool is the person not employing these tactics to get ahead; the lesser fool is the person who employs them and gets caught. These are the ultimate truths that, as Neumann says, are not "new knowledge", and certainly are not restricted to VC-funded firms; they underpin how all firms conduct business today. The trick is to not be too obvious about doing these things, not to stop doing them.
I wish that a book like this (maybe not this one specifically, since it's quite targeted to a particular way of funding companies) was required reading for all new grads entering the workforce, because it delivers truths about modern capitalism that every employee should know. I feel like I figured it out pretty early in my career, and I'm thankful I did, because it allowed me to make life choices that increase my leverage in some small way against those who have more economic and political power. For example, if you don't have children (enormous cash drain with little upside), and you don't have to service a huge mortgage on an abnormally huge house, and you're generally frugal about your spending including going to post-secondary schools that don't saddle you with massive student debt, then it's a lot harder for someone to grab you by the short-and-curlies and really make it hurt. (Or, in Zalman's language, your "fuck you money" number can be much lower.) These life choices, made with full knowledge that I labor under an oppressive system, make it far easier to pursue what I value: investing in or working for folks who are truly trying to solve tough problems that I find personally interesting, without regard to some unlikely, mythical upside having to do with founder common stock (or ISOs) whose likelihood of being worth anything is approximately zero. I only have one life to live, and if you, like I do, take seriously Daniel Burnham's exhortation that accordingly you should "make no little plans", you must be single-mindedly invested in that objective. That includes the realization that relationships with others are subservient to that purpose in life, starting first with the ones you have with your co-founders should you found a company: you might start as friends, but you will almost certainly end up as enemies by the time your company gets to an exit. You just need to keep it together long enough to get there.
There is one irony outside of this book that I can't help but notice, and that is the fact that Elizabeth Zalman is now working for Crane VC as a founder advisor! I can't imagine how those conversations must go. What does she have to impart to founders, other than that they are going to get fucked? The only variables up for debate are how fast, how deep, and how much is it going to hurt. I suppose Zalman is very much executing the "if you can't beat 'em, join 'em" playbook because hey, in the end, everyone needs to look out for themselves first.
1. No founder who is not completely insane would take venture capital, because it is essentially like taking a loan from the Mafia. The Mafia will kneecap you or make you swim with the fishes if you can't pay them back at a 200% interest rate, and although no physical harm will come to you if you're a founder who exits short of being the single investment that returns the fund, a VC's behavior towards you will not be dissimilar to the Godfather.
2. Notwithstanding point #1, without many other options for raising capital for risky investments, founders -- even though they are not actually insane -- still take money from VCs, even though they know (or should know) that 99.999% of the time, they are going to proverbially end up at the bottom of the ocean.
Of the two co-authors, Zalman comes across as the one who is more nihilistic, unhinged, and scarred from her experience as a VC-taking founder. Who can blame her? The VC-founder relationship is just like any other one in modern capitalism: it's a question of who can out-sociopath the other person (CEO vs. C-level operating executives, managers to employees, etc.) The issue is that with such an imbalanced power dynamic, the founder is always going to lose. As both Zalman and Neumann correctly state, the founder has at stake his/her entire company, as well as probably some modicum of personal financial well-being, not to mention their mental health. Whereas to the investor, their conflict with a founder is just one of 50 or 100 in their fund, so they have far less to lose. In the game of who has the most iron testicles, of course the VC is going to win.
As Zalman states early on (and to paraphrase a well-worn trope), funding risky ventures by venture capital is the worst possible way to get them off the ground, except for all the other methods already tried. And for the founder and anyone else on board the ship, it is a completely crazy emotional roller-coaster. Working for a startup was one of the most exhilarating experiences of my life, and I'm not sure that, unless I go on to work for another one (or God forbid, become a founder), I will experience anything like that again. At the same time, when things were bad -- and I say this with the utmost seriousness and gravitas, not just to make a point in a flippant way -- if I'd owned a gun, and certain co-workers or founders of the startup had been within firing range, I absolutely could have murdered them in cold blood with no regret. Perhaps it marks me as the kind of sociopath that is perfect for being the co-founder of a future VC-funded startup.
Which leads me to my final point, and where I think Zalman -- who has primarily spent her career as a startup co-founder, rather than working as a leader in large enterprises -- has a blind spot. It's not like a lot of the fundamental incentive structures, or even behaviors exhibited by folks who hold power vs. those who don't, don't exist inside established companies! Many readers would probably be horrified by some of the sociopathic behavior that I exhibit on a day-to-day business as an operating executive inside a large, non-startup company. Playing politics, building an empire, throwing "friends" under the bus, outright lying (only a very small proportion of the time -- mostly it's just deception-by-omission or other less obvious tactics), and many other highly unsavory activities are just another day at the office and necessary survival skills in any kind of corporate environment. In our current economic system, the biggest fool is the person not employing these tactics to get ahead; the lesser fool is the person who employs them and gets caught. These are the ultimate truths that, as Neumann says, are not "new knowledge", and certainly are not restricted to VC-funded firms; they underpin how all firms conduct business today. The trick is to not be too obvious about doing these things, not to stop doing them.
I wish that a book like this (maybe not this one specifically, since it's quite targeted to a particular way of funding companies) was required reading for all new grads entering the workforce, because it delivers truths about modern capitalism that every employee should know. I feel like I figured it out pretty early in my career, and I'm thankful I did, because it allowed me to make life choices that increase my leverage in some small way against those who have more economic and political power. For example, if you don't have children (enormous cash drain with little upside), and you don't have to service a huge mortgage on an abnormally huge house, and you're generally frugal about your spending including going to post-secondary schools that don't saddle you with massive student debt, then it's a lot harder for someone to grab you by the short-and-curlies and really make it hurt. (Or, in Zalman's language, your "fuck you money" number can be much lower.) These life choices, made with full knowledge that I labor under an oppressive system, make it far easier to pursue what I value: investing in or working for folks who are truly trying to solve tough problems that I find personally interesting, without regard to some unlikely, mythical upside having to do with founder common stock (or ISOs) whose likelihood of being worth anything is approximately zero. I only have one life to live, and if you, like I do, take seriously Daniel Burnham's exhortation that accordingly you should "make no little plans", you must be single-mindedly invested in that objective. That includes the realization that relationships with others are subservient to that purpose in life, starting first with the ones you have with your co-founders should you found a company: you might start as friends, but you will almost certainly end up as enemies by the time your company gets to an exit. You just need to keep it together long enough to get there.
There is one irony outside of this book that I can't help but notice, and that is the fact that Elizabeth Zalman is now working for Crane VC as a founder advisor! I can't imagine how those conversations must go. What does she have to impart to founders, other than that they are going to get fucked? The only variables up for debate are how fast, how deep, and how much is it going to hurt. I suppose Zalman is very much executing the "if you can't beat 'em, join 'em" playbook because hey, in the end, everyone needs to look out for themselves first.
January 9, 2024
Author said he’d bust my kneecaps if I didn’t leave a five star review
This entire review has been hidden because of spoilers.
December 19, 2023
* I would give this book a 3.5 if I could.
I do agree that reading this book is something founders can do to get a quick lesson on VC/founder relationships and what you are getting yourself into. There isn't much that is new here, but there are very few good resources that cut through and say it straight.
I disagree with some of the things that are shared. Elizabeth is very jaded by her experiences but I think this can counteract the blissful ignorance that most founders have when they start a company.
The one thing I would highlight is that your experience will vary. Most founders will not have the good fortune to experience anything similar to what Elizabeth experienced. Also, your first fundraising effort will not take a month. That is unrealistic.
Jerry comes across as a very level-headed investor, and I would seek him out if I were looking for investors.
I do agree that reading this book is something founders can do to get a quick lesson on VC/founder relationships and what you are getting yourself into. There isn't much that is new here, but there are very few good resources that cut through and say it straight.
I disagree with some of the things that are shared. Elizabeth is very jaded by her experiences but I think this can counteract the blissful ignorance that most founders have when they start a company.
The one thing I would highlight is that your experience will vary. Most founders will not have the good fortune to experience anything similar to what Elizabeth experienced. Also, your first fundraising effort will not take a month. That is unrealistic.
Jerry comes across as a very level-headed investor, and I would seek him out if I were looking for investors.
October 30, 2023
Novel format, not necessary novel content
I love Jerry Neumann’s blog and read the post that inspired this book. I liked the back and forth construct of this book, which shares the perspective of both VCs and founders. I did find that most of the advice I’d read in other places.
I left feeling that the founder perspective was too nihilistic. The book paints a picture of worthless VCs and a broken structure, but does not offer a true alternative other than pushing for better legal terms. I suspect this book may discourage potential founders from starting companies, which I don’t think was the intention.
I love Jerry Neumann’s blog and read the post that inspired this book. I liked the back and forth construct of this book, which shares the perspective of both VCs and founders. I did find that most of the advice I’d read in other places.
I left feeling that the founder perspective was too nihilistic. The book paints a picture of worthless VCs and a broken structure, but does not offer a true alternative other than pushing for better legal terms. I suspect this book may discourage potential founders from starting companies, which I don’t think was the intention.
August 10, 2024
Love it - Lizzie (Elizabeth Zalman) and Jerry (Neumann) offer an insightful exploration into the complex relationship between startup founders and the investors who fund them. This book describes honestly the power dynamics, conflicts, and misalignment that may arise between two parties who are supposed to be on the same team. This book is also very authentic as Liz is a seasoned founder, and Jerry, a veteran investor.
The authors are not afraid to disagree and they don’t shy away from uncomfortable truths: the sometimes conflicting goals of growth versus control, the emotional toll of fundraising, and the power struggles that can lead to a founder’s ousting.
It is a must-read for anyone involved in the startup world.
The authors are not afraid to disagree and they don’t shy away from uncomfortable truths: the sometimes conflicting goals of growth versus control, the emotional toll of fundraising, and the power struggles that can lead to a founder’s ousting.
It is a must-read for anyone involved in the startup world.
September 25, 2023
As Stevo’s Novel Ideas, I am a long-time book reviewer, member of the media, an Influencer, and a content provider. I received this book as a review copy from either the author, the publisher, or a publicist. I have not been compensated for this recommendation. I have selected it as Stevo's Business Book of the Week for the week of 9/24, as it stands heads above other recently published books on this topic.
May 22, 2024
I picked up a few things from this read, but most of what was shared was already familiar to me. I liked the concept of hearing from a founder and an investor and not making an attempt to have the two viewpoints agree. This would have been better as a podcast segment with witty repartee between the authors. The audiobook format was helpful in this regard, but overall I left this book feeling a little blah.
November 16, 2023
This book is one that you read cover to cover, but then leave on your desk as a reference guide forever. This book is a textbook on how to fundraise, grow, exit, and generally survive in the venture backed world. It is a textbook, yet it is told through compelling narratives that help you truly understand why some companies fail, and how to not be one of them. MUST READ.
January 12, 2024
This was really good. I heard Elizabeth and Jerry on the Invest Like The Best podcast and was intrigued. This book says all the quiet parts out loud regarding the often fraught relationship between founders & VCs. They’re both very brave for being so frank. The result is a practical and fast read that will likely help a lot of early stage founders and investors avoid some serious pitfalls.
November 28, 2024
La verdad es que le pondría un 5/5 pero no quisiera confundir a la gente que encuentra este review.
Para mí, este libro ha sido refrescante, dinámico, buena info, nada muy complejo sobre el mundo de VCs, creo que si nunca haz investigado demasiado sobre el tema, como es mi caso y quieres una mirada desde ambos lados, es perfecto para ti.
Para mí, este libro ha sido refrescante, dinámico, buena info, nada muy complejo sobre el mundo de VCs, creo que si nunca haz investigado demasiado sobre el tema, como es mi caso y quieres una mirada desde ambos lados, es perfecto para ti.
January 24, 2025
On one hand, some actual good knowledge about the path of founders, investors, and VCs.
On the other hand, the two writers sound cocky, uncaring, and generally like two people I would hate to meet in real life. Which I guess is a fair representation of what it might take to survive as a silicon valley founder or investor. But jeez this writing is unbearable
On the other hand, the two writers sound cocky, uncaring, and generally like two people I would hate to meet in real life. Which I guess is a fair representation of what it might take to survive as a silicon valley founder or investor. But jeez this writing is unbearable
December 26, 2025
I loved this take on the different perspectives in a startup, having met a lot of investors who say they are always in the same boat as the entrepreneur. It made me want to work with Elizabeth, and get an investment from Jerry and their dynamic made it all funny at times and always very relatable. Can really recommend it to other founders and investors who are curious.
March 2, 2024
A book that captures the challenges of entrepreneur life and outside interests (investors, friends and family who have expectations of time but no understanding of the work life, timing when to exit a product or business)
October 28, 2023
Utility killed the cat
November 14, 2023
Very educational, informative and learnt a lot.
Loved the simple glossary at the back
Loved the disagreeableness yet chemistry between the authors.
Loved the simple glossary at the back
Loved the disagreeableness yet chemistry between the authors.
November 24, 2023
audio! very fun format, wish it had existed back in my day : )
December 25, 2023
I enjoyed the back and forth of perspectives more than I thought I would. Will def use for references later
May 7, 2024
Required reading for both VCs and startup founders
July 9, 2024
Need to reread the last chapter of Exits.
July 14, 2024
Not bad, although the founder co-author could present ideas across with less bluster and more thought. Guess that’s what the other co-author is for
February 13, 2025
Good job, jerry
May 30, 2025
This is the first book to read before planning to raise from investors. I only wish I read it earlier.
December 25, 2023
I was pleasantly surprised by the level of candor we got from the authors, both of whom clearly have a wealthy of knowledge and experience in the startup world. I learnt a lot more from this book than I was originally expecting. Definitely a must-read for any wannabe founders.
August 21, 2024
For anyone in the area I am sure the book is hacky, but if you've ever only been tangentially involved in the start-up world (in my case friends and family) I thought the book was interesting. Gave me a clearer understanding of news-stories, was written in a layman friendly way (i.e. limited jargon) and was dynamic enough to keep me interested. The gimmick of the two-sided nature of the discussion also was quite effective.
October 12, 2023
"Founder vs Investor" is nothing short of a masterclass in the intricate dance between startups and their backers. This brilliant exposition dives deep into the often-murky waters of entrepreneurial ambition and investor expectations, shedding light on the unspoken dynamics that can make or break companies.
Zalman and Neumann's combined experiences lend a rare authenticity to the narrative, weaving together stories and lessons that feel both personal and universal. Their brutally honest accounts and unapologetic stance on the challenging moments faced by founders and investors alike offer a refreshing perspective in a genre often filled with sugarcoated tales of success.
Beyond the gripping tales of trials and tribulations, the book is rich with practical recommendations, making it an invaluable manual for both budding entrepreneurs and seasoned investors. The nuanced insights challenge conventional wisdom and instigate an intelligent debate about the roles, responsibilities, and ethics that come into play in the startup ecosystem.
What sets this book apart, though, is its readability. While it delves into complex topics and hard truths, it remains a fun read, with witty anecdotes and engaging writing that keeps you flipping pages.
In "Founder vs Investor," Zalman and Neumann have crafted a seminal work that not only informs but also inspires. Whether you're knee-deep in the startup world or just a curious onlooker, this book promises a journey of discovery, reflection, and empowerment. A definitive 5-star must-read for anyone looking to understand the heartbeat of the entrepreneurial world.
Zalman and Neumann's combined experiences lend a rare authenticity to the narrative, weaving together stories and lessons that feel both personal and universal. Their brutally honest accounts and unapologetic stance on the challenging moments faced by founders and investors alike offer a refreshing perspective in a genre often filled with sugarcoated tales of success.
Beyond the gripping tales of trials and tribulations, the book is rich with practical recommendations, making it an invaluable manual for both budding entrepreneurs and seasoned investors. The nuanced insights challenge conventional wisdom and instigate an intelligent debate about the roles, responsibilities, and ethics that come into play in the startup ecosystem.
What sets this book apart, though, is its readability. While it delves into complex topics and hard truths, it remains a fun read, with witty anecdotes and engaging writing that keeps you flipping pages.
In "Founder vs Investor," Zalman and Neumann have crafted a seminal work that not only informs but also inspires. Whether you're knee-deep in the startup world or just a curious onlooker, this book promises a journey of discovery, reflection, and empowerment. A definitive 5-star must-read for anyone looking to understand the heartbeat of the entrepreneurial world.
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