This is Michael Seibel with Dalton Caldwell. In our last video, we talked about the setbacks that make founders feel like shit when running their startups. And this time we're going to talk about how to prevent these punches to the face and how to take a punch and recover, if you absolutely must.

So, Dalton, I think the cool way to think about this is a little bit like healthcare. There's preventative healthcare, and then there's, you know, treatment. So, let's start with the preventative, and let's set the framework here. Like, a lot of times founders get punched in the face as almost unforced errors. It's like a result of magical thinking or like other parts of their lives not being set up. And so here are things you can do to either reduce the number of punches that come or at least reduce their intensity because you have your other shit locked up. Does that make sense?

Yeah, exactly. It's like, as we spoke to last time, you can't think that you're not going to have any setbacks and you're not going to, again, take some punches. It's going to happen to you 100%. The highs are high and the lows are low. And so rather than assuming you can be so smart that you will never have low lows, Instead, plan ahead. Put the infrastructure in place so that when you do have these big challenges or these low moments, you have the infrastructure set up that you plan ahead for it. I think that's a very good idea.

So we were joking when we were talking about what to talk about in this video. A lot of these things could be put in the category of adulting. And it might turn out that if you want to be a founder of a very successful company, you might have to adult harder than the people around you. In fact, it almost assuredly requires adulting harder than the people around you. Sometimes the founders look at us and they're kind of like, well, you know, my roommates don't do this.So why do I have to? And it's like, well, your roommates aren't trying to build a billion dollar company. Then they don't have to. But Maybe you need to be better than the people around you to do something extraordinary.

It's yet another thing that distances you from your peers. And if your whole thing in life is I'm the same as my peers and I'm the same as my roommates that have jobs at like big tech companies. This is yet another way that you're going to be isolated and different and have to learn to love that and not feel sad that when they're like, hey, we're gonna go pull another all nighter. We're gonna go party Thursday, Friday, Saturday. You have to be cool with opting out of that, right? But if you think you can have it all. I don't know if you can have it all.

You can't. We're here to ruin that have it all dream. So what I like to start is audit how you live. Think about where you're waking up in the morning. Did you get enough sleep? Are you living in a place that makes you more powerful or less powerful? Are you sacrificing? Are you losing hit points at home? And if that's happening, man, that's unforced error. So that's who you're living with, what you're eating, do you have easy access to exercise? Are you living in a place with a bunch of alcohol and drugs everywhere? Not helping you. At the minimum, your home should be neutral, but I think for the most successful people, the home's actually a plus. The home is like, where they're making points, where they're winning points. And I think that a lot of founders in their early days don't understand how much they could be losing based on just how they're living.

Yeah, I think almost from a clinician's perspective, when someone is having issues, the first thing you look at is sleep disruption, diet and exercise. If you go look at research depression or anxiety and things, that's usually where the 80/20 solution is for a lot of folks that are struggling, is you look at their sleep patterns, are they sleeping okay, are they eating okay, are they getting exercise, are they getting sun, all these sorts of things. And so if you don't have your house in order on those fronts, you are not even if you don't currently have depression, you are not well situated to deal with really hard things that might happen to you, right?

But Dalton, I went to an Ivy League school and it was really hard. And I went to a really challenging high school and I didn't have to change these things to get good grades or to get the good internship. Like I, you know, I was able to like work hard and play hard. Why do I have to change now? It's working. It's working for me, this lifestyle.

I think it can work for people. You and I know people that certainly don't follow this advice and they still did okay. I just think you and I also know the same people where eventually you've got to pay the piper. Like at some point, no matter, it's almost like you're going into debt, like personal health debt or whatever you want to call it. And man, you can go pretty far into debt. You can go five years into debt. You can go 10 years into debt. I don't know. But at some point the debt comes due where you can't hold it all in anymore. You can't hold the whole world on your shoulders. And I think what we're just trying to say is if you start off with good habits early, you're not gonna incur this massive debt that one day causes you to have like a breakdown or a meltdown, or again, whatever you wanna call it.

Well, to double down on that, I might argue that like you probably can sacrifice these things for five years, like maybe even seven years. The tricky thing is that like the best companies last multiple decades. The tricky things is the shit that you can get away with in your 20s. You can't get away with in your 30s. And company running just gets harder. And so I think sometimes people are like, oh, this is gonna be a relative sprint. But it's like, what I like to talk to you about with YC founders a lot is like, what happens if this works? Like, are you set up for this to not work? Or are you set up for this to work? Because this works like, you're gonna be in it like you're gonna be in it for a while And I think sometimes people set their lives up for it to like not work and then wow, you know self appealing prophecy

And when you think about it, this isn't an age thing. This is a lifestyle thing because you'll see like 19 year olds with all the good habits and you'll see folks that aren't 19 that like Still live like 19 year olds. And so this isn't an age thing at all. This is a habits thing

Well, and you'll even see successful people with good habits lose them and then wonder why they can't succeed again. Right? It's like, even just having these habits doesn't mean you keep them. So, okay. So that's, that's, that's your, you know, physical life style setup. You want to talk about this kind of social media piece? Cause I think that a lot of people don't understand how toxic social media is like.

Yeah, I think, I think you just want to look at your information diet. The metaphor I think about this stuff with is, um, the same way we have a food diet and like, of course, what we eat and drink affects our moods and how we feel. I actually think the information we consume affects us. And if you think about, again, like myself and all of us, you know, when, when it's a really heavy time in history, when there's a lot of going on, when I'm doom scrolling all the time, reading about Pandemic news or war news or whatever of course that affects my state of mind. Okay, and so to some extent you can't completely stick your head in the ground about what's going on in the world No one's saying to do that, but to the extent your social media habits are make you feel bad or compare yourselves to people or say you follow a lot of like investors and everything they're talking about is the investment market and who's raising and all of that. And this is just every day you're bombarding your brain with stuff about investor shit. Why? Why is that good? How is that helping you actually run your startup? Reading what a bunch of investors say about the market all the time.

And I think people are surprised that successful founders explicitly block social media. They do crazy things. They grayscale their phones, what looks less interesting. They turn off notifications. They're aggressive users of screen time tracking, they're pretty aggressively audit this stuff.

So that illiquidity saved you all. And so again, so if you're consuming media every day and you're reassessing the value, like if you're too paying attention to this stuff, it doesn't make you make better financial decisions, does it? It's not wild.

The next area I like to talk about is salary. Oftentimes, and this is more of course for companies that have raised funding, just a small incremental 5% or 10% salary bump can make a huge lifestyle difference. And it's almost always worth it. Like I think people screw up. And this is where I say to founders, I'd love to hear your advice. If your startup salary is allowing you to save money, it's probably not good, right? You shouldn't be sitting here like with Google employee level savings running your startup. However, if your startup salary is giving you the lifestyle that allows you to be all in on your startup because the real world isn't distracting you negatively. Then it is good.

And what's interesting is that often for different founders, this is a different salary level. You know, for example, when I was starting, I had student loans in college. My co-founders did it. I made a little bit more money so that I wasn't like going into debt with my student loans. And that was perfectly reasonable. And no one was like, oh, well, you need to take X percent less because you need to pay a $200 student loan every month. It's like, no. So sometimes small changes in salary now, you know if you have a co-founder where it's like I need to make a half a million dollars a year and I'm 23 Yeah, that's probably different but like sometimes people are sacrificing Pennywise pound foolish right like sometimes people are being Pennywise pound foolish.

I think this is one of those topics also like equity where what founders want to hear is here's the right answer, one size fits all for everyone, or here's the formula. Oh, here's a spreadsheet. Here we go, Michael. Here's how much to pay yourselves. Just fill out the spreadsheet and we're done. And sadly, many things in life, anyone that tells you their simple answers is probably trying to sell you something. Right? They're like, yeah, it's probably snake oil.

And so the subtlety that I agree with you on is, you wanna pay yourself enough that you don't get into debt. You wanna pay yourself enough so that you're properly motivated. You also wanna keep the money in the company. These are all variables that you have to turn. And if you're gonna be a successful founder, you have to have good judgment and you have to have opinions. And so when founders have no opinion about this stuff, it's not a great sign.

So it's kind of like you need a philosophy of what you're solving for around compensation. You wanna set everyone up for success, Align incentives well, and also realize that this looks different for every company, man. Like a lot of folks ask me, well, how much should I pay employee number one? I'm like, That's a nonsensical question. Who are they? Do you see what I'm saying? What they want is some answer. Oh, you should pay employee number 1x. But no, man, that's not how this works.

It was almost easier to come to these conclusions when I think back, because we didn't have very much money. And so we kind of had to talk. Whenever anything is scarce, you have to ration it more effectively. And I think that our philosophy, because I like what you're saying. There's no formula. But we had a philosophy, which is like, salary is for living and equity is for upside. Like that was the kind of philosophy and I think that served us pretty well.

The next area of prevention, you have to learn how to have hard conversations with your co-founders and for everyone to be okay afterwards. Everyone has to go through this, and it's gonna suck. But if you have some of those in the bag, when you get punched in the face, y'all know a little bit more how to interact with each other. And to me, the biggest challenge that I've seen on this front, and we've talked about this at YC quite a bit, is this anxious personality type versus avoidant personality type. You know, when people are challenged, people are frustrated, and this is way over simplification, but sometimes people are anxious, they want to deal with the problem right now, they're leaning in, they want to talk for, they've talked for two hours with you, and they want to talk for another two hours with you. And sometimes people are avoidant, and you know, after five minutes, they're done. They want to think about it for a long time, they rather talk asynchronously.

And I actually see that most problems between co-founders The root cause isn't whatever went wrong or whatever they're debating. It's actually their style of dealing with their frustration. And if you can have a little empathy, if the person who you're working with has a different style of dealing with frustration than you do, and you can just take a beat, right? I'm the anxious type. You know this, Dalton. Like I'm super, I want to like talk about it for six hours, then six more hours. I want to plan, I want to write it down right now, go, go, go, go. And I always get into trouble when I'm interacting with someone who reacts negatively to that. And I always have to kind of be like, fuck, I got to take a beat. Like in this situation, you got to take a beat. And so in my experience, If you can figure out that dance with your co-founder, it's so much more helpful when you're dealing with these external challenges. And like the startups going to present many opportunities for frustration with your co-founder, right? Like infinite opportunities.

It's like the whole topic today, which is eventually you're going to take punches, you're going to have to set back to your startup. Eventually you're going to have conflict with the co-founder. 100% like like in the thing that you're disagreeing about isn't even the thing like who cares it's noise right like oh it's like roommates oh did you take did you put the dishes away or like it's not about the thing and like it's not about who's right or who's wrong and it's funny because a lot of people want to ask us advice about co-founder stuff and what they want is us to agree that they were right and their co-founders wrong. "Dalton, can I tell you about the situation? Basically, I'm smart. My co-founder is dumb. What do you think I should do about it?" And it's like, no, no, no, no, no. I'm not going to take the bait on that. I'm sure.

The actual thing that you need advice on, a thing to work on, is the meta conversation, which is like, how do you deal with conflict? so that people feel good when it's over. Otherwise, whatever the, you know, not cleaning up your dishes or taking the trash out, whatever the equivalent of that is in your co-founder relationship, eventually it's not going to work out, man. Right? You got to have tools because there's going to be more issues.

Well, I think that's what's fun about this one is that like, early stage founders argue about the dumbest things, that there's almost infinite opportunities to practice this dealing with frustration of your co-founder. Like it is like a roommate relationship. There's infinite opportunities before something that's a real whammy comes. So like, take those opportunities, like. Please take them.

Do you have any more on the preventative side before we move the treatment?

I think it's just this expectation setting. I think so much of life is expectation setting where setting expectations for yourself, setting expectations for people you work with about what to expect. If you are good at that, people can deal with all sorts of stuff. And when you get into the biggest trouble, both with yourself managing your own brain, as well as working with other people, is when you say a bunch of stuff that turns out to be really not true, and you set expectations poorly, and you have to dig yourself out of this deep hole that you dug yourself into, because you promised a bunch of shit, or you set expectations in such a way that just weren't true. And so expectation setting is key for prevention.

And you know, we talked about this in another video, but man, it's it helps to study the real story of companies, right? It helps just to just know how long this takes. Man, it really helps for you to not have stupid expectations. Oh, well, this company became a billion dollar company in two years. So that's clearly the average path. It's like, no, but absolutely not. Absolutely not. It's funny because in some ways you're saying sometimes these companies punch themselves out, right? Like they don't even need external forces. They set a stupid expectation. They don't hit their own unrealistic expectation. Then they feel like something's wrong. And you're just like, holy crap, you just invented a crisis. Startups have enough crises without that.

Well, we've talked about all the things you can do to prevent the injury. Let's say the punch happens, bam, and you need some treatment. something really bad happens or you suspect something really bad happens. I think the first point that you brought up that I really love is this idea of like, do I have to do anything right now? Like talk about that a little bit more.

I think I learned this as a founder of the hard way, which is when something bad happens, you want to immediately like make a move. You want to like call a meeting or you wanna, you get an email with bad news in it. You wanna hit respond and like, in the moment of fight or flight when you're adrenaline's pumping, you're like, (hidden aggression) how dare you, sir? You wanna start writing emails with that tone? (hidden aggression) "Dear sir. In response to your query about ...". like if you're ever typing an email with that tone, Don't do it.

And what I've noticed is you can just like not respond or like let stuff sit a little bit and sleeping on it is the minimum thing I would do. This is what I always tell founders is when they have something to happen to at least sleep on it because I just noticed the next day You have a whole new amount of clarity on the situation?

And I often find myself in my best moments, in my worst moments, and exactly like you said, I'm like, act now, go. Send that email, like punch back. In my best moments, I'm always like, if there's ever a decision that feels like it's action one or action two, There's always a third option, which is Don't Act. And it's almost never presented to you. I find a lot of times lawyers fuck companies with this. It's like, you gotta do this or that. And it's not like, how about we don't respond?

What if we do nothing? What would happen?

And then what's really funny is that the best founders no action becomes one of their key plays. They use that play way more than you think.

It's a great play. It's a great play.

Such a good play. And it's amazing that for the best founders, no action is 20, 30, 40% of the time what they do maybe more. But for other founders, they don't even know the play exists. They don't even know the play exists.

Yeah, maybe just archive the email. Whatever the email says. Just hit archive.

Yeah, that's true. It's a really big deal. They'll probably reply back. I've noticed that. It's a really big deal. And of course, don't do this in the case where someone's health is on the line or someone's going to go to jail or whatever. That's different.

Yeah, it's more of the stuff where it's interpersonal or someone, I don't know, someone said something bad.

You can archive, you can wait till the weekend's over to reply to that Slack message. Like it's gonna, it'll survive.

So the next one on the list is it's okay to take a day off, it's okay to go home. I think that, you know, there was one moment in my career where we were gonna get bought, social cam was gonna get bought and we were two months into the diligence process. And we got a call that said the deal was off. And it was the only moment in my career where I was like, I'm not going to react to this well in front of my co-founders. I just need to go home. At least home I can react in a way that won't be a bad example to them. Because they're gonna look in my reaction, they're gonna be like, are we fucked? And if I'm looking like we're fucked, that's not helping. When the generals pull in their hair being like, this looks horrible, we're gonna die. It's not gonna.

And man like going home um hanging out with you know at the time was my girlfriend but then you know later became my wife like taking that day the next day I could kind of bring a better Michael to the table. that was that was a big thing that was a big thing.

I was thinking about this in the context of like when things go bad, there's a current side of peace set of people you should probably be hanging out with and a certain set of people you probably shouldn't be hanging out with. Like, how do you think about that?

I mean, yeah, we, I have my personal experience and I have all the data points we have across YC founders and you just sometimes see people that are that are taking punches and having a hard time and there's some really amazing people that you can't hang out with that support you and tell you you're okay and validate your experience and like let you take space for yourself and like all this good stuff and like these are these are great people to have in your life and then we see other sorts of folks that are like You know, oh you should do tons of drugs or hey like let's go not sleep for a really long amount of time or let's hang out with celebrities or like you know like there's all these different crowds you can get into.

It's. depressing how predictive that is for how people will deal with like setbacks, you know, even and these are adults we're not even talking about, these are adults these are our grown people our age people still struggle with this particular one and so I think you just want to think about yeah who you're spending time with when you're when you're taking punches and what kind of habits that you're taking from the peer group.

You know, man, I really think that the best people, you know, I'll be explicit, right? The best people shit goes wrong and they go take a hike or something. And the worst people think shit goes wrong and they drink and do drugs. And like, it tends to be that those friend groups, you know, for a lot of founders, you know, the friends who if you go out with them, you're going to drink and do drugs. And you know, the other friends where if you go off them, you're going to go on a hike, like, Just expose it, you know? And, you know, pick the right group. Pick the right group. And it's weird because I don't think the friends are bad. They're not trying to harm you, you know?

Well, they're doing their own thing.

Yeah. It's just that, you know, you have to choose the right therapy. You have to choose the right therapy for yourself. And actually, that's a good segue. Let's talk about real healthcare. Let's talk about mental healthcare for a second. This is becoming less of a controversial issue, but I still think that it's something that needs to be normed more, right?

Yeah, I mean, therapy is good. Medication is good if you're prescribed it and it's not from your friend (just kidding). You know, this is, this stuff is de-stigmatized and it's, it's important. And like a lot of founders struggle, I think it's the ups and the downs exacerbate this stuff. And again, the stuff I said earlier, sleep disruption, stress, all these other things exacerbate it. So, you know sometimes that is the appropriate thing to do here, so you should do it and not think you're too tough or whatever reason it would be that you wouldn't use these things as a crutch. I've noticed that people that aren't willing to use this stuff, they find other crutches that I would not recommend.

Well, and I think that most people don't realize, this isn't the kind of stuff that comes out in your favorite company's press release. Most people don't realize how the founders who they are impressed with actually take advantage of therapy, actually take advantage of medication. Most people don't realize, you know, they're founders I know who've sworn off drinking because like they are not good, you know, they're not the best version of themselves in the drinking. Like this isn't the kind of stuff that people will talk about very publicly, but we know a lot of people. And when someone's trying to squeeze every ounce of positive productivity out of themselves, sometimes like, you know, um, they need to use these tools and it's really helpful, really, really helpful.

So, you know, let's talk about the fatal punches, right? You know, why I see we deal with a lot of failure. We deal with a lot of companies who fail and you and I have to have a lot of conversations with founders who their company is failed and their first thought is I'm a failure. They personalize that failure. What are the some of the things you tell those people when they're dealing with that fatal punch?

Yeah, I think it, as we talked about here, a lot of the things that people think are game over aren't. And so our advice is don't give up. Like you actually have a bunch of customers, you have a bunch of money in the bank, like let's look at the facts, you're good. And so a lot of our office hours are let's examine the facts. fact, fact, fact, fact, great. You're fine.

However, sometimes we look at the facts and you're not fine. And it doesn't help you like you don't need a pep talk to keep going. And it actually is probably the right thing for you to not keep going. Because at the end of the day, this is your life. You only have one of them and messing up your life in a permanent way, Your savings, your family, your friends, whatever it is. you know, don't do that. And again, I know it can be confusing out there because we get bombarded with messages. Oh, but you say you never give up or you say, you know, like, yeah, it's confusing.

Not that easy. It's not that easy. It's complicated.

Yeah. It's complicated. So I think you need to actually, with as clear objective ways as you can, be able to know when it's not working and that there was a fatal punch and that yeah, you should not do this anymore. Like sometimes you see people get into like, debt where they owe a bunch of people a lot of money and then they shut down and they ripped off all their suppliers. Again, you know what I'm trying to say? Like, you fail in such a way that you hurt a bunch of people, not just yourself. Don't do that.

Well, I think that this is what's tricky is that I think someone needs to be out there saying that these aren't the things you have to put on the table to win. Yes, when you're working hard, you're gonna probably have to spend less time with your family or friends, but you don't have to put those relationships, you don't have to sacrifice those relationships to win. In fact, the resource of strength. You're working hard, you're probably not saving as much money as you would be if you're working another job, but you don't have to sacrifice all your savings. You don't have to go into extreme debt. If you're working hard, you might not be able to get the salary that allows you to live in the apartment of your dreams. But like if you have to crash on friends' couches, these things don't tend to have to be sacrificed to win. And so if you're taking these kind of one-way hard life hits, maybe the facts are set up.

And again, what's tough is when you're one of those folks, sometimes you can even be victimized by people that'll like keep bleeding you because that's the racket. And we see this a lot with struggling startups. All sorts of people will come out of the woodwork to sell you services or promise they'll connect you with the investors or they'll help you fundraise or you name it. And it's like, it's kind of like moving to Hollywood to become an actor and it's not going well. All these people will, like there's a whole underbelly of folks who exist to rip off the people who aren't doing well.

You know, to me, where I see this happen that's most tragic is with non-technical founders, because it'll be some dev shop or some, you know, if you give me your last dollar, I promise that I'll solve your problem.

And you see people writing checks for 20, 30, 40, whatever, 50 grand out of their personal checking account, their life savings to some dev shop. That's like their whole business models to rip. I shouldn't say rip off, but like they're like, yeah, cool. Like whatever, like just as long as the check clears, we'll do it. You know, it's pretty depressing.

It's really depressing. And I think that like those founders, when we have this conversation, the like, Hey, your startup failed that doesn't mean you failed. You know, sometimes they just need to hear someone say that like so often, we'll talk about like, look at this person, they're sort of failed and they have another one that does well, look at this person, they're sort of failed and they're not working as an executive at this really cool company like these experiences you have are valuable to you, even if your company didn't work. You learned 10x more than you would have learned otherwise, even if your company didn't work. And sometimes when we explain that silver lining, people are like, oh, are you right? Yeah. That's actually a fun part of the job.

So there you go. Step one, how to try to avoid the punches, and step two, when they come, how to recover as fast as possible.