Werd I/O

One of the newsletters I subscribe to ran a sponsored post for Paintbrush, a firm that gives idea-stage founders a $50,000 loan to prove out their idea. The pitch on the front page is, “No rich aunt or uncle? No worries.”

My initial reaction was positive: I do think access to capital for founders from non-wealthy backgrounds is important. We’re missing out on so many important businesses by perpetuating an ecosystem that works best for people with deep pockets (who, in turn, tend to come from a narrow set of demographics). But the more I dug in, the more I think this is a bad deal, and I wanted to talk about why.

Based on their literature, Paintbrush provides a $50,000 loan with a very low-friction application and a fast decision. But the total repayment amount can be as much as $75,000, tied to a personal founder guarantee. That means that if your startup doesn’t work, you as a founder are required to pay that amount back at an amount pegged at 15% of your pre-tax income. For example, if your total income was $150,000, you would pay back $22,500 a year. That amounts to around 22% of what your post-tax takehome pay would be before payments like health insurance and rent.

Investor and founder Erik Severinghaus, in a piece entitled Never, Ever Personally Guarantee Your Startup:

Remember that 75 percent of even venture backed startups fail. Behind every one of those failures is a story of heartbroken entrepreneurs trying valiantly to extricate themselves from a challenging situation while retaining some modicum of dignity. Putting the money aside, that emotional hell is one that you don't want to live through, and it's exponentially worse if your creditors can come after your personal assets in addition to the corporate ones.

Not only that, but if you want to follow the VC path — or, for example, take part in an accelerator — you should know that investors take a close look at debt that you might have on the books. At an earlier stage startup, debt is a higher percentage of a startup’s total value, so early investors may take a particularly unkind view of it.

I expect that the founders of Paintbrush are trying to do the right thing. And in some cases, it may well still be a good solution! But I’d warn entrepreneurs to think about it very carefully before plunging in. Even if they provide a quick answer about your “funding”, you need to take your time and consider your options — and particularly the consequences if, like 90% of startups, yours fails. A fast process can lead to emotional decision-making where you’re all signed up before you consider the consequences. There may be better routes forward.

I’ve been thinking a lot about how to build high-performing teams: specifically, teams that build great products that I would also enjoy to be a part of. An incredibly productive team that also happens to be full of jerks is not something I’m particularly interested in replicating; I care about building meaningful things well in a resilient, nurturing environment. As well as being nicer places to work overall, these kinds of teams tend to have lower churn (people tend to stay for longer) and higher quality end products (the people who build things really care about what they’re building).

One of the most important things I learned working for Corey Ford at Matter Ventures was that a culture of open feedback is a core part of building a supportive culture. If people are to do their best work, they have to receive constructive feedback from their colleagues well; they also have to be able to give it openly. A team that’s stewing about friction they’re encountering without being able to talk about it in a way that might lead to resolution is one that’s highly likely to burn out.

One of the tools we used at Matter, which I believe was inspired by the famous Interpersonal Dynamics class at Stanford Business School, was a simple way to give and receive feedback on a regular cadence. I’ll describe the Matter version, which was face-to-face, and then discuss how I’ve adapted it for remote working.

By the way, Corey is an expert at this; he now runs Columbia University’s Sulzberger Executive Leadership Program for news executives, which is a giant opportunity if you’re in the industry. Regardless of the kind of organization you work in, you want him to help with your organizational culture.

In-person feedback.
Time to complete: 30 mins

Two people — Person A and Person B — sit opposite each other. Each has twelve square Post-It notes of a particular color; Person A might have twelve yellow Post-Its while Person B might have twelve blue Post-Its.

They set a timer and spend roughly fifteen minutes writing privately:

• Three Post-Its giving themselves positive feedback. What’s something that went well?
• Two Post-Its giving themselves deltas: what’s something they wish they could change?
• One Post-It describing how they’re feeling about their work overall.
• Another six giving the other person feedback in the same pattern: three positive, two deltas, and one that describes their overall feeling about their working relationship with that person.

Post-Its should always be written in a thick pen like a Sharpie, which forces brevity. Each one should be as simple as a headline, with the author’s name in the bottom corner.

Then the participants take turns to reveal their Post-Its.

• If Person A starts, they start with their feedback to themself first, revealing each Post-It one by one, and describing it a little bit more than is written in the headline.
• Then they continue onto their feedback for Person B, revealing and explaining each Post-It one at a time. Person B must remain silent except to ask clarifying questions.
• At the end of Person A’s Post-Its, Person B just says “thank you”. No rebuttals are allowed.
• Then you swap: Person B presents their Post-Its in the same way, and Person A says “thank you” at the end.
• Each person takes the feedback Post-Its that the other person has written for them.

There are a few obvious pitfalls, which should be explicitly called out at the beginning of explaining this kind of session for the first time:

• Don’t go “over the net”. This means don’t make assumptions about someone’s motivations or causation for a particular event. It’s totally fine to say, “when you did X it made me feel Y”; it’s not okay to say, for example, “you did X because you don’t care about Z”.
• Be aware of other common cognitive biases.
• Don’t interrupt the presenter.
• Nothing leaves the room. No feedback should be discussed with anyone else.

Most importantly, when someone is giving you feedback, they’re giving you the gift of their inner mind: they’re speaking what might otherwise be unsaid, so that you can become aware of other peoples’ reactions and learn from them. The process should be taken and received in the spirit of gift-giving.

Therefore, protecting a safe space is vital. Crucially, managers should be prepared to receive honest feedback as well as give it, in the same spirit of gift-giving. If there is ever any blowback from feedback from a manager, or an adverse reaction, the space is no longer safe and the feedback is not effective.

This also can’t be a one-off, because comfort with giving and receiving feedback builds over time. So it’s best if everyone has a one-on-one feedback session with all the people they directly work with at least every few weeks.

Remote feedback.

Obviously, there are no Post-Its directly in a Zoom call, and collaborative whiteboarding services tend not to have a function that allows you to write in private and then reveal your sticky notes one at a time. It’s also awkward as hell to write on a paper Post-It and hold it up to the camera as you speak.

I’ve experimented with a shared Google Doc or a whiteboard space, and I think the best version of this that I’ve come up with works as follows:

• Each person starts in their own document. I prefer sticky notes a whiteboard space, but a Google Doc works pretty much as well with a little set up. You’ll want to make sure that positive feedback, deltas, and the summary notes are each well marked, perhaps with a “+”, “Δ”, and line respectively.
• There is also a shared document that both people have open. Rather than screen sharing, each person is looking at this document during the sharing step.
• Each person copies and pastes a note into the shared document as they are describing it, one at a time.
• At the end, both people retain access to the document. Next time, a new document is started.

Otherwise, exactly the same rules apply.

This is just one tool. Obviously, establishing a participative, open, supportive culture requires a great many techniques, and is about an overarching mindset more than it is about any one type of meeting. But I’ve found this to be a very helpful part of my toolkit when I’m running teams. I hope you find it useful too.

Kate McKean describes how she’s writing her novel:

Right now, I am getting up early (6ish, not bonkers early) and leaving my house about 7am to go to a local coffee shop to write for an hour or two before my regular work day. I do this Tuesdays and Thursdays as much as possible.

It’s honestly not a bad plan. I’ve mostly been writing in the evenings once the baby goes to sleep, but not as consistently as I’d like: there are sets of days where I get barely any words down at all. But then again, there are other days when I write thousands, and because I’ve become used to my own ebbs and flows I try not to be too hard on myself.

If I’m writing during the daytime, green tea is my crutch. There’s something about just enough caffeine, without the cortisol boost that coffee gives you, that puts my head into the right spot. I used to depend on brain.fm to tune out distractions, but I’m lucky enough to have an office with a closing door. The sound of the wind outside — or more commonly lately, a raging thunderstorm — works just fine.

It’s taken a very long time to get this far, but at this pace I expect to have a full first draft ready by the end of September. Obviously, I’m full of self-doubt about being able to do anything with it once I hit that milestone, but getting there will be an achievement in itself.

And that’s all I really want to say about any of this, because talking about something you have written feels much more meaningful than talking about something you will.

Nonetheless: worth mentioning that I’m still at it.

It turns out that Cheltenham Township, the municipality where I live across the northern Philadelphia border, incurs an extra earned income tax on top of the state and federal taxes that I’m used to paying. This would have been fine if I’d had any idea that such a tax existed, or if it had been automatically deducted from my payroll (everyone I got a paycheck from in 2022 used Justworks), or if Turbotax had let me know that this was something I needed to do. As it turned out, I didn’t have any idea until I got a letter in the mail this morning, it wasn’t deducted from my payroll, and Turbotax gave me the impression that I was done with my taxes, so I was inadvertently delinquent on my taxes until I paid them and the associated late fees tonight.

This isn’t, by the way, a post about being mad about paying tax! I like taxes. I want to pay for great community infrastructure like public schools, community fire departments, integrated public transit, and so on. I want those things to work when I pay for them, but I’m delighted to do so. (Please also let me pay for single-payer healthcare. I’m begging you.)

Also worth saying: I work in a well-paying industry and should pay tax at a higher rate than people who earn less than me. I welcome this with open arms. Tax me well! And then use that money to pay for vital infrastructure for my whole community.

Here’s what I don’t want: to not pay my taxes because I didn’t know they existed and didn’t know to look for extra earned income taxes. That doesn’t feel good.

What also doesn’t feel good: tax collection in Cheltenham has, for some reason, been outsourced to a private company called Berkheimer Tax Innovations, which has a website that looks like it was built in Microsoft Frontpage in 1998, which you appear to be forced to use to file those taxes if you want to do it online. They also have an app — Berkapp — which lets you e-file by writing out your tax return by hand and then taking a picture of it.

It’s baffling to me that a local government should outsource its tax collection to a private company in this way — particularly one that provides such a bad service at the taxpayer side. Presumably they have a hefty contract with the township, or perhaps even a cut of transmitted funds, which could have been better used on a more open system. Again, I’m not objecting to the taxes themselves, but I’m extremely grumpy about how I was notified, how I had to file them, and the arrangement underlying how they are collected and paid. (I’ve come to understand that the county chooses this arrangement, even though the county itself does not levy these taxes. What?!)

What I’d love to see: a well-designed local government portal that lets me log in, see all my local services and responsibilities, and notifies me of everything I need to know about living here as it comes up. I’d love the software and infrastructure to be owned and developed by the township, or more likely as an open source endeavor by an alliance of townships, rather than outsourced. Give me some Code for America-influenced 21st century public service web software. Let me pay any fees — earned income taxes, trash pickup, whatever — straight from the portal. Let me volunteer from there, too. A real community hub.

Done well, this could be less expensive than private contracts to weird third-party companies with terrible websites. It could be more open and participative, and actually involve civic participation in its code from people who live here. It could drive awareness and ownership and help build local skills.

Instead, we got … whatever the hell this is. It’s incredibly broken. And surely someone at the township has got to know how terrible it is.