I wanted to catch up with Phil Morle (I don’t need to explain who Phil Morle is, do I?) and have a conversation with him about the relationship between early-stage investors and the founders in whose companies they invest.  
Phil has been writing a lot lately, or maybe I just noticed…but either way, his writing is resonating with me and a recent ‘article‘ he wrote prompted this recorded conversation.
Listen as Phil, who is one of the most thoughtful investors I know, expounds (Yes. He presented and explained his ideas systematically and in detail…) on the fragility of the relationship between early-stage investors and founders.
Phil discussed:
  • Being 80 days into a 30-day writing challenge
  • The immense difficulty of building something from scratch and trying to turn it into something meaningful
  • How founders are obsessed with the ideas that underpin their companies
  • The concept that founders are motivated more by impact than money
  • The reality of being time-poor and the need for investors to respect their time
  • Founders are all-in…Investors are not
  • Founders are “bad at some things” but may have to do everything at the start
  • The imperative for investors to “be there” for the founders
  • Co-imagining the future with the founders
Other titles we seriously considered for this episode:
  1. Drinking From the Firehose of Life
  2. Red Flags In Little Emoticons
  3. Funding Discovery, Not Growth
  4. Building Something While the World Doesn’t Care
  5. Squeezing Out All the Toxic People

The audio on this episode was expertly edited by Isabelle Goh.

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:25
Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. Today we are super happy to welcome Phil Morle, a partner at Main Sequence Ventures. I know I’m concerned I pronounced your last name wrong. Anyway, Phil, thank you so much for coming on the show. How are you?

Phil Morle 0:41
I’m really good.  Drinking from the firehose of life, having a good time.

Michael Waitze 0:49
Drinking from the firehose of life, that’s gonna have to be the title. It’s not normal that the title comes from, like the first 30 seconds, but I think that’s what’s gonna have to be. It has been a while. And, you know, I was trying to figure out when we first met, it must have been 10 years ago, or nine years ago, something like that. No.

Phil Morle 1:07
Oh, I think so. It was it was about then it was when the tie starts appearing ecosystem was really beginning its surge, right. And it was you guys were very involved in that I was doing things in other Southeast Asian markets, for the most part, quite a lot in Myanmar in those days, in fact, and, and the Philippines and Singapore. But I think for that reason, we were all in the same conversation, and we had similar hopes and dreams for what, you know, has grown into quite a rich environment these days. And there was good times.

Michael Waitze 1:45
It really was, I mean, I look back and I think about like Arden capital was still an ongoing concern back then we were funding a commerce. And yeah, a lot has happened in the interim, but most of it good. And yeah, the the ecosystems made a ton of progress. My original idea, and I think, you know, this was to kind of get you on the show to talk about something that you’d posted on LinkedIn about this relationship between early stage investors and founders. And I want to get to that. But I also noticed, and it feels to me like you’re writing more than you have, but I’m not sure actually, if this is one of those things where like, you know, you buy a Honda Accord, and then everybody has a Honda Accord, or just that the LinkedIn algorithm is treating me differently. Just tell me what’s going on? Are you writing more? Or am I just saying?

Phil Morle 2:30
Yeah, so I’m a big believer in people sharing out loud what they’re learning so that other people can benefit from that. I think there are very few things which are proprietary and should be protected in a locked case. And for the most part, everything that we do, and everything we learned is better just to get it out there. And that’s always been my belief. It was my belief when we met when I was when I was running pollenizer here in Australia, and I used to do that a lot. I’ve always been a blogger, I’ve always been a tweeter. And then I, when I started this current job as a partner at Main Sequence, I found myself needing to write a lot of internal documents, so trading documents, investment memos, government briefings on things, and I got more and more frustrated each year that there’s this accumulation of stuff, which seems interesting. And in particular, in in the area that I’m working in now, which is deep technology, science driven companies helping scientists manifest what they’re doing and to globally significant companies. There is a big learning curve, and it feels very suboptimal to have to tell each person one at a time, some of the things that we know. So for the last sort of couple of years, I’ve had a New Year’s resolution, Phil, you’ve got to blog more, you’ve got to get into this and I’ve, I’ve, you know, like most people’s New Year’s resolutions, I’ve failed to deliver them.

Michael Waitze 4:10
We all know this year I,

Phil Morle 4:11
I saw a friend of mine had jumped on a course called ship 30 for 30, which effectively get forces you with peer pressure to post something that they call an atomic essay every single day for 30 days. And it sort of pushes you into avoiding overthinking avoiding imposter syndrome, just you know, take possession, write a short three to 400 word atomic essay, each essay has just one idea in it. And that in itself was a big unlock because I’ve historically been this person that starts a Medium post and it starts getting bigger and bigger and it was left angling for weeks and I don’t quite finish it. Whereas this way, you just put an idea out. And then what I found is I was first of all, scratching that itch that the ideas were coming out. Right, I then found myself in very rich conversations with people. I found even when I was meeting people in person, the conversation would often begin with Phil, I really liked that post you wrote on x. And I’ve got to meet some amazing people, my Twitter algorithm. I mean, I think that the algorithm does matter. Because my I basically, in my view, I’ve, I’ve squeezed out all the toxic complaining people. And all I have now is the super rich debate about the things that I’m thinking about. And I think the final point is I, because I’m now on today, at of 30 days, so I’m still coming. It’s I find it valuable for all those reasons I’ve said, but also, I use it to think out loud about the stuff that matters at work, right now. And then do it. It’s like they say, teaching is a really good way to organize your thoughts. actually understand yourself what you know, the writing means I have one hour every morning, it’s the first thing I do when I wake up. And it’s one hour to try and formulate a problem that I’m thinking through into something which I’m happy for other people to read.

Michael Waitze 6:26
So 80 days into a 30 day project. That means and if everything that you’ve written has one thought in it, not to put too fine a point on it, but that’s 80 separate thoughts.

Phil Morle 6:35
That’s right. Yeah. Right. But that’s kind

Michael Waitze 6:39
of cool. When you think about, do you have this feeling? You know, I get this when I work out, right? Or when I start some new habit or try to start a new habit. I do it one day, and then I’m like, Okay, I did that. But is that really gonna work. And then I do it another day, and then a third day. And then by the fourth day, I’m, I’m exaggerating a little bit, I feel like, Oh, God, if I don’t do that, I’m going to let myself down kind of thing. Yeah. And then I just keep going, I do this when I walk home. Actually, to be fair, I say, I’m just going to walk to prom punk station. But then I’m already a little bit sweating. I’m like, You know what, Tom was not that far away. I’m just gonna do that. And then I walk the six kilometers home, right? It? Do you feel the same thing? You’re like, I’ve done 80? Let’s get to 100. Or maybe I just don’t stop doing this kind of thing.

Phil Morle 7:21
Yeah, I think I’ll keep going until I just don’t feel the need to do it anymore. I’m definitely getting the value out of it. It’s very interestingly, actually, the days when I struggle the most. So imagine like a Sunday morning, you’ve had a massive week, you’re just thinking, I can’t like I haven’t even got anything to say, what do I want to say today? And then those days actually, in general, have been my most read posts. Interesting. And I don’t know why that is, maybe it’s just completely random. Or maybe it’s because I’ve actually had to think about something new, I’ve actually had to labor it a little bit. And it’s, it’s come up with some, you know, an interesting perspective people.

Michael Waitze 8:06
So maybe we should pretend we’re at one of those parties you were talking about and someone walks over to you or some gathering and somebody walks over to you and says, Hey, I read that thing you wrote on the relationship between early stage investors and founders. I don’t know why this one. Well, actually, that’s not true. This one really resonated with me. Because it’s something that I think about a lot. And this kind of power imbalance. I think that exists at some level between people that make investments and their perception of what their role is after they make the investment. And the founder who feels like they lose a little bit of agency sometimes after the investment is made, but even beforehand when they’re trying to attract investment. And one of the things about which I think a lot is that at the earliest stages, and again, you’re way more expert at this than I am. But at the earliest stages of a company, you’re really just experimenting, and the funding of that is really funding an experiment in my mind, right? So if you’re funding an experiment, well, then you don’t know what you know the hypothesis, but you don’t know what the result is going to be. And if you don’t know, well, then that relationship actually should be iterative. But I think maybe you should kind of run through this with me, and then we can just go through it. Because I think it’s really important for you know, and I think people at the angel squad are trying to teach this right at the hustle fund. And I think a whole bunch of people, even Jed ang, through his angel education venture is trying to teach this as well that when you make an investment, understand why and your position in the founder position, maybe if you can, sort of illuminate that a little bit more, that would be great. And then we can go through it.

Phil Morle 9:45
Well, I think you hit the nail on the head when you use the word power. And it’s something which if you’re not careful, as an investor, you can negligently accidentally perhaps not pay attention to you are power For just in the context of what your role is, in the whole relationship, you’re, you are one of the few people who is a gatekeeper towards the resourcing of a whole bunch of people to execute on their dream, right. And then it’s important that we respect that feeling that need to get that resourcing from the people that are seeing us that need for help. And not to treat it from a position of, of arrogance, or knowing more or, you know, being more important. And I think that’s particularly important, because I would say all of us, some more than others, but all of us don’t know, as much as the founder, generally, the founder that’s decided to start a company is starting that company, because they have arrived at a unique insight, they may have a unique understanding of a market, they may have invented somebody that nobody invented something which nobody else would have dreamed of. And they know more about that thing than we know now, what we what we know, which is we as investors know, which is interesting and helpful, is we have a broad view of what’s happening at 30,000 feet, at the people that are doing interesting things, what people have learned, and we can definitely give a perspective, which is valuable. But we should never say to ourselves, that is the truth. You know, we’ve been doing it more we’ve we’ve seen 1000s of companies we know, things that you don’t know, because I think leaving founders with that feeling, and I think many founders feel this is disrespectful, and, and it’s sort of negative force in the market. And one of the things I ask our team, that main sequence to do is just go and look at Twitter, and tune in and follow, you know, some of the sort of VC Twitter accounts where you see what people say about investors. Even the other night, I you know, there was a little bit of a thread around, we keep saying investors that actually say mean things about a founder pitch they just had on Twitter without the founder isn’t reading it? Right. And it makes them look smart. And they think, you know,they think that Right? Right. And it’s like, wow, you know, that it’s it’s just incredibly demeaning. And…

Michael Waitze 12:38
and also, so can I jump in for a second, right? Because I want to make this point, one of the things I say about social media, is that I think at some level, it should run with the same rules. And I put rules in quotes, right that your offline life runs with. So imagine being in a VC pitch, if you’re an early stage founder. And when it’s done, let’s say you’ve messed it up, or you didn’t have your best day or just didn’t go well or didn’t match. And then that investment, just literally like walked out into the main part of like, whatever the main square in his town and just screamed like, I just had the worst possible pitch in the world. Yeah. Bill is an idiot, or Lisa was silly. Like they would never ever do that.

Phil Morle 13:19
Yeah. Is that fair? Yeah, that’s, that’s absolutely right. And it’s usually got the phrase red flag and little emoticons. But red flags, like crikey, come on, like someone’s just had a bad day. But I think if you just look at the numbers of trying to get investor found a fit, what’s the main reason people don’t invest in, in a startup? It’s not because the startup is poor quality. It’s because there isn’t a fit. It’s not what we’re focused on right now. It needs more money than we’re investing in. It’s not a subject area, we feel we can really help number of things. But even though there’s hundreds of 1000s of funds across the world, there’s probably only a handful that are really relevant for you, literally waiting for you. They’re fit, right. And so the way I think about that is even from my own perspective, for all those meetings you have with founders who need help, and let’s say that’s an hour each session, the first session, and in our case, we do 1000 opportunities come into our pipeline for every one that we do. And we make 25 investments per fund. And so the odds are stacked against the outcome of that meeting being an investment, but I believe that every meeting can have a positive outcome for the founder, right? It’s the next connection, the next meeting with another investor. It’s somebody that can help you build the product at your next hire. It’s an insight for something that you’ve seen recently. It’s something that an Other investors said to you that like, there is something you can give. And so I make the primary objective of my meeting is to leave the founder with a benefit. And to get them one step closer to the funding that they need, in particular, whether or not it’s me, right, that actually provides it. And I find that that sort of helps, helps shift.

Michael Waitze 15:22
So one of the other things that you wrote about, and I think this is very important, is this idea about being there for them. And again, I want to make an offline analogy to this. If you’re married, if you’re dating, even if you just have a really great friend, you understand this concept of being there for them? It’s a way it’s not a you or a me. Yeah. And there’s I always say that in any relationship, that there are disconnects along the way. So if you saw, if you could see me right now you’d see my two fingers together, but over time, you kind of create this sort of reverse parabolic relationship, and then you come back. Yeah. And then maybe they weave in and out, right. So sometimes I’m doing way more of the work. Other times you’re doing way more of the work, but at the end of the day, we meet, right, so it’s not parallel. Yes, like criss crossing, but criss crossing for the same goal. Can you talk to me about how this works in the VC in the investor space, this idea of being there for them?

Phil Morle 16:22
Yeah, I think the opposite of that, of course, is what many investors do, which is invest capital. And now consider the relationship that the founder is there for them, like I have just given you money, rather, your job is to return, you know, that money to me with a multiple. And I’m going to check in with you every month and ask how it’s going. And, you know, I think that doesn’t help doesn’t help the founder, which doesn’t help the company, which doesn’t get you to where you need to be. One of the things that makes it really hard to make an investment decision is actually not the capital so much. It’s the, in my mind, at least, it’s the it’s the thought that I have now made a 10 year commitment. The marriage analogy is very good. Yeah. Right. It’s, I’ve, I have now committed myself to helping this company to be successful. And even when it’s going badly, right, when it’s going badly. My job is to say, what can we what can we do together? How can we? How can we get through this? How can we make things better, even that we have to acknowledge the difference in what our role is compared to the founder, in the end, we’re not carrying the company on our shoulders, we’re not going to go in every day, every minute, every hour, we do think about things a lot. I mean, I must say I do feel like I’m spinning plates for every single one of my portfolio companies. But I’m not the same as the CEO of one of those companies who’s you know, worried about it excited by it in love with it, thinking about it every single moment. Right? And, and it’s on them to deliver. And they know that they don’t, they don’t they don’t need the investor or even worse, sort of 10 investors telling them that. So our job is to be there for them to figure out what’s needed. And sometimes that effectively from our perspective just means working for the company, like I’ve spent times where I’ve been in a company for a couple of weeks, doing all kinds of things that just fill a gap. And it just helps. And this goes back to your earlier point that at the beginning, it’s just an experiment, right. And it’s, it’s, there is no certainty to share the experiment, we’re in it together. You know, we’ve got to find the way through, we do have a different context, which does allow us to find other things that may be able to help. And that’s why we have to be there for them. Now, where it gets really interesting is when the day comes, which inevitably does that you can’t refund a company that you’ve invested in. So this is a moment where you get this separation, right? Of director slash helper slash champion of the company, and the person that may or may not be able to fund the next round. There may be many reasons for that. It may just not be the best use of capital, or maybe the fund is fully depleted, right? could be many reasons. But all of a sudden, you have to be very, very clear in board meetings and hidden in discussions about which hat you’ve got on right now. And for me, the one I was find the hardest, but I have to be very, very clear about is, even though I can’t find you, I’m still here,

Michael Waitze 19:56
right? It’s weird. It’s a weird balance, right? It’s like there’s so many Things that I can do for you. But one thing I can’t do for you right now is give you more money. But what else can even

Phil Morle 20:03
I’m your investor, right, especially a main sequence that feels awful because we’re generally the lead founding investor. Right. So we’re in from the beginning, we haven’t just loved to check in at the series B or something like that. You’re not funding growth. Yeah. Right. That’s right. We’re funding discovery. Right.

Michael Waitze 20:24
Right. Yeah, but I think so this is great. So discovery experiment. These are things that are really important, I think for, for investors to understand as well. And I want to get back to this point, you just make that when it is going badly. This is the most important time to support somebody, right? Because anybody can stand on the sidelines. This is true. Let’s get back to the marriage analogy, right? When things get hard, it’s the most difficult time for any relationship, because it may be sort of asynchronous in a way. And then maybe a symmetrical, and if it’s a symmetrical, where it’s like, let’s say your fund is doing super well. But one of your portfolio companies isn’t doing great. Again, it’s hard for them to come to you when they see all of this other success and say, Look, we’re really struggling over here. And then for you, in any relationship to just be like, yeah, that’s terrible. But I’m over here having a party kind of thing. It’s when it’s most troublesome. I think we’re you need not you, but we’re like one needs to provide the most support. Regardless, does that make sense?

Phil Morle 21:25
Yeah, I think that’s right. And I think we’ve all had experiences when that idea that company that found that would be all too easy just to give up hope. Sure. And in fact, do something which is talked about a lot in venture circles, which is, you know, if you’ve got a portfolio of 20 things, which you’ve invested in individually, and you have to figure out what you’re going to focus on, you know, it’s quite often said, You need to deprioritize, those ones that aren’t going to return, you know, the same the ones that you have conviction on, I get that, in theory, but actually, in terms of my marriage to all 20 founders, right? I’m incapable of doing that. That’s kind of it may be my failure one day as an investor, because I’ve never got comfortable with it. I’ve never done it. And the reason comes back to what we were talking about there at the beginning of the question, that darkest moment, when it all seems like it’s over. That’s when epiphanies can happen. And the breakthrough occurs and something extraordinary happens. And you have to be there for that moment. And when and I suppose a startup is hopefully a milder version of that every single day have peaks and troughs, and Tom working, it’s working, it’s not working. But there are extreme versions of that where, oh, my God, we’ve got two months of money left, and we haven’t got product market fit and investors looking glazed over when they’re looking at this, what are we going to do, and then a breakthrough happens, it starts off with a small moment, and then it just cascades from there. And it’s that’s why we can’t give up.

Michael Waitze 23:09
Right. And I can tell you from my own experience with building my own business, which we can talk about for hours. It’s just so interesting, what you learn when you actually try to do the things you tell other people to do. It’s fascinating, actually. But I’ve had a couple of experiences where I’ve signed a contract with somebody, and because I’m a small company, like in a way, it just doesn’t matter. Yeah. Right. Like you get to 1/3 of the way through, and they just say nevermind. Yeah. And there’s nothing you can really do. But this idea, this ups and downs, right? You said maybe it’s like every day, sometimes it is but they’re really deep. And they’re really high, right? And explaining this to somebody who hasn’t been through it, I think is really difficult. But this is the idea of you have to be there for somebody, right? Because as a founder who’s really deeply involved in it, who may know more, like you said, all of these points that you’ve noted, are really true. And I’d be curious to know if some of your other founders say this to you, but like sometimes it feels particularly at the early stages, like you’re operating in a vacuum, we are building this thing and the rest of the world just doesn’t care. You know what I mean?

Phil Morle 24:09
That is a startup, isn’t it? Yeah, it needs to be acknowledged at it. And the driver behind all the work is around that idea. Nobody cares. Well, first of all, it means that’s great news, because you can make all kinds of risky moves to punch through. And actually, the risk of catastrophe is very, very low, because nobody’s even looking. Which is very different if you’re IBM or the Apple or Apple, right? But yet, nobody cares. So how do you prove to the world I always think it’s like entropy. The world wants everything to collapse to zero energy. That’s what physics says about the universe. You sort of make a little pile of sandwiches. I have a company I think it’s going to be valuable and here’s what it does. And the way and just blows it away. And then you make a slightly bigger pile of sand. And then you say a bit louder and a bit more confidently. And then you show a little bit of evidence, and then the wind comes again, and you have to keep coming back and making a bigger sandcastle. And it gets over time, it gets more and more robust. And eventually people start to care that that’s the job is that you could you could say the job of a founder is to cause people to care.

Michael Waitze 25:32
Yeah, I love it. I love it the job of the founders to cause people to care. And I wrote down as well, you know, if a tree falls in the forest doesn’t really make a sound. This is the vacuum. Yeah, it does. But again, nobody really cares about this. One more thing before that, because I feel like we could go on forever. But one more thing before I let you go. Because I think this is important to you said earlier, you know, you feel like sometimes people invest money, and then they just get the monthly update. And that’s it. Some people do do that. But some people also require that, make sure you get back to me every month, and just give me all these reports and stuff like that. I’m curious if you and I know it’s different for every startup, right? Like some of them, or it’s a general question like some actually require updates, right? Because let’s say they’re working on things that have like a timeframe to it or something like that, but others don’t? Yeah, I’m curious what you think, as a general rule, if that kind of stuff is necessary, desirable. And I’ll tell you why. For me, if I work with a partner, I like to have a weekly meeting, I really do. And I have probably 10 of them. But I do that, because I want to make sure that neither one of us are letting the other one down. But that also we both understand, like what we expect from each other on an ongoing basis of particularly if it changes Anyway, go ahead,

Phil Morle 26:45
I think it comes back to being there for them. Yeah, primary primarily, rather than them being there for you. And so if the damaging versions of these, and certainly how they’re perceived by founders is investors requiring quite detailed reporting, right, that is kind of broadcast and sent to them, maybe every quarter. And then in companies where you may have multiple investors, you could have 10, investors all asking for slightly different things. And that very quickly adds up to founders just making reports all day. And once you when you combine that with your board pack, and if you’ve got investors that want a reasonably verbose board pack on the board, founders aren’t running the company anymore. They just entirely report ticking boxes and reporting founders time is all that a founder has, at the beginning, they have some resources, some money, but in that job to get the world to care, they need to be busy doing that. And I do the same thing as you by the way, nearly all of my founders, I have a weekly meeting, right? It’s at least 30 minutes. And it’s for them, though. That’s that’s the thing. It’s for them. I may have some questions, you know, things that I’ve seen, but generally, it’s a what do you need? Tell me what you need. And what that can be is I would like to not have the meeting this week. I’ve got to get some other stuff done. And that’s completely fine as well.

Michael Waitze 28:14
Yeah. But this is a really good point. And that was the point that I was trying to make is that the meetings? Not necessarily for me, it’s to make sure that the other person knows where things stand. And that they can ask me all these other things, right. And it’s sometimes because I’m not the investor. In some cases, it’s just like, if I said I was gonna do something, or if I was supposed to set up a meeting for them, or if I supposed to send something. Did I do that? And sometimes you write the chat before the meeting goes like this. Do we need to do it this week? Nope. Okay. All good. But we still communicate. That’s right. I think it’s important.

Phil Morle 28:48
Yeah. It’s the manifestation of being there for each other, and and holding each other accountable and supporting each other.

Michael Waitze 28:55
Yeah, look, I think that’s a great way to and the other thing I would suggest is when you have these thoughts you’ve had at home, maybe we should just have more of these conversations so that they can have like a wider distribution that would be awesome for me.

Phil Morle 29:06
Whatever, you’re up for it, Michael, you just you love me. No, I’ve enjoyed myself and thank you so much. Thank you

 

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