Why psychological sustainability matters as much as financial viability.

With the closing of Fund III, I can safely say that I know what I'll be doing for the next 15 years or more.

Early-stage venture, especially the kind we practice at Deciens, is an incredibly long-term proposition, requiring extreme patience and steadfastness. And the horizon seems to be stretching every year, as companies choose to stay private longer. The data suggests that the mean time for an early-stage fund to go from inception to end of life is approximately 16 years.

At Deciens, we welcome that timeline. We are long-term co-owners alongside management, and that alignment is one of our greatest strengths, especially in an industry with an ever-growing number of traders with ever-shrinking attention spans.

So, yes – I now know what I’ll be doing until at least 2040.

Why Great Things Take Decades

I have long believed that accomplishing big, important things takes time, often decades. Building one of the best venture capital firms (with many successful, long-dated vintages) or creating category-defining companies both require patience and sustained effort. For every flash in the pan, there are many, many more ten-year overnight success stories.

Nvidia, the first company valued at more than $4T, is a timely example. A cursory look at the history of the company’s stock price suggests that it could be considered a 30-year overnight success. All that matters is that they could survive, compound, and ultimately thrive, letting the market finally come to them. An incredible story of perseverance, fortitude, and leadership.

Beyond Financial Metrics

I think Deciens sees things differently from most of our peers. We recognize that working on the same problem – or set of problems – day in and day out for decades, and having the longevity required to enjoy the benefits of compounding (where most of the value accrues in the outyears), requires operating sustainably in every sense of the word.

If an individual or organization collapses – mentally, physically, financially, spiritually, or otherwise – it cannot have any longevity, let alone generational longevity. All the blood, sweat, and tears, all the hard work poured into the company, project, or organization up to that point, might have been for naught.

As an industry, we seem to have developed sophisticated ways to measure and assess operating performance and financial runway – the fiscal sustainability, or lack thereof, of our portfolio companies. At Deciens, we track this in four distinct ways, and we share a company-by-company summary with you each quarter.

But fiscal sustainability is only part of the picture.

An equally existential risk is teams running out of the time, energy, and emotional capacity needed to continue building their companies. Put simply, we’ve lacked a clear view of the psychological runway of the companies in our care – and the people we entrust to run them. While we screen for grit, fortitude, and resilience – all pieces of the puzzle – even the hardiest people can only be knocked down so many times before they throw in the towel.

As partners, we need to recognize when their reserves are running low, long before they hit empty.

The Marathon Partnership

The longest single partnership Deciens has had with a company dates back to late 2012. For 13 years, we have watched the founders move through the entire gamut of human experiences, from births to deaths and everything in between. This feels entirely normal to us.

If, like us, you believe that some partnerships could last two decades or more, then it follows that we would be alongside these incredible individuals for a significant portion of their lives. And life is marked by vicissitudes – the inevitable ups and downs of the human condition. Understanding where someone is on their journey, and how it intersects with those of their colleagues and collaborators, is key to helping navigate the ebbs and flows of any organization – especially the pressure cookers that are high-growth startups.

Having ample psychological runway – and the ability to replenish it – is an increasingly necessary condition for building the kinds of companies that drive venture-scale outcomes. Creating these defining franchises just takes time; there’s no way around it. Without a deep and continually renewed supply of psychological runway, founders and management teams risk running out of time before they can enjoy the fruits of their labor.

When Founders Hit Empty

A deficit of psychological runway can damage both individuals and organizations. In extreme cases, founders or senior executives can suddenly run out of it, leaving themselves – and their teams – metaphorically, or even literally, falling apart. The resulting value destruction (and the cleanup required in the aftermath) can be every bit as real as if the business model collapsed or the company became insolvent.

Even in less extreme scenarios, running out of psychological runway can have profound consequences. The most obvious example is when a promising company chooses to take an early exit rather than building a generational business. Good acquirers know how to tug at the exhausted heartstrings of founders, just as the going is getting good.

Building a successful company requires both financial and psychological runway. It follows that we, as an industry – Deciens included – should be as thoughtful about managing psychological runway as we are about managing financial runway.

Yet in practice, this topic is rarely discussed, let alone managed, resourced, or optimized. I have certainly been remiss in this area, especially in my work with founders and management teams. And I cannot recall a single time an LP has asked me about this – a gap that speaks to how our industry is wired.

Why?

There are many reasons, but chief among them are tech industry norms. Think: “Hustle culture,” “996,” “Founder mode.”

These norms fail to recognize that building a company is less a sprint and more an ultramarathon, punctuated by a series of 10K relays. These norms tend to consider nothing of the burdens those careers place on those who choose them – and on the people who matter to them most. Having been in this business for 18 years now, I can see how burdensome the expectations can be.

The Validation Trap

Our industry thrives to an unusual extent on external validation.

Founders are taught to seek, and are rewarded for seeking, the validation of financiers through financing rounds, the adulation of the media, and other affirmations.

GPs (and to some extent LPs) thrive on the endorsements of their peers, in the form of mark-ups and crowding into each other’s deals – seemingly prerequisites for raising the next fund.

Rightly or wrongly, executives, employees, their families, and all the other stakeholders look to these substantiations as a means of reinforcing their wise choices or as signals to reexamine those choices. And these moments of external validation are often used to replenish an individual’s and organization’s psychological runway.

What If There Is No External Validation?

A fast-growing company that never receives another round of VC funding after our investment (because it doesn’t need it) and is never in the press (because it chooses not to be) is a great outcome from where we sit. It is a win for LPs, shareholders, and other stakeholders.

But without the usual markers of success, a set of questions naturally rises to the surface:

How do founders and management teams validate their work?
How do GPs show LPs that they are “making money” when the reported value of their investments has not changed?
How do LPs know they picked “good” managers?
How do prospective employees know they are making a good choice when agreeing to devote their valuable labor to one of our companies?

And perhaps most importantly: What is the substitute for the dopamine hit and the associated replenishment of psychological runway that external validation brings?

These are weighty questions, especially in an ecosystem where other venture capitalists have created, and continually reinforce, a system that feeds on extrinsic validation for its very survival.

The Self-Sustaining System

While we care far more about substance, we recognize that form has value in and of itself, and ignoring it comes with its own costs. But the way we choose to practice venture capital – a set of choices we believe in deeply – inevitably leads to second- and third-order effects with unintended impacts on how, and how often, we and our stakeholders receive validation.

If that validation is rare or absent, what takes its place?

We would never want to be “all hat, no cattle,” as they say in New Mexico, but a good hat is still worth having.

Psychological runway must be actively managed. Both individuals and organizations need the capacity to self-renew – to refill their own wells rather than rely on others to refill them.

Just as achieving cash-flow break-even gives an organization an infinite financial runway, gaining the ability to self-renew ensures psychological runway can stretch as far as needed to achieve the organization’s ambitions (I am indebted here to John Gardner’s 1994 essay, “The Road to Self-Renewal”). Conversely, relying on external validation to keep going is as risky as relying on external capital – often unavailable when it’s needed most.

Finding Fuel From Within

The question is how to develop the ability to self-renew. Most importantly, we should not ignore the reality that everyone needs validation. It is too basic a human need to deny, and too central to how people operate.

In our case, the extremely hard-working people running these organizations – and the people and communities that support them and their missions – deserve validation. They have earned it.

But that validation must be primarily internal to the organization’s ecosystem: the kind that comes from themselves, their colleagues, their customers, and their other stakeholders, rather than from external parties and forces. It’s the validation that comes from knowing that their work matters to customers, that they are doing the best work that they possibly can, and that their teammates are fighting just as hard for each other.

External validation – tempting as it may be – must remain a byproduct of incredible work, not the work itself. As Bill Walsh famously said, the score will, in the fullness of time, take care of itself.

Our Work Ahead

This line of inquiry has pushed us to think more about how we assess the psychological runway of founders and executive teams, along with what tools we can create for those short on it. We want great answers to these two central questions:

How do we support founders who are running low on psychological runway?
How do we help founders replenish themselves and their teams?

And we need to be able to ask and answer these very same questions for ourselves.

Unlike our portfolio companies, which can step off the fundraising hamster wheel, Deciens’ business model requires fundraising every few years – both to continue partnering with new portfolio companies and, frankly, to remain a going concern. We do this all while knowing the results of our work today likely won’t be revealed for another 10-15 years.

The VC business is a long-term one that requires extreme patience and fortitude. That’s why we invest in building and renewing our own psychological runway – through team offsites, deliberate time together away from the day-to-day, and practices that strengthen trust and stamina.

We’ll keep building on these efforts in the months and years ahead, because self-renewal is key to going the distance – to 2040 and, I hope, well beyond.

Epistula #12: Psychological Runway