19 April 2019 Courier Apr/May 2019

How are you really feeling?

In a bid to grow their businesses as quickly as possible, too many founders neglect to take care of their mental health. Finally, that could be changing.

When Deciem launched in 2013, it had all the ingredients for startup success: an innovative product range, an ambitious growth plan and a maverick founder – Brandon Truaxe, a computer scientist from Canada. 

The beauty brand’s flagship line of skincare products, The Ordinary, quickly became known for stripping back unnecessary scent and packaging, and marketing ‘clinical formulations with integrity’. The products, typically less than $10 and credited with democratising the beauty industry – which is notorious for overcharging consumers – started selling faster than Deciem could make them. On one occasion, more than 25,000 people signed up to a waiting list for the launch of a new foundation. 

For the company to scale up, help was needed. In 2017 Deciem sold a 28% stake to Estée Lauder, one of the biggest beauty conglomerates in the world, for an undisclosed sum. Growth skyrocketed and staff headcount went from 100 to 450 within a year. But behind the scenes, Deciem’s founder appeared to be struggling with the pace of change. This was Truaxe’s biggest professional undertaking yet. And his behaviour was becoming increasingly unpredictable. 

In January 2018, he bypassed his social media team to take control of Deciem’s Instagram account and, in a series of posts, started insulting customers and uploading graphic images of dead sheep to announce the brand’s cruelty-free ethos. In October, through a video posted to Instagram, Truaxe ordered Deciem stores across the globe to close, accusing ‘almost everyone’ at the company of financial crimes. 

Estée Lauder promptly took strong action, removing Truaxe as CEO and barring him from entering their offices or approaching anyone at the company. Yet another, final erratic video followed in January 2019, this time on Truaxe’s personal Instagram. With his speech significantly slurred, Truaxe gave his 13,000 followers a tour of his Toronto apartment. The camera lingered on the full length windows. He stated his full address three times. The morning after the video was uploaded, he was found dead, having fallen from the top floor of his apartment building.

Whether Truaxe, just 40, fell intentionally or accidentally remains unknown. Either way, for many people involved in startup culture his story is uncomfortably familiar: a founder worked into oblivion, ousted from the company he had built by a minority investor. It also emphasised a societal misunderstanding of how to identify symptoms of mental illness, with much of his mania misinterpreted as creative genius. In a tribute by Deciem’s Nicola Kilner, Truaxe is described as ‘the ultimate superhuman’. 

While Truaxe rejected any speculation that he was mentally ill, he did describe himself as ‘screwed up’. As founders become increasingly aware of the mental toll of running a business, more are starting to speak with the same kind of openness and, at last, an ecosystem of new businesses are launching to try and provide much needed support. 

The scale of the problem

More people than ever are entering the world of startup. In the US, 63% of people in their 20s either own their own business or would like to. It’s also no secret that running a business is difficult: half of all businesses fail within the first five years. 

Between December 2018 and February 2019, We Are 3Sixty, a founder-led community focused on entrepreneurial wellbeing, surveyed over 270 founders in the UK about their mental heath. The underlying conclusion is that entrepreneurs are suffering in silence. In figures We are 3Sixty exclusively shared with Courier, the survey found that 78% of founders say that running a business has negatively impacted their mental health. Nearly 70% report feeling depressed; 55% say they are burnt out; 50% experience anxiety and panic attacks; and 68% say they struggle with their sleep – a symptom often seen as a precursor to mental illness. 

The statistics are particularly staggering when compared to the wider population: across the UK, irrespective of career, it’s estimated that between 16% and 20% of people are experiencing mental illness. 

‘The results paint a stark picture,’ Christina Richardson, founder of We Are 3Sixty, says of the results. ‘Everyone in the ecosystem needs to ask themselves what can we do to address the human side of entrepreneurship.’ 

A 2015 survey, ‘Are Entrepreneurs Touched With Fire?’, by Michael Freeman, a doctor at the University of California, San Francisco, also found that US startup founders are twice as likely as the general population to be diagnosed with depression, experience suicidal ideations, or be admitted to hospital for a psychiatric illness. 

For this report, Courier spoke to a number of founders on and off the record. Many of them say they feel isolated and exhausted by running a business. Many asked to keep their identities secret, concerned that investors might view them as ‘weak’. One London-based tech founder says watching Netflix in bed has become the highlight of her day – the only time she can switch her brain off from overdrive. ‘I’ve been in my room working for three days at a time, I haven’t been outside,’ she says. ‘There are months when I’ve worked so much and at the end there’s no guaranteed salary. Your friends are buying houses, getting married, and you’re living out of a suitcase with a dream. It’s hard.’ 

Another New York-based founder, working in the wellness industry, says she is concerned for the mental wellbeing of nearly every entrepreneur in her personal circle. And those that did reveal their identities had harsh things to say about the status quo of building a business. In particular, they view the role of venture capital as problematic, saying that the pressure this puts on founders to grow their business at speed often requires them to sacrifice their mental wellbeing. 

According to James Routledge, founder of the UK-based coaching company Sanctus, ‘With venture capital, you’ve got a group of people who hold a lot of power, influence and money making bets on other people to grow businesses insanely quickly. The power dynamic is off. It’s almost predatory at times.’ 

‘If you’re not happy, what’s the point?’

Business was going well for First Sukpaiboon. In 2011 she launched Her, an east London coffee shop, utilising her background in graphic and architectural design to create a space in which people were happy to work from all day. She quickly expanded to two sites, grew the team to 10 people, and launched Her Coffee Concentrate – a quality alternative to instant coffee granules. Investors soon took an interest after spotting the slickly branded product stocked in Selfridge’s. She didn’t even have to send them a pitch deck. 

Sukpaiboon was reluctant at first – she understood that investment comes with strings attached – but in the end she felt the opportunity was too good to pass up. ‘They really believed in me, believed in the product and could see the future of this,’ she says. 

But she found the growth of her business stifling rather than exciting. She hired more staff and started talking to investors about a second round so she could increase production of Coffee Concentrate – the prospect of which only compounded the stress she was already feeling. There was a never-ending list of decisions to make – from crucial strategic plans to trivial things, like what design to put on the takeaway coffee cups. During the day she fed her team on a performance of enthusiasm and optimism. At home, she was taking her frustrations out on her partner.

‘I had no capacity left to speak to him. Even when I would try I’d think: you’re not a business owner, you’d never understand,’ she explains. ‘We’d go from small, tiny, nothing-at-all conversations to me saying “I’m breaking up with you”. I was so horrible, and I couldn’t see anything apart from myself.’

Eventually, though, Sukpaiboon acknowledged that her work was making her miserable. ‘The path to making Her successful – that’s not my path,’ she reflects. She told her investor how unhappy she was. To her relief, they took it ‘amazingly well’. ‘It was obviously a shock for him, but he said one thing that was really amazing: “We invested in you. So if you’re not happy, what’s the point?”.’ The investment was written off, and Her stopped trading. 

When vulnerability isn’t okay

The current narrative around entrepreneurship doesn’t leave much room for vulnerability. It’s characterised by machismo: the most successful companies are the ones that grow the fastest, work the hardest and raise the most money. The startup press also follows the money, with one headline after another announcing who has raised what. Founders that don’t adhere to this formula are seen as simply not trying. To run a ‘lifestyle business’ is considered a cop out. 

Even being employed to work at a high-growth startup is considered a privilege; an opportunity so unique that it’s worth the lower-than-average pay and lack of job stability. To keep morale high in this world, it’s essential that founders and workers alike keep telling themselves they are building something profoundly world-changing – even if it is just another mobile bank. 

High-profile founders such as Elon Musk and Reed Hastings are considered startup heroes. Rather than causing concern when these icons disclose outrageous working hours – according to Musk himself, ‘nobody ever changed the world on 40 hours a week’ – and nasty KPI-driven working environments, their stories are often celebrated as demonstrating the modern model of success.

‘People who start businesses are people who identify highly with their work – that’s how I introduce myself at a party or whatever,’ says Routledge. ‘It gives people a sense of purpose and direction. But when things aren’t going great, it can be a real knock to their confidence.’ 

Routledge has experienced this himself. In 2012, he dropped out of Sheffield University to launch MatchChat, an app for football fans that raised £600,000. After multiple pivots, the founders felt the business still wasn’t going in the right direction and decided to wind it up. Routledge had also started to experience panic attacks and anxiety. ‘When I shut down my first business I kept asking myself – who am I? I felt like James the nobody. It was fucking scary.’ 

Routledge acknowledges that MatchChat’s biggest mistake was taking investment from the wrong people – and pursuing the startup dream even when it failed to align with the founders’ own interests and passions. ‘Some [founders] are resigned to the fact that it’s part of the deal. People burn themselves out, put their lives on hold, over work,’ he reflects.

Since launching Sanctus in 2016, Routledge and co-founder George Bettany have committed to staying away from venture capital, instead raising money from vetted individuals and controlling their own pace of growth. The company is aiming to double in size this year – while that might feel slow to investors hoping to get their return within five years, it’s fast enough for Sanctus. 

Building a better ecosystem

By avoiding venture funding, Routledge and others are hoping to build businesses that not only makes a profit, but don’t require their founders to drain their mental and physical capabilities. 

If more founders approach business like Sanctus – which has made over £1m in revenues and achieved profitability just one year into its lifetime – Routledge reckons investors will take notice. ‘Venture capital is a supply and demand industry,’ he says. ‘More founders and entrepreneurs are aware of their health and wellbeing – so they won’t take money from an investor that won’t give them what they need. If the best quality entrepreneurs want to run a business in a healthy way, the money will follow.’ 

GrantTree is another London-based company that has shunned venture investment in a bid to control its own destiny. When it launched in 2010, co-founder Paulina Sygulska Tenner says the decision to bootstrap the business put significant pressure on the founders to bring in profit quickly. ‘My work patterns back then hugely contributed to various breakdowns that I had. But I didn’t have the awareness to do it differently,’ she says. ‘Every single weekend I broke down because I was so exhausted just trying to do my best, keep up the mask of productivity and essentially hustling really hard to get our first client. When the weekend came I was completely broken, emotionally, and I remember numerous weekends where I was just crying and sleeping and having arguments with my husband.’ 

It’s been a difficult journey for Sygulska Tenner, who was diagnosed with depression as a young woman, but there has been a big upside to her strategy. By making sure the business makes money, she can now work three days a week. ‘I’m grateful that [GrantTree] is relatively successful right now, which means I can take more time out to be with myself and commit to my healing.’ 

This approach also helps GrantTree’s employees. It’s not a big deal to take a mental health day if you know that the boss understands what it’s like to feel as though you can’t get out of bed in the morning, and many founders advocate being open about struggles with mental health in order to make it more socially acceptable. 

The money in the machine

As with everything in business, all roads lead back to (VC) money. The startup ecosystem is largely financed by venture capital – of which $293bn (£223bn) poured into small businesses in 2018 – and investors looking to maximise their returns can essentially dictate how these companies grow. While putting together his book, 100 Stories of Growth, serial entrepreneur Guy Tolhurst noticed that most of his interviews with founders touched on the pressures of taking on investment. 

‘You don’t want to show a lack of confidence to your team because they might leave. Speaking to [investors] shows a lack of confidence. Unfortunately the culture of some investors is quite a disposable culture as well – they might replace the founder CEO. You are suffering in silence,’ Tolhurst explains.

Tolhurst is currently lobbying investors to adopt the ‘Mindful Investor’ framework he developed, where investors agree to support and monitor the health and wellbeing of founders in their portfolio companies. So far over 20 investment firms have signed up to the framework, including several prominent London VCs. 

Bryce Roberts is the founder of Indie.VC, a San Francisco-based fund that wants to provide an alternative to the current VC model. He believes that VC in its current form is essentially a treadmill: a seed round needs to be followed by a Series A round for the VC firm to get a return. This repeats until a company IPOs or it bought out. For founders, this means a continual push to grow as fast as possible. But, despite being accepted as the way to do business, Roberts says it doesn’t actually generate as many big-ticket businesses as it could. 

‘The Blitzscale model produces about 10 to 15 billion-dollar [companies] every year and it’s been the same for decades,’ Roberts explains. ‘If we want to see more meaningful outcomes we need to create more meaningful [growth] paths – by not having to be on that treadmill of fundraising and by allowing founders to bring their whole selves to companies. They don’t have to worry about getting fired, they can build companies with creative cultures that would make [traditional] VCs cringe.’ 

Indie.VC’s model, which relies on convertible notes (loans where any unpaid sums convert to equity when the company exits or enters a second round of fundraising) rather than exits, is one way of doing this. By giving companies an option to pay back their investment over time, it empowers them to control the speed of their growth. 

Other funds are starting to accept responsibility for the wellbeing of their founders, too. Roberts says Indie.VC has been working with Ustwo Adventure, a London-based investor that focuses on creative companies, to build out its funding model, which has a capped return. Also in the UK, Connect Ventures, which has backed software companies from club night streaming platform BoilerRoom to business software provider CharlieHR, now connects founders with executive coaches that can support them through the highs and lows of business building. 

Later this year, StateZero Labs, a London-based blockchain accelerator, also has plans to launch ‘InvestWell Community’ – a community of VCs, investors and accelerators that want to retool the investment ecosystem so that it caters to the mental wellness of those operating within it. 

‘Most people today are in this race [asking] “how quickly can I look fundable?” Instead of saying, “do I want to be like that? Do I look at my cohort and my peers who are grinding themselves into a pulp – is that what I want for myself?” Or do I want to not have a boss, control my own destiny? Would I be satisfied making a couple of million out of cash flow, versus not having to go huge and have my investors catch most of that upside,’ Roberts says.

‘If we can support entrepreneurs to be better leaders, to be resilient, to be their best, most effective selves, then we create better, stronger startups too,’ We Are 3Sixty’s Richardson adds. 

To explain why it’s so important to support founders holistically – not just financially – several founders liken learning to lead a business to an athlete training for the Olympics. ‘If I think about the level of support I had as a national level, amateur rower: we had conditioning coaches, physiotherapists, nutritionists. We didn’t have psychologists, but that wouldn’t be unusual,’ Richardson explains. ‘All this support to get the very best performance out of an individual, both mentally and physically. What do entrepreneurs have? Nothing. Yet the individual is the single biggest asset in the business.’ 

If you are affected by any issues raised in this article, you can contact the Samaritans for free on 116 123, or visit samaritans.org in the UK. In the US, the National Suicide Prevention Lifeline can be contacted on 1-800-273-8255.

This story appears in the Apr/May 2019 edition of Courier.