Elizabeth Zalman & Jerry Neumann - Founder vs Investor

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money.
Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts, including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:57)
Patrick O'Shaughnessy is the CEO and founding partner of PositiveSum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of PositiveSum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:29)
My guests this week are Liz Zalman and Jerry Neumann. Jerry has been on the show two times before. He's an early stage venture capitalist and adjunct professor of entrepreneurship and an amazing writer. Liz is a two-time founder, most recently co-founding StrongDM, which Jerry was a seed investor in.
Together, they've written a book called Founder vs Investor that leaves bare the relationship at the core of most new businesses. It takes specific moments in a startup's life up to its IPO and share their experiences on the friction that inevitably appears between founders and investors. In our conversation, we discuss the strong reaction to the book, the incentive problem at the root of the relationship, and explore best practices for other founders and VCs to follow. Now, please enjoy my conversation with Jerry Neumann and Liz Zalman.
So I just hit record because we were having a conversation around the book itself. Maybe someone can read the quote on the back.

**Elizabeth Zalman** (3:23)
It says, super problematic, over the top, venture capitalist, name withheld.

**Patrick O'Shaughnessy** (3:29)
Name withheld. So what's the story behind him saying that? To me, this seems just like a great, interesting book that's an actual perspective from an actual founder and an actual investor about how the interaction between these two class of people work.
And that's interesting and it's valuable for people to know how it works. And it seems to have ignited a response that's different than that.

**Jerry Neumann** (3:49)
So I'm a venture capitalist and I have been for a long time.
I read Liz's sections and some of them make me uncomfortable. Just as a venture capitalist, I don't see myself in what she writes. I don't see myself the same way that she sees me or at least sees venture capitalists as a class. But this was part of what we wanted to do with the book. I actually insisted that if we were going to write a book together, that we not agree, that we don't come to some consensus.
Every book's like that, right? Like, oh, here's one side, here's the other side. Let's find a place where we can all agree. And you read these venture capital books and it's not true because that's not what happens in the company. People aren't always agreeing. So the point was we write the book and we each tell our sides as convincingly as possible so that people can see what each side says. And then when they read it, they can say, okay, I'm talking about venture capitalists and this is what they're thinking. They're thinking what I'm thinking and what I write in the book. And if you were a venture capitalist, you can say, well, I'm talking to these entrepreneurs and they say one thing, but what are they really thinking? And they can read Liz's section and say, oh, this is what they're thinking. And I think it's true. But when I showed the book, when we were writing it, and we had a bunch of people, including you, take a read of it beforehand, just to give us feedback and tell us how it was gelling, the people who were venture capitalists were very negative on it.