About This Episode

In Episode 67, Patric and Shub explore why transparency about limitations and past failures is crucial for building trust between founders and investors. They discuss how acknowledging constraints doesn't signal weakness but rather demonstrates a professional athlete's mindset of continuous improvement that leads to stronger partnerships and better businesses.

In This Episode

Patric explains why investors distrust founders who hide their weaknesses, comparing it to establishing trust in a marriage where honesty about limitations is essential for a strong relationship.

Shub discusses how acknowledging constraints is the only way to improve as an individual and organization, using the Theory of Constraints to identify and eliminate bottlenecks.

The hosts share real examples of how vague answers, white lies, and glossing over problems during due diligence can completely erode trust and derail potential investments.

They examine how exceptional founders and investors are more comfortable discussing their limitations because they know their overall value proposition remains strong despite imperfections.

Timestamps

(00:00 ) - Introduction

(01:53 ) - Building trust during the diligence phase

(03:30 ) - The misconception about hiding weaknesses

(08:56 ) - The Theory of Constraints and acknowledging bottlenecks

(15:03 ) - How founders hurt themselves by hiding limitations

(16:31 ) - The professional athlete's mindset

(19:15 ) - Red flags: embellishment and vagueness

(22:27 ) - Cultural differences in acknowledging responsibility

(24:42 ) - Game theory: What hiding weaknesses reveals about you

(28:05 ) - Building emotional bonds through vulnerability

(32:26 ) - The importance of identifying your constraints

(35:42 ) - Conclusion and wrap-up

Connect With Us

Practical Nerds Website:⁠ https://practicalnerds.com/⁠

Subscribe to the Newsletter: ⁠https://www.linkedin.com/newsletters/practical-nerds-7180899738613882881/⁠

Foundamental: ⁠https://www.foundamental.com/⁠

Patric Hellermann: ⁠https://www.linkedin.com/in/aecvc/⁠

Shub Bhattacharya: ⁠https://www.linkedin.com/in/shubhankar-bhattacharya-a1063a3/⁠

Youtube: ⁠https://www.youtube.com/@foundamentalvc⁠⁠

The Daily Blueprint: ⁠https://tinyurl.com/the-daily-blueprint⁠⁠

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