Negative Signals, Frustrations & Messy Middles: Scott Belsky on the Spearhead Podcast
“I feel like the greatest product and project ideas are born from some sense of frustration.” — Scott Belsky
Entrepreneur, investor and author Scott Belsky was frustrated with the disorganized nature of the creative world, so he created Behance to fix that problem. Scott’s new book, The Messy Middle, was also born out of frustration.
In the world of startups, much excitement, attention and care are given to launches and exits, but what about the all-important mid-stages of the scaling of a startup? “In the world of new ventures and bold, creative projects, there’s just very little discussed around this very volatile middle part of the journey,” says Scott, who released The Messy Middle in October of 2018.
Angel investor and entrepreneur Cory Levy speaks with Scott Belsky in this week’s episode of the Spearhead Podcast. Cory and Scott discuss Belsky’s new book, how to meet new founders, startup warning signals and more in their 30-minute conversation.
In addition to being the founder of Behance, which was sold to Adobe, Scott is also a Chief Product Officer at Adobe and a seasoned seed-stage investor. On the subject of how investors bring value to the companies they invest in, Scott says, “I think great investors help guide entrepreneurs and teams through their messy middles.”
Before assisting a team in overcoming their messy middle, you have to be able to identify teams worth investing in from the start. When asked how Scott meets new founders, he points to his experience and established pipeline as a leading source for new deals. After making over 80 investments dating back to Pinterest in 2000, Scott states that there is an alumni network of the companies he’s been involved in that introduce him to new projects. Scott advises other investors to “build a peer network of other founders you really admire and (are) building businesses you think are interesting. If you become an organic advisor of theirs, put some skin in the game.”
Startup Warning Signs
Through his journey as a successful founder and investor, Scott has recognized several negative signals that he now avoids when considering investing in a startup team, including:
- Outsourced design
Scott has worked with teams that have outsourced their design with the intention of hiring a designer when they’re ready. “(They) have typically not worked out in my experience, except for a company like Warby Parker, I guess, or a few that were more like brands that did engage third parties to assist with the early UX in brand design,” Scott says.
- Outsourced development for technology companies
Scott concentrates on the tech industry, which relies on design and development to find product/market fit and scale their projects. When a technology company outsources development to a “dev shop,” Scott states, “It’s been a bad signal, I find… If you’re trying to win on user experience or technology, those just have to be native skills that are attained by people at the helm.”
- Bad team chemistry
More than anything, when Scott is looking at the long-term future of an early-stage company, he looks for strong founding teams. “When these founders talk over one another and you can tell that there’s some unresolved stuff going on and there’s a weird power dynamic, I can really feel that very quickly in the room with a team… I think that that’s just a recipe for disaster.”
- Self-awareness and admitting fault
Not every founder is self-aware and able to face reality in tough situations. While Scott believes founders should be able to showcase their strengths, he also looks to invest in entrepreneurs who can understand and accept what’s going wrong and quickly adjust and iterate. Scott says:
“These are people who in your journey with them, when things get tough, when you go through the messy middle and those lows, they’re not going to face the facts and they’re going to get screwed as a result.”
Learn how to overcome the messy middle as both a founder and an investor. Listen to the full conversation between Cory Levy and Scott Belsky here on the Spearhead Podcast.
In the interview, Scott Belsky and Cory Levy talk about:
- The Messy Middle
- Writing the first check
- Investing feedback
- Traits Scott looks for in founders and warning signs
- How Scott feeds his curiosity
- And more!
- Cory Levy and Scott Belsky begin their conversation by discussing Scott’s book, The Messy Middle (1:10)
- “In the world of new ventures and bold, creative projects, there’s just very little discussed around this very volatile middle part of the journey” (1:40)
- Cory and Scott discuss the messy middle of investing (3:34)
- How to hack reward systems in the messy middle (4:23)
- What Scott is most curious about today (5:54)
- How Scott meets new founders (8:25)
- Scott’s advice to an entrepreneur who is starting to dabble in angel investing (9:23)
- How Scott says no to friends or former colleagues (12:03)
- “I typically have been investing in someone who I believe is really investable” (14:01)
- Negative signals and signs that Scott has learned to stay away from (15:22)
- Cory poses a scenario to Scott, asking him what would happen if he loves one founder and doesn’t really like the other. “Do you bite your tongue and make the investment and trust that things work themselves out or do you have a rule around that?” (18:18)
- Scott on keeping an anti-portfolio (20:34)
- How Scott stays curious (22:00)
- “Silicon Valley has made financing a celebratory moment and, therefore, a goal, which is completely backwards” (24:30)
- How you can find diamonds in the rough (24:54)
- “I’ve learned more to just be proud of my edge as opposed to regress to the mean and look at what other investors are doing and think I should be doing more of it that way” (25:56)
- Show close (27:23)
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