Jack Altman, Auren Hoffman and Jason Lemkin Debate Founder-Led Venture Funds

Harry Stebbings convenes a roundtable on founder-led venture funds with Lattice founder Jack Altman, SafeGraph CEO Auren Hoffman and SaaStr founder Jason Lemkin. Each has experience investing as well as operating or building a community, so the discussion concerns a model in which the guests themselves have an interest.

Altman says founders may value advice from another active founder because it is tactical and current. He does not suggest replacing full-time investors: the two can offer complementary perspectives. Hoffman adds that many operational practices change quickly, making recent experience useful even if broad leadership principles endure.

Lemkin argues that founder-investors also bring a recognizable personal brand. For busy founders, familiarity with an operator can serve as a proxy for quality, although he sees operating experience as only part of the appeal. He discloses that he has co-invested with and recommended Altman and Hoffman.

Stebbings asks why successful angels need institutional funds at all. Lemkin recalls growing limited-partner interest in angels and microfunds, while Altman agrees a fund is not strictly necessary. Larger checks can bring closer involvement, he says, but he recalls small Lattice angel investors providing substantial help relative to the dollars invested.

The group challenges the idea that founders are necessarily more empathetic investors. Hoffman speculates that many successful founders have low emotional intelligence, a broad assertion others do not establish. Altman reframes constructive directness as kindness over the long term: the feedback that is hardest to hear can be the most useful.

Asked whether more founders should be replaced as CEOs, Altman distinguishes an early company, where a founder may be important to repeated reinvention, from a more mature business where an outside executive might be effective. This is his judgment, not a rule that any particular founder should remain.

Lemkin cites his own analysis that 88% of SaaS companies he examined had a founder CEO at IPO. He acknowledges that leadership can change later. He also argues that replacing a founder requires a credible successor, something he thinks many small founder-led funds do not have readily available.

On investment performance, Lemkin recalls analysis that did not show operators consistently outperforming professional investors, while noting that the data and comparison may not cover every early-stage strategy. The group treats founder preference and limited-partner returns as distinct questions, without claiming a definitive performance study.

Hoffman says an operator can discover investment opportunities by using a vendor's product, becoming a customer and then contacting the founder. Altman agrees that working alongside functional leaders exposes him to their software needs. He limits the advantage he describes mainly to business software, not every market.

Lemkin says his own operating experience helped him see changes in established categories such as customer support, search and recruiting before other investors found them compelling. He also warns that founders can make poor angel investments; knowing a problem personally does not by itself validate a business.

Stebbings suggests an operator can compare a founder's abilities with their own experience. Lemkin calls this a useful benchmark, but the exchange is an informal heuristic rather than evidence that investors can reliably rank every founder or predict returns.

Hoffman asks whether investing should be an individual or team sport. He expects more firms to divide sourcing, diligence and other tasks among people with complementary strengths. In his view, active founders may spot opportunities optimistically while professional investors may bring more skepticism and financial analysis.

Lemkin says doing every part of investing alone gave him control and attractive solo economics, but also meant missing opportunities and lacking support. Altman notes that both specialized firms and relatively independent full-stack investors have succeeded. Stebbings argues co-investing with professional firms can supply complementary skills without putting everyone on the same payroll.

The speakers consider how many startups an investor must see to find rare outliers. Lemkin says the volume has grown substantially; specialization and a strong brand can improve access, but a founder who is also running a company may need help screening opportunities. No specific deal-flow number is established as a rule.

Asked whether investing makes someone a worse operator, Altman says it can when time is the binding constraint. He discourages early-stage founders from spending substantial time investing before their companies can function without them for a while. At a larger company, he believes lessons from other founders and markets can be worth some time.

Hoffman frames any activity outside a CEO's company as a trade-off, whether investing, family or exercise. His test is whether the company remains the main priority when needed. Stebbings presses the competing responsibility: a fund manager has also accepted outside capital and obligations to limited partners.

Hoffman argues that limited partners may benefit from a founder's access, though they could reasonably be unhappy if performance suffers. Lemkin says fund agreements must address time commitments and that investors must be transparent about other roles. They disagree about the balance; no return advantage is established in the conversation.

Lemkin wonders whether limited partners will still back unconventional emerging managers as venture allocations tighten. Stebbings says his own conversations suggest differentiated managers with relationships can still attract interest, while generic pitches struggle. Hoffman expects limited partners to become more discerning about underperforming managers. These are individual observations in 2023.

Altman says Lattice has allowed employees to invest or hold outside roles as long as they do their jobs. He believes exposure to other companies can help people, and that retaining employees for several years can be more valuable than extracting a few extra hours. He also says a company can choose to value employees' lives beyond work.

Stebbings argues that time spent outside a job could instead improve performance, though he accepts some activities aligned with the role. Hoffman observes that his most impactful colleagues often worked more hours, but explicitly says the direction of causation is uncertain: enthusiasm and inspiration may also drive both hours and performance.

The group discusses retention at highly successful companies. Altman cautions against extrapolating from unusually valuable equity at a few dominant businesses. Hoffman says winning can help retention but that people leave for many reasons, including the desire to found a company; turnover alone does not prove a company is good or bad.

On scaling founder-led funds, Hoffman thinks large investments require teams for diligence and execution. Stebbings asks whether a solo investor could simply write fewer, larger checks; Hoffman responds that deploying money is easier than producing consistent returns. Lemkin says it remains unclear how directly founder-led funds can compete with the largest venture firms.

Lemkin distinguishes a founder who actively leads a fund's deals from one whose name serves as a flagship while others do the work. Hoffman says Flex Capital has a full-time CEO, which he believes has helped it operate. The structures may both work, but offer founders different levels of access to the named operator.

Lemkin suggests successful founder-investors may be less likely to overreact to small portfolio setbacks because their livelihoods do not depend on a single investment in the same way as some partners at large firms. Altman says temperament and individual behavior also matter; he has seen founders give investors tough feedback too.

Hoffman suggests founder-investors may negotiate minor terms more flexibly while still caring about economics. Stebbings raises the opposite concern: smaller or solo funds may have too little capacity for board oversight. Lemkin suspects some founder-led investing involves less diligence but says he does not know that oversight is necessarily worse.

Hoffman argues that in a power-law portfolio the companies between obvious winners and failures may benefit most from an investor's time. Lemkin says he continues helping founders who remain fully committed, and that improving a modest outcome can still matter. Their claims are personal experience, not proof that commitment guarantees success.

The episode ends with a playful bet on whether a group of recent IPOs would all trade above their IPO prices by Halloween 2024. The automatic captions do not clearly identify every company, so the specific basket is uncertain. The bet records competing predictions from 2023 and does not establish the later results.