Startup Life’s Dark Secret: Founders Often Face Mental Health Challenges

GrepBeat graphic by Jackie Sizing

Aaron Houghton, who ran Morrisville-based iContact from age 20 to 30 before he ultimately sold the company in 2012 for $169 million, could have been perceived as the picture-perfect representation of startup success. But he had a secret: the more successful he became as an entrepreneur, he said, the less happy he was personally.

He had grown up admiring the dot-com founders he read about in magazines. For so long, that was all he wanted. But once he had it, he found himself not wanting to get out of bed because of intense anxiety.

“I wanted to be one of those people that look so glamorous, and I set my sights out to do it,” Houghton said. “By the time I achieved some relative level of that, I found myself more anxious than I’d ever felt before.”

Aaron Houghton, CEO of Founders First and former CEO of iContact

Houghton’s story is just one of many, and the Triangle is definitely not immune. We talked to local founders, investors and former founders (like Houghton) who now specifically work with other entrepreneurs on mental wellness to understand the issues. The bottom line is that behind the often glamorized version of startup life that you might see on the screen—or in an interview after a founder has made a successful exit—can often lurk very real panic attacks, depression, and overall uncertainty.

In fact, these mental health concerns are well-documented among founders. A UC Berkeley study found 72 percent of entrepreneurs reported mental health problems.

This is not surprising at all to Houghton. He said that logically speaking, it’s a “bad decision” to become an entrepreneur based on average outcomes and incomes. In fact, he describes entrepreneurship not as an emotional rollercoaster per se but instead as a “sawtooth experience” perched on top of a saw blade.

One morning, you wake up with a new prospect from a huge partner that wants to put your company on the map and drive tons of revenue. The next day, you find out your co-founder wants to own more of the company than previously agreed upon, starting a big fight. Another day, you find out one of your key executives is having a bipolar episode and calling employees at 3 a.m., saying God is speaking to them.

These are just a few of Houghton’s experiences, and they wore heavy on his own mental well-being.

“I knew when I became an entrepreneur that I would have highs and lows,” Houghton said. “I just didn’t know that they would happen all on the same day. And I didn’t know they would happen four times in the same day.”

The type of people psychologically predestined to become entrepreneurs are often the people least capable of handling its pressures, Houghton said. Often, they have feelings of grandeur regarding their ideas and companies. They thrive on the highs of their accomplishments, and they will neglect other aspects of their lives to reach those heights, even when the lows ultimately come later.

“The future of humanity and all of the world’s biggest problems are being solved by people that are going to struggle and sacrifice greatly personally in order to deliver those solutions that drive humanity forward,” Houghton said.

Kelly Pfrommer, CEO of Cloud Giants

That’s why Houghton, now based in Boulder, Colo., runs Founders First, a health and performance platform for entrepreneurs—with mental health very much at the forefront. Having experienced the chronic stress and anxiety of running a startup, he wants to make the journey easier for others.

Kelly Pfrommer, the CEO and Founder of RTP-based Cloud Giants, is another tech leader who has gone on the record about her own experiences working to protect her mental well-being. Pfrommer is open about going to therapy, and said controlling your own mindset is vital when dealing with the undeniable stresses that will come within the startup world.

“Early on, you just don’t really know what you’re doing,” Pfrommer said. “That can be a blessing and a curse. I didn’t know how little I didn’t know. To lean into the positive and focus on the good, and that it’s a learning process—that’s been really critical for me. It can be lonely, so having a support system and people who can share their stories and mentorship is really important.”

Emily Finkelstein, the former founder of online music streaming platform Tourpedo and now the Founder and CEO of VentureXpert Advisors, is also frank that mental well-being can be placed on a back burner as an entrepreneur.

“It really disrupts your world,” Finkelstein said. “But by the same token, people have asked me, would you do it again? And I say, I’d do it again one hundred times over because now I’m on my fourth venture, and I can’t get enough. I would never want to go back to corporate America.”

Emily Finkelstein, CEO of VentureXpert Advisors and former Co-Founder of Tourpedo

For a long time, Pfrommer said she ignored her mental health during the pandemic as she was in “firefighting mode” with Cloud Giants. But when the weekend arrived, she felt lost and stuck. Now she sees her therapist as her “mindset coach,” and she understands she’s not the only one who has struggled.

She said a lot of mental well-being challenges, though certainly not all, can come down to a quote Pfrommer admires from Albert Einstein: “I think the most important question facing humanity is, ‘Is the universe a friendly place?”

How you feel about this question entirely determines the attitude with which you enter the world, and that choice reverberates throughout your entire day, Pfrommer said.

“If I could go back and do it all over again, I would have put a lot less pressure on myself,” Pfrommer said. “It’s my responsibility to have a good experience in this world. It’s my job to find my happiness, and no one else’s. And when I make that my responsibility, it’s a lot easier to feel powerful and feel like you’ve got a good mindset.”

Investor Concerns Can Prove Heavy

One potential way to improve current mental health trends among founders is support from the investment community around mental well-being. Tim McLoughlin, a partner at Cary-based Cofounders Capital, recognizes that the stress of running a startup—as well as taking in funding from friends, family and early angel investors—can deliver a heavy impact on a founder’s mental health.

“While most startup ventures ultimately fail, all founders have to convince themselves, investors, and their teams that they are going to be the next big winner,” McLoughlin said. “This dichotomy creates unreasonable expectations and an incredible amount of stress.”

And if founders expect their employees to work intense hours with little pay, as so many early-stage founders do, they are also incentivized to work even harder themselves, neglecting their personal lives and families and ultimately damaging their mental well-being.

“As a founder you have to lead by example,” McLoughlin said. “If founders expect the employees to work extremely hard for often below-market salaries, they feel the need to work even more hours, take less time off, and also take lower pay, which affects their personal lives and families.”

Tim McLoughlin is a partner at Cary-based Cofounders Capital

Simply stated, there are often just not enough hours in the day to do everything that is needed.

At Cofounders, McLoughlin said they recognize that if founders are not healthy, efficient and productive, the startup will not be successful. So that means they have a vested interest in each founder’s mental health.

To address this, Cofounders has started building in budget pre-investment for founders to get executive coaching, pay themselves closer to market rates and surround themselves with other advisors who can help shoulder the load. McLoughlin said if more founders see that investors want and expect them to use capital in this way, they are more likely to take advantage of it.

Not all investors may be thinking about founders and mental well-being in this way, though.

“What I’m not sure of is if most investors are thinking of it in the correct way, which is in this order,” McLoughlin said. “One: Investing in the mental health of founders and their teams is the right thing to do, and then two: it will ultimately generate a greater return for you. Some may be looking at it in the reverse order.”

Lister Delgado, a partner at Durham-based IDEA Fund Partners, was upfront that the investment community—including IDEA Fund—needs to do more when it comes to fostering mental wellness in their CEOs.

“To be honest, I don’t think we do enough,” Delgado said. “We recognize this and are trying to get better, but we have a long way to go. What we do today is try to be supportive as individuals.”

Mental Well-being For Employees, Too

Founders aren’t the only ones who struggle to deal mentally with the stresses of the startup lifestyle. Employees can be suffering too, so founders have the added responsibility of creating a company culture that supports their employees’ mental well-being.

For Pfrommer, establishing core values as a company was key. One from Cloud Giants’ list seems simple enough: “have fun.” The value almost didn’t make their final cut, but Pfrommer said it is now integral to the startup’s success, something that will keep employees healthy and happy to be at Cloud Giants.

“It just felt at the time like a vanity value,” Pfrommer said. “It didn’t seem as important to me as the other ones. And boy, oh, boy, is it one of my favorite core values now. I now see it almost as a competitive advantage.”

Ultimately, founders and investors alike feel that awareness around mental health is growing in the startup world.

Lister Delgado, Managing Partner, IDEA Fund Partners

“I do think that the tide is indeed turning,” Delgado said, who has been making investments for two decades. “I have seen how the conversation at the board level has changed dramatically in that time. It used to be that you never showed vulnerability or weakness to your investors, board members, or employees.”

Now, Delgado has conversations where directors are asking CEOs if they are exercising and taking enough time off.

“Don’t get me wrong, the pressures are there,” Delgado said. “The high expectations exist. But I hear advice that I would not have heard in years past.”

Currently, IDEA Fund Partners is looking to hire someone to be Head of Platform, where part of the role will include getting to know each entrepreneur and their needs, including mental health. They put together resources for entrepreneurs, and mental health is one topic covered. But as Delgado said, they are still learning how to help their entrepreneurs more.

There are many skills founders themselves can develop to help address this problem, according to Houghton and Finkelstein, who have teamed up their respective companies, Founders First and VentureXpert Advisors, to address this exact issue.

VentureXpert Advisor’s Peak Ability program and Founders First teach founders techniques to reduce burnout and triple goal attainment. The idea is that businesses cannot be at their peaks if the founders aren’t at their peak mentally, Finkelstein said.

This means founders must take screen breaks and make time for activities that increase mental well-being. They must hold themselves accountable by purposefully scheduling time for self-care. And with the Peak Ability program and Founders First app, founders are incentivized to engage in self-care because it is tied to connecting with other entrepreneurs socially.

By and large, venture capitalists are still not spending real money on mental well-being for founders, Houghton said. They’re talking about it, they’re writing blog posts about it—which are a first step—but it’s not indicative of everything that needs to be done, he believes.

“I think we are in the first 1 percent in terms of investment into this,” Houghton said. “I think the whole 99 percent is still to come.”

About Suzanne Blake 335 Articles
Suzanne profiles startups and innovation for GrepBeat. Before working at GrepBeat, Suzanne attended UNC Chapel Hill, obtaining a degree in journalism and political science. Previously, she wrote for CNBC, QSR Magazine, FSR Magazine and The Daily Tar Heel.