Conference Presentation, Fireside Chat, Panel
#AIS: Pear VC’s Mar Hershenson on making successful founders
- Investment Philosophy: Mara Hershenson, a founder of PairVC, invests in the first check for startups with no product, customers, or traction, relying solely on the founders' innate potential.
- She has backed 100+ startups valued at over $100 billion, observing that founders with "nothing" yet succeed based on character.
- Nature vs. Nurture in Entrepreneurship: The debate over whether founders are born or made is supported by conflicting data points:
- Born Argument: 42% of entrepreneurs started businesses as children; notable examples include Palmer Luckey (Oculus prototype at 17), Melanie Perkins (first business at 14), and Elon Musk.
- Made Argument: While only 37% of founders are repeat founders, 59% of unicorns are led by repeat founders, suggesting skills and lessons are acquired through experience.
- Hershenson's Distribution Model: Based on her experience with 10 portfolio companies:
- 2 companies will fail regardless of intervention ("destiny").
- 2 companies will succeed regardless of intervention (founders like DoorDash's Tony Hsu would succeed independently).
- 6 companies represent the "influence zone" where investor effort and peer environments can accelerate success or increase failure rates.
- The "Machine" of Success (Environmental Catalysts): Hershenson argues that high-performing peer groups fundamentally transform character, ambition, and self-belief, acting as "machines" that create entrepreneurs.
- Stanford University: Produces 10% of unicorns and 40% of summit speakers; success stems not from coursework but from immersion in a high-ambition, innovation-focused peer network.
- PayPal Mafia: A cohort that launched companies like Tesla, LinkedIn, and YouTube; success driven by confidence gained through shared, intense early-stage experiences.
- Rappi (Colombia): A modern example where 100+ companies have been founded by former employees, transforming the Latin American startup ecosystem with a shared culture of rapid growth.
- Educational Experiments & Outcomes: Hershenson details two specific programs designed to replicate "PayPal Mafia" effects outside elite institutions:
- Stanford Startup Simulation:
- A 6-year class where 8 teams of 4-5 students with only ideas (no prior work) are forced to present weekly to each other.
- Results: Generated 1-3 companies per year, including 2 unicorns and $600M raised; female enrollment increased to produce more female-founded companies, maintaining high success rates.
- Female Founders Accelerator (Non-Stanford):
- Designed for 30-40 high-potential women who are not yet founders, utilizing role models, peer connection, and social events.
- Results: Of 78 participants across two cohorts, 45+ companies were incorporated; 35 raised over $1M from top-tier investors (Sequoia, Paradigm, Dragonfly, Pair).
- Stanford Startup Simulation:
- Q&A Insights on "PayPal Mafia" Dynamics:
- Recruitment: The original team was built on friendship networks because no external talent was willing to join the "crazy startup"; Peter Thiel recruited college friends, Max Levchin recruited university friends.
- Culture of Trust & Friction: Pre-existing trust allowed for "brutal honesty" and high friction; employees could yell at one another without fear of hurt feelings to debate truth and risk.
- Comparison with Google: Hershenson and panelists argue that ex-Google founders often struggle with entrepreneurship because Google's early exponential success created a culture of execution and safety rather than risk-taking and grit.
- Ex-Google hires were often "analytical" overachievers with limited tolerance for failure.
- Ex-PayPal founders have more success because they endured a "hard" environment that taught them to persist through failure.
- Strategies for Teaching Failure & Resilience:
- Desensitization: Regular, forced presentations where teams share "litany of bad ideas" normalize failure, making it a "nothing burger."
- Induced Failure: Assignments designed to force failure quickly (e.g., "10x sales in one week without ad spend") teach students to handle rejection and iterate.
- Grit Development: Overcoming the "overachiever" mentality of students who have never failed in school is critical for entrepreneurial success.
- The Critical Role of Narrative and Sales:
- Narrative as a Skill: The ability to sell a vision (to employees, investors, and customers) before the product exists is a learned skill, not just innate talent.
- Sales Education: Hershenson notes that while higher education often stigmatizes sales teaching, it is the most important skill for founders; accelerators must teach founders how to explain their value proposition.
- Gender Dynamics in Entrepreneurship:
- Imposter Syndrome: Women face higher levels of imposter syndrome than men and must actively work to build self-belief and confidence.
- Media Bias: Outlets often prioritize "chicks for clicks" narratives, sensationalizing female founders (e.g., Glossier, Theranos, WeWork) to generate engagement, creating an unbalanced view of success and failure.
- Market Gap: Only 2% of all companies have all-female founder teams; Hershenson's programs aim to close this gap by creating visible role models and structured networks.
- Forward-Looking Recommendations:
- Early Intervention: Society should implement "gifted program" style interventions for children identified with entrepreneurial potential to shape their character early.
- For Investors: The primary role of VCs is not to make the company but to create opportunities for founders to grow, including coaching and peer groups.
- Individual Action: Founders should prioritize surrounding themselves with the best people and reading extensively; if unable to afford coaches, they must form peer groups for character building.