How founders build (or break) trust in high-stakes moments - HV Capital's Lina Chong on hard decisions in startup leadership

For me, it's all about following the money. I would go to where people are willing to pay the fastest and the biggest checks. And if it's not in my home market, then so be it.

This is Melanie. And this is Christian. You're listening to Follow the Gradient, the weekly podcast with actionable insights about how to build a business while staying sane.

Why is it that some founders scale faster in worse markets while others freeze when things get hard? In this episode, Lina Chung shares what she's learned from being on both sides of the table. How she spots founder conviction early, why experimental cultures outperform rigid ones, and when loyalty, certainty and caution start becoming liabilities. This isn't hindsight storytelling. Lina built and exited companies herself before becoming a partner at HV Capital. And the last market shift, from growth at all costs to efficiency above everything make these lessons painfully relevant. I personally really enjoy conversations with investors who have actually lived the founder journey before becoming investors, but this one went even deeper than expected. Now, if you want even more from Lina, check out this week's newsletter at followthegradient.io, where she shares additional insights, tips and stories beyond the show. But now, enjoy the conversation between Lina, Christian and myself.

Great to have you here, Lina. We jump right into our questions and our conversation that I'm truly excited about. You built and exited companies long before you actually touched the venture space from the side of being a VC. My question would be, those early years really taught you to say yes before you felt ready and to act before you had perfect clarity. I think that helps you a lot to actually understand the founder side today. When you look at founders, that you're checking out today and working with. Which parts of your own operator DNA still drives the way you push, challenge, but also support them? I think this is such a good question and I wish there was actually more overlap between my time and experience as a founder and what I've learned makes a very successful investor. With that said, I do invest pre-seed and seed so quite early. And I think some of the, let's say, perspectives or learnings that I carry over from my founding times are things like... You know, I know, I understand that things are not always as clear and as black and white. And, you know, I think many times investors just want to know, it working or is it not? it, does it fit into this box or that other box? Right. And I think my experience lends me a little bit more to this experimental piece of entrepreneurship. And it's actually what I love to see in teams and in founders is like a very highly experimental DNA and willingness and kind of more of a systems thinking rather than, you know, this is what it is and this is what we're going to build and end of story. So I think it helps me navigate. First of all, what kinds of teams I like to work with and what kind of founders I like to work with. And then when I get into the details of their business more.

from the lens of how do you run this business or how do you intend to run this business definitely helps me form my opinions on what I like and what I do not like. It's really also this flexibility to know that things change and it's not always zero or one. For sure. Somewhere in between. What I really liked when we had our earlier discussions is, and what also made me think and where I could relate a lot was that you were talking about the time after your second exit where you described also going through a period where everything stopped at once, so to say. the momentum, the identity as a founder, the feeling of being needed everywhere. And that kind of left you questioning your abilities and the path forward. And I think many, many people can relate to be that they kind of left an adventure or just like to kind of re-identify themselves with some new kind of venture. That moment also ultimately triggered very positive side and that is the step to become a VC and support other founders with your experience. Now, as I said, many founders know that exact emotional crash or roller coaster. How does that specific experience influence the way you support founders when they hit their own version of, I don't know what I'm doing without this company and how does that also help like let them become better founders, so to say. I think there's a very dark side of being a founder and you probably know it Melanie very well. It's a lonely road and you know, it's a bit of a principal agent conflict, right? Where I'm usually on the board. I am representing my own interests, which is the interests of my own investors, right? But I think at the end of the day, it's such a long road that the most kind of productive relationships that I've had with founders were very vulnerable ones.

Right. Where the founder and I can also say, look, this is not exactly going as planned or it's really difficult for me or for the founder, right. To, now look at what's going on here and be able to really put, you know, deploy more, more, more money behind this or whatever that situation might be. And I think the more vulnerable and the more honest in a way that both sides can get with each other, the more clarity in the room there is. And the more productive the solutions can then become, or the conversations around the solutions. And I would say in general, the most high performing founders that I know are in that way, very self-aware. They know where, you know, they're hitting walls. They know when they need support. They know when to hire the right kinds of people. And when to kind of take in advice in a... you know, in a more pragmatic way than just, thanks for the advice, right? And that they're super kind of honest and self-reflective. Yeah. Because I think if you also acknowledge the fact that, and it's so natural, that is also what makes you a great founder to identify completely with your startup. But then it's also connected to if the startup is going well, you probably feel well, but if the startup fails or has really bad... It kind of is very easy to then also say that you failed and you're a failure, so to say. And I think the only way forward is to actually be aware of that and then also get support where it is needed and where you can actually leverage support. And you said something nicely. You said that basically the most successful founders are those who are also reflect, like reflect on themselves and also are self-aware. Because my question would of course also be what are things that signal you?

founder behavior, that reliable signal, hey, this person will scale because as we all know, once you're a startup, you become bigger, you become a scale up, you become bigger and it might also come with changes in your position and so on. And this takes so much energy from you, so much also self-reflection. So you need to scale with the company and what signals are you looking forward? And then also, of course, the signals that tell you, oh my God, this will never scale with this founders. Yeah, I think it's such an interesting question because there's so many different flavors of success and founders. you know, it is difficult for me to put it in a kind of a nutshell, but maybe some of my favorite qualities of successful founders that I've worked with and that I look up to, I think one has to do with incredibly fast decision making. And I think this is a, perhaps a product of being super self-aware and just, you know, always a little bit switched on about details and what's, you know, the step that this person or the team should make next, right? They're always, they kind of have like these, the system or a way of making decisions that allows them to move incredibly quickly. I think the ability to then ingest information, right? A lot of data, a lot of inputs from your team, from the market, from the customer, from your product data or what have you. And then kind of aligning this with, right, like here's then the conclusion, right? Here's then the direction. I think the best founders really have this uncanny ability to simplify what feels very complex and feels very undefined into a path forward. And I think that's maybe the third. quality is really this leadership. It's not kind of a thickheadedness for the sake of it, but it is somewhat, it shows up a little bit more like clarity and kind of a supporting guide to the team, right? Rather than like, we just do this now and we do as I say, for whatever reason, right? So I think those are some of the favorite kind of qualities. I think that the fourth, that's maybe the most understated one.

are, and maybe a little bit unrelated to what we were talking about before, but very charismatic, right? I think every kind of founder in their own way has her touch, her charisma. And I think this is also something that I think goes very underestimated, their ability to tell your story, to convince. So much because you can't have the best idea if you cannot convince people to be crazy enough to actually join your journey when no one else sees it yet. Like it's a lost case. You set leadership and also taking decisions very quickly. And one topic that we see again and again pop up is the kind of the mistake that many founders do. I include myself there that you kind of are very loyal to the very, very early employees, no matter Like the journey you go through, no matter the size of the company, like you just think, hey, no matter what, this is also my kind of loyalty to them back to kind of stick with them. And sometimes it's just then not the right fit and you kind of, wait too long, which is not good for your company, but it's also really not good for the employees yourself. And I know that you also had experiences with, stories like this, with startups. And my question of course is like how... What helps in such a situation? Because it's a situation that we all know, we hear that again and again, but what helps you to actually realize that maybe now is the time to actually bring in senior talent sooner or make a painful team change and so on. What are the ways forward that you have seen work in order to still maintain the gratitude towards this very early employees that are so crucial for the whole journey? I think in the very early stages, it's of course really important to keep to the core team. think this, especially if it's a high performing team, I think there's very little reason to change it. However, I think the question is rather around at what point in time should you, or how can you think about that step change in the business? Because at some point the potential of the business is as greater

is as great as the individuals within. And at times it does then require, right, external or different experiences to step in, to take the lead. I think it's very difficult for a founder. To be honest, I've seen it in both extremes as well. Like I've seen founders who've really very, almost systematically cut out like 90 % of their founding team and rehired and... you know, really kind of led with that style. And I've also seen the complete opposite extreme, which was the very early, you know, founders plus like first, you know, 50, 100 employees are like the culture, you know, carriers and nothing then changes from this group. I think if the ambition of the founder or of the founding team is to become a globally leading company. You have to look at the business and the people you work with, not as friends or entities to be loyal to, but rather dispassionately and, you know, say, how can we position this business and the components of this business team being one of them in the best way possible? Right. And I think without compromising too much on your culture, I think there are definitely ways to communicate that. very honestly and very openly with the team and say, look, this is the next stage of the company's journey. We want to achieve, right, 50 million, a hundred million in revenues or whatever that next next step goal might be and say, quite frankly, I don't have the experience to get there and neither does anyone here. Right. So let's kind of look for that, that expertise and that, that next kind of piece, right. To, help us get there. think on the other hand, as a business, you don't absolutely need to do that, right? There are, there is something to be said about keeping high performing kind of early teams and training them up and getting them advisors and surrounding themselves with a supporting team. I think there's not one valid or invalid strategy, but yeah, it is from like an emotional standpoint, it is hard to do the former and maybe a little bit easier to do the latter.

right, which, you know, again, I think has its pros and pros and cons. The clear con for the second piece is that, you know, people at some point do get complacent and you know what you know, you don't know what you don't, right? And so if you don't bring in that knowledge and that kind of freshness to the team, I think the risk of just kind of, yeah, being complacent, falling behind is relatively, relatively high. Yeah. And I think also like, because we said, like, it's so crucial, like the first 10 employees that you have, it can feel like, like family because you also spend a lot of time, but I feel like the better association that I found is you're not family. You're, you're like a sports team, a very successful, a high performance sports team. And the sports team works because you support each other, but you also demand. from each other the best like performance, so to say. So that is still a given that the performance needs to be given, but then you basically are one team and you go into the right direction. Another thing that also has to do with speed and also like with leadership and kind of fast decision is also that you said, and I completely agree is that especially in the startup world, it's not about incremental steps. It's really about the leaps that you take, like the risk that you're taking. And I know that you once worked with a company and I know that there many out there. So that is just one example. It had a huge window of opportunity, but kind of the leadership avoided bold product bets because they feared being wrong or being judged. And that caution became kind of the culture and custom, their timing. Today, how do you test whether a founder has the instinct and courage to place? this high conviction at the moment it matters. Is there anything that helps also founders who are maybe in such situation where they know, yeah, I can just move on like I did the past year, but it won't kind of put me on distraction of like also high growth, but also high risk.

Yeah, I think it kind of goes back to the experimental nature of the founding team. There's maybe a couple things, qualities that I think help that. One is that the founders can't believe that they know everything. They have a vision and they're executing against a vision, but there are a hundred different ways to get there. And along the way, there should be an openness to also explore. a pivot or alternatives or some other variation of the thing that they envisioned. Maybe because it addresses a larger market, it solves a bigger pain, what have you. But I think if the, for me, if I see a team that's unwilling to compromise in that way, or there's not really a culture of exploration internally, and this can show up in several ways. It can show up in, right, like how do you actually build product? How do you engage with customers? How do you... What's the methodology that you employ to really kind of collect this data and drive decisions from this data, right? How much does intuition also play and how do those decisions get made, especially between, let's say, if you're a company with like founder that's leading sales or leading product and then a team below that founder, how does the inputs from the team actually get then, you know, wrapped into to... actual product build, right? Things like that. So I think, I mean, one of the things that I like to do, especially at a, at a certain size of company is I tend to diligence, not the, just the C-suite or the, the level below, but kind of multiple levels below. And I try to get a really good sense of how those kinds of decisions really get made in an organization. And if there's clarity around the system, right? Or, or if it rather feels random or one-off. or that the decisions get made behind closed doors within a very exclusive group. It's like a very different way to run the org than another. So I do look for more of these kind of experimental cultures and systems type thinkers in my day to day.

You spoke a lot about the different characteristics of a founder or a founding team and their early employees. Maybe can you walk us through your inner process on when a founder or a team appears on your radar? How does that journey look like from that initial meeting to your personal conviction on them and on their team? And I don't mean a, you know, for instance, financial due diligence, but really the evolvement of your conviction and that you stand behind. You know, it's really such an interesting question. And I think over the years, I've started to also get more honest with myself and maybe it's just me getting more proficient at the job. when I thought about this question, I realized I kind of know, I know from the very first, maybe five, maybe two minutes even sometimes, like how excited I really am. And I think part of this has to do with how well the founders can present the opportunity. and how well they can speak to the opportunity and what they're building. So their ability to communicate, and we talked about charisma, you know, I think that really shows up in the first kind of interactions, right? And then throughout that first conversation, the depth to which that founder of the team can really go in their field, I think is like another piece of it, right? So the truth is, I think in my gut, I know very early. really in the first moments. And then I kind of seek to validate or invalidate my excitement in all the following interactions, right? And there's all sorts of ways I can rationalize or not, right? Like my feeling on the team, my feeling on the product. Obviously this is not exactly the same when it comes to a series A company. Sometimes, right, the idea or the problem space might be more or less obvious and it's a lot about traction. But I think for the earlier kind of earlier teams and earlier companies, I do feel a different kind of excitement with all the teams that I then go on to engage with and eventually bring to a committee.

I mean, once you've backed someone or a company, team, obviously this team can also use you as a VC, you as a person as a resource, right? So what are like particular patterns where you felt this is a really intentional and very effective way to use this resource, the VC and your experience and where did you feel this is kind of misused or underused? Most founders who really know how to utilize their venture investor resources are things like go-to-market and fundraising. Especially the funds that I've worked with, Chivi, and in the past are large generalist platforms. So I think really smart founders know how to put all of their board members and all of their investors to work, either in the form of high-value introductions, name it, be it the advisor, but more importantly, customers. right? Or they essentially don't call until they fundraise again, right? And then it's like, then I think it's actually quite smart of the founders to then really kind of use the investor base to gain more momentum, right, for the whole fundraising process and conversation. I think often where I feel maybe underutilized is a little bit more strategic on strategic points. So, you know, between me and and some of my colleagues, we probably cover a large percentage of early in growth tech companies across Europe and even in the world, right? Like in the US or so. We're not actively investing there, but we definitely keep tabs on the high performing companies. And I feel that there's maybe a lack of questioning or a lack of, maybe they don't know that they can ask these questions. It's also a little bit of a, know, where's the Chinese wall kind of thing. But just to get some patterns, right? Like what is a great company look like at this stage or right? Like what is a great sales pipeline or a great hire or whatever, right? What does that look like? So I think when it comes to kind of, yeah, understanding maybe like certain benchmarks around very closely situated competitors or lookalike companies or even candidates, I think that's where I feel a little bit underutilized actually.

Why do you think that is? since you've been on kind of both sides of the ocean, right? Because there's obviously a sort of love-hate relationship between VCs and founders. So why do you think that is? most founders don't really want the advice from venture investors. I think it can be appreciated and I think there are moments in time where there's an actual need and an actual question, right? But I think for the most part, it's not like, they'll likely not be. basing their whole decision on the input from their investors. think internally, the team has a process. They have opinions. They have a culture. They have way of thinking about certain, coming up with opinions around certain things, whether it's, do we think we're doing a good job or do we think this candidate is a good one, where it's not necessarily within that process to consider an investor's opinion. on that. Although I don't think that's always the case. do. I do. Yeah, there are founders that do ask these questions and they tend to actually be companies where data matters, where data is a lot more available and data matters a lot more. you know, in like, so for example, consumer versus B2B, right, consumer, you just have access to lots and lots and lots of data. And it is a very, important piece in decision making. Whereas in B2B early stage, a lot of that is quite anecdotal.

You've mentioned a go-to-market earlier as one component where founding teams can seek support with their investors. Now you've supported companies like Travel Perk, Freschner, many, many others from this, these days of early traction to global scale. And especially here in Europe, go-to-market can be very daunting, right? Scaling across the continent can be difficult with different languages, cultures, regulations. Going global is a jump many companies want to do rather later than earlier and be questioned if that's right or wrong. So when you distill everything you've seen, what would you say are the kind of practical GTM moves that consistently work for SaaS teams operating or starting from here? Yeah, it's such a good question. I think there's maybe two camps when it comes to go to market. One is let's start local first and then expand, which is wise and feels more digestible, especially when it's like founder led sales, right? You have your immediate network and that tends to be in your market. And then there's kind of the let's go global first. Let's go to the U S first or whatever that might sound like. mean, Especially in those two cases of companies, TravelPerk and Fresher from day zero, think they had a, both of those companies had a very differentiated go-to-market strategy, which was they were almost in a way more, I mean, okay, so TravelPerk, let me put that aside for a second. Fresher was very much a market-agnostic go-to-market, meaning they didn't care where they got traction because 100 % of their go-to-market in the first X years, like years, was all product driven. they decided, Fresher decided to employ a free, know, best in class free to use software as a growth strategy and got into many, many different markets and then looked at where are they getting traction and why, and started to form go-to-market teams around certain geos or certain segments or so. In Travel Perks case, there's a

of a limitation to that, obviously, because there's inventory connected to TravelPerk, right? TravelPerk is B2B Travel, but they did also employ very much a kind of a freemium type product, a very kind of prosumer-y product, go-to-market motion to see where they would land and then build out their sales teams from there. TravelPerk also very, very early on hired an external, so he was a non-founder, but very early, very senior. go to market higher. And he's still in that organization today. He's absolutely crushing it. So I think they, and they had a very like super, super ambitious goal, right? They wanted to immediately cover all of Europe and then like very quickly go to adjacent markets. But yeah, they also employed kind of a product excellence, go to market strategy plus outbound sales and targeted like as broad of a market as possible first. What's your take on scaling across Europe first versus conquering your home market, whatever that is, Germany, Spain, UK, and then directly jumping to the US. So I think there's a couple parts to this question. One is, why do you need to start in your home market? And is that home market enough, is that a deep enough market for you to grow, you know, four, five, six times year over year in the first several years, if you're absolutely crushing it, right? And if it's not, then I would really question why it is the home market discussion in the first place, right? So I think that's one. There are obviously, kind of disadvantages to going global or going to the US from day zero, which is you have no network and you have no idea culturally or whatsoever how things work there. But I think that's kind of a solvable problem. For me, it's all about following the money. I would go to where people are willing to pay the fastest and the biggest checks. And if it's not in my home market, then so be it. I think there's, you know,

A lot of startups that I've seen coming out of smaller markets, let's say the Nordics or Israel or right, like different, parts of the world where they employ a global first strategy and it works very, very well for them. And they're still not like, you know, U S native companies, but, it works. And so I would really encourage founders to question very deeply their go-to-market motions and, and, and why they choose home versus. other versus global, right? Like I think to some extent it's a bit arbitrary sometimes to pick like in our backyard just because it's there, right? Now, what we also saw in the past like three, two to three years is a complete shift also like the market environment. went from a growth at all costs to like being super efficient. Then you're an AI startup, then the whole world looks anyways different again. Now in your also experience and looking at your own portfolio, what did the most resilient founders concretely do differently? in how they ran the business and how they ran themselves that others might copy and especially those who are in this situation can actually apply. On the one hand, we went from growth at all costs to be super efficient. Like there is not money deployed as it was in 2021 when, for example, we raised where it was just like so much money. But then the other points, and this is then just to also say there are still exceptions where there is. a ton of money and you don't need to basically care because you're just a super hyped AI startup. So I don't want to talk about these cases because they stand for them own, but for the rest of the startup community where it's not just super easy always to raise money because the context has shifted. How do the best and the resilient founders act and what do they do differently?

Yeah, I think the most resilient founders are incredibly adaptive. We were actually just talking about this, some of the, there's maybe two different camps of founders. One is a founder that says, well, I'm going to let go of my team, you know, maybe 10 % of my team and another 10%, another 15 % of my team. Right. And it's a little bit like a slow roll. And then there's another approach that's like, we're hitting a wall with our budget or we just need to become way more cash efficient or whatever that is, right? Here's a new reality, cash isn't around. We need to adjust to this reality. And then they make this like super aggressive move, right? It's like, like 30%, 40 % adjustments plus. And I think probably the best founders, and this also kind of maybe goes back to the ability to make decisions, like hard decisions quickly and very resolutely is I think the best founders are oftentimes the ones that go for those 30, 40 % type changes rather than the incremental ones because they're really steering a ship aggressively. I think this is one. think that the second thing is the best founders though don't just cut for the sake of cutting or don't just do things for the sake of it because everyone else is doing it. They sometimes say, look, we will do that to become more capital efficient. But here's still our North Star. We still want to be the number one in the world. And so we're still going to aggressively invest where investment makes sense and try and position ourselves as that number one player in the world. And we'll come up with a kind of opportunity. So if the rest of the world, especially in your field or in your vertical, is having trouble to fundraise, maybe that's also an opportunity to do something different. right, or something meaningful, or maybe there's assets that you can pick up or teams like top tier talent you can pick up, right, that's now maybe a little bit more affordable than they were in past years. Right, so I think every kind of the best founders are on the one hand, able to make these super drastic decisions, but still drive and invest and double down where it does make sense. And they don't, they're not afraid of it, right? Even against the face of their board members.

even against the face of their team, right? Sometimes, I mean, I think these are like really hard, very pivotal decision moments, but the best founders, I think, are able to navigate not just with this kind of paranoia on the one hand, but with this kind of optimism on the other. Yeah. And on this point also, there is a saying like death by a hundred cuts. I think that is what is often so much underestimated when you're just like, okay, let's just like cut 10 % and then again, 10%. I mean, especially at the second or third time, I mean, the best employees would just look for another job because they think like, I will be next. And you cannot really recover. And you also often forget, I mean, it's very sad for the people that you have to let go, but you still have. keep people and you need to motivate them. need to see the North Star and see why they're on this journey. Now, before we head into the last questions of Rapid Fire, I want to actually ask also a personal question about resilience because we now talked a lot about resilience and also how you see the founders who have the energy to go through it all. You're a partner, you're a mom, you're one of the few women in partnership layer of European ventures. And without turning this into a diversity narrative or like going into that corner, what structures or boundaries enable you to operate sustainably without burning out and also kind of stay resilient to actually be the best version of yourself? It's a tough one. I don't know if I have the best balance in the world, to be honest. However, it's not always possible, but like, for example, my kid's first words was, or like first phrase is like, mama abited, right? So like, mama's working and it is always what he's hearing. So, you know, it's a bit, it is what it is. I think I learned how to really prioritize, like what really moves the needle.

Self-reflective?

in my day, in my life, for my firm, for this founder, for this company, right? And I think if I were really honest with myself, I'm not that pivotal everywhere all the time, right? But I do think there's some moments in time and some places where if I show up and I bring 100%, it makes all the difference. And so I wish I could say, you know, I could still go for beers and do the random hangouts and, know, but it's just not possible. the time. But, if I need to take a call with Pacific Time at like midnight, I absolutely will do it. I think it's a lot about finding that priority list. Absolutely. Thanks for sharing. Now let's just end with like rabbit fire questions, just like one or two sentences about our questions. So the first one is, what is one founder behavior that instantly tells you they will struggle to scale? Yeah, being too, I think, too self-convinced and not enough self-reflective. That's one. The second one is afraid to hire outside of their comfort zone, whatever that might be, right? Someone who speaks a different language, someone who's older, right? Just different. Yeah.

What's a piece of fundraising advice founders should actually ignore? That's a really good one. think raise money when you don't need it is a good one to follow. think raise as much money in the first round is a difficult one to follow because we see it happen where you over raise in the early rounds with very little proven and then it comes really biting you in the behind. What is one product or go-to-market experiment you believe European founders should try far earlier? Go global ASAP, cast the widest net you possibly can and experiment aggressively there. What's the personal ritual or boundary that protects your clarity or that keeps you sane?

I have a routine in the evenings and I have a routine on the weekends with my family and I really try, it's like two, three hours in the evenings and it's four or five hours in the weekends. And I really try not to compromise on those hours. Time with family keeps me sane and grounded. Lina, could go on and I think there's a couple of topics we would really love to dive deeper, but time's up. Last question maybe, if founders, operators or anyone interested want to learn more about you and your work at HB, how can they get in touch and learn more about you? You can always get introduced to me through a portfolio founder or anyone in the portfolio to anyone in the HV team that goes for partners and associates and principals and analysts and so on. You can always reach out to me on LinkedIn as well. Thank you so much for being on our show and talk to you soon, Lina. Melanie Christian, thank you so much for your time. It was so much fun.

And this was another episode of our Follow the Gradient Podcast. And now we would love to hear from you. How did you like it? What should we improve? Do you have any suggestions, ideas or dream podcast guests? Please let us know. Thank you and see you again next week!