Dear GPT, what's a high variance founder?

ChatGPT said:

A high-variance founder is one whose performance — and the company’s trajectory — swings much wider than the average early-stage startup leader.

It’s VC shorthand for: “This person could produce an extraordinary return…or flame out spectacularly.”

Key traits of a high-variance founder

1. Unusually high upside potential

   • Sees patterns and opportunities others miss.

   • Can create breakthroughs in product, positioning, or execution that catapult the company ahead.

   • Often operates outside conventional playbooks.
     

2. Unusually high downside risk

   • Decisions can be rapid, bold, and unorthodox — meaning when they miss, they can miss hard.

   • Emotional intensity or volatility can alienate team, investors, or customers if unmanaged.

   • Less margin for error in relationships because they push harder and move faster.
     

3. Polarizing perception

   • Some stakeholders see them as brilliant, unstoppable forces.

   • Others see them as dangerous bets who could destroy value quickly.

   • The same traits that make them magnetic to some make them uncomfortable to others.

Why VCs still back them

• Venture capital is a power law business — one or two massive wins drive the entire fund’s returns.

• A high-variance founder can deliver that “fund returner” outcome in a way a safe, steady founder almost never will.

• The risk is that you get the downside instead of the upside…but for some funds, that’s a bet worth making.

ChatGPT said:

Yes — Don Valentine absolutely backed high-variance founders, and in many ways he built Sequoia’s brand on them.

Valentine wasn’t looking for “safe” early-stage bets; he wanted founders who could redefine entire markets, even if that meant they were polarizing or hard to manage.

Why he backed them:

1. Market-first, founder-second, but still embraced bold personalities

   • Valentine famously said: “We have always focused on markets — big markets — because big markets pull product out of companies.”

   • But the people he put in those markets were often high-variance: not just competent operators, but visionaries willing to push boundaries.
     

2. Pattern of massive upside

   • Apple (Steve Jobs)

   • Cisco (Sandy Lerner & Len Bosack)

   • Atari (Nolan Bushnell)
     These were not consensus “safe” CEOs. They were intense, idiosyncratic, sometimes chaotic — but could scale something world-changing.
     

3. Tolerated volatility if upside potential was unmatched

   • He’d accept ego, conflict, or erratic style if the founder could deliver the market dominance he was betting on.

   • If volatility became destructive with no sign of compounding returns, he would step in and replace leadership — but he didn’t reject someone just for being volatile.

Bottom line:

Valentine would back a high-variance founder if they were in a massive market, had a differentiated insight, and could move fast enough to capture it before anyone else.
He was willing to ride out turbulence if the upside justified the risk — and he often won big because of it.

ChatGPT said:

Yes — when they’re in their “productive” mode, high-variance founders often attract capital, talent, customers, press, and strategic allies more effectively than almost anyone else.

It comes down to the same traits that make them polarizing:

Why they attract more

1. Magnetic narrative energy

   • They speak in a way that makes people feel they’re part of something rare, urgent, and inevitable.

   • This urgency and conviction is intoxicating — investors feel FOMO, recruits feel they’ll be in the history books, customers feel they’re buying into the future.
     

2. Extreme clarity on the “why”

   • High-variance founders tend to cut straight to the core mission without burying it in corporate speak.

   • People are drawn to sharp, unvarnished clarity because it feels honest and decisive.
     

3. Risk tolerance signals confidence

   • Willingness to make asymmetric bets telegraphs that they believe in their vision more than anyone else.

   • That confidence can override concerns about volatility, especially for early believers.
     

4. Emotional intensity as a bonding agent

   • When they’re “on,” high-variance founders transmit belief at a level that changes how others see themselves.

   • Great hires, early customers, and aligned investors often join because they felt something rare, not because they ran a spreadsheet.

Why it can backfire

• If volatility tips into destructive mode — constant pivots without compounding progress, public blowups, chaotic internal culture — that same intensity makes people run the other way.
  

• Capital and talent markets don’t like feeling whiplash. Investors may label it “uninvestable risk,” top hires may see it as career-ending danger, and customers may worry about stability.

Net effect:

High-variance founders can be the most magnetic people in the ecosystem when their variance is working for them.

But because the swings are bigger, their ability to repel capital/talent/customers when in a down-swing is also stronger than most.

ChatGPT said:

Yes, exactly.

A high-variance founder operates under the steepest reputational gradient in venture:

• The upside is career-making, fund-returning, and legacy-defining.

• The downside is disproportionately punishing — one flameout can follow you for decades, because the swings are public, personal, and easy to misread as recklessness.

That means the pressure isn’t just about the company’s survival — it’s about your long-term credibility, your future investor access, your professional network, and your personal identity.

Every win builds myth; every misstep risks erasing the myth. That “life or death” feeling is real, and it’s part of why high-variance founders either channel the volatility into compounding breakthroughs or get consumed by it.

ChatGPT said:

Short answer: most don’t “choose” high-variance—their wiring and history make any other life feel intolerably small. Longer answer:

What actually drives them

• Compulsion > preference. A restless pattern-recognizing brain that can’t not pull on big threads. Curiosity feels like hunger; relief only comes from shipping.

• Meaning density. Regular jobs feel underclocked. Building compresses years of growth, emotion, and consequence into months; they crave that intensity.

• Agency addiction. They’d rather own the consequence of a wrong call than live with a right call someone else made for them.

• Asymmetry math. They internalize power-law upside. Even 5% odds of a category win beat 95% odds of a pleasant plateau.

• Justice/repair energy. Many carry a formative slight—being underestimated, excluded, ignored—and transmute it into “watch me reshape the room.”

• Craft & control. Company-building is their medium (like film to a director). The product, team, narrative—those are their instruments.

• Identity coherence. The only story that feels true is the one where the stakes are real and the scoreboard is public.

The shadow motives (often unconscious)

• Vengeance-as-discipline. Proving a past judge wrong becomes fuel—useful, but volatile.

• Attachment to chaos. Familiarity with instability (family, early career) can make calm feel alien; turbulence reads as “home.”

• Status-as-safety. Money/press aren’t the point, but recognition feels like armor against ever being powerless again.

Why they keep doing it despite the cost

• Flow beats fear. The hours in deep work, hard conversations, or live negotiation produce a state they can’t get anywhere else.

• Non-substitutability. They sense their advantage is unique enough that not playing would be wasteful—even immoral—to them.

• Legacy pressure. They want artifacts that outlive them: standards, products, playbooks, institutions.

From the inside vs. outside

• Inside: feels like inevitability—“I’m built for high stakes; the quiet life is the real risk.”

• Outside: looks like reckless courage until the compounding shows up; then it looks like destiny.

If there’s a “spider bite” for high-variance founders, it’s usually an early, high-impact collision between extreme possibility and extreme instability — both happening close enough together that their brain permanently fuses risk with potential.

The patterns I’ve seen most often:

1. Formative whiplash

• The contrast: They experience a moment of outsized possibility — winning something improbable, getting early recognition, seeing a huge door open — and almost immediately see it threatened, undermined, or yanked away.

• The imprint: Teaches them both that big wins are possible and that nothing is safe unless they grab the wheel and never let go.

2. Early autonomy under pressure

• The contrast: Thrust into situations as a teen or young adult where their decisions mattered way more than normal for their age — family crisis, running something without a safety net, being the only competent person in the room.

• The imprint: They normalize extreme responsibility and see it as the baseline, not the exception.

3. Proof-or-die moments

• The contrast: They had to prove themselves in a compressed, visible, all-or-nothing context — a high-stakes pitch, competition, performance, or survival scenario where the outcome was public and personal.

• The imprint: Makes them comfortable (or addicted) to arenas where the scoreboard is instant and unforgiving.

4. Long-term outsider status

• The contrast: They grew up underestimated — whether due to background, appearance, personality, or unconventional choices — and developed a deep library of moves for earning space they weren’t initially given.

• The imprint: Hardwires a “convert doubt into propulsion” loop, which thrives in high-variance environments.

If I had to boil the common thread into one sentence:

They got an unshakable taste of how high the ceiling could be and how fast the floor could drop — and decided they’d rather live in that swing than settle for anything smaller.

-Kaeya (and GPT)