The “Chip and a Chair” Mindset

Originally a thread on X/Twitter:

Are you a “Chip and a Chair” Founder? Are you a “Chip and a Chair” VC? How much fight do you have in you?

A few thoughts on what it means to stick it out when times are tough:

One of the most profound pieces of advice that I’ve given over the years when someone I like is facing adversity is to “go ahead and quit”.

Taken out of context this might sound like a horrible piece of advice.

But I believe that presenting the option of quitting is always better than forcing someone to stick it out. Why?

There are people who can’t help but give everything they have and people who are wired for balance and you can’t force one to be the other.

To be clear, one type of person isn’t superior to the other. Each has its strengths and its weaknesses, but it doesn’t change that fact that people really do tend to fall nicely into one of the two categories.

I’ve also observed that when a person says they’re “giving their all” they typically aren’t. Giving one’s all to any given task is truly difficult and comes with sacrifice in other parts of one’s life. For this reason, giving one’s all isn’t universally a positive thing!

For many people, the pursuit of balance is more important than being “all-in”. Balance isn’t bad in concept, but it is the mortal enemy of unwavering grit because there’s only so much time and energy a person has. 24 hours in a day is all any of us ever get.

So back to my advice. Accomplishing big things isn’t easy and the path is always rocky (and many times downright treacherous).

So when I let someone know that they always have the option of quitting, what I’m really doing is asking the question: “What type of person are you?”

I ask them to think really hard about quitting and more importantly how they think they’ll feel the day after they quit. If “relief” is among the emotions they surface then they’re a different type of person than if “extreme regret” is the prevailing thought.

And it’s important to internalize that this isn’t exclusively a “Founder trait”. I frequently see Investors throw in the towel on their struggling companies under the logic that “the power law dictates that I should spend the vast majority of my time with my winners”.

While the logic behind this decision has merit, this is a narrow way of thinking about the role of an VC. Part of the job of a VC is to be there side-by-side with your companies through thick and thin and help them navigate tricky situations.

Hopefully Founders seek out VCs who come with the best reputations, so spending time with a struggling company could end up accreting long term value. Founders should reference check Investors regarding their “grit” in the same way that VCs underwrite Founders.

And as important as the power law is to VC returns, there are situations where a struggling company sticks it out and makes the right pivots and business decisions. They live long enough to “figure things out” and ultimately succeed as a result!

I affectionately call this the “Chip and a Chair” attitude which really should be attributed to Jack Straus, a Poker legend. Jack was best known for winning the 1982 World Series of Poker Main Event after coming back from being down to a single chip earlier in the tournament!

Jack Straus had a chip to play with and a chair to sit in so he was still alive in the tournament. Many poker players would have given up or gone “on tilt”, but Jack stuck it out and played the best poker he could.

He knew that he had very few moves available given his chip stack and he also knew that when he made moves they had to work. But he stayed alive long enough to build his stack back up and eventually won the whole tournament!

So, are you a “Chip and a Chair” Founder or VC? How much fight do you have in you? Which is more important: Getting a bit of relief or avoiding future regret? If you ever want to know, just quit when the going gets tough and see how you feel the next day.