The Songwriting Credit
On why firms break the same way bands do, what sourcing actually is, and episode three of Carry On with Santosh Sankar
Bands almost never break up over the music.
Ask anyone who has been in one. It does not end because the songs got worse or because somebody stopped being able to play. It ends over the credit. Who wrote the bridge. Whose name goes on the record. Who gets paid when a car commercial licenses the chorus eleven years later. Nobody has that fight in year one. In year one there is a van and a shared amp and nothing to split, so the question never comes up, and everyone tells themselves the silence is alignment. It is not alignment. It is an unpriced asset. The fight arrives on schedule the moment there is something worth arguing about, and by then the arrangement between the people is the fragile part, not the music.
Near the end of episode three I put three archetypes on the table, because I think every firm is one of them whether or not it has admitted it.
Some firms are the Rolling Stones. This is the band. We are doing this into our seventies, or until we quit. We ain’t adding nobody new. Some are small market franchises. Utah, Oklahoma City. We are not getting top free agents, so we had better be excellent at the draft. And some are the Lakers. We do not care about draft picks. Once somebody proves they are amazing, our brand is better than theirs, and they will come. We are watching that one happen right now, with people folding firms they started themselves to go join a bigger name.
The taxonomy sorts firms by how they hold together and how they replace people, which is more useful than sorting them by AUM or stage. And the band is the one most people are actually building. It is also the only one of the three with no plan for its own failure. The franchise has a draft. The brand has a recruiting machine. The band has a handshake.
Most of the episode is about the least glamorous part of this job, which is sourcing. Santosh’s framing is that the shift already happened and a lot of firms have not noticed: you stop tracking companies and you start tracking people, sometimes years before they come to the realization that they want to go found something. At pre-seed and seed there is no database and no portfolio page to scrape. There is only whether they know your mettle before they need you. That is a different job than the one most of us were trained to do, and it does not produce a pipeline you can screenshot for an LP update.
At my stage the problem inverts. When I started in 2015, sourcing at Series A still meant something, because there were fewer firms and much less information moving between them. Now everything ends up in a database, so I am not sure proprietary deal flow at traction stage is a real thing anymore. Anybody can find it. Can you win it. Can you show a founder why you are the right partner, and then actually help them inflect.
Santosh’s answer for how you earn that is plainer than it sounds. Make a promise, know in advance which ones you can keep, and then keep them. Founders run the list afterward, and so does everyone watching. Which is really a conversation about brand. We learned it at Kauffman and I have never found a better version: your brand is what people say when you are not around.
The middle stretch of the episode is solo GP versus partnership, and the way that question usually gets asked is about economics and speed. The way it should get asked is about self-knowledge. Do you know how you behave when you are wrong in front of someone whose opinion you need. A partnership is not a structure for making decisions. It is a structure for surviving disagreements, and Santosh is right that the ones without a real conflict resolution process do not blow up. They poison slowly. Resentment compounds while everyone stays professional about it. In a firm the unpriced asset is carry splits, decision rights, and whose name is on the deal when it works. That is the songwriting credit again.
Do not run a partnership like a dentist’s office. One admin at the front desk, three dentists, one building, nobody talking to each other. That is not a firm, it is a lease.
Sam Heshmati from Citizens Private Bank sits down partway through, and his stretch is the best articulation I have heard of why problem solving beats product pushing. He says their job is not to be the reason a company succeeds, it is to slightly increase the probability of success, and to do that for a lot of people. Products and services get commoditized. People and relationships do not. He is describing banking, and he is describing our job.
There is more in the forty-four minutes than I can carry into one essay. We get into why the easy version of your strategy is usually just a different hard thing, and what an associate is even for when diligence takes ninety minutes.
So here is the ask, same as the last two times, because it keeps working. Listen to the episode. Then tell us where we got it right and, more usefully, where we did not. Reply to this post, comment wherever you listen, or send me a note directly. If there is a question about this craft you think two GPs owe you a straight answer on, that is how episodes get made.
Write the songs. Then write down who wrote them.
Grateful to AngelList, WilmerHale, KPMG, and Citizens Private Bank for backing this from the start, and to the Heard Media team for turning two people talking into something worth your time.
with gratitude,
Earnest
Listen on your favorite platform.