Legendary investor, John Doerr, famously said that there are only two types of entrepreneurs: missionaries and mercenaries. While he publicly codified this idea in his founder framework over two decades ago, his words have never been more applicable than today.

2022 was one of the worst years on record for crypto. We witnessed the destruction of protocols, hedge funds, lenders, exchanges, and the accounts of tens of millions of retail investors. $50B+ of enterprise value gone. As we investigate to understand what went wrong, we can find “mercenary” fingerprints touching the major implosions.

Doerr describes the difference between missionary and mercenary in the language below:

^{“Mercenaries are driven by paranoia; missionaries are driven by passion. Mercenaries think opportunistically; missionaries think strategically. Mercenaries go for the sprint; missionaries go for the marathon. Mercenaries focus on their competitors and financial statements; missionaries focus on their customers and value statements. Mercenaries are bosses of wolf packs; missionaries are mentors or coaches of teams. Mercenaries worry about entitlements; missionaries are obsessed with making a contribution. Mercenaries are motivated by the lust for making money; missionaries, while recognizing the importance of money, are fundamentally driven by the desire to make meaning.”}‍

While mercenary founders can still be successful, missionary founders are the ones that lead to the massive venture-backed outcomes that most VCs desire. In crypto, examples of true missionaries include Vitalik Buterin (Ethereum), Brian Armstrong (Coinbase), Hayden Adams (Uniswap), and Stani Kulechov (Aave). There are lesser known missionaries out there today, marching to architect their vision of the future digital landscape. It’s my job as an investor to find those missionaries and increase their chances of success.

So, how does one identify a missionary?

Doerr’s framework defines missionary and mercenary in a somewhat theoretical sense. In practice, it’s difficult to validate the authenticity of a founder’s motives in the first few meetings; after all, many savvy founders will know the right “shibboleths” to avoid red flags.

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Backchannel references are one of the most expedient ways to gain clarity on a founder’s character. A former boss, direct report, co-founder, or investor typically has had a long-standing and close working relationship to easily identify the individual as missionary or mercenary - usually with specific examples. References have traditionally been core to diligence processes. Believe it or not, there were times when an investor took weeks/months to complete 20+ references on a founder or team. In recent years, the rigor around references has dropped off precipitously, but I imagine its popularity will return.

Although it’s obvious that the screening process is important for an individual investment, it also serves a secondary objective - to not fund those founders that portray toxic mercenary behavior. Not because an individual investment will return poorly, but because of the broader implications that a mercenary can have on the industry. Crypto is particularly receptive to mercenary behavior - tokens with no real utility, pump-and-dump schemes, high APY / high inflation design, and hacks/exploits. While there will be regulation to (hopefully) safeguard retail investors, financiers have both an obligation and an incentive to ensure mercenaries don’t tarnish a promising, nascent industry.

As we emerge from the fog of 2022’s financial carnage, the missionaries continue to march the space forward, and with what will surely be more contagion on the horizon, Doerr’s framework to find and support those missionaries has never been more important.

Looking forward to 2023.

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Notes:

1. Special thanks to Jared Newman and John Necef for editing.