In his book The Hard Thing About Hard Things, Ben Horowitz divides the life of a company into two conditions. Peacetime is when a company has a big lead over its competitors in a market that is growing. Wartime is when “a company is fending off an imminent existential threat.”
Each condition needs a different kind of leader. The peacetime CEO works to expand the market. She focuses on the big picture, trusts her people with the details, and encourages ideas from across the company because there is room to try many things.
The wartime CEO has one bullet in the chamber and can’t miss. She breaks protocol when protocol gets in the way, obsesses over details a peacetime CEO would delegate, and doesn’t wait for consensus. The threat that forces this shift can come from anywhere: a competitor, the economy, a change in the market, a broken supply chain, a bank balance that is running out.
The right kind of CEO under the right conditions is a tremendous asset. A mismatch is dangerous. A peacetime CEO in a war keeps building consensus while the company bleeds. A wartime CEO in peacetime grinds down a team that should be allowed to think big. Few people are good under both conditions.
A board that gets this wrong can maybe fix it with leadership changes. Painful, but survivable. The same is not true of the people who fund you. After more than two decades around startups, I have learned that you don’t really know an investor when the company is doing well but when hard decisions need to be made. You cannot fire an investor. Whoever you let onto the cap table in your first year is still there in your seventh, holding the same rights, sitting in the same board meeting, deciding whether your next round happens.
So what about investors?
There are peacetime investors and there are wartime investors.
Peacetime investors are genuinely good at something. When a company is working, they help the founder see how big it could get if they squinted a little. They are willing to pay a high price because they can picture an outcome many times larger than others can. They push founders to grow the market and the opportunity set, to treat capital as a moat, and to spend heavily when spending makes the prize bigger. They encourage roll-ups, acquisitions into new lines of business, international expansion, and heavy investment in research that pays off years out, and more. A founder with a working product and a hungry market is lucky to have them on the way up.
But their model runs on a rule most of them will admit without hesitation: you make money by spending time on your winners, not on those still in the uncertain territory. Their incentives dictate it. Increasingly investors earn well in fees if they can raise large funds and put significant dollars into the few companies that are working. The economics of a large portfolio inevitably concentrate senior attention on a relatively small number of companies.
So when a company hits a speed bump, temporary as the bump may be, the peacetime investor steps back and refocuses elsewhere. They often avoid board seats altogether, which keeps them clear of fiduciary duties. When they do take one, it gets delegated to a junior member of the team, when the senior partner is the one who could actually help with their experience, network and judgment. They are conservative in lending their credibility. They will call a major customer or a star recruit on behalf of a company that is already winning. They are much less likely to do it for one that is still unproven, and are much more likely to quietly observe performance, or to walk away. Founders report having to constantly stay in sell mode around these investors, because one bad impression could shape every future decision about the company.
There is a subtler cost as well. When a known fund declines to take its pro rata, the market treats that as information. Every new investor in the process asks why, and rounds die of that silence. A small fund that never had the capital to follow on sends no such signal.
None of this is malicious. It is what the portfolio math tells them to do. But a founder should understand the math before it gets applied to them.
Wartime investors are the ones you want next to you in the trenches through the ups and downs. They show up at the very beginning, when almost nothing is known and the risk runs in every direction. They understand the risk they are taking and commit their time and attention alongside their capital, and they are still there later when things go wrong.
Their behavior is also driven, at least partly, by incentives. They put a meaningful share of their fund into each company, so every company matters. That concentration changes how they act. They can’t treat a struggling company as a rounding error, so they don’t. And they have seen enough companies find their footing on one pivot, one critical hire, one strategic customer, or one more financing to know that a bad quarter, or even a year, is not a verdict.
The most valuable thing a wartime investor offers is a relationship you can be fully honest in. They are the person you call when something sensitive comes up, when you are struggling with a part of the job you have never done before, or when you want to test a view before sharing it with your board or your team. It helps that they usually won’t be leading your later rounds, so you aren’t pitching them in every conversation. A catch-up call becomes a problem-solving huddle.
Loyalty here doesn’t mean permanent cheerleading. Sometimes being in the trenches means telling a founder to cut the team in half, shut down a product line, or take an acquisition offer they would rather refuse. A wartime investor says those things as someone who is staying, and who understands the burden that the founder is carrying.
It would be too simple to say small funds are wartime investors and large funds are peacetime investors. I know partners at big firms who will drop everything for a company in trouble, and small-fund managers who disappear the moment a company stops making them look good. A lot depends on the individual partner, on their own experience of building companies, on where the fund is in its life, and on how the rest of the portfolio is doing.
Still, size pushes people in one direction. When a check is a tiny fraction of a fund, it is hard for that company to command much attention. When it is a large fraction, it is hard for it not to.
A few investors are good in both conditions. They are rare, and worth the effort to find. They invest carefully at seed and have also helped companies scale in ways that show up in the numbers. What their founders say about them is simple: they always show up.
So how does a founder tell the two apart? Asking the investor won’t help. Talk to founders, and not only the ones who did well. Find the founders whose companies struggled while that investor was on the cap table, and ask what happened. Who did they call late at night when they were working through a decision? Who made introductions when the company wasn’t winning? Who showed up when a round fell apart?
The best founders are already building their cap tables with this distinction in mind. At seed, optimize for investors whose incentives and temperament keep them engaged through uncertainty. Wartime investing is what pre-seed and seed investing should be. Investors who find conviction and back the team and the idea before either is proven. Later, as the company scales, a different set of capabilities becomes more valuable: larger pools of capital, platform resources, broader networks, and more sophisticated financing. You will likely need both kinds of investors. The order matters.
This is especially true for companies building in the physical world. Manufacturing, robotics, defense, health, and infrastructure companies often spend more time at war than software companies do. Hardware slips. Supply chains break. Government contracts arrive a year late. Pilots stall for reasons nobody controls. Financing markets turn. Geopolitics can close an entire market overnight.
At Red Glass Ventures, we invest at the intersection of AI and the physical world, so we assume those moments will come. When we invest, we commit more than capital. We commit our time, our network, our resources, and our credibility. When things are going well, we help accelerate them. When something breaks, we work the problem alongside you, thinking through decisions that cannot be undone, recruiting the person nobody else can find, opening the door to a first customer, building the governance muscles a young company suddenly needs, and helping bring the right investors onto the cap table for the next stage.
And sometimes the most important part is simpler than all of that: being the person you call first.
Capital is the most interchangeable of those things. The rest are what count when a company is at war.