DD11 • The New ROI: Return on Involvement
Most investors chase IRR. Matthew Sutton chases proximity.
// 7-8 min read · "Money is running out. It was so bleak. And he's like, I'm going to fight right through this. Now they are a unicorn. Itamar… I contact him all the time and say, come back and speak to our class. And he's like, no, I'm too busy eating the world." – Matthew Sutton
Last December, 24 hours before my 18-hour flight to Asia, I did what any reasonable person would do: ignored my suitcase and sat there counting down the hours to an interview. Upbeat music on. The Rainforest book in my hand.
Priorities were clearly in order, depending on your definition of prudent, anyway.
I was counting down because I already knew Matthew was different. When we first spoke months earlier, he opened with a question I’ve heard maybe five times in my career:
“Tell me, Nihal. Who are you?”
He didn’t mean my credentials or background. He meant who I really am. The kind of question that makes most investors look like you just asked them to explain quantum computing without slides.
Matthew doesn’t do transactional. There is no silent spreadsheet running in his head calculating whether this conversation closes a deal by Q3.
He’s sharp, obviously. But more than that he is actually present. Not in the “I read the seven chapters of How to Win Friends and Influence People last year” way. Present present.
He is someone who optimizes for proximity over financial returns. He sees founders as humans first. Not as cap table entries. Maybe later, maybe never. Dollar signs alone don’t motivate him.
Which makes him unusual in this world. Most investors chase upside. Matthew is motivated by proximity. Especially today, our world is overly optimized for extraction. Not many really cares about the builders until they generate revenue. But the magic happens before crossing that chasm. That is why his approach makes him an outlier. He sees talent before the headlines.
At first glance, his approach might look inefficient. When you get closer, it is dangerously ahead of the curve. And historically? That's where the best investors tend to be.
The investors worth having ask "who are you?" before "what's your traction?" If someone skips that first question, you are talking to a check, not a partner.
Who is Matthew Sutton?
Matthew is one of those rare investors who sees people and what makes them unique. Wall Street trained, Harvard Business School Field X instructor and private investor backing technical founders in AI, defense, quantum computing and space before they are proven. Anthropic, Starcloud, Perseus Defense and Sygaldry, to name a few.
Starting a Company
Anyone who has tried to start something from scratch knows the temptation of metaphors. We borrow them from sport, war and occasionally theology. The most precise one I know comes from a friend of Elon Musk:
“Starting a company is like eating glass and staring into the abyss.”
It sounds theatrical but it is also accurate.
What the line gets right is the pace of pain. You don’t eat the glass all at once. You swallow it in shards. Some days you mistake bleeding for progress. Other days you stare into the abyss long enough to wonder whether you should quit.
The startup stories sound heroic. Behind the scenes, the actual experience is pain management. That gap is where most advice collapses.
And the only way to survive that is to choose, with care, who you allow to stand close while you’re swallowing.
Matthew Sutton has watched thousands of founders swallow glass.
He goes for something most investors call irrational: return on involvement. Not investment. Involvement. He's in there to help first before anyone knows whether it will work. For the thrill of innovation, watching someone make it happen. It's staying close and long enough to actually contribute.
Most investors can’t afford that kind of patience. Also, they are inherently drawn to exit dreams. They are not in it for the problem or the builder. Their interest begins and ends with the cap table.
Now, let's break down what return on involvement actually looks like in practice.
Key Insights
01. The Six-Month Inflection Matters More Than Your Last Five Years
When Uber already dominated last-mile delivery, Itamar Zur, fresh out of Harvard, started another last-mile delivery company.
His pitch wasn't better technology or cheaper pricing. It was this:
“I’m going to do 1,000 deliveries myself and learn how this business works.”
Because he knew this could be done better.
I worked in last-mile delivery. Unless you deliver yourself, you have no idea what actually breaks or delights. And it's not a one-time thing, you keep driving as long as you are building, because the problems keep changing.
Most VCs told him to stop wasting time and get a real job. Matthew stayed close.
Then the money ran out. Co-founders left. Itamar called from a parking lot:
“It’s so bleak. But I’m going to fight right through this.”
He did. Veho is now worth $1.5B.
What this means for you:
The six months where you rebuilt everything after it collapsed will tell investors and the world more than the five years before when it all worked.
Show your learning velocity, not your resume. The art isn't avoiding the fire, it's how fast you learn when everything is on fire.
02. The Ten-Second Test
Matthew asks one question to every founder:
“If you weren’t doing this, what would your next company be? You have ten seconds.”
The best founders don’t hesitate.
At Y Combinator Demo Day, 140 companies presented. Most investors chased the obvious ones. Matthew saw a last name and got curious. Started talking. In his mind, he was saying to himself “This is the Thomas Edison of quantum computing.”
While the crowd moved on, Matthew stayed to have a quiet conversation. There were not really a lot of people around them.
That was Chad Rigetti, the founder of Rigetti Computing, now building Segaldry. What kept Matthew there? Rigetti already knew his next companies, in other words, the problems to tackle. Not someday. Now. He was just deciding which problem to kill first.
What this means for you:
If you hesitate on the ten-second test, you are still exploring. That’s fine but know that’s what you are doing.
Founders who move fast aren’t smarter. They are clearer. They have already mapped the territory and are simply choosing which mountain to climb.
03. Why “Best” Doesn’t Mean “Winning”
Cambridge, Massachusetts during the school year is the densest concentration of raw talent in the world.
But raw talent isn't the same as commercial success.
Cursor didn’t take off until the founders moved from Cambridge, Massachusetts to California.
Different ecosystems. Different functions. Boston builds brilliant builders. California builds commercialized outcomes. California has the commercialization pressure cooker: YC, South Park Commons, a network of investors and founders who have seen your movie before and know exactly which scene you are in.
What this means for you:
Find your tribe where the builders are. Where the craft matters and you learn from one another. When you are ready to commercialize, find the ecosystem, people who have done it. Sometimes that is where you built. Often it is not.
04. Ideas Expire. People Don't.
Matthew met a founder at a squash match right before the founder started MIT. Stayed close for years. Watched him build a consulting firm, then a 3D software company, then pivot to AI. Matthew always felt AI was this founder’s true calling.
When the founder invited him to invest in the 3D company, Matthew passed.
That company became Cursor.
The founder?
Matthew’s response? No regret. Pride. “I’m excited to see how he’s doing.” He stayed close through the pivots because he was investing in the person, not the pitch.
The truth is that anything living transforms. Your pitch deck today won’t be your company in the next 12 months.
What this means for you:
Stop optimizing the current idea for investor preferences. Focus on learning by doing. Investors betting on ideas will leave when you pivot. Investors betting on you will help you figure out what’s next.
The best founders Matthew backs aren’t attached to their first idea. They’re attached to a problem space and willing to keep trying until something connects.
05. Learn to Fail
“Entrepreneurship is an oral history. Experience and failure and struggle. Not something you can read like a cookbook.”
Matthew’s class at Harvard, Field X, teaches something counterintuitive: You succeed by learning to fail.
Imagine. You get into Harvard because you succeeded at everything. Then you take a class that says, “I’m gonna teach you about failing.” How would that feel?
Lectures, books teach us how to optimize. Failure teaches us how to survive. One gets you into McKinsey. The other gets you through the parking lot call when the money runs out. You can't read your way out of that.
What this means for you:
When you hit the wall and you will, call the investors who asked "who are you?" before "what's your traction?"
Matthew picked up when Itamar called from a parking lot with no money left. Stayed close through Aman’s three pivots. The investors who matter don’t ghost when the deck stops working.
If someone only shows up for good news, they are not on your board. They are in your audience.
In The End
Ben Horowitz once said:
“This is not checkers, this is motherfuckin’ chess. Technology businesses tend to be extremely complex... like playing three-dimensional chess on Star Trek, there is always a move.”
You think you are out of options. Then someone goes public with six weeks of cash, in the worst market ever. With a plan that sounds insane. And yet it just works. That was Horowitz in 2001.
There is almost always a move.
But here’s what no one tells you: No VC, angel or advisor sees what you see. They reason from distance. You reason from consequences.
Matthew watched VCs tell Itamar to give up. He noticed Chad Rigetti when others walked past. He knew Aman Sanger years before Cursor existed.
The best work isn’t done calculating exit numbers. It’s done with childlike curiosity in an adult willing to endure what most won’t.
Matthew invests in what can’t be tallied: character, learning velocity, whether you’ll keep going when the glass shows up.
If you’re building something that won’t make sense for a while, you don’t need more advice. You need better proximity. The kind that stays close before outcomes are visible, that sees who you are and why you are building, not just what you are pitching.
Matthew’s father worked on NASA’s 1975 space colonization program. That vision seemed impossible then. Fifty years later, Matthew backs the founders finally making it real.
Great work has never been done alone. It’s built in ecosystems, with people who believe before it’s obvious.
Find your Matthew Sutton. Someone who asks who you are before what you are building.
Your path is yours alone. But you don’t have to walk it alone.
Until next time,
Nihal
P.S. Next up: Elias Almqvist (Zettascale, YC S24) taking on NVIDIA with AI chips and Skyler Chan (GRU Space, YC W26) building hotels on the moon. Luma invites in the next email.
Watch the full conversation:
Further Reading:
The Rainforest: The Secret to Building the Next Silicon Valley. by Victor W. Hwang and Greg Horowitt — Where “Return on Involvement” originates.
The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz — “This is not checkers, this is motherfuckin’ chess.”
Yes, I’m with you on this. The investors who stay close early tend to matter most when things wobble, not just when numbers look tidy. There’s solid evidence behind it too. An Endeavor Insight study found that founders with active mentors were over seven times more likely to raise follow-on funding. Proximity builds judgement, not just confidence, and that shows up long before traction slides ever do. It also explains why some partnerships last well past the first pivot.
Do you think this kind of involvement can scale, or is it only possible with a very small number of founders at a time?
Best article I've read this week! Thanks for sharing. Brilliant 🤓