At a VC, deals are literally the business.

But Rachel Townend's philosophy? People first, always.

As Chief of Staff and General Partner at Illuminate Financial - employee #1, 12 years, fourth fund, Rachel's watched what happens when founders get this right versus wrong.

Her take: Without the right people in the right seats, you can't do deals. It's a multiplier effect. Good people attract good people. Get the first hires wrong and everything compounds negatively.

This episode breaks down how to build a people-first culture from day one, why frameworks matter more than you think, and how Illuminate does things differently from typical finance culture.

You'll hear about sharing carry with everyone (not just deal makers), building a culture that scales, the performance and behaviour framework, and why starting early beats retrofitting later.

Rachel also covers the zero-based org chart exercise, why onboarding gets skipped, and what founders need to carve out time for today.

One action: Listen to the end for Rachel's specific advice.

More from James:

Connect with James on LinkedIn or at peer-effect.com

Most VCs work non-stop and still feel like they're failing. They do 2x the deals of their peers. They're at every event. And they still feel like they're not doing enough.

What James Johnson and Freddie Birley reveal in this episode is what VCs won't say publicly: the loneliness, the ambiguity, the constant feeling of underperforming despite objectively crushing it.

What drives this?

Founders want freedom. VCs want peak performance. When you're optimizing for achievement but venture's ambiguity makes it impossible to define what "good" looks like, you're stuck in perpetual dissatisfaction.

In this episode:

Why most VCs feel like they're failing even when they're crushing it

The loneliness both founders and investors experience (and why both jobs are more similar than different)

What actually drives each group - and why this explains why they talk past each other

How to shift from outcome obsession (exits - out of your control) to input control (craft mastery - in your hands)

For founders: Understanding this changes how you work with your board

For VCs: This is the validation you didn't know you needed

This is Peer Effect Post Bag - James and Freddie answering your toughest questions.

More from James:

Connect with James on LinkedIn or at peer-effect.com

You spent a year building a feature. Someone just replicated it in a day using AI.

This isn't hypothetical. Roei Samuel is watching it happen in real-time. As founder of Connected - a marketplace helping 5,700 fractionals work with scale-ups - he's spinning up products daily that took his team a year to build in 2020.

His conclusion? Unless you're building quantum computing or genuine deep tech, your technology moat is dead. AI killed it.

Here's what makes this different:

Roei isn't being dramatic. He built and sold a media company that scaled to 9 million monthly users, worked with the Premier League, NBA, and NFL, and joined the senior management team of a PLC at 26. He's seen what creates lasting value.

And his take is clear: product doesn't create defensibility anymore. Network effects do. When every feature can be replicated in weeks, the only moat is how your users create value for each other - and how hard that is to reproduce.

You'll learn:

Why AI just eliminated technology moats. What took a year to build in 2020 now takes a day. Your 10% optimization? It'll be copied in months. The only defensible businesses are built on network effects and brand—mechanisms competitors can't easily replicate.

What network effects actually mean. It's when one user's participation improves the experience for all users. Could be data (more users = better matching), could be multi-sided supply (Roei's fractionals average 3 roles each, solving the liquidity problem), could be customers becoming promoters.

How most businesses can access network effects. You don't need to be a marketplace. If you're good at turning customers into promoters—testimonials, LinkedIn posts, word-of-mouth - you're building network effects. The best businesses layer multiple mechanisms.

Why hiring full-time is becoming the last resort. Smart founders now think: (1) What can I automate? (2) What requires a fractional specialist? (3) Only then, do I need full-time? This isn't theory - startups on Connected average 3.7 fractionals each.

How to solve marketplace liquidity problems when starting. Don't try to build both sides simultaneously - it kills companies. Use SaaS-enabled networks: give one side free tools (dashboards, benchmarking) while you populate the other side. Roei did this launching Connected in the US.

Why you shouldn't scale until you nail cohort metrics. Don't worry about growth. Start with 150-200 users. Measure daily active usage, retention, behaviors that drive engagement. Roei invested in Lapse based purely on cohort analysis—they raised £8M seed, then £30M Series A from Greylock. Zero monetization. Just strong network effect metrics.

How to identify your specialty if going fractional. Lean into where you deliver tangible results fastest. Not what you're best at. Not what's most fun. Where can you prove ROI in 6 months? That's your first case study. That's how you build track record.

Why living out of alignment destroys everything. Roei's real mission isn't about fractional work - it's about helping people live authentically.

The reality check:

This isn't anti-product. Product still matters. But product alone won't save you when competitors can replicate features in weeks. Network effects create the compounding advantages that turn good products into defensible businesses.

If you're building a business in 2026 and you haven't thought about network effects, you're building on sand. AI just raised the stakes.

One action: Listen to the end for Roei's hiring sequence every founder should use immediately.

More from James:

Connect with James on LinkedIn or at peer-effect.com