The DNA Of A Great Entrepreneur
How do you recognize a great entrepreneur? It comes down to a handful of key personal characteristics.
Recently, I took a look back through fifteen years of our investments. A half-dozen stand out as companies that made a huge difference for our fund and our investors, as well as their management teams and their customers. As I looked at the performance data, my thoughts gravitated to the question: What did these highly successful companies have in common? They were all software-based companies, and all were related to the Internet in some way. Although in diverse businesses (travel booking, video delivery, text messaging, advertising, and electricity delivery), they all had a clever insight into how value can be created for customers by delivering part of an important value chain much better. These are all enabling factors, necessary but not sufficient to success.
The most powerful common factor in these big successes was an outstanding CEO. That’s not a revolutionary thought: many venture investors will tell you that the team is the most important factor. In my experience the CEO individually is the biggest factor: in a startup a great deal depends on the CEO’s personal performance, and s/he recruits and shapes the rest of the team.
So, how do you know these people when you see them? What traits do you look for?
Start by looking for someone who is a top-decile sales person. John Fisher emphasized this early in my venture capital education. Usually great CEOs are skilled networkers and self-promoters. They are good speakers and command respect from people they meet. But they can’t be all about themselves; they need to be promoting their company, products, and team, making their new company appear important. And they have to be practical and self-aware, too. Entrepreneurs have little room for error, so if they are on the wrong course they need to correct fast. People who take their own PR too seriously often can’t do this.
Great entrepreneurs are high-energy, positive, and charismatic leaders. They must recruit and build a highly loyal and motivated team by selling a vision with little money behind it. The entrepreneurs I know have different styles, but all of them can launch a powerful charm offensive when they need to.
Great entrepreneurs are passionate about their product and business. They do what they do because they want to make something happen, to change their world. Tim Draper warns new VCs to beware of entrepreneurs who are there for the money: they will disappear when the going gets tough. Those who are there for the impact will keep going.
But they are not dogmatic about their business. They keep processing customer feedback and drilling down where progress is faster or slower, they modify their beliefs, and they adjust their strategies. For our top-performing businesses, the strategy that won was always related to the strategy with which the company began, but it had evolved significantly, particularly in the go-to-market model or monetization method.
Great entrepreneurs are tireless and hard to stop; some are relentless. Usually they are fit people, because you need a strong body to run this course. Of the six people I have in mind, three were in their twenties and three were mid-career when they started their businesses. Two are women and four are men.
All of my top entrepreneurs are truly smart and clever people. But they are not Einsteins who go into the office, close the door, light the pipe, and come back with a blinding insight. They are smart about how to lead a team to solve a problem or reach an objective.
The CEO needs to have strong business instinct: ability to sense how the customer sees the world, what s/he cares about, where you can take money out of the market, and how to structure a deal to be a big win for both sides. This is different from analytical smarts: it’s a gut sense of where opportunity lies and how to sew it up. Most of our top CEOs are not deep technologists, but they are comfortable with the tech.
And finally, great entrepreneur CEOs have respect for every stakeholder: they listen, consider, and keep relationships strong. This can be tough because starting companies is extremely intense and the demands fall heavily on a few individuals. The company naturally comes to feel like a personal creation, and that makes it easy to dis the other fathers and mothers of success. That’s an illusion. It takes a team to win, including investors and others outside the company; the early contributions matter in the end (because without them you would never get to the end); and you never know whose help you will need next. The best CEOs know this deeply.
These outstanding people are hard to find. That’s a big reason I constantly refine my understanding of what to look for. And when I do find an outstanding CEO, or one I know decides to start the cycle again, I am very psyched to work with him or her.
Originally published at www.forbes.com on March 21, 2016.