Startup grit — the top characteristic we look for in startup teams

Building a successful startup is hard. This is almost a cliche now, but few of us stop to think about what “hard” really means in this context. We talk about hiring “A players”, about living the “Ramen” lifestyle. But until I read Angela Duckworth’s excellent book called “Grit — The power of passion and perseverance”, I did not have a good framework for describing what exactly I meant by being able to stick it out to succeed. Now I am clear that success in building startups is more about grit — a combination of passion and perseverance — than it is about raw talent.

Grit is a relatively new concept in psychology. Ms Duckworth built her initial scientific data to support her theory at the West Point military academy, where the staff had been unable to develop a measure to reliably predict who would graduate and who would not. She developed a psychological self-evaluation test for grit, which turned out to be a more reliable predictor than academic and other test scores, and is still used today. In her words, highly successful people had a kind of ferocious determination that played out in two ways: “First, these exemplars were unusually resilient and hardworking. Second, they knew in a very, very deep way what it was they wanted. They not only had determination, they had direction.”

Moving on from the military environment, Ms Duckworth and others have tested the grit scale in many other areas of life, repeating the same results to determine who succeeds in high-pressure, difficult tasks. While I have not seen any systematic tests on entrepreneurs starting new businesses, it seems obvious that this is one of the key predictors of success in startups. Having spent the last 15+ years of my life as a C-level executive, founder, mentor and board member in various startups — everything about the theory of grit as a major factor in startup success fits like a glove.

Take AeroScout for example, where I was employee #7, the first business hire and a member of the executive leadership team. The company went through many ups and downs, including moving its base technology from Bluetooth to WiFi as well as suffering a down round that skirted with disaster. After all these adventures the company was eventually acquired by Stanley, Black and Decker for well over $200M. This was by far the best exit among its peers in the real-time location space and delivered a healthy return for investors. Our CEO, Yuval Bar-Gil, exemplifies grit. He inspired the management team to pursue passion and perseverance, which was critical for us to build a successful business from a technology concept.

But what about that talent thing? Surely engineering or design brilliance has an impact on the outcome of a startup? One would think so, but it turns out that raw talent is just a building block. Extremely talented people can also turn out to be unable to deliver excellence if they don’t have the passion and perseverance to create the required results. Ms Duckworth developed a great explanation for why this is so. In order to build great achievements, your raw talent is useful when combined with effort , enabling you to develop your skills faster than others. But it requires deliberate practice of these skills through an additional application of effort, to result in notable achievement. Here is the simple chart from Ms Duckworth’s book:

In short, applying consistent effort is much more important than talent in generating achievement.Ms Duckworth went on to prove in a variety of real-world settings that talent, in and of itself, had low prediction value. It takes grit to deliver the effort required to reach real achievement.

If you start to think of the examples of successful entrepreneurs, this becomes obvious. The famous quote attributed to Edison, who invented the first commercialized lightbulb, exemplifies this: “I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.” Elon Musk, a much-admired modern entrepreneur, is clearly talented, but more importantly he clearly has a passion for what he wants to achieve and the determination to push himself and his organization to achieve it, despite plenty of failures and risk along the way. Steve Jobs and his relentless drive for perfection are another example and here it is important to remember that this passion must be consistent over a longer period of time.

The key to effort is very specific, it is “deliberate practice”. This is not just hammering your head against the wall by doing the same thing again and again. It is systematic practice where you are measuring results, analyzing what could be done better, making adjustments and trying again. Yuval, my CEO at AeroScout, had an uncanny ability to raise capital, securing over $60M in venture funding, including raising funds right after the dot com crash of 2000 and the financial crisis of 2008. He had no prior experience of raising capital prior to AeroScout, but set about methodically learning, getting advice, changing his approach in response to feedback and results, until he was world-class.

We will write more in future blog posts about startup grit and what it means in detail. But first we want to emphasise to founders that this is one of the key metrics for evaluating our investments. We want to see evidence that the founders, individually and collectively as a team, have grit. And lots of it. We look at how long they have kept at it to pursue their vision against all the odds. Whether they systematically learn and improve how they operate. Teams that show high grit are much more likely to succeed and will get our money.

To learn more about grit, I highly recommend to get Ms Duckworth’s book. You can also do the quick 1 minute self-evaluation test and watch her TedX talk (which is more about the educational applications of grit).

Key takeaways:

• Grit is combination of passion and perseverance
• Raw talent is a building block to develop skills, but the consistent application of effort is more important in delivering achievements
• Deliberate practice is the key effort — systematically getting better and better over time

Andris K. Berzins
Managing Partner

About Change Ventures:

Change Ventures is the first pre-seed/seed venture capital fund with boots on the ground in all three Baltic states. We back ambitious founders based in Estonia, Latvia, Lithuania as well as Baltic diaspora entrepreneurs building their businesses elsewhere in the world. Our initial investments range from €100k to €750k, with follow-on capital available for later rounds. Our founder-friendly no-nonsense investment process is designed to help founders with big, bold ambitions get fast investment decisions. Once we are on board, we help with getting to product-market fit, raising additional funds and growing the business, leveraging an unparalleled network of follow-on investors and partners.

Find us at www.changeventures.com or email us at info@changeventures.com.