I often get asked what I look for in the founders that I invest in. The truth is that its a multitude of factors, but can be boiled down to three primary traits: perseverance, leadership, and scrappiness (PLS).
First and foremost is the ability to persevere, to deal with the many setbacks that come with building a startup and believe me there will be many. There will be many days that a founder, especially the CEO, will wonder what the hell he or she is doing here and why hadn’t they just listened to their mother and keep the steady day job. But, the best entrepreneurs have that special something that no matter how many times they get knocked down, they keep coming back. Its their reaction to setbacks that set them apart from the rest of us. One of my tricks to determining whether an entrepreneur possesses this quality or is likely to is to ask about the circumstances of their pre-adult life. Was life easy for them or did they have to overcome any meaningful adversity in life? How has their life evolved to bring them to this place? This is why immigrants tend to be such successful entrepreneurs; because often they have had to overcome significant hardships to get where they are. They didn’t grow up with money and advantage. Everything they have has come from not letting their circumstances hold them back from achieving their goals. I also ask about the professional failures a person has had to overcome, why a failure occurred, what they did to fix it or what they learned from it if it was unfixable. It’s fine to fail as long as one owns it and learns from it.
The second thing I look for is leadership qualities. For me, this does not mean an individual’s rah rah abilities or their charisma, but their ability to bring people along with them particularly in the face of tough times. This requires articulating a clear vision of the company’s reason for being and when I ask the team they can easily repeat it. It requires terrific listening and empathy skills which create trust from the team. And finally, I look for the ability of a leader to make decisions that will be supported by the team. Because after all, the definition of a leader is a person who has voluntary followers. Unlike managers who are given authority by people above them, leadership is granted by those a leader leads.
Finally, I am looking for scrappiness. This is the ability to hustle, be clever and problem solve, and get a lot done with limited resources. These are qualities you don’t generally see from senior executives coming out of big companies. That’s why relatively young people are often very effective entrepreneurs. They haven’t been spoiled by the perks of corporate office and are hungry.
One of the hardest things to do is to be intellectually honest with one’s self as to whether they really have the right stuff to be a successful entrepreneur. No one starts out wanting to believe that they don’t, but I have made the mistake of funding what are extremely highly qualified individuals from the best schools and the most prestigious hot companies who quickly folded and went back to the big company world the moment they ran into difficulty. My advice may sound trite, but “to thine own self be true”.