This is the first in a 10-part series celebrating EF’s 10th London cohort, which starts in April 2018. First up, Alex Diaz — Managing Director of EF London—shares what we are looking for in founders. If the below sounds like you, apply by 31st December at joinef.com/apply
We are now reviewing applications for our 10th London cohort at Entrepreneur First, where we build deep tech companies from scratch. With each application, the question before us is the same as when we started 6 years ago: does this person have what it takes to build a high-growth tech startup from scratch?
This question is at the heart of everything we do at EF. Because we take individuals — usually before they have a co-founder or an idea — all we have to go on is each individual’s potential to form a world-changing company.
Since every company and founder is different, a perfect answer to “what makes a great founder” is both elusive and hotly debated. After speaking with thousands of candidates over 12 cohorts in two continents — and following hundreds of companies from their moment of genesis — we think we have a pretty good sense of who has a good shot to build a fundable, promising company.
What we have seen over and over is that successful founders tend to have four qualities in common:
They are highly intelligent, able to problem solve and learn quickly.
They are able to contribute work of value to an early stage company.
Great founders are able to think laterally and generate unique (even counter-intuitive!) solutions to known problems.
Successful founders want to be entrepreneurs and have the resilience to push through the inevitable adversity.
No one of these criteria alone is enough to get on the cohort. Even founders who demonstrate all of these attributes may face significant — often fatal — obstacles in building their companies. But we firmly believe that an individual lacking even one of these attributes is unlikely to succeed at EF.
What these criteria don’t include is also important: the candidate’s background, industry, view of the world, personality or passion. For these criteria, we want to select the widest and most diverse set we can — because, by bringing these together in a cohort, we see the most interesting and important companies form.
Smart people with a fast “clock speed”
We know that it is very hard for an individual to succeed on EF without having a strong ability to problem solve and learn quickly.
Research shows that IQ is one of the most important indicators of whether someone will be a high performer in a role. In particular, IQ demonstrates how quickly someone can learn which is vital for founders who have to learn a lot, fast.
No other factor matters more in relation to ability than general intelligence. Few findings are as consistent and robust as the positive correlation between IQ scores and job performance. The correlation is particularly strong when jobs are highly complex. […] You can take a group of extremely smart people and the smartest people in that group will tend to outperform their very smart (not quite so smart) counterparts… Higher IQ scores are also predictive of job performance at the team level: teams with higher IQ scores tend to perform better.
— The Talent Delusion by Tomas Chamorro-Premuzic
Skills needed at an early-stage company
At EF we have seen that it is very hard to build a successful startup if there is not a strong skillset within the founding team that’s uniquely suited to solving a particular problem.
One way a founder can be skilled is to have a unique and deep technical ability — to be able to create something that few others can. Many successful teams at EF have exemplary technical abilities, such as the machine learning and neural network expertise of Zehan and Rob from Magic Pony.
But one of the greatest misconceptions about an early-stage startup is that it’s all about the technical ability to build a product. What we see over and over is that the best teams not only exhibit the ability to build, but also the commercial and relationship skills to find customers, understand the problems and opportunities they face, and ultimately persuade them to try and buy the product. (Indeed, if anything EF companies underestimate the importance of this work especially at the early stages.)
One simplification we use at EF is to distinguish between the “talker” co-founder (usually highly charismatic and external-facing) and the “doer” (who can expertly lead a product and team). Not every great co-founding pair divides this neatly, and indeed some of the greatest co-founders are both “talkers” and “doers.” But it is clear that even a very smart, knowledgable individual will be able to accomplish little for his or her team if he or she is neither a compelling “talker” nor a “doer”.
Insightfulness and the ability to think laterally
We think the ability to think differently than others about a problem, domain, or solution is vital in a co-founding team. As Marc Andreesen puts it:
We think you can draw a 2×2 matrix for venture capital. You make all your money on successful and non-consensus. … it’s very hard to make money on successful and consensus. Because if something is already consensus then money will have already flooded in and the profit opportunity is gone. And so by definition in venture capital, if you are doing it right, you are continuously investing in things that are non-consensus at the time of investment. And let me translate ‘non-consensus’: in sort of practical terms, it translates to crazy. You are investing in things that look like they are just nuts.
We look for people that have the capacity to take a different view than everyone else, with a chance of actually being right. In our experience, founders tend to generate the best insights about areas they know well — what we call Edge.
- An insightful technical edge may know how to build something others think can’t be done
- An insightful domain edge may know a “dirty secret” about a sector
- An insightful product edge may know something counter-intuitive about how users behave or think
We are looking for the individuals who reject consensus decisions to create new opportunities. We want people who question fundamental assumptions others take for granted. We love people who enjoy lateral thinking puzzles.
We look for individuals, in other words, that have something weird or surprising to say about the areas they know well.
Committed to being a founder despite inevitable obstacles
In general, across a number of jobs and industry, motivation to a particular career path is a core component of success on a job. This is especially true of founding a company, which is one of the most emotionally, operationally, and intellectually challenging roles a person can take. Not surprisingly, at EF, motivation scores were consistently more correlated with eventual raise outcomes than almost any of the other factors assessed by the team.
[In hiring] I look for people who, at least in part, define themselves by their work. Their personal identity is intertwined with what they do and how successful they are. It’s those attributes that will keep them engaged and striving to succeed long after they are tired and worn out. It builds the mental toughness needed to be successful, especially in the start-up world.
— Daniel Portillo, Greylock
While EF works hard to accelerate the journey for entrepreneurs — to remove roadblocks, help you avoid mistakes, and magnify your outcomes — the journey will only be suitable for the most committed individuals.
Does that sound like you?
If you are a smart, skilled, insightful person committed to the co-founder journey, we’d love to hear from you! Now’s the time to apply to EF.
Alex Diaz is London MD at Entrepreneur First (EF.) EF runs full-time programmes that fund the most talented scientists, engineers, developers and industry experts to find a co-founder, then helps those teams grow their businesses and raise funding. We’ve built >100 companies worth >$1B so far.
We currently run programmes in Berlin, Singapore and London, you can apply here or sign up below to get advice from the EF team on your startup journey.