Our framework for understanding Founders and avoid “Voodoo Investing”

Bruno Raillard
Mar 13, 2018 · 9 min read

Someone famously quipped that VCs were “recruiters with a checkbook”.

This proves so true everyday — across all investment stages of course, but particularly during the seed phase when Founders quality is the ultimate proxy for almost everything the startup can become and achieve.

But in spite of this, I frequently come across fellow investors who keep asserting that “finding the good entrepreneurs is merely a matter of experience”.

Please — just read this book

While experience obviously teaches a lot, each time I see this kind of statement it reminds me of voodoo hiring (as best described in “Who”, the famous recruiting classic) — “voodoo investing”, if you will.

What they call experience looks a lot more like gut-feel, if you ask me. Actually I don’t think that you can somehow reach a “magic touch”, black-belt-like level whereby you would “just know’em when you see’em”.

The game is not about assessing what the founders ARE, it is about making an educated guess as to what they can become. Intuition alone cannot help you do that.

But I do believe that you can capitalize on the experience you accumulate over time by applying it methodically on a structured framework, and by iterating on this framework with a short feedback loop. We are “recruiters with a checkbook” after all, so why couldn’t we fish in the recruiters’ playbook ?

“The main reason nerds are unpopular is that they have other things to think about” — Paul Graham, Hackers & Painters

So I thought that a good starting point was to share the framework we currently use at Otium Venture. But let’s clarify a few things beforehand :

  • This framework must be understood in conjunction with our investment goal. We are seed investors looking to back Bn$+ companies, and we think that only outlier entrepreneurs are able to build this kind of company. So this is definitely NOT about identifying well-rounded, lookalike McKinsey robots, nor is it about crafting an imaginary “standard profile” for successful entrepreneurs (spoiler: there is no such thing)
  • This is not about applying a rigid questionnaire. All of this is a multi-threaded discussion that occurs over the course of several meetings, coffees, lunches and reference calls — we want to see how the discussion evolves over (a short period of) time
  • Although you can draw many parallels, this is not a hiring interview process : we want to evaluate individual skills, but we also spend a great deal of time on team skills & dynamics— both for the founders team as a whole and for the “founders+investors” team
  • A framework is nothing more than a method — this does not warrant that you can’t still fail miserably in your assessment
  • This is only one (significant) part of our broader investment diligence framework —which looks very much like what Louis Coppey has described in his awesome post on the matter

🔬Our framework for understanding Founders

We have summed up our diligences around 6 key areas we want to test over the course of our interactions with the CEOs and the founding teams :

  1. Grit & contrarian mindset: we are looking for teams that will be in for the long haul, are powered by a sacred fire, and have a secret goal
  2. Learning curve & hacker mindset: we are looking for teams that will demonstrate a steep learning curve, have an insane ability to focus on what really matters and find smart hacks to go faster
  3. Strategist mindset, business sense & product skills: we are looking for teams that will be able to both (i) strategize the key phases to building a massive business and (ii) pick the good business milestones and product features to laser-focus on in the short term
  4. Leadership & people skills: we are looking for teams that will be able to (i) attract the best talent there is, (ii) sell themselves to their first 50/100 customers and (iii) convince investors over time to jump aboard
  5. Founders complementarity and dynamics: we are looking for teams that will be able to stick together, have each other’s back, and augment one another
  6. Investors/founders dynamics: as investors, we want to have a strong conviction that we will be able to work efficiently with the founding teams. We are looking for a common “secret language” we will share with them that will make our relationship ironclad

For each of these areas, we want to make sure we will be able to write a short paragraph in our investment memo giving our final assessment on each topic (also including improvement areas to watch).

🚧Implementation phase

Now I’d like to dig deeper and share a few questions that we may ask ourselves in order to get a good sense of where the founding teams lay on those 6 areas. This is by no means exhaustive and there is no such thing as a unique “good” answer — also many of these questions might be not applicable at the same time. Sorry if this looks a bit like a bucket list, but the point is precisely to have multiple angles to test over time in order to reach a good level of confidence on each topic.

For grit & contrarian mindset:

  • What drives them : Is it greed, mania, power, impact? This needs to be something deep and we spend a great deal of time identifying this
  • Do they have a contrarian mindset? What is it they see that most people can’t see, in a Thiel-ian kind of way? How deep is this anchored within them? This one is key too, because we are not searching execution plays but rather looking for asymmetric bets on big visions
  • How ambitious are they? Would they be able to turn down early attractive offers to exit?
  • For how long have they been working on this project? What did they achieve in this timeframe?
  • How often are they talking about potential buyers and exit valuation (not a good sign)?
  • What can we find in their past experiences & academic training that indicates a hard-working, over-achiever mindset?
  • Did they encounter setbacks in the past (in this company or otherwise)? How did they overcome them? How committed where they in these past endeavours? How does it make them stronger?

For learning curve & hacker mindset:

  • How quickly & how often do they act on feedback and new ideas they collected along the way? This one is key because this is an early indication of their learning curve — and a startup only grows as fast as its Founders’ learning curve
  • Do they have an history of hacking stuff? e.g. did they launch an eBay arbitrage business or a lead gen engine for psychologists when they were 15yo ? Bonus point++ if they have developed a funny-named, game-changer internal tool for their current startup (wink wink Firmin Zocchetto & Charles Thomas)
  • Do they know their company inside out? Do they master the key figures of their business? Can they play with the key drivers of the business model they want to pursue in an agile way?
  • How organized are they? How concise are their messages? Their speech? Their slides (optional) & other material?
  • How thorough / methodical have they been when they built their business plan?
  • Weak signals — how reactive are they in meeting & e-mail follow-up?

For strategic, business & product:

  • Are they able to articulate in a few strokes their secret plan to deliver their vision? If we stood in their shoes, would we articulate this plan in roughly the same way? This one is crucial, because this is actually when we finally know that we have found a common “secret language” that will cement our relationship with the founders for several years
  • Are they able to constantly shift back and forth between (i) a strong focus on the short term challenges and (ii) zooming out to prepare the next strategic moves for the secret plan?
  • Do they have an edge in the market? How did they come across this idea? Do they have a previous experience that triggered this new venture ?
  • Do they have a good business sense? How much do they know about their customers and their needs? Is it superficial or did they dig deep? Do they know the inner workings of a few of these companies? How does this inform their business strategy?
  • Have they been able to give themselves access to key decision-makers in some of their potential clients? Are they able to hold enterprise-level business discussions?
  • Are they good “product pickers” (kudos to Point Nine Capital and Michael Wolfe for putting it so nicely)? i.e. do they have great intuitions for how to build the MVP with the highest impact on clients?

For leadership & people skills:

  • Sales(wo)manship — How quickly can they sell me into the vision? How brilliant are they at making me see the future they envision? This is important as a CEO’s core job is to always be selling — to each and every person they meet, candidates, clients and investors alike
  • As an employee, would I put this company on my shortlist to go and work for? Why/why not? Do they make it stand out? Do their core values resonate with me?
  • Are they able to show weaknesses and own some mistakes they have made? Or do they keep trying to show a strong, ironclad, infallible face?
  • How many people have they already hired? Are these consistently A players (we also want to sit down with each one to assess this)? How do they assess them? How do they provide guidance and feedback to them?
  • Have they already fired people? How many? For what reason? How long did it take them to realize the fit was not good?
  • What kind of manager do they think they are? How have they organized work with their first hires?

For founders complementarity & dynamics:

  • For how long have they known one another? Worked together? Do they share the same secret & long term commitment?
  • How did they get together? Can they each articulate their precise role?
  • Is their a clear, undisputed leader that sticks out when needed?
  • Are each of them able to own their area of expertise, and communicate clearly about their achievements and challenges?
  • Are each of them able to articulate the vision?
  • How do they collaborate to answer questions that are “on the edge” between several areas of responsibility?
  • How do they interact in meetings? Do they respect one another? Do they keep interrupting or contradicting one another? Or is it a one-man-show?
  • Do they show a strong appetite for getting their hands dirty and getting stuff done themselves?

For investors/founders dynamics:

  • What are the dynamics of our discussions? Are we progressively finding this common “secret language” that will be the cement for our long term collaboration?
  • Are they able to listen to feedback and different opinions, while keeping a strong backbone on a few core principles?
  • How do they act on this feedback it (i) on the spot and (ii) in the following days/weeks?
  • Are we all able to get messages across in a functional, mutually respectful way?
  • Do we have an indication that we will be able to contribute to the project?
  • How curious are they of our opinion & ideas?
  • Are they really listening to our questions and trying to dive in, or are they systematically trying to dismiss them?
  • How do they interact with the more junior people on our team? Do they treat them with respect? Do they listen to what they have to say?

🚀One last thought

Again, this is not a secret equation that makes us 100% certain to pick the right teams.

But we are convinced that by having an explicit framework and covering each theme with good discipline we will be able to (i) foster a richer, more objective discussion in our investment committee, (ii) significantly reduce our failure rate as investors, and most importantly (iii) prevent many entrepreneurs from working with an investor that is ill-fitted for them.

A big thank you goes to Pierre Entremont for his insightful comments !

Hope this post makes you feel and think stuff — so please give me a shout in the comments.

Ah — and also, one last piece of advice: if by chance you happen to back this kind of founding teams, don’t forget to check back on them at least every month, because otherwise there is a fair chance you won’t even recognize them the next time you see them 😀


We are the first believers.

Thanks to Pierre Entremont

Bruno Raillard

Written by

Seed investor at frst



We are the first believers.

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