The Founder Mindset
As an early-stage investor at PJC, I spend a great deal of my time speaking with founders. Last year I spoke to several hundred founders that were building their unique version of the future — it’s a privilege being able to speak to so many smart folks each year. While having these conversations, one thing that I spend a significant amount of time thinking about is the mindset of a founder. Given that I invest almost exclusively in companies that are still seeking product-market fit, a founder’s mindset has become the single most important thing that I evaluate — and in my opinion, mindset plays the most significant role in whether a founder finds success or not. Let me elaborate.
Carol Dweck, an American psychologist, outlines that there are two types of mindsets: a fixed mindset and a growth mindset. Quite simply, people with a fixed mindset believe that intelligence is static, whereas people with a growth mindset believe that intelligence can be developed. It seems like a simple delineation, but the answer has extreme ramifications especially in the world of early-stage startups. In the eyes of Carol Dweck, a growth mindset leads to a desire to learn, embrace challenge, persist in the setbacks, see efforts as a path to mastery, learn from criticism, and find lessons and inspiration in the success of others. This leads to higher levels of achievement. That said, a fixed mindset tends to result in a desire to look smart, avoid challenges, give up easily, see effort as fruitless, and ignore useful negative feedback, which leads an individual to plateau early and achieve less than their full potential. Clearly, an early-stage investor would much rather invest in someone with a growth mindset, which is why it surprises me that I don’t hear investors talk more about this. In my opinion, it is the single largest surrogate marker of potential success in a founder and early-stage team.
It would be really easy if people wore a sticker on their shirt that revealed to others the type of mindset that they possess. However, that sticker does not exist. So as an early-stage investor, my objective is to figure this out. And as you could imagine, everyone believes that they have a growth mindset. Why would someone not want to have a growth mindset?
In order to determine one’s mindset, it is important to look beyond academics and certain forms of work experience. Some investors that I know hold academic achievement in high regard, whether it be consciously or subconsciously. The issue that I have with this is that the educational system in the United States does a really nice job teaching students to always stay on a paved path, progressing in a structured and mostly linear way. While this is rarely how one actually learns, it is how people can achieve high marks in school and progress on to study at revered institutions. Let me quickly caveat this by saying that intelligence is incredibly important and attending a great school is an indication of intelligence, but, ultimately, it does not reveal much about one’s mindset. At the beginning of each academic semester a person gets a roadmap that outlines how to succeed in the classroom — no such thing exists when building a company.
Similar to using education as an identifier of one’s potential, some investors hold big tech experience in high regard such as having worked at companies like Google or Facebook. That also feels like an inefficient method for evaluating future success because individuals can spend years saying the right things and following a playbook that leads to success in a large organization but does not translate well to starting a company. So, you may be asking, well then what do you look for?
It is simple. I look for proof that someone got off of a paved path and learned from being off that path. Most people with a fixed mindset will not get off a paved path for fear of what others will think of them or for fear that they will not be viewed as a success. As an investor, I want to know that a person had the courage and conviction to pursue a different path and that they learned while doing so. The best example of this as it applies to the early-stage startup world are people with past founding experience. The data overwhelmingly points to the fact that this category of people, more so than any other, create exit values in excess of $1B.
In my mind the founder mindset ultimately consists of initiating, adapting, learning, and coming out ahead. If this pattern continues in one’s life it is likely that they will be incredibly successful at one point or another.
