A startup with

investor DNA

Founders looking at founders

About a year ago, a longtime colleague of mine and I decided to branch out on our own. We’d built trading systems. We’d built social web applications. We’d built iPhone apps. And we realized that what kept us interested and motivated was the opportunity to build new things from scratch with awesome people.

So, how to craft a job that lets you do that over and over? If you have an infinite supply of money, then you can build whatever strikes your fancy (and you don’t really need a “job”). If you don’t, then you’ve got to fund your creative endeavors somehow.

In our case, the clear solution was to unite and conquer. We set up a consulting shop with an exceptionally talented team (design+development) and hit the phones (or, more accurately stated, the Internets). Our target market: startup founders. They were the ones confronted by the most daunting of challenges — how to take a nascent idea and breathe real economic life into it. At that stage, there are a thousand choices to make at every turn: who to target? what features to build? what platform to start with? which frameworks to leverage? etc…

All of a sudden, and without exactly intending it, we found ourselves in the same position as VCs do — we hadn’t yet provided anything of value to these founders, and yet they were pitching their ideas to us, making the business case for their startups, and asking us to share the risk with them, to bring our experience to bear in the hopes that together we might build a successful company together.

Of course, we were pitching too — realists that we are, we wanted to work for cash, not equity (for now) — but darnit if we didn’t find ourselves in the catbird seat, getting to hear all these cool ideas and deciding which were ripe for plucking and which needed more time to mature. Over time we started to develop an intuition for evaluating founders and their startup ideas, and the likelihood that they would succeed. Here’s a basic rubric:

• Responsiveness: how responsive is the founder to queries? You can measure this both by how quickly they reply to emails/trello cards/beta builds, and also how thoughtfully they reply. Does it take a few days to get feedback, or do they let you know immediately? Do they drill into the details, or do they gloss over it?
• Clarity: is the founder able to articulate their vision clearly, and to apply it to the specific tasks involved in building a product and a business? When new information becomes available, how capable is the founder at revising the vision to conform to that new information, and communicating it outward? How well are they able to tailor and re-tailor to achieve optimal product/market fit?
• Prioritization: how aggressively does the founder prioritize, and how adamantly do they enforce that prioritization? This affects every aspect of the startup: branding, audience targeting / product positioning, graphic design, feature selection, etc. Some things are worth spending time on, some aren’t. If the founder isn’t cracking the whip in this arena, nobody else will until it’s too late.
• Pragmatism: when the founder encounters bumps in the road, do they spin their wheels trying to power through? Or, do they take a moment to rationally re-evaluate the terrain and find a new best path forward?
• Commitment: this is a lame term for a very real criterion — is the founder full-time on the project? If the idea is just a side project, that’s a huge strike against it. It’s impossible for anyone to bring their full passion to bear on a side project, and making a startup succeed will require nothing less than a founder’s full passion.

So that’s what we at Proto have termed the “RCPPC” or “ruh-kup-puc” litmus test for founders. Just kidding. That’s a stupid name, and a stupider concept.

The point is that startups abound these days — or at least, startup ideas — and in our business (yes, we are a startup too) it’s imperative that we pick winners, both for the sake of our portfolio, and more immediately, to ensure that the cash to sustain us will be available. Besides, it sucks working on a product that doesn’t succeed. We, too, pour our hearts and minds into the work we do, and we really really want it to result in successful products.

As rumors of increased investment fervor proliferate throughout the Eurozone, we are excited about continuing to help great founders bring their products to life. No, we aren’t a VC, but we invest a hell of a lot in the work we do.

Andrew / Proto