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February 17, 2014

Since I posted my Seed VC Decision Tree, one of the most frequent requests I’ve gotten is to define what makes an “awesome founder”.  I’ve hesitated to define this because I think evaluating founders is very subjective and I hate to make anyone think I have a particular checklist or profile of founder that I’m looking for.  Since starting NextView, I’ve worked with founders of a wide variety of backgrounds, experience, and attributes.  Many of these founders share some common characteristics, but if you put them all in the room, I think you’d be surprised at their differences as well.

But, I try to respond to my readers as best as I can, so here’s my best attempt. I think there are many dozens of attributes that awesome founders have, but here are the four that I find to be nearly universal:

1. Smart and Tough. It’s just a baseline requirement. Starting and leading a company is not easy work.  Not all awesome founders are necessarily genius-level smart.  Nor are all founders UFC-level tough.  But there is a baseline that is certainly well above the top 5% of humans on both.  No need to say much more.

 

2. Convincing. Founders need to all have their own way to be convincing. It doesn’t look the same for everyone, but as a CEO, you need to convince people all the time.  You need to convince customers to use a product before they really should.  You need to convince partners to work with a no-name company at the risk of their jobs and reputation.  You need to convince employees to work their ass off for a lot less pay than they are probably used to.  You need to convince candidates to join a company that may go nowhere fast. And you need to convince investors to ascribe value to things have haven’t happened yet. Not all founders are evangelistic, charismatic, or the greatest salespeople. But almost all are able to be very convincing in their own way.

    

3. Superlative.  I’ve found that awesome founders tend to be really really great at something. No one can be amazing at everything, but I’ve seen the most success with founders that show superlative traits.  I’m always excited when I hear the word “best” in reference calls. A lot of people are “very strong” or “great to work with”.  But quite often, when I am referencing founders we ultimately invest in, I hear the person who is providing the reference almost correct me and say something like “he’s not just good…”.  This goes for folks with a ton of experience and functional expertise as well as those that are relatively raw or have no prior startup experience.  I remember doing a reference call on Stu Wall, the founder and CEO of Signpost many years ago.  Stu had no startup experience, and at that point had only been a junior consultant at Bain previously.  But I asked one of his former managers how he stacked up relative to the other associates she had worked with – top 5%? Top 10%?  “Oh no” she said “Stu is clearly the best”.

        

4. Fitting for the task at hand. Every company is different.  All around athletes are fine, but usually, great founders tend to be tuned well to the task at hand.  This doesn’t necessarily mean domain experience.  It does mean a strong overlap between the skills and attributes of the founder with the short-medium term needs of the company she is trying to build. It doesn’t do much to have a strong, technical founder at the helm of a company where technology is not a differentiator.  It also doesn’t help to have an experienced, Fortune 500 exec at the helm of a company that is all about building a great consumer-social product experience.  Many founders have multiple strong attributes, but great founders are great in the context of the task at hand.

  • http://linknovate.com Javier Cambon Sanjurjo

    Nicely stated. For those start-ups with several founders… what does an awesome founding team mean for you? Or do you mainly analyze the visionary / public speaker founder?

    Regarding teams as a whole, I remember one of @hunterwalk’s posts where he was explaining what he looks for in an awesome team:
    + ability to accomplish a technical achievement which serves as differentiation
    + key insight into product/business strategy and ability to execute
    + unfair advantage: access to distribution channel, talent or other key asset
    + sheer force of will
    I believe both ideas complement very well, execution and vision.

    • robchogo

      Those are good points. For my list, I do think that all ought to describe a founding team, but VC’s tend to weight the CEO more heavily. I find that any founding executive has to be convincing for example, if they are going to help to hire amazing talent.

  • http://adamlieb.me/ Adam Lieb

    Re: point 3. Are you usually talking about being superlative at a functional area? Like marketing, biz dev, design, or hacking? Being the “best” consultant at Bain sort of seems like a catch all type thing. He was probably personable, great work ethic, great brain power/analytical skills, which is why you were told he was “the best.” Just trying to clarify the point.

    • robchogo

      Not every founder has that much experience, but I think that some sort of superlative feedback is pretty meaningful. Considering that a large office at Bain hires 20-40 associates each year, being “the best” over someone’s 5+ year career puts you at #1 out of ~150 really smart, talented people. It doesn’t say that much about one’s functional excellence, as you point out, but does tell you something about the person’s overall capabilities relative to their peer set.

      In many other cases, the superlative feedback is much more fuctional, and totally makes sense if that function is something that is critical to the company. But I like using the example of Stu because it shows that one can be superlative even without direct domain experience.

      • http://adamlieb.me/ Adam Lieb

        Makes perfect sense. Thanks for the clarification.

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