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What Investors Look For in a Founder, Shamelessness as a Strategy, and More.
Bring Ambition Newsletter - August 4, 2022
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1.) What investors look for in a founder
I had a conversation this week with a venture capitalist (let’s call him Nick - not his real name, obviously) who is considering investing in a vendor I use. Nick and I discussed the company/product, what I like about it, what it’s missing, and so on.
At the end, I took the opportunity to ask what qualities Nick, as an investor, looks for in a founder. If you are an aspiring or active entrepreneur, or you’re simply curious what makes one person give another person mounds of investment capital, you will want to hear Nick’s response:
They are articulate.
First, Nick evaluates whether the founder can clearly articulate what they’re doing. Many founders are incredibly technical, making them good problem-solvers, builders, and technologists. However, that over-specialization toward technical skills generally means their “soft skills” have been neglected. They may struggle to articulate the story and the “commercial argument” behind their product or service. A founder who can both build a good product and tell a good story demonstrates the critical blend of technical and interpersonal skills that investors value.
They are mission-driven.
Next, Nick wants founders who have a massive ambition to fix a problem that is personally important to them. Nick and his team will interrogate how strongly they feel about the problem and why. Usually there is some specific experience or anecdote from the person’s life that explains why they have such strong emotional ties to the problem, and that’s a good sign for investors.
They’re surrounded by a great team.
Nick will also look at the founder’s team. It is critical for investors to understand not only the talent collectively working on the problem, but the founder’s ability to attract people to the project. Founders have the herculean task of luring extremely capable people away from well-paying, secure jobs and toward an extremely risky, uncertain, and initially low-paying opportunity.
There is one final, often overlooked quality Nick looks for in a founder to invest in: they listen more than they talk. More accurately, “They use their ears and mouth in the ratio that God gave them.” Love (and plan on stealing) this quote.
I really like these characteristics because they’re like icebergs: beneath each surface-level quality, there is a mass of other implicit yet important details. For example, Nick looks for founders who can hire a talented team. This implies that the founder has the ability to “sell,” which is non-negotiable for an entrepreneur. It also implies they’re a good judge of people and character, which presumably will remain an important skill for their company’s entire lifespan. It further speaks to the founder’s determination and ability to prioritize - they make the time and find the energy to build a team while simultaneously working on the business and product itself.
The list could go on, but it shows that Nick and his team have intelligently created heuristics - or shortcuts - for evaluating a founder’s capabilities in a short amount of time. They observe A, and conclude that likely also means B, C, D, E, and F. And judging by their investment record, it works.
2.) Food for thought
“Shamelessness as a Strategy.” Here’s an interesting primer on an increasingly frequent phenomenon. The author examines how many influential individuals counterintuitively increase their social standing by leveraging shameless self-promotion, leaning into stereotypes, and/or ignoring “obvious” rules for proper behavior.
Whereas society historically has punished “outlandish behavior,” the author argues now that we’ve grown skeptical of the “obvious” playbook and instead put our faith and trust into rebels and rulebreakers.
I don’t know if I’d recommend this strategy, but it’s fascinating to have the playbook laid out so clearly and thoughtfully. At the very least it’ll be easier to recognize when someone is using it!
3.) Quote of the week
“We seldom regret the risk we take and fail. We usually regret the risk we fail to take.” — Marshall Goldsmith
(Calls to mind one of our oldest blog posts.)
4.) In case you missed it
“Optimize Your Performance With These Sport Psychology Tactics.” In our last newsletter, I shared an article I penned for Training Industry Magazine’s summer 2022 issue. This piece explores how research-backed Performance Psychology techniques can enhance and round out our workplace performance.
Thanks for reading this week’s newsletter! Hope you enjoyed and I’d love to hear your feedback — reply here or reach me via the links below.
Have a great weekend!
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