- Today, we're gonna look at
what investors look for in a founder.
What trait are they actually looking for
in a startup founder?
- [Narrator] This is Raw Startup.
- I sat down with three incredible investors
and they're gonna be very straight on
what they're looking for.
- It's the whole kind of phenomenon
of wantrepreneurs, right?
People who like the idea of being an entrepreneur
but when they come to it, can't really do it.
- This ability to change your mind
and to be comfortable changing your mind as you go
based on new data, based on new insights,
I think it's also mission critical.
- And that just doesn't happen
if you haven't got a founding team that has huge ambition
from day one.
- Because, they might have a great idea,
but boy, they're curious.
They might have three or four more great ideas later.
- In the final part of the video,
you'll see things they will never
ever compromise on in a founder.
So stay tuned for that.
So we started out with doing a big, big brainstorm
where all the investors came with ideas
and what they're looking for in a founder.
And as you can see, there is quite a bit here.
- The list is very long,
and the reason for that is because I think
there are very few people who actually
have all of these qualities.
And there are a very wide variety
of different types of founders out there.
- Obviously it'll take a little bit of a superwoman
or a Superman to have all of this.
- They have different value.
They have different backgrounds and styles
and risk tolerance.
And that's incredible how they manage to
leverage all these differences to build massive businesses.
- Yes, all founders are different
but there are certain things that the investors
really need the founder to have.
Next, we voted three things for each investor,
what are the three things you cannot compromise
on in a founder?
So this is a ranked list
with the most important stuff on top.
So here we go, let's start at number 10.
Number 10, hardworking.
We actually had hardworking and grit on the list
and they're a little bit different.
Hardworking means putting in the hours,
grit means, can you keep going
when things become really difficult?
- So you probably need to be hardworking
and some grit to keep going.
- Just know that it will be hours,
it's gonna be unending hours for 10 years
and so much of your life,
and so much of Ramen noodles, as you say.
(indistinct), it's all of that mixed in,
it's hours and hours of all of it.
- It's like, it's a learning curve
but you can't accelerate that,
it's like consistency
and putting hours will bring you there.
It's not enough to be passionate,
it's enough to be strategic or visionary,
sometimes like with accounting, right,
or with any kinda boring exercises,
you just need to put hours on it,
there's no way out, right?
- It's the whole kind of phenomenon of wantrepreneurs,
right, people who like the idea of being an entrepreneur
but when they come to it, can't really do it.
I think a lot of that is because
they don't want to actually work hard on the boring stuff.
And the reality is
there's a lot of boring stuff that is not sexy,
not cool, pretty tedious, pretty pedantic.
And a lot of that stuff ends up in the hands
of the the leadership actually,
particularly in the early days, right?
- Yeah. - So,
and some people just shut up and do it
and others complain about it and they won't get there.
- I remembered what my coach said, you know what?
When you're ice skating and general in sport,
it's not the most talented person wins.
The person was willing to put more hours and more hours
and more hours practicing the same elements,
that's the one who wins.
And it's really hard to find those.
- That's exactly right Olga.
The more practice you get, the better you get.
It's true for an ice skater, as well as a founder.
Number nine, adaptable
- Things are gonna change, you're gonna change.
You're gonna get more success,
10 year, you meet these people when they're 20,
they're totally different at 30, completely different at 30.
- This ability to change your mind
and to be comfortable change in your mind
as you go based on new data, based on new insights,
I think it's also mission critical,
maybe as much as ambitious, because if you just dig in
and you know, you are no longer relevant,
it doesn't really matter how hard working you are,
how much grit you have,
you're just like digging in the wrong direction.
But if you can't read this alerts and changing environment,
change your mind
and change your team composition, change your product,
change your go to market strategy.
I think that's critical.
- Number eight, ambitious.
- Because in order to build something big,
you need to think big, you gotta have this way of thinking
where you can just like, think about reshaping things,
creating industries, changing the industries.
It's a lot of self confidence in that as well.
But I think it's the premise.
There's also another thing,
there's like ambitions when people want to succeed.
This is kind of overlaps with a lot of like resilience,
and persistence, greed.
When you want to change things so much,
you have this desire to just continue,
despite failures. - Yeah.
- Ups and downs, you have this ambition to do that
and you're gonna do it, no matter how hard it would be.
- The model that you have as a VC firm
is that you take a number of extremely risky investments
because you're investing early stage and the reality is,
most early stage companies don't work out.
But that's okay because the belief and the hope is that
the few companies that do really succeed,
succeed in a really big way.
And that just doesn't happen
if you haven't got a founding team
that has huge ambition from day one.
- Yes, that's it.
They're looking for people that wanna change the world.
And that really takes us to the next one.
Number seven, rebellious.
Take it away Suranga.
- Founding a company is kind of a
pretty rational thing to do.
Most of the people who are founders are really smart,
really able, often highly educated, talented people.
They could very easily go and join
any number of large companies and be incredibly successful
and have a pretty straightforward life,
but they decide to throw all of that away
and go into this crazy scenario
where they're eating Ramen every day
and trying to do this thing that
everyone else thinks is a crazy idea.
And I think again, the reason why that gamble works
is if the bet that you are making
is sufficiently contrarian.
If it isn't contrarian,
if what you are doing is essentially a small iteration
or an extra feature on something that already exists,
then I think it's really hard to succeed
because whoever is doing something that's similar already
will probably move into your space
and probably do what you are doing.
And even if not, the value you are adding on top
of what's already there is minor.
So you've taken all this risk,
you've done all this crazy stuff, but the payoff is small.
So for me, if you're going to be
a venture investor or an angel investor,
if you're going to be a startup founder,
you need to start with an idea that's audacious.
You need to be a person that's rebellious
because that's how you ensure
you are taking almost enough of a risk
to be able to actually make this crazy bet
that you're taking with your life worth it.
The other reason I pick rebellious is
because I just like those people.
You know, at the end of the day,
I enjoy working with people who,
they have their dark days when things aren't working,
but at the end of it,
there's this small smile that creeps over their face
and that basically says,
fuck it, I'm gonna try again anyway tomorrow.
- Number six, focused.
There's always options to go in all kinds of directions
but you have to make some hard choices,
focus on certain things.
Take it away Olga,
- In my portfolio, I have this incredible person
who is just like always example of staying focus.
So he's doing intermittent fasting
and he designs his workless schedule
that when he does 24 hours intermittent fasting,
he doesn't answer emails, he doesn't pick the calls,
he's just grinding in a accordance with things
that are like on top of his list.
And he does that twice a week.
He lost a lot of weight,
he looks absolutely great,
he doesn't (indistinct) anymore.
And you know, that's one of the most successful companies
in my portfolio right now.
It's a whole new level of staying focused
and how you kind of optimize
all of your routine to maintain this focus.
- I remember at GitHub, Chris would always say,
does it help the developer?
Does it help the developer?
And that was always the question.
It was kinda the only question, does it help the developer?
And so, I find myself when I meet founders
like I ask him, okay, cool, you made something,
you have this service, what's your philosophy around it?
Because when you go to the market
you're gonna have a little bit of service and product
and a little bit of philosophy about what you think
this is gonna bring to the market.
And I think it's really important to stay focused
on what you're doing and why you're doing it.
And don't let people and things and events,
whatever comes your way change that focus.
I think it's really important.
And so I lived by that,
brought a lot of success to the company
if we just stayed on one path.
- What Paul says here is incredibly important.
Chris, who was CEO and founder of GitHub kept saying,
does it help the developer?
He did not want to do anything
that didn't help the developer.
It's really good to have some kind of overarching philosophy
that keeps you focused.
In GitHub's case was it,
don't do anything that doesn't help the developer.
- I would say that I quit as a CEO
when I realized I was gonna lose my focus.
You know, I spent almost 10 years building my company,
by the end of that period,
I was probably the world expert, certainly in the top three
in the extremely narrow focused world
of online video advertising.
I knew freaking everything that anyone could know
about online video advertising at that point in time.
But I had known for a year or two that I was bored of that
and that I really wanted to do other things.
And it was when I realized
that I wasn't going to be able to maintain that focus
that I started to think, you know, I've got to move on.
- There's really a dual focus here,
there is a personal focus for the founders
and there's a focus for the company.
You need to have a little bit of both.
You don't have to do 24 hour fasting,
you know, you can, but you don't have to.
Okay, well are halfway there
and remember this list is ranked,
so the most important stuff is up top.
Number five, curious.
- I really love people, founders, whatever,
people who are curious
about how things could work differently,
or curious about how things could work
outside of their own ponds,
who don't really settle for
one solution that is commonly accepted,
like dogmatic homeless approach.
We're curious to try and fail and try again
and pay attention to things that happen around them.
- It's always great when you meet someone who says,
let me tell you how this
like particular part of the world works.
And let me tell you how I'm gonna change it.
And they can only make that leap if they are curious, right.
If they really keep digging, keep digging, keep digging,
keep asking why?
They're like, I mean, it's like a five year old, right?
It's the classic kind of cliche thing about a five year old.
They always just say why
and you answer a question,
and they say why to that as well.
And you answer that question, they say why again.
And I think founders are a bit like that
and it can be annoying at times, but actually it's kind of
what gives them their secret power.
- I know founders that they have so many of these trades,
they have like, they're curious about this weird thing,
and they have this habit and it's like, really?
How'd you get into that?
And then they have a story behind it.
And then there might be two or three of those.
So I think there is something to that.
And it's just not the one thing they're making
but it's why you invest in people, you know,
because they might have a great idea,
but boy, they're curious,
they might have three or four more great ideas later.
- Number four, emotional intelligence and empathy.
- You know, when they talk to investors,
they're gonna build this rocket ship to Mars
and it's amazing.
And the investors wanna hear that,
but you gotta ask 'em how do they think about the market?
And if they go to the market
with the same rocket ship story,
it's not gonna work.
And the market's gonna say, that's not real
and they're gonna reject it
and they're not gonna trust the company
that's selling them the service and they're gonna move away.
And the company's gotta hear kind of both,
they gotta kinda hear the rocket ship story
but also the reality
so they know where their daily life is.
So I think you need a founder
who has emotional intelligence ingrained,
and they know how to actually read the room
and how to work with the room
and how to be honest and trustworthy,
but at the same time,
you know, tell the story of the future.
- To do that really well over a sustained period of time
requires emotional strength.
And there's a great talk that
Travis from Uber did at one point
where he talks about the sort of strain
on being a founder and CEO, because of these
subtly different narratives
one has to have for different stakeholders
and how as you say, it's the same narrative underlying
so not like, it's not about being dishonest,
but you have to be able to modify that.
And the reality is there's a gap
between each of these, right.
What your employee knows and needs to know
is different from what your investor knows and needs to know
and what your customer knows and needs to know.
And he describes the gap in between those things
as being an emotional weight
that a founder has to or a CEO has to carry.
And actually that puts weight on you and it's tiring
and it's exhausting,
and over time it can really drag you down.
He talks very eloquently and actually very openly
about some of his issues around anxiety and stress
and all these sorts of things.
And yeah, it's an amazingly important quality
I think for people to be able to have, and it's not easy,
and it's one of the things that makes that job really hard.
- It's interesting how a founder has to have multiple heads
and understand when to switch
and what is expected of him or her
given where he is in his journey.
- So this is not only
about emotional intelligence and empathy,
it's also about being adapted in your empathy
when you tell the story to different kinds of people.
Number three, passionate.
- When shit hits the fan, and you need to carry on,
you need to have something
that would just like keeps you going.
And to me, passion is that things that keeps people going
when things don't necessarily work as you want,
you need to always be obsessed and believe
and want something so much
to completely ignore things that don't work.
I mean, it definitely has downsides as well.
Just, I can't ignore things that don't work for too long.
- What can I say?
This is important.
Passion can be the fuel
that takes you through the hard times.
Number two, grit.
- Grit is just the quality
and the ability to just grind it out,
even when absolutely everything is against you.
I know I felt this
at numerous points in my journey as a CEO myself,
I remember somewhat fondly, somewhat painfully,
weeks spent in places like New York
knocking on door after door after door,
trying to sell and basically getting no after no after no,
and sometimes not even getting a no
because the person wouldn't even
bother turning up to the meeting?
So I just remember how painful that was
but also how that grit, that it sort of creates in you
means that you just don't take no for an answer.
Every company I have worked with goes through secondary
or tertiary periods of this at some point,
there's a competitor who brings something out
that changes your model,
there's a big player that suddenly moves into your market.
The market changes underneath you
or you lose some critical people or whatever it might be.
And so I find that, you need a founding team
that can just keep going in those moments
and have the belief and just keep pushing.
So to me, that's super important.
- Sometimes I run into founders and they have this belief
that their product is just amazing,
and they believe that
it's just gonna get accepted by the market
and people are gonna start using it,
and it's just gonna take off
and they're gonna have no problem making money with it.
And I meet them in the beginning,
and then when I tell 'em,
if you really wanna go after the market,
you really wanna understand your customer.
It is such a load of work.
It's grit, it is gritty, gritty work
where you spend months and months talking to customers,
figuring out how they use your service
versus another customer.
And figuring out how to make it better
for a market in general
and a specific customer weighing the balance between,
do I accept all the requests
or do I have a philosophy on how my service should work?
So it's, I don't think they understand the level of work
needed to actually get product market fit
and keep getting product market fit.
But it is a lot of work and it's just like anything else
if you prepare for a speech relentlessly,
you'll give a great speech
and if you don't, you won't.
And I think it's the same thing with a founder.
They have to understand the level of work
they're gonna get into.
And they don't.
No one does 'cause you don't until you start.
You wouldn't start maybe if you knew, right.
But then when you get into it,
you gotta have that passion that gives you,
and that allows you to have the grit to get through it all.
So I think it's really important.
- I think grit is also important
because there are so many factors
that don't really depend on the founders,
like market timing, market environments, a global pandemic,
that just can't happen.
Like this shit just can't happen
and there's nothing you can do to control it.
And this ability to perceive,
ability to just like you mentioned, guys, continue
despite whatever is happening
and finding that internal source of believe in yourself
before other people believe in, it's super powerful,
but it's also super rare.
A lot of people give up
before they have an opportunity to task,
to validate their idea for substantial amount of times.
People try five times and then they give up.
And those people who choose to try 200 times
and they succeed.
- That's right,
you have to have the grit to keep going.
And we are at number one.
(drum roll plays) Number one, trustworthy.
- Trustworthy may not sound like
the sexiest word on the list, but it's really important.
I always like to point out that the average marriage
in the UK and the US is about seven to 10 years.
So that's what I'm doing,
I'm getting married to the founders.
And it is guaranteed that just like any good marriage,
there will be good times, but there will also be bad times.
And if you're not at least honest with each other,
it's so hard to make that work.
So I don't mind that things will go wrong,
I don't mind that mistakes will be made,
but if you can at least be honest with each other,
that helps.
I think it's actually a very hard thing to measure for,
you could ask the question, are you trustworthy?
I think most people would,
it's a classic logical totology, right,
anyone who's not trustworthy would be untrustworthy
and say yes.
So it's very difficult to test in the short period of time
that you have to get to know someone.
- Yeah, you're right.
It's hard to test in the beginning,
but a sole founder who wants to build a team around them,
I think that's dangerous.
I think when you find somebody
who has a whole crew that they've been with,
even if it's one or two people,
that says a lot for trustworthiness
- Once you have an untrustworthy relationship,
people are not really there for each other.
And when difficult stuff happens,
it's very hard to have those direct conversations quickly
that you need to have sometimes,
you know, many companies go through touch and go moments.
And if you can't speak cleanly and clearly
without politics in those moments,
then it's really difficult to maintain success.
- I agree that trustworthiness credibility
are one of the most important things,
especially as Suranga said
as you get into this long term marriage
and hopefully without ugly divorce.
- That's it for trust, but let's be really clear here,
investors will not back a founder they cannot trust.
They all agree on that.
We started out by saying that all founders
are very, very different and this is true.
I've met all kinds of founders.
That's it,
there's certain things that a founder needs to have.
If you look at the top five here,
I would say you need to have all of those.
They are a requirement,
and the rest of the list, you actually need most of them.
Almost all of this top 10 is a requirement.
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