3 Founder Attributes We Look For When Investing
I’ll never forget when Laura Modi, the CEO of Bobbie, called me to share that they were going to recall their product based on an FDA concern surrounding their labeling. The company had just launched its product weeks before, and being first to market was a key piece of the company’s strategy. On top of that, we were running out of cash and needed to raise a round. The original plan was to complete this fundraising on the back of the newly launched product, so needless to say, this was a huge blow for the company.
When I think of all the value drivers in our portfolio, every single one faced at least one if not several crucible moments like this. They may not look exactly like Laura’s situation, but I think all of these founders have found their backs against the wall, scrambling to find a path forward for their business.
As seed-stage investors, we are committing to work with founders when they have very little to show. We are also committing to work with these founders (hopefully) for a very long time to help fulfill the ambition of their companies. Because of this time horizon, we end up thinking quite deeply about how these founders will respond to these really tough situations. And often, the attributes that empower founders to get through these crucible moments are precisely what gets us excited to work with them. Three of these attributes immediately come to mind.
The first is zen-like resilience.
The pressure that a founder/CEO faces is incomparable to anyone else in a company, and it’s magnified in moments of crisis. The ability to stay focused, remain clear-headed, and grind through challenges is the hallmark of the best founders we’ve worked with. This process is also a significant attack on one’s psyche, which is why I think prioritizing mental health and coaching is such an important investment for any founder. I’ve really enjoyed the show “The Bear” recently, and one of the things that strikes me about the best kitchens portrayed in the show is the combination of extreme sense of urgency AND extreme calm.
The second is customer obsession and market focus.
Often, the trigger of a difficult situation is when the founder misreads something about the market or the sands are shifting underfoot. Being able to anticipate and respond to major market shifts and identify new tailwinds to draft behind are critical skills, and will probably need to happen at least several times in the life of a successful company. The best founders we’ve worked with tend to see around corners much earlier than their competitors and make tough calls to course correct before it is obvious. Being truly customer-obsessed and market-aware gives them the best chance to be able to make these tough calls.
The third attribute is courage.
Founders need to make company-altering decisions quickly, decisively, and with imperfect information. The bigger the business and the more you have invested in a particular path, the harder it is to have the courage to change course. It also requires courage to stay committed to a course if you decide that you are indeed on the right track, and that the shifts in the market are more of a distraction than a sign that change is required. I remember when Will Ahmed at Whoop shifted their business model from a transactional model to subscription. I believe most of the folks around the table counseled him against this, but he had the courage in his convictions to advocate for what he believed was best for the business.
Each of these characteristics is rare, and having the combination of these three is particularly challenging because they can sometimes work against each other. And this is all on top of all the other skills that are needed to assemble a great team, build a great product, and bring a great company into existence.
This is why I’m constantly in awe of the founders that we get to back, and am particularly reminded of that when their backs are against the wall. And not every company is able to get out of tough situations, even with a great founder at the helm. Startups are hard! But it’s often in these hard moments that greatness is able to shine through.
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