01. Qualities of a winning founder

Estimated Time

• Reading: ~5 minutes
• Video: ~16 minutes
• To Do: ~20 minutes

To Do

Top Insights

• Are they solving a problem that has personal relevance?
• Are they building a great product?
• Can they recruit talent to join their team?
• Do they understand their customers?

Spotting a Winning Founder

• Resiliency & desire
• From Jason's blog "You don't have what it takes" [Sept 2015]
• He says to look yourself in the mirror and ask these three questions

1. “Am I willing to sell everything I have to get one more month of payroll for my team to keep this company going?”
2. “Am I willing to max out my two credit cards and go $20,000 into debt to keep this startup going?”
3. “Am I willing to ask everyone on the team to work for deferred salary while I try and save this company?”

• Jason wants to know - is this founder focused on their company completely or do they have other goals?

Additional Tells of a Great Founder

• There are a lot of people who think they have what it takes to start a company.
• Those are people who want to "play" founder
• They are people who:
• Are willing to start companies if you give them money.
• Start companies if they find a developer to work for free.
• Are willing to start companies, but need to go to TED or Necker Island first.
• Are willing to start companies, but only if they can make the same money they made at Google.
• Great founders start building now!
• No excuses!
• Great founders build credibility by building before raising money
• Create a landing page
• Create an MVP
• Run a test
• Conduct user interviews
• Build something!
• Great founders do not wait for permission

What does it take to be a winning founder?

• Winning founders need an unrelenting desire to see their vision realized
• Winning founders have an unapologetic resiliency
• They have a passion - but what does passion really mean?
• Founders want to complete a certain mission
• They want their product to get to market and have a specific group of people adopt it
• Winning founders can build or craft a product and understand the features completely
• Product obsession is an obvious tell this founder will win or has a great chance to win
• Winning founders have the ability to see something through to completion
• It is easy to get distracted - winning founders stay the course
• Winning founders recruit others to work on their project
• They have the ability to sell this vision to others and get a team excited about working towards the same goals

What is a startup flywheel?

• Creating the flywheel
• When a team is building a great product and delighting customers a feedback loop begins
• The product is first used by individuals
• Users enjoy the product and spend more time using it
• The team collects data to drive future feature development
• This leads to enhancements to the product
• This allows the team to collect more data on the users
• Collect data from product usage, direct feedback, or testing the founders vision
• The price of the product increases as it is enhanced
• Now that more money is coming in, the founder can spend more money on team upgrades
• Which allows founders to build a better product
• Leading to more delighted customers
• The flywheel continues...

How Jason Teaches his Team to Spot Winning Founders

• Jason asks his team the following questions after they meet with founders:
• Can this founder build a great product?
• Is it well designed?
• Is the product clunky and ugly?
• Is this founder delighting their customers?
• Does the founder even know who their customers are?
• What are their customers saying about the product?
• Is this founder building a great team?
• Can they recruit and hire a team around them?
• If the founder can't do these things this is an early red flag to investors

Betting on the Right People

• Does the location of your startup matter?
• Not anymore - although there is limited downside in being located in a tech hub - the advantage is negligible at this point
• Jason wrote a blog in 2019, "Should I move my startup to Silicon Valley: the 2009 & 2019 answers compared"
• He identified pre-covid that remote work was becoming common place and compared that shift from a little over a decade ago
• Jason's stance now is that "no one cares where you are located anymore."
• Investors are more efficient now with the - watch a Loom, jump on a Zoom, then book a Room method of meeting founders
• Are winning founders typically introverted? Extroverted? Does some other quality stand out?
• No, identifying winning founders isn't about personality traits like most people might think
• So when it comes to the success of a company what do investors care about more than location or personality traits in the founders?
• Most simply want to know:
• Do they have a product that is incredible?
• Do they have an awesome team of builders and doers?
• Are they growing (revenue, downloads, engagement, whatever their metric is) consistently?
• Are they delighting customers?
• And is the founder credible?

How do founders build themselves up to be worthy of an investment?

• It is important for founders to know how investors think when evaluating startups
• The most important thing to investors is for the founder to build credibility
• So how do you do that as a founder?
• For some investors, yes, having impressive credentials is important
• Jason believes the following are more important than a degree from a prestigious university:

• Product Roadmap
• They design and understand features
• The product is being built in house
• This goes back to - Build a great product
• Ideal Customer Profile
• They can explain their bottom-up TAM
• They talk to customers, and know who the user is
• This goes back to - Understand the customers
• The role of the team
• They know what gaps they have and how to fill them
• In an enterprise - five people do one job, but in a startup, each person does 5 jobs
• Can the founder hire the right people?
• This goes back to - Recruit great people

• When they ask a question respond crisply and avoid being general

• If they ask for how many customers - answer with a number - not a story about why you are where you are today
• The longer you take to answer the question the less credible you sound

• Describe what is real
• Do not make excuses and do not filibuster
• Explain the facts and the describe the future vision
• Investors want to hear that you have 7 customers and how you got them
• They do not want to hear why you don't have 25 customers yet

So, do you have what it takes to be a founder?

• Being a founder is extremely hard work
• Are you motivated to work 100 hours a week for 500 weeks?
• You must sign up for what you care about
• If you are not completely invested - you will quit
• Your complete focus has to be on Product & Customers - Product & Customers - Product & Customers
• Then at some point ask yourself can I recruit and build a team?
• Even after all the work - 80% of startups will still fail
• However, as a founder, you only fail if you learn nothing

Summary of Qualities of a Winning Founder

• You are going to do well if you can answer and deliver on the following
• Does your startup idea have personal relevance to you?
• Can you build a great product?
• Can you recruit great talent to join you?
• Do you understand your customers?
• Did you learn from your failures?
• Everything is a learning opportunity
• Learning from failure sets you up to have a successful company down the road
• If you’re not able to do these things at a high level you do not have what it takes to be a great founder
• It is important to ask yourself do you still think you want to be a founder?

To Do

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