01. Qualities of a winning founder

01. Qualities of a winning founder

Estimated Time

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

To Do

1. Begin to identify a product or service idea that is relevant to you

2. Identify who is the ideal customer for your startup

3. Start thinking about the design of your product & how you will build it

Episode Date: July 13, 2021

Jason Calacanis|TWiST|Twitter|LinkedIn

Top Insights

Jason asks these questions to identify if the founder has the right qualities to be great

  • 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
  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:

1. Founders must have a deep understanding of:

  • 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

2. You want to be specific with investors

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

3. You want to answer questions directly

  • 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

4. You want to be unapologetic about your business

  • 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

1. Begin to identify a product or service idea that is relevant to you

2. Identify who is the ideal customer for your startup

3. Start thinking about the design of your product & how you will build it

Subscribe to the Weekly Recap Newsletter (sample) | Follow TWiST's Twitter