One thing every early stage investor says is “we invest in people first”. You hear it again and again in different formats. Do you bet on the jockey or the horse? Professor Steve Kaplan did research and found at seed you must bet on teams.
Fine, how do I know? What’s the tell?
For me, I look for certain qualities and characteristics. “Can they sell” is a huge one. I have blogged about this before, but the founder doesn’t only have to sell to their customers. They have to be able to sell a vision and a culture to attract a quality team that can help them execute.
But another characteristic that is really hard to measure is drive. Intestinal fortitude. Do they want this bad enough? That characteristic gets all jumbled up into competitiveness, will to win, MTXE, and ability to do the right things to give themselves a chance to win-not necessarily just working long hours.
You can get a sense of this if you spend some time with a person. You will see patterns in their personal life and past professional life that give you clues as to what their drive really is. Coaches talk about it in terms of athletes. College and pro athletes are physically gifted and that can separate them-but at the higher levels it’s really internal drive that separates.
It’s possible for a lot of people to “fake” drive. Fake it till you make it. I hate that term. That’s why I never invest after a first meeting. I like to get to know the people over time. They may feel it in their gut-but a lot of the time it’s only because they want the money.
Feeling pain and having to scramble isn’t fun but the struggle is probably good for people and companies. That’s why VCs guard against raising too much money too early.
I remember when I was starting out as a clerk on the trading floor. I was making $150/week gross. No insurance, no extras. That was it. I had to scrounge income. I worked part time at a gas station. I played basketball for money.
I remember the firm I worked for, Stotler, had a few back office jobs that paid an extra $200 a week stuffing envelopes. I tried to get one but there were so few of them it was impossible-and the cadre of people that had them weren’t leaving. They were prized because not only did you earn a little extra dough, but you got to physically be around traders and people that could help further your career-that was the really good part.
Every day, I pestered the guy that ran the desk I worked for. Could I make the jump to phone clerk? They made more money. He looked directly at me in the face and tole me I would never make it in this business. My gut burned.
I persuaded them to move me to another desk on the floor. I started networking with people in that quadrant and soon found a job as an arb clerk for $200/week which eventually lead to $400/week. That allowed me to meet Roger Carlsson who made me his fifth employee and paid me $400/week. But, for Roger, I showed up at work at 6AM and I left at 5PM.
But, it didn’t matter to me. I wanted it that bad.
It was clear I was on the right path. Roger put me in the pit, educated me and helped me go on my own. I owe my entire career to him.
Was it luck? Maybe some. I was lucky Roger needed an employee. I was lucky I was physically tall. But, the reality is you make your own luck by doing whatever is necessary to get it done. Roger wouldn’t have backed me had he not sensed I had the drive.
The same goes for seed investing. The same goes for starting a cash flow business.
Thanks for the link Mattermark. Awesome startup news source.