In my previous blog post, I shared five out of ten characteristics that I believe separate great founders from good ones. In summary, those five characteristics were punctuality, not hiding bad news, brevity, financial awareness, and adaptability (see Part 1 here). In this blog post, I’ll share the remaining five characteristics that complete my top ten.
The greatest founders I have interacted with all demonstrated the five remaining characteristics:
They are highly coachable
As a former collegiate athlete, I have had the opportunity to have close proximity to great players. My sport was basketball. What I observed in great players was not just their raw talent, but their ability to receive and accept instruction from those around them. Not only did they receive instruction well, they sought it out. This same characteristic is present in the best founders we work with at Serac Ventures. As VCs, we don’t always have the perfect answers to every founder’s problem. But what we do have is the benefit of observing a lot of the same types of problems common to most early-stage founders, which we share with founders we work with. We view ourselves as coaches that help our founders keep sight of the bigger picture. Great founders take the framework of the advice we give them to make real-time decisions in the field. That’s the essence of the VC/founder relationship.
They are humble
Humility is not a lack of confidence. It’s a quiet understanding that some things are simply out of our control. Humility also goes hand-in-hand with coachability. If you acknowledge that there are some things you can’t control or predict, then you’ll plan accordingly for the unexpected. No matter who you are or what line of business you are in, unexpected things are going to happen. That’s why we encourage founders to be conservative with their cash on things that they don’t need (e.g., high-rent office space) and aggressive in areas of their business that have a higher probability of growing their top line revenue.
Founders should also be humble enough to quit something that isn’t working, like a poor product line, marketing strategy, or bad employee. When a founder can admit when they are wrong and choose a different direction while they still have cash in the bank, that is smart. When a founder refuses to admit when they are wrong and they burn through all their cash in the process, that is the opposite of smart. That’s stubbornness. I’ve seen this happen to many founders over the years.
When founders are humble enough to consider outside perspectives, the chances of their company succeeding are generally much higher. I remember a founder who cussed out my boss and me because we challenged him on his valuation. He refused to consider that, even though his company had zero revenue or customers, it might not be worth the astronomical value he was seeking. Not only did he not receive an investment from us, but his company never got off the ground. This outcome does not mean he was wrong and we were right. The point here is that if he were humble enough to consider our perspective, we would have been willing to negotiate with him to find a way to invest in his company.
They are consistent
Great founders show up on a consistent basis. They are consistent in how they treat their team members, customers, and shareholders. Being a consistent person is hard because life and business are filled with uncertainty. One of my sales trainers from a long time ago gave me the best piece of advice I have ever received about consistency in business. He told me to focus on the controllables (my activity) and not worry about outcomes. So many people stop short of achieving their goals because they lose patience with the process of getting there. When they don’t get the outcomes they want in the timeframe they want, they give up. It’s a lot easier to be consistent when the reward is not just the outcome, but the successful completion of the activities. The process is the reward. Founders who adopt this mindset are steps ahead of their peers.
They are creative
I believe that everyone is capable of being creative. Creativity is what differentiates us from one another, yet many people suppress this inborn skill. One of our portfolio companies, SoLo Funds, created a peer-to-peer lending network for sub-$1,000 loans. Given the volume of financial activity on their platform, they came up with a creative idea to use that data to forecast the consumer price index (CPI) ahead of official government releases (source). They sell this anonymized data to enterprises who need this type of information. Their creativity opened up an entirely new business vertical that may benefit the company for years to come. They are proof that creativity is in all of us. We just have to set aside time to tap into it.
They are great storytellers
When I initially meet with founders I always ask them to tell me the backstory of what led them to where they are today. The reason I ask this question is because I want to know their “why.” If their why is strong enough then the probability of them making it through the challenging phases of the company building process is higher. How they answer also showcases their salesmanship. When I listen to them tell their story it provides a window into how they tell their story to their customers. A strong, concise story is preferred. All founders should aspire to be great storytellers, especially early-stage founders whose companies aren’t yet well-established. For many founders at the early-stage, their story may be all they have in the absence of historical company performance metrics. As Simon Sinek said, “Start with why,” as it is one of the better ways to engage your listeners and to get them to buy into your narrative.
Key Takeaways
In summary, punctuality, not hiding bad news, brevity, financial awareness, adaptability, coachability, humility, consistency, creativity, and the ability to tell a great story will take founders a long way. There are of course many other founder characteristics I did not list (like authenticity) that are important to me as well. Building a company is hard and I applaud all founders out there who are trying to make it happen. Everyone who embarks on this type of professional journey (including myself) goes through periods of being good and being great. I know it’s cliché, but it’s one of my favorites: when the going gets tough, the tough get going. This is the mantra of great founders.
