When investing early stage, a big question we always ask ourselves is “will the founders be able to achieve product/market fit?”
We look for five basic elements when speaking with founders. Startups with a strong dose of these five elements have a higher likelihood of achieving product/market fit.
Thinking Clearly – For a startup founder, the cycle of analyzing, thinking, and executing never ends. But especially for pre-product/market fit, you have to go through the cycle many times, as fast as you can, and as efficiently as you can. We look for founders who show that they are capable of rigorous thinking and can articulate the thoughts in their head with clarity.
Learning Machines – Brad Feld mentioned that he invests in learning machines, and as founders you consistently have to learn new skills and acquire new information every day. Founders need to learn to do product management, marketing, hiring, customer development, and many more business skills. This knowledge and skill set needs to be picked up very quickly or you will run out of time.
Courage – Ben Horowitz emphasizes courage strongly, one of the things he looks for in founders. As startup founders you are faced with many situations where courage is required: courage to make hard decisions, courage to follow your gut feelings, courage to think big, and courage to face rejection. With courage, I think decisions can be made and actions taken more quickly, both important for building great startups.
Passion – Running a startup is a marathon. It takes a lot of passion to keep going and to think long term. We look for passion, a highly contagious passion that can attract many supporters and employees.
Resilience – As startup founders you will be faced with a lot of discouraging moments. Your potential customers might reject you; things might not work when you’re building a product; or your co-founders might even leave. We look for founders who can quickly get back on their feet after discouraging moments and use that as fuel to accelerate even faster.
As Marc Andreessen said, “They [startups] fail because they never get to product/market fit.” It is crucial for startups to focus on achieving product market/market fit; as early investors, we look for founders with the five elements that correlate with that early success.