Being a successful entrepreneur isn't just about having a good product or knowing your KPI's. One of the best ways to gauge a successful company is its ability to raise funding from venture capitalists and private equity investors.
For most investors, however, a lot of it comes down to the individual entrepreneurs who are giving the pitch. Specs and product features are great, but if the team behind it doesn’t possess certain key traits, the company will inevitably fail.
To find out what these key traits are, and what makes investors tick, I decided to research the most sought after personality traits according to some of the worlds top billionaire venture capitalists and private equity investors. Do you fit the bill?
Company/Title: Partner, Greylock Partners
Net Worth: $3.3 billion
Noteworthy Investments: Co-founder and CEO of PayPal (sold to eBay for $1.5 billion). Co-founder of LinkedIn (sold to Microsoft for $26.2 billion). Current holdings include Airbnb.
Confidence: don't be afraid to be embarrassed with a less than perfect product.
In a recent interview with Kissmetrics, Hoffman emphasized that entrepreneurs should start with a very thin product and not get caught up in trying to make everything perfect:
“It’s the emphasis on time. It’s getting out and getting in the market and learning and moving, which are much more important than the ego satisfaction of ‘Oh, I want to do it completely behind a cloak and then remove the cloak and everyone knows how wonderful and what a genius I am cause they think the product is so wonderful.’
That’s actually rarely a winning strategy. The actual winning strategy is ‘I’m moving, I’m getting out there and I’m adapting at a fast rate.’”
He further describes the importance of getting to market without obsessing over first having a perfect product:
“…the key thing is to shorten the length of time for getting to the market with a minimum viable product…I had learned from SocialNet and PayPal. As opposed to waiting for a perfect product, you actually want to be launching the minimum viable product, the thinnest possible product, and then you iterate and develop.”
"Launching early brings the benefit of seeing how customers use and interact with your product. It’s also important to have metrics that tell you if your aspiration and vision are on target."
In a recent post, I talked in-depth about the destructive obsession of making things perfect. In business, “perfection” doesn’t exist. The most important thing any new business can do is to dive-in and make adjustments along the way. Have confidence and get to market early.
Drive & Passion: you have to be ready to go full time on things.
In a 2016 interview with Driven Media, Danielle describes her thoughts on what traits make a successful entrepreneur:
"I love to see people working on things because they’re truly passionate and interested and not because they think it’s a popular idea. You have to be really passionate about what you’re doing and wedded to it, and not just kind of 'okay'. This is a 24/7 thing. We’re really about working with people over particular products."
As Danielle describes, if you're going to build a successful company you must be immersed in it 24/7. You can't treat it like a side hobby, or a side hobby is all it will ever be.
Net Worth: $2.6 billion
Noteworthy Investments: Co-founder of PayPal (sold to eBay for $1.5 billion). Early investor in Facebook (sold his shares for more than $1 billion). Co-founder of Palantir (current value $20 billion).
Be a Definite Optimist, but have a plan.
In the book Zero to One, Thiel describes the key personality trait he believes makes a successful entrepreneur:
"A definite optimist is someone who knows the future will be a good one. However, this person also realizes that to make the future bright, you need to make a plan to ensure it will happen. When someone is starting a startup, it is best to be a definite optimist.”
“Entrepreneurs are the kinds of people that have positive visions of the future. They're optimistic that their projects and policy will be successful. However, if they do not make specific plans on how to achieve their goals, they enter the land of indefinite optimism where results are left to chance."
"They are better off making specific plans to realize their visions, even if those plans are not perfect, and improve on those plans as they learn more about the future.”
Once again we see the importance of confidence and the detrimental effects of being a perfectionist.
If you only ever discuss your business at a 'high-level overview' you'll remain an indefinite optimist. Dive into the nitty-gritty, make a specific plan, and be a definite optimist.
Company/Title: Proprietor of Lowercase Capital
Net Worth: $1.11 billion
Noteworthy Investments: Early investor into Twitter, Uber, Instagram and Kickstarter.
Have Confidence and Conviction, without a doubt.
Speaking with Inc.com, Sacca describes the need for the feeling of absolute inevitability:
"If you look at the greatest companies in our portfolio, and compare them to the ones that haven’t panned out, the one thing that sets apart the greatest founders is the feeling of inevitability of their success; they just know it’s going to work out. There’s no doubt in their voice, they speak in a clear future tense – this is going to work and here’s why."
"I need to believe that this founder has in their bones a conviction of the inevitable success of this company.”
Company/Title: Founder & CEO, Forerunner Ventures
Net Worth: Estimated at over $100 million
Noteworthy Investments: The only institutional seed investor into Dollar Shave Club (purchased by Unilever for $1 billion). Seed investor in Jet.com (sold to Walmart for $3.3 billion).
Be a Visionary, be Disciplined, and be Magnetic.
During an interview with Project Entrepreneur, Kirsten outlined the top personality traits her private equity team looks for when deciding to back an entrepreneur:
"At Forerunner the top three traits we prioritize include: visionary, disciplined, and magnetic."
"We believe these three areas encompass most of the critical ingredients possessed by leaders able to turn ideas in action."
"Confidence also plays a major factor: Investors aim to partner with confident founders who are able to lead and navigate an active conversation. When you allow an advisor or board member to outshine your efforts it can undermine your leadership capabilities. No one should know your business better than you – pitch time is your time to shine!"
Company/Title: Co-founder & General Partner, Andreessen Horowitz
Net Worth: $1.12 billion
Noteworthy Investments: Co-founder of Netscape (sold to AOL for $4.2 billion). Seed investor into Facebook.
Other notable investments include Instagram, Reddit, and Twitter.
Have Courage, but not without Genius.
In a 2014 interview at the Stanford Graduate School of Business, Andreessen described the two key personality traits he looks for in every private equity investment:
"90% of our decision revolves around people, not so much the product. There’s two things we look for when choosing to fund an entrepreneur. Courage, and Genius."
"Courage is not giving up in the face of adversity – just being absolutely determined to succeed. But without genius to back it up you won’t get very far."
"We are strongly biased towards people who are so determined to succeed they never give up; they never quit; it’s something we look deeply for. That’s also the kind of thing that’s not listed on a resume; it has to be fundamentally deep in somebody’s character."
Company/Title: General Partner, Benchmark
Net Worth: Estimated at $2 billion
Noteworthy Investments: Owned a 6.6% stake in Twitter at the time of its $25 billion (market cap) IPO.
Have Authenticity, Fearlessness, and a Willingness to Learn.
In a 2016 interview with Outlook Business, Fenton described the three key traits he looks for in the first 90 seconds of meeting any new entrepreneur:
"The first quality in any entrepreneur, which is visible in the first 90 seconds, is authenticity. You need to have a solid foundation and confidence in what you are doing.”
"The majority of entrepreneurs we meet are unfortunately promotional. It’s a gut feeling and I felt it, for example, with Travis at Uber or Evan at Snapchat. If you met Evan, at age 21, the intensity of his belief in what he was building was captivating."
"Secondly, I think the trait that great entrepreneurs have is fearlessness or fearsomeness. There needs to be something crazy in terms of recklessness, intensity, and irreverence. A lot of great founders are dropouts. They don’t necessarily want to get grades in a system, which they didn’t create."
"The third trait is a mindset that I look for in an entrepreneur — a learn-it-all, and not a know-it-all, approach."
"I think it is a remarkable trait that is common among the very best people, be it Mark Zuckerberg or Jack Dorsey. They are effective critical thinkers; they are constantly asking questions and listening. That drives their long-term success. As a potential investor, I find them interrogating me as much as I am interrogating them."
Company/Title: Founder & Managing Partner, Baseline Ventures
Net Worth: Estimated at $150 million
Noteworthy Investments: First seed investor into Instagram (sold to Facebook for $1 billion).
Be Flexible in your Mindset and Deliberate when you make Decisions.
Sitting down with Business Insider, Anderson said he looks for entrepreneurs who can check their ego at the door:
"He [Anderson] wants founders who are thoughtful, but then make forceful decisions. This is important because few people get their idea exactly right on the first try."
"I find it really hard to believe that any one person will have the perfect vision right from the start. So, that's part of my assessment: 'hey, does this person have an opinion, based on a worldview that they've developed through listening, paying attention, and pondering; and, are they very deliberate once they make a decision?'"
Company/Title: Partner, Founders Fund
Net Worth: Private
Noteworthy Investments: Early investor into Oculus VR (purchased by Facebook for $2 billion).
Owns a $150 million investment in Airbnb that is currently worth approx. $1.4 billion. Owns a $100 million investment in Stripe that is currently worth approx. $400 million.
In an interview with Vator, Inc. Singerman described an investment-worthy entrepreneur as someone who thinks BIG:
"He [Singerman] said he looks for entrepreneurs who are confident enough to think in billions rather than multiple millions. The common mistake entrepreneurs make is 'selling their business short and not thinking big.'"
Company/Title: Managing Director, First Round Capital
Net Worth: Estimated at over $1 billion
Noteworthy Investments: Founder of Half.com (sold to eBay for $350 million).
First institutional investor into Uber with a $500,000 investment at a $4 million valuation (current valuation approx. $70 billion) – that’s 17,500 times more valuable than when First Round Capital initially invested.
Check your Ego and don't be afraid to ask for Help.
According to a recent interview with the Huffington Post, Kopelman explains the need to build credibility by checking your ego at the door:
"The ability to say “I don’t know”, which leads to founder credibility."
"I believe that a key investment criteria is founder credibility. No one expects a pre-launch company to have all the answers. (In fact, we get scared if you think you have them). Rather than have an entrepreneur sell me on why they are 100% correct, I’d much rather understand how they are attacking the different risks facing the business."
Key takeaways: in putting this research together three underlying themes (and traits) quickly became apparent among private equity investors:
Firstly, confidence is a major requirement for Venture Capitalists. Know your product, but better yet, have absolute conviction in the inevitability of your success. Don't be a perfectionist and don't be scared of going to market with a less than perfect product. Get out there and start evolving.
Secondly, the best private equity investors look for a deeply-ingrained passion. Are you entirely immersed 24/7 in what you're doing, or is it more of a side hobby? The latter abates success.
Finally, get out of your own way and remove your ego from the equation. If you don't know what to do next, or which direction to go, simply ask for help. Know that your business won't be perfect the first time out. Be open to change, adapt along the way, and leverage the expertise of those around you – it's OK to not have all the answers.