What Investors Want

If there's one thing that start-ups worry about more than anything else at the pre-fundraising stage, it's what investors want.

What Women Want may have been a terrible film, but getting in the mind of people you are trying to attract is exactly what founders need to do.

If you ask investors about their requirements, it often boils down to one thing: the founders themselves.

‘Mediocre teams do not build great companies. One of the things we look at the most is the strength of the founders’, so says Sam Altman, tech entrepreneur and the head of one of the world’s most famous accelerators, Y Combinator. But this is a sentiment found amongst most, if not all, successful investors.

Altman continues: ‘The most important characteristics [of a founder] are ones like unstoppability, determination, formidability, and resourcefulness. Intelligence and passion also rank very highly. These are all much more important than experience and certainly “expertise with language X and framework Y”’.

Unstoppability - or, as award-winning psychologist Angela Duckworth would say, ‘grit’. In her book of the same name, just published, she argues that a person’s ability to stick-at-it is directly related to their level of success. This may sound an obvious thing to say, but what exactly does it mean in reality?

According to Duckworth, who herself is pretty much the embodiment of her own buzzword, there are four traits that gritty people have in abundance: interest, practice, purpose, and hope.

As part of her research for her book, Duckworth interviewed a large number of super high achievers. What she found with these paragons of greatness was that they have a “supremely well developed interest. They cultivate something that grabs their attention initially, but they become familiar enough, knowledgeable enough, that they wake up the next day, and the next day, and the next year, and they are still interested in this thing.” Having an interest, or a passion, for what you are doing rather than, say, the money you hope to make from it, is a characteristic that has been pointed out by many other business leaders. Richard Branson, for example, is a big believer in character and toughness of spirit.

But just because you like something doesn't mean you are good at it. That is where practice comes in.

Rowdy Gaines, the American former competitive swimmer, told Duckworth (as mentioned on a Freakonomics podcast) that in the years up the 1984 Olympics where he won the 100m freestyle gold medal, he swam equivalently around the world. That’s 20,000 miles of practice. So she asked, did you love that practice?

“Are you asking me if I loved getting up at four in the morning, getting into a cold pool, and swimming fast looking at a black line on the bottom, at the very edge of my physical ability, when my lungs are screaming for oxygen, and my arms feel like they are about to fall off? No, I don’t. But I love the whole thing, I have a passion for the whole sport.” As Duckworth notes, you do have to have the passion first.

There has been a great deal of public discussion about the 10,000 hour rule of practice, ever since Malcolm Gladwell popularised it in his 2008 book Outliers.

But just messing around in your chosen sector for 10,000 hours, as might be imagined, doesn’t guarantee success. It has to be deliberate practice, “labouring in a very methodical way” to get better at this thing you are passionate about. This means asking questions of yourself about where you went right, where you went wring, of not being afraid to ask for negative as well as positive feedback.

The third part of grit is purpose, which is connecting your work to other people. This could be described for many people as feeling that what they are doing is making a difference to the world. Many of the world’s leading tech entrepreneurs are often insanely driven about their mission in life. Like Travis from Uber. As memorably proved by the Blues Brothers, those entrepreneurs who believe that they are on a ‘mission from God’, or more perhaps more humbly, ‘ a mission to save mankind’, will keep going and going and going.

The final trait is perhaps the hardest to maintain: hope. During the entrepreneur’s journey there will be challenges, some minor, some soul-crushingly large that make even the toughest man or woman question whether it is worth staying on this path. Hope, as Duckworth defines it, is “the belief that there is something you can do to come back from these problems or these challenges.”

Hope is found most in optimistic people. A huge raft of research has shown that optimistic people are more successful than pessimistic, and everyone loves an optimist more than a pessimist.

So, perhaps to summarise Duckworth’s research into a sentence, successful entrepreneurs are those that are passionate about something that they think will have a positive impact, and are therefore driven to keep working at it until it succeeds, no matter what tough challenges are thrown their way.

In other words, a winner: and that is what investors want.


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