One of the things I like least about seed stage venture is the compressed amount of time to get to know a new founder during fundraising. “Solutions” include pre-emptive activities such as building long-term relationships with future founders or mentoring at incubators to meet teams pre-seed, plus getting really good at reference diligence, but we still rely upon accelerating the “would we work well together” discussion during fast-moving investments. So each seed investor comes up with their own “minimum viable relationship” threshold, usually a factor of their investment strategy/velocity, how quickly they can get comfortable with someone and their skill in asking questions which matter.
One question which matters to me is the “why” of your startups, especially as it relates to your longevity as a founder. The most difficult question for some founders is “why do you want to spend 10 years of your life working on solving this problem.” Whoa, 10 years? Who said anything about 10 years? I’m just trying to raise some money, hire a designer and find product market fit!!!
Yeah 10 years is a long time. And that’s the point. Most startups won’t make it 10 years and the question doesn’t necessarily assume the founders will be in the same roles the entire journey. But my bet is the stronger your flinch to the question, the shorter the roadmap you have in your head and the smaller, less urgent, less valuable the problem you’re trying to solve. And I want founders with long roadmaps solving large, urgent and valuable problems. I’m still iterating on this question’s phrasing. I sometimes say “why do you want to spend several years, and hopefully many more, of your life working on this problem.”
The answers which resonate most with me have some combination of:
- I’ve been working on this already (ie everything I’ve done to this point makes me ready to win here – doesn’t mean industry expertise but means some combination of skills and assessment of why you’ll succeed)
- A definition of success that can only exist at that scale, whether it’s the complexity of the problem, the business they want to build or the organization they imagine building
- Acute awareness of what needs to be done in the next year to move forward at highest velocity. It’s the long and the short. The founders know what it looks like in the near term and in the longterm. The middle – the path – is what they figure out as they go.
I may not enjoy the compressed timeframes to get to know teams but figuring out how to use my time with them effectively and efficiently is a key component of being a good investor.
Oh, and here’s the Why of Homebrew.
- Kanyi of Collaborative Fund shares two of his favorite questions
- Josh Elman of Greylock likes asking: What has changed in the world that will let you make this product and a big company now when it hasn’t happened before?
- Ethan Kurzweil of Bessemer: A question I usually ask is “why will this work?” and I leave it deliberately vague as to what I mean by “this” and “work”. The reason is that if they interpret the question the normal way: “why will your company be successful?” I’ll get an interesting and instructive answer. But it’s often the other interpretations of the question that tell a lot of a founder’s personality, their motivations and priorities, and how they see success – and so those variants are interesting to see and hear about as well.
- Bubba Murarka of DFJ: 1/ How do you know your co-founder? and 2/ What do you want in your lead investor? Besides a check, of course! Both tell me a lot about how the founders think about building a team.
Amazing candor and introspection. Funny, when I look back with JCP, I think I should have left in 83 when Dave’s team was broken apart and I got a lateral move for the first time. Everyone close to me advised me to stick it out; I didn’t realize they were even more risk averse and how it played into my own fears. Not that I was going to be entrepreneurial, but I would have been able to choose instead of settling by the time JCP left NYC in 86-87. Anyhow, I love reading your blog. Dad
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