May 12, 2025 • 40 mins
What really makes a great startup founder? In this episode, Raju and Will rank the top characteristics they believe best define successful startup founders—from grit to customer obsession—all backed by real-life stories.
They break down essentials like adaptability, salesmanship, and technical skills, while also spotlighting often-overlooked qualities like delegation and decisiveness. Whether you're a seasoned founder or just getting started, this comprehensive conversation will give you a better understanding of what it takes to excel.
Show Highlights
(0:00) Introduction
(1:01) Ranking founder traits on a scale of 1 - 10
(1:46) Grit
(5:09) Adaptability
(9:34) Startup Experience
(12:28) Domain Knowledge
(15:50) Salesmanship
(19:28) Vision
(23:52) Decisiveness
(29:02) Technical Skills
(31:56) Customer Obsession
(33:47) Delegation
(38:28) Gatling gun section
Links
RRE POV Website: https://rre.com/rrepov
X: @RRE
Apple Podcasts: https://podcasts.apple.com/us/podcast/rre-pov/id1719689131
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Amazing.
I’m telling you, like, it’s—
You were a busy man this weekend.
Wow.
No, it’s a special thing.
Like, well, there was a lot of people in town, right?
Like, a lot of VCs, a lot of entrepreneurs, a lot of business
partners, and so everybody has, “Hey, I got, like, eight extra
tickets,” you know? Like, you know, “Come.” And I enjoyed it.
(00:21):
I enjoyed it a bunch, but Miami is a little
bit of a special place this time of year.
A lot of people are down because of the weather.
So, you went running, I went dancing [laugh]
. [laugh] . Outstanding.
I’m Will Porteous.
(00:42):
And I’m Raju Rishi.
Welcome to RRE POV, the show in which we record the
conversations we’re already having among ourselves, our
entrepreneurs, and industry leaders for you to listen in on.
Hello listeners.
This is Raju Rishi, along with my partner, Will Porteous.
We’ve backed hundreds of founders over our history, and today we’re
(01:04):
going to discuss the handful of characteristics of killer founders.
So, Will, I’m going to toss out a founder characteristic.
I know there’s no preparation on this from your side, so you’re going
to give me a ranking, from one to ten, of the importance of that
characteristic, with ten being the best and one being the worst.
(01:26):
And if you can think of it, an example of that characteristic
that can sort of showcase what that means to our listeners.
Sounds like a great exercise.
We’ve been preparing for this for decades.
Ari’s backed more than 400 companies, and
we see thousands of founders every year, so—
Excellent.
Sure.
Okay, go for it.
All right.
First characteristics (01:47):
grit.
So, where do I rank it?
I mean, I probably rank it an eight out of ten.
Okay.
You’re starting off strong.
I mean, just sheer tenacity that comes from
character more than anything else, I think.
And a lot of times we find this in founders
long before they ever started their companies.
(02:08):
In fact, I think it’s one of the qualities that impresses us
the most (02:10):
people who have had to overcome personal hardship,
people who’ve had to really build a life for themselves.
It’s part of the reason, I think, that we naturally gravitate towards immigrants
who’ve had to build a life for themselves and their family in this country.
So yeah, I rank grit really pretty highly.
Yeah.
I’m going to give it a ten out of ten.
(02:32):
I’m going to give it a ten out of ten.
I think it’s actually one of the most important characteristics.
I mean, there’s so many moments in a startup’s life where you think the
sky is falling, and it’s over, and you have to sort of see a pathway, and
you got to, just sometimes, just like, put it on your back and take it.
(02:56):
We have lots of examples of this in our portfolio, and the one that comes
to mind fastest, and you know, most profoundly, is Noah Glass from Olo.
Sure.
A 20-year-old company, which we took public a few years ago.
And it started out as a mobile ordering platform.
And you know, kind of interesting mobile phones were coming out
(03:17):
there—actually started before the iPhone, so it was a text messaging
platform—and you know, you wanted to order your Starbucks in advance.
You know you can go and… order it through your mobile phone and pick it up.
And you know, that was fantastic.
The problem was he was really focused around the consumer
experience as opposed to the restaurant experience.
(03:40):
And they pivoted to serving restaurants.
We had Covid happen, which actually was a huge benefit to Olo because Olo
was an online ordering platform, so people wanted to pick up their food.
And went to borderless transaction, which went without
passwords, so just to make a frictionless experience.
(04:02):
And Noah is the kind of founder that you look at, and you’re like, the things
that he had to overcome to get to a public company were seriously profound.
Well, and Noah’s a great example, Raju, because it wasn’t like he’d had all
this prior professional experience to draw upon in making those decisions.
(04:24):
Noah was in his early-20s when we backed him.
He was not long out of undergrad, and a lot of the investment we
made at the time, the team discussion, was really about character.
We really just liked this guy, and we liked his resilience, and his
seriousness, and the way he could inspire other people, but there was
(04:44):
no one there to teach him to have that kind of grit and to pivot his
company in the ways that he needed to many times over the long journey.
Yeah, yeah, yeah.
No, I mean fascinating journey, and you know,
we can do an entire episode on Noah and Olo.
But—
We probably will.
Yeah.
Yeah, we probably will at some point.
But anyway, let’s move to the next characteristic.
(05:05):
I’m trying to keep us on track.
So, the second one is adaptability.
Adaptability is sort of at the heart of the
qualities I look for in an entrepreneur.
I want people who can see where they need to modify
their vision for what they need to build, while remaining
(05:29):
true to their commitment to building something of value.
And I think that adaptability implies the ability to take feedback
and to fine-tune the organization you’re building, the product you’re
building, the go-to-market, many other things, in the face of feedback.
So, for me, this is probably eight or nine.
(05:51):
I’m going to give this a ten [laugh]
. [laugh] . Everything is a ten with you.
Everything is a ten, my friend.
Oh, my God.
Uh, no.
No, I promise you, not all tens.
But this is a ten for me.
And this is actually the yang to the yin of grit, right?
Grit is determination, you’re going to plow through.
And sometimes grit without adaptability becomes
(06:13):
a problem because you just want to plow.
You feel so determined to create success around something.
And, you know, what I always say is that the startup’s
goal is to go from point A to point B as fast as possible,
until they realize point B is the wrong destination.
[laugh]
(06:35):
. Exactly.
And then you have to go to b-prime.
And a great example of this is one of my entrepreneurs Luke Bonney at Redox.
And so Redox, you know, the three founders came out of Epic, and they noticed
that healthcare had a data transferability problem, an interoperability problem.
(06:55):
And they were working for Epic, and they were doing a
bunch of custom deployments for medical applications
that wanted to tie into a particular health system.
And the quandary was, well, why don’t we have
an API that allows it make—make it really easy?
And initially they created this API and sold it to healthcare establishments.
And healthcare establishments really, really have low margins,
(07:18):
they don’t have a lot of technical staff, and you know, their
interests are maybe to hold off on creating medical application
integration because they don’t want to mess up the EHR.
Medical device and medical application companies, however,
have a huge need to basically integrate into a healthcare
(07:40):
system because they get paid when their data gets into the EHR.
Indeed.
And so, they paid, they pivoted, they listened to the market,
and they said these medical application companies like Stryker
or [Wound] Management or, you know, you name it, they all
needed to integrate into the EHR and were willing to pay.
(08:02):
And that adaptability to the market and the
business model revolutionized their business.
All of a sudden, you know, huge amounts of medical applications
companies said, “Well, if we work with Redox, we can tie into this
EHR without learning how to tie into that specific EHR.” And so,
they solved the need for them, and they created a business model. So,
(08:26):
that’s one example, but there are many you know that we can point to.
Well, that’s a great example of a situation where Redox knew—Luke knew—they
were creating value for all the players, but he had to be adaptable
in deciding who was the most motivated to focus on and who would be
willing to pay ultimately, and pivoted his business model in the process.
(08:49):
It’s a great example.
Yeah.
Yeah.
And you know, it’s interesting, two—sided, I don’t want to call it marketplaces,
but two-sided application companies or technical companies—what I found—start
with one side of the marketplace, and if it doesn’t work, they move to
the other side of the marketplace, and it often unlocks a bunch of things.
(09:15):
Because everybody wants to serve the end customer initially, and then they
realize, well, maybe the end customer is the other side of the marketplace.
So, we’ve seen that happen in Capitalize, we’ve seen that happen
with Noah in Ola, where instead of serving the consumer, he
was serving the restaurateur, and it creates a lot of value.
So, okay.
Next one (09:34):
startup experience.
That’s a good question.
I don’t rate it that highly, to be honest.
I have a variation on it, which is, I want people to have worked in
a well-run company, and to know what a well-run company feels like.
And so, that might not have been a startup.
That might have been a company that’s considerably larger in scale.
(09:56):
So, for me, startup experience is, like, a four or five kind of thing.
All right.
We’re on the same page on this one.
[laugh]
. I gave it a five [laugh] . There’s plenty of first-time
founders out there that have made a ton of money.
Noah for example.
Redox for example.
I think in consumer, it actually may be a detractor, and you rarely
(10:19):
see multiple successes on a consumer application with the same founder.
And the reason being is, usually, you know,
it’s like that inherent knowledge of that space.
Like, you know, Zuckerberg, he was at college,
he was like, hey, we should have social network.
I want to meet more people in my university.
(10:40):
And, you know, for him to sit there and say—well, I mean, the guy’s
tremendously successful, so we don’t want to, like, complain, but
like, is he really in touch with the consumer again, at a scale?
Like, you know, Snapchat had to be created.
Instagram had to be created by other people.
Now, he was smart enough to buy Instagram and know that, you
(11:01):
know that they needed something on that level, but—and WhatsApp,
you know, so he’s really astute in terms of basically allowing
founders to create, and he’s got enough leverage to buy, but
second-time, third-time consumer founders are tough, in my opinion.
Enterprise—
Oh, yeah.
(11:22):
Well, so many things have to align from a go-to-market standpoint
and a product-market fit for things to work for consumer companies.
But I think what you’re about to say is that enterprise
founders have a much higher likelihood of repeat successes.
And I think we both know second-time, third-time founders,
or people who are in their second startup and third
(11:45):
startup, for whom a lot of things just come naturally.
And there’s a lot of things they don’t have to think about, and they know what
to focus on, and they don’t get distracted by things that aren’t creating value.
Yeah.
Enterprise is, like, there is a little bit of rinse and repeat there.
Like, once, you know, the buying cycle of particular types of
companies, their buying cycle doesn’t change all that much, you know.
(12:07):
The model doesn’t change all that much.
So, you’re kind of ahead of the curve on enterprise.
The only exception is a ShamWow.
[laugh]
. I think the guy has two.
That ShamWow was fantastic.
This is why he’s really famous [laugh]
. Yeah.
I mean he’s got two.
I can’t remember the second one, but, you know, ShamWow, kind of, ahh.
What a product.
(12:28):
Okay.
Domain knowledge?
To me, this is a big thing, right?
I want to feel in my conversations with an entrepreneur that
they have a visceral understanding of the product that they need
to be building, who it’s for, why that person cares, why it’s
such a priority for them to spend money on solving this problem.
(12:48):
So, this is a ten out of ten, actually, for me.
Domain knowledge is huge, and pretty much all of the founders that
I’ve backed over time, the company that they were building that
we were going to back was the thing that they felt they had to do,
that they knew that only they were the person who could do this.
And you’re aware of our upcoming investment in Lovelace AI, I mean Andrew
(13:14):
Moore, former CEO of Google Cloud AI, Andrew could do lots of things.
Former dean of computer science at Carnegie Mellon, this is
the thing that he has to do is really bring AI to large-scale
data analytics for financial services and national security.
He’s driven by the need to do it.
It’s more than domain knowledge.
(13:35):
It’s visceral.
Yeah, I agree.
You know, I give it an eight out of ten.
I didn’t give it a ten out of ten.
I think smart, inquisitive people can learn,
but it’s all about the motivation to me, right?
So, if you have domain knowledge, you know the pain points and you
(13:56):
have inherent knowledge of why this problem needs to be solved, right?
And you have relationships in the industry.
So, we backed, you know, an HSA company, sort of HSA is very broken.
A lot of people have high-deductible insurance plans, and they’re always
eligible for HSAs, which has so many tax benefits and so much value.
(14:21):
You know, you basically have, let’s say, $1,000
a year that you can spend toward medical.
But if you don’t use it, it rolls forward like a 401[k],
and you can invest that money in a wide variety of
different, you know, vehicles, including stocks and bonds.
But, you know, people aren’t aware of it.
So, Tom Torre, tons of experience.
(14:42):
Not only did he help get the company to a level, but
when we were ready to land the plane, he knew everybody.
Like, he was like—I didn’t do any-I was like, ah.
I just love, like, you have that conversation, “I think it’s
time to land the plane,” and he’s like, “But I got it,” you
know [laugh] ? I’m like, we don’t have to hire a banker.
I’m kind of good.
Yeah, that’s actually a really crucial point.
(15:04):
Domain knowledge often ends up mattering a ton when
you’re ultimately selling or exiting a company.
Those decades of experience in the industry, being known by the players—you
know, I used to do a lot of investing in the storage sector, and I was fortunate
to have a series of CEOs who had all come out of established storage companies.
And they were essentially being—the companies that they built
(15:28):
with capital from RRE, they were essentially being acquired back
by their friends, by people that they had worked with before.
You want people who are deeply rooted in industry when it comes to
partnerships, when it comes to M&A, and a lot of that is about the value unlock.
So, it’s big for me.
I love it.
(15:48):
Yeah, big for me, too.
All right, next one salesmanship?
I mean, nothing happens without
it [laugh] . I think one of the things you realize early on as a
venture capitalist is that companies can basically be distilled
down into people who make something and people who sell something.
(16:09):
And the founder really has to be both, and particularly in
the earliest days of revenue generation because I have yet
to meet the classically-trained salesperson that you can drop
into a startup and have them be really successful, right?
So, founders drive all of the early sales, and if they’re not
actually selling the product to a customer, they’re selling
(16:31):
the company, they’re selling the vision to investors, they’re
selling the opportunity to employees that they’re recruiting.
And this is where, like, force of character, and charisma, and
the ability to be a great storyteller becomes so important.
And I think we can look across the portfolio, we see
a lot of our entrepreneurs who are great at this.
(16:53):
And I’ve met a lot of entrepreneurs who are better at salesmanship than
they are at anything that happens after, to a point where you’re like, okay,
[laugh] wait a minute, like, where does this actually leave us?
Because you’re so persuaded for their vision, but maybe
the execution isn’t altogether there after the fact.
So, I need a number.
[laugh] . Okay, I mean, it’s pretty close to a ten for me.
(17:14):
It’s a ten for me.
Yeah, salesmanship takes a lot of different forms, though.
I think that’s the really important qualifier.
Yeah, it’s a ten.
It’s a ten for me, without question, right?
I never want to walk into a conversation—if I back a company and we
have poor salesmanship by the founder, the next round’s got to get done.
(17:36):
I can’t make the next round happen, right?
It’s the founder that sells VCs.
They sell the early customers, they sell the
employees that they’re trying to recruit.
And so, if you don’t have that panache and that capability,
you know, the company is going to have trouble, right?
Like, I mean, you might be in a situation where
(17:56):
it’s like you hit a slipstream, but that’s rare.
And I think the flip side of what you said, Will, is important.
Awareness is vital because you can be too convincing.
And I know a lot of founders that get ahead of
their skis, they oversell a product, and… I did it.
[laugh]
. I did it.
I don’t want to claim—I mean, I am a sales guy, right?
(18:18):
I mean, I’m technical, but I—not—I’m trying to be a little humble here, but yes.
So, I went, you know, we had a company and, you know,
selling million, two-million pieces of software, and
you know, the product was not up to snuff to solve that.
So, you know, you run into issues where it’s only so
(18:40):
long you can tell customers this stuff’s coming, right?
Or you sell a vision, and just, they’ve got
a tip of the iceberg, they need more, right?
So, you have to have some level of awareness
of, like, when to stop selling or over-selling.
Okay.
So, I think you and I are in agreement that it’s super
important, but that awareness element kind of needs to be there.
(19:01):
So.
Well yeah, and you’re touching on one of my favorite
topics, which is self-awareness, generally, for
founders, and it comes up in every dimension, right?
Understanding what you’re good at, and how people perceive you,
and where your personal strengths lie, and being willing to let
others lead for you in the areas that you’re not, it’s a remarkable
(19:24):
sign of maturity when you see founder CEOs willing to do that.
Yeah.
All right, next topic (19:28):
vision.
I mean, there is no company without the vision.
So, the ability to have a clear vision for what is to be built and
why, and then to communicate that vision takes us back to salesmanship.
You know, to me, this is not hard.
It’s probably an eight-plus on my scale, but the thing about it is
(19:52):
it’s really embedded in a lot of what we talked about earlier, right?
That deep domain knowledge, that need to do something,
if I can’t sit with a founder and viscerally feel
their need to pursue that vision, like, you’ve lost me.
It’s just not going to be worth it for either them or for us.
Yeah, you know, I give it a seven.
(20:13):
Mm-hm.
It’s up there.
But it’s not like up with salesmanship, in my
opinion, or, you know, grit or adaptability.
I think those are super important.
I think one of the things I say to all entrepreneurs is,
like, more startups will die from indigestion than starvation.
I do believe you say that [laugh]
. A lot, a lot.
And it’s true [laugh]
(20:34):
And if you try to do too many—it’s true, it’s true, it’s
true—you try to do too many things, you do all of them
poorly, and you’re better off doing one thing really well.
And the second piece is just as important, and that’s sequencing.
What are you going to do great in step one, and then what
are you going to do great in step two, and great in step
(20:57):
three, not all of them at the same time, but in sequence?
And a great example of a founder that we had
in our portfolio is Luke Schonfelder at Latch.
So, what Latch is doing—and you know, continues to
do—is they make smart locks for apartment complexes.
And so, you look at an apartment complex, and you know, a lot
(21:18):
of keys, and the management company has to keep a bank of keys.
They have to, you know, sort of somebody loses a key, you got to replace one.
They have to have keys for the superintendent to go and fix stuff.
And they move to a smart lock model where, you know, you
sell a thousand doors at once, which is fantastic, right?
So, every room, every apartment has a smart lock.
(21:42):
You can change the locks in an instant by changing the key code or the NFC card.
But the broader vision is to be able to offer services
to the tenant, and services like, “Hey, you just
moved in. Do you want cable?” “Hey, you just moved in.
Do you need a maid?” “Hey, do you need a dog walker?” And you
(22:03):
only can offer those services when you have density. So, you have
maybe 10 or 15 or 20 buildings in a particular zone, all of a
sudden there’s a bunch of service providers that want to play.
Or UPS, or Amazon wants to deliver packages, and they’d love to
leave it inside the building, as opposed to outside the building.
So, that sequence is super, super important, but step one is, get enough
(22:28):
locks on doors [laugh] . And so, I love the vision that he painted, you
know, early on, and you know, continues to be the mission of the company.
I think the thing about vision, and the reason I gave it a seven out of
ten is, as long as you listen to the marketplace, sometimes, if you’re
(22:48):
maniacally focused on step one in the sequence, the second step comes.
And so, I don’t give it a ten out of ten because
everybody doesn’t need to have the end game.
And I don’t even think Zuckerberg had the end game in mind—
No.
—you know?
And so, I think that that can come out of really
being focused, obsessed around the customer.
(23:09):
Yeah, I think you’re completely right.
I do think any discussion of vision has to turn back towards
this topic of sequencing, and you’ve articulated it very well.
I think we both have encountered, and can think of a lot of founders
who are good at expressing a vision of a future state of the world
that they want to help will into existence, but the ability to actually
(23:31):
break down the steps, and then think through the contingencies to
be thinking from an optionality, from an adaptability standpoint,
about every phase of the company-building journey, realistically,
those are the rare entrepreneurs, and we don’t meet enough of them.
Sequencing is ultimately the superpower.
(23:52):
It is a superpower.
Okay.
Next one (23:53):
decisiveness.
I love this.
It’s always the, you know, how much money is left in the
bank [laugh] when you need to make a decision, right?
And decisions made in tough moments with
uncertain information often save companies.
So decisiveness, I think, also often counts a lot more than analytical
(24:14):
rigor, meaning you’ve got to be willing to have just enough information
to make tough calls, and sometimes that means going partly with your gut.
You can’t wait around for perfect information,
so decisiveness counts for a lot in founders.
Is it ten out of ten?
No, but it’s probably six or seven for me.
I gave it a six.
(24:34):
I think we’re kind of aligned on some of these.
I think decisiveness sometimes can be a negative.
Sure.
I think there are some founders that feel like they have to be decisive,
and you know, work without perfect data, so they don’t dig enough.
I think there are moments in time where, like, you’re never going to
(24:55):
get more data, or you have 80%, and you know, the 20% is going to just
take a month to get, and in those cases, yeah, you should be decisive.
But if you feel like you have to be decisive on every single notion of the
company, sometimes you just need a framework and advisors, and you know, sort
(25:15):
of have experts that you can go to and talk to, like your board members or
your advisors, or you know, marketplace experts that help you frame this out.
And I’ve seen founders that are saying, like, you know,
“We’re going to go here,” and it’s like, “Whoa, whoa,
whoa.” Like, you know we haven’t explored x long enough.
(25:39):
You want to go to y. Like, let’s do x-prime, or
x-double-prime, you know, like, before we move to y.
And you know, so I think it’s not as critical.
I think there are moments where it is absolutely vital, and you
have to know when those are, but I think you surround yourself with
the right sets of people to create an impetus on when to do it.
(25:59):
All right, financial skills?
Well, to me, I think founders have to be
financially literate in a sophisticated way.
So, I get frustrated with founders who don’t understand the
difference between sales and bookings and revenue and cash [laugh]
. Mm-hm.
Mm-hm.
Yeah, yeah, yeah.
I don’t have a lot of tolerance for that because it means that, at
(26:20):
some level, they don’t understand the fundamental value-creation
exercise in equity, and that, to me, is sort of, is troubling.
So, I expect a high degree of financial literacy, and I expect a
principled commitment to high standards of financial reporting,
but I also don’t expect founders to live in the models.
(26:41):
In fact, I think it’s a very good discipline for a founder to partner
with a strong finance leader who can be their great FP&A person—Financial
Planning and Analysis person—early on in the life of the company.
A good thought partner in that exercise is
often better than the founder doing it alone.
So, what do I give it?
I give it about a five.
Yeah, yeah [laugh] . Okay.
(27:02):
I gave it a five.
I gave it a five because I think if your intelligence—if you’re
an intelligent person, you’re going to figure this out, right?
It’s not complicated.
There’s lots of literature out there, there’s lots of advisors, there’s,
you know, part time resources that you can get to supplement this.
But it needs to be a five, right?
(27:22):
You have to have just at least an average level of financial
literacy to understand the difference between a booking and,
you know, ARR and cash and, you know, whatever it might be.
But you don’t need to be off the charts.
You don’t need to be ten, unless you’re starting a financial
services company that’s focused on accounting, [laugh] you know?
But you know, it’s worth pausing for a minute, Raju, because
(27:44):
implicit in this conversation is that we are backing businesses.
We’re backing people who are building businesses that are going to have sales
growth, they’re going to have margins, they’re going to ultimately have profits.
And there are an awful lot of founders out there—and we see this
a lot in consumer and media—who are creating new experiences,
(28:04):
they’re creating end-user engagement, they’re definitely
creating value, but whether that value is actually capturable
in money that can power a business is another exercise entirely.
And that, to me, is kind of—that’s a
boundary condition for me with entrepreneurs.
And we’ve certainly underwritten our share of companies that
we’re going to create great consumer experiences, and the business
(28:27):
would have to come later, but you got to be thinking about it
from day one, and that requires a lot of financial literacy.
Yeah.
I mean that to me is… is not financial literacy; it’s just a business
model that you kind of sit there and say, like, okay, you know,
step one of the sequence is, you know, grow at some incredible rate.
And step two, you know, we turn on revenue, but you
(28:50):
have a sort of an insight into, like, that happening.
I just don’t need them to be all capable of
creating, you know, sort of a financial book, right?
I think somebody else in the organization can do that.
Okay, technical skills?
I mean, I think they have to be technically capable, and they have
(29:10):
to be capable at the innovation level in thinking about what they’re
bringing to market and building is fundamentally different and better.
Do they need to be a senior architect, or to have been a senior architect,
or to have been a CTO, or do they need to have their name on patents?
Not necessarily, but they need to be someone who
(29:30):
fundamentally understands the innovation process.
And that, to me, is actually more important than engineering credentials.
So—
So, how big is it?
It’s probably—
[laugh] . You don’t like to give numbers out.
It’s a seven or eight [laugh]
. It’s a seven or eight.
Okay.
I gave it a six, and the reason I gave it a six
is because it really depends on the company.
(29:53):
There are a bunch of companies that can cobble stuff together,
but they’ve kind of figured out some nuance of, either
the go-to-market model, or the friction, or the whatever.
I actually think at least somebody on the team needs to have
technical skills, but it doesn’t necessarily need to be the founder.
If it’s a sole founder and they’re not technical, but they’re
(30:14):
great at salesmanship, they’re going to bring in a CTO that
can actually execute on their behalf who knows this stuff.
Like, that salesmanship is super, super critical to me, particularly
if you don’t have the, you know, technical skills in-house.
And I think it, you know, really depends on the company.
There’s a lot of companies which are grounded in
technology, and so your founders better have that, right?
(30:37):
If you are an AI-first company, you better
have some inherent knowledge of AI, you know?
If you’re doing something like software architecture as a business, you
know, your founders better have an understanding of software architecture.
But, you know, if you’re building something that—sort of like Ola
built, right—like, Noah was there, but I don’t know if he had all
(30:59):
of the technical chops, you know, at the first get around, right?
So, I think he developed that, or hired,
you know, alongside for that kind of thing.
But anyway.
So, there’s another area we haven’t mentioned, where I think
this really matters, and that is in the shape and the scaling of
the organization, understanding what good innovative engineering
(31:19):
teams look like, understanding what good product groups look
like from a technical standpoint, it’s really important.
And you and I have both been part of a lot of companies, some that we started,
we’ve both been around them, and that the great things that happen inside of a
technical organization early in the life of a company are super special, right?
(31:40):
You get these super high-talent engineers
working together, it’s almost like a band.
And if you have a founder who’s not really
rooted in that, it’s not going to happen.
That’s my experience.
So.
Yeah, I’m mixed on it.
But, um… customer obsession?
Most of my founders are completely customer obsessed,
(32:00):
but they’re not so customer obsessed that they get
pulled into the needs of any one particular customer.
So, being able to keep that distance from the needs of customers
and what you’re hearing, and having the ability to shape product.
So, are they customer obsessed to a healthy degree?
It’s a six or a seven.
(32:22):
Yeah, I gave it a seven.
Ok.
I mean, I think we’re just nailing these, man.
[laugh] . I can’t wait to hear what’s a two or three.
I don’t know—there’s nothing that two or three.
These are characteristics of founders, of killer founders.
I’m not going to put in here things that are two or three.
It’s going to go from five to ten.
It’s going to go from five to ten.
I would say seven for that, and I agree with you.
(32:45):
I think that you need to think broadly about the market,
and so customer obsession can get you pulled in, so
that you narrow your scope, unfortunately, right?
You have to sit there and say, like, what’s going to meet the needs—what’s
so important that it’s going to meet the needs of enough customers
(33:06):
without sort of siloing yourself down to one particular customer?
That being said, you know, your first 10 for enterprise customers,
and your first 10,000 for consumer apps or something like
that, you got to listen, and you got to sort of understand,
like, what is it that’s, you know, people are falling off from?
What is it that, you know, gets people to churn?
(33:28):
What is it that people are just unhappy about?
So, I think it’s high enough that you have to have, it has to be a seven,
but, like, incredible obsession for the customer can narrow your scope.
It’s more what a consultant would do as opposed to,
like, a company that is trying to scale at large.
Okay, so the last one is delegation.
(33:51):
This is pretty high on my list.
Again, it’s probably a seven or eight.
I know a lot of founders who are actually kind of lousy at delegation
early in the life of their companies, and I think that can be a
superpower because they need to be close to the action, and that
means they need to be personally involved because every decision is
(34:13):
pretty major early on, particularly when they have limited resources,
but ultimately, they have to pivot to being great delegators.
And as I look at my companies that have scaled smoothly, over and
over again, I see founder-CEOs who were very comfortable and very
confident in hiring great people, people who are better in their
function than the founder was ever going to be, and delegating to them.
(34:36):
So, to me, it ultimately can be a company maker if you’re
good at this, but it’s a seven or eight kind of territory.
I didn’t give it that high.
I gave it a five.
Wow.
I gave it a five, yeah.
I think it’s really important, from my perspective, that early founders
are sort of in tune with everything that’s going on in the organization.
(34:58):
And, you know, I like to back teams; I don’t really like to back
single founders all that often, so you know, I feel like the team—I
use this term smoke jumpers—I think we talked about it in a prior
podcast—I think that founders sometimes can see something broken
in an organization, they smoke-jump in and they get involved.
I think delegation comes later, and I think it
(35:23):
happens when the maturity of the company is there—
Yeah.
—where you’re not really kind of nimble anymore,
and it’s more like a little bit of a battleship.
And so, now you have to get organizational experts.
And you realize, like, hey, these organizational experts are far
better at producing financials, or far better at hiring salespeople,
(35:45):
or far better at hiring technical leadership, and I need an
engineering head that doesn’t necessarily do; they just manage.
And so, I feel like out of the gate, it’s less important to me.
I need somebody that is able to free themselves from this long-term,
(36:07):
otherwise they’re probably not going to be CEO forever, right?
Like—
Well, that’s the thing, right?
Part of retaining the job is actually letting go of this over time.
And so, when I was favoring it, it’s because I still want—you know, you look at
the success rates and in companies that lose a founder—and this is one of the
reasons companies might part ways with their founder—success rates are always
(36:30):
much higher when the founder is on board and in leadership all the way through.
I’ll tell you one quick story about one of my
favorite founders before we turn to the end.
So, my very first company, an enterprise software business called Frictionless
Commerce, a procurement software app, I had come from this world, and when
I first joined RRE, this was my first deal—and the founder of that company,
(36:53):
while the business grew and raised more money and had lots of sales and
customers, and ultimately had a great outcome and a sale to SAP, the career
trajectory of the founder through the organization was downward the whole time.
Alex Moukas went from being CEO, to being president, to being VP of
Business Development, to being VP of sales, to being a bag carrying
(37:15):
account rep [laugh] . And culturally, it was incredibly powerful for the
organization because everyone saw this founder who was doing the right
thing for the company through their own example, all the way through.
He remained captain of the company soccer team,
by the way, [laugh] throughout all of this.
(37:36):
Yeah, yeah, yeah.
You can’t take that title away.
I mean, like, look, when you’re good at soccer.
And he was a phenomenal account rep. And if he had—
What did he play?
Did he play midfield, or what did he play?
I think he played midfield where he could tell everybody what to do.
The interesting thing is that his career
trajectory settled out in a great place for him.
He was an all-star account rep. If he had gone to a big
(37:56):
software company in sales, he probably would have been
an all-star account rep instead of starting a company.
But going downward through the organization
helped the whole rest of the organization go up.
And this gets to founder values, and how people lead, which matters a lot.
Yeah, so for all of this, I mean, I think grit plus adaptability
(38:18):
plus salesmanship plus domain experience, and I am in [laugh]
. [laugh]
. I’m in.
You have those characteristics, come to me.
Man, I will just be so in.
All right, so we’re going to move to the Gatling Gun section.
I knew we would [laugh]
. I didn’t do a lot of preparation, so this is going to be a
simple question (38:33):
what’s the best thing you did this weekend?
Oh, what is the best thing I did this weekend?
You know, it was warm in New York.
I went for a long run on Sunday.
It was great to be outside.
So, what about you?
Oh, my God.
So, this week was Miami Tennis Open.
Oh, Wow.
It was eMerge, and it was Miami Music Week, and I love all of them
(38:57):
[laugh] . Oh, man, I went to some… I don’t know, festivals, I guess it was.
You know MoBla—Mo—I’ll tell you the four favorite.
I’ve been to, like, six, [laugh] so and
a couple of these were at the same event.
But MoBlack and Francis Mercier.
If you get a chance this weekend or this week
(39:17):
to listen to some of their music, amazing.
Great.
Amazing.
Like, really kind of Root-y, but with a nice
vibe, and great, you know, sort of beat.
And then John Summit—you know, John Summit?—
Mm-hm.
Oh, my God.
John Summit was fantastic.
And then there was a mini-SXM festival.
(39:39):
Amazing.
I’m telling you, like it’s—
You were a busy man this weekend.
Wow.
No, it’s a special thing.
Like, well, there was a lot of people in town, right?
Like, a lot of VCs, a lot of entrepreneurs, a lot of business
partners, and so everybody has, “Hey, I got, like, eight extra
tickets,” you know? Like, you know, “Come.” And I enjoyed it.
(39:59):
I enjoyed it a bunch, but Miami is a little
bit of a special place this time of year.
A lot of people are down because of the weather.
So, you went running, I went dancing [laugh]
. [laugh] . Outstanding.
Well, thank you for another great episode of our RRE POV.
Thank you to our listeners.
We love doing this.
We hope you enjoy it, and we will see you for another episode soon.
(40:23):
Thank you for listening to RRE POV.
You can keep up with the latest on the podcast at @RRE
on X or rre.com, and on Apple Podcasts, Spotify, Google
Podcasts, or wherever fine podcasts are distributed.
We’ll see you next time.
Amazing.
I’m telling you, like, it’s—
You were a busy man this weekend.
Wow.
No, it’s a special thing.
Like, well, there was a lot of people in town, right?
Like, a lot of VCs, a lot of entrepreneurs, a lot of business
partners, and so everybody has, “Hey, I got, like, eight extra
tickets,” you know? Like, you know, “Come.” And I enjoyed it.
(00:21):
I enjoyed it a bunch, but Miami is a little
bit of a special place this time of year.
A lot of people are down because of the weather.
So, you went running, I went dancing [laugh]
. [laugh] . Outstanding.
I’m Will Porteous.
(00:42):
And I’m Raju Rishi.
Welcome to RRE POV, the show in which we record the
conversations we’re already having among ourselves, our
entrepreneurs, and industry leaders for you to listen in on.
Hello listeners.
This is Raju Rishi, along with my partner, Will Porteous.
We’ve backed hundreds of founders over our history, and today we’re
(01:04):
going to discuss the handful of characteristics of killer founders.
So, Will, I’m going to toss out a founder characteristic.
I know there’s no preparation on this from your side, so you’re going
to give me a ranking, from one to ten, of the importance of that
characteristic, with ten being the best and one being the worst.
(01:26):
And if you can think of it, an example of that characteristic
that can sort of showcase what that means to our listeners.
Sounds like a great exercise.
We’ve been preparing for this for decades.
Ari’s backed more than 400 companies, and
we see thousands of founders every year, so—
Excellent.
Sure.
Okay, go for it.
All right.
First characteristics (01:47):
grit.
So, where do I rank it?
I mean, I probably rank it an eight out of ten.
Okay.
You’re starting off strong.
I mean, just sheer tenacity that comes from
character more than anything else, I think.
And a lot of times we find this in founders
long before they ever started their companies.
(02:08):
In fact, I think it’s one of the qualities that impresses us
the most (02:10):
people who have had to overcome personal hardship,
people who’ve had to really build a life for themselves.
It’s part of the reason, I think, that we naturally gravitate towards immigrants
who’ve had to build a life for themselves and their family in this country.
So yeah, I rank grit really pretty highly.
Yeah.
I’m going to give it a ten out of ten.
(02:32):
I’m going to give it a ten out of ten.
I think it’s actually one of the most important characteristics.
I mean, there’s so many moments in a startup’s life where you think the
sky is falling, and it’s over, and you have to sort of see a pathway, and
you got to, just sometimes, just like, put it on your back and take it.
(02:56):
We have lots of examples of this in our portfolio, and the one that comes
to mind fastest, and you know, most profoundly, is Noah Glass from Olo.
Sure.
A 20-year-old company, which we took public a few years ago.
And it started out as a mobile ordering platform.
And you know, kind of interesting mobile phones were coming out
(03:17):
there—actually started before the iPhone, so it was a text messaging
platform—and you know, you wanted to order your Starbucks in advance.
You know you can go and… order it through your mobile phone and pick it up.
And you know, that was fantastic.
The problem was he was really focused around the consumer
experience as opposed to the restaurant experience.
(03:40):
And they pivoted to serving restaurants.
We had Covid happen, which actually was a huge benefit to Olo because Olo
was an online ordering platform, so people wanted to pick up their food.
And went to borderless transaction, which went without
passwords, so just to make a frictionless experience.
(04:02):
And Noah is the kind of founder that you look at, and you’re like, the things
that he had to overcome to get to a public company were seriously profound.
Well, and Noah’s a great example, Raju, because it wasn’t like he’d had all
this prior professional experience to draw upon in making those decisions.
(04:24):
Noah was in his early-20s when we backed him.
He was not long out of undergrad, and a lot of the investment we
made at the time, the team discussion, was really about character.
We really just liked this guy, and we liked his resilience, and his
seriousness, and the way he could inspire other people, but there was
(04:44):
no one there to teach him to have that kind of grit and to pivot his
company in the ways that he needed to many times over the long journey.
Yeah, yeah, yeah.
No, I mean fascinating journey, and you know,
we can do an entire episode on Noah and Olo.
But—
We probably will.
Yeah.
Yeah, we probably will at some point.
But anyway, let’s move to the next characteristic.
(05:05):
I’m trying to keep us on track.
So, the second one is adaptability.
Adaptability is sort of at the heart of the
qualities I look for in an entrepreneur.
I want people who can see where they need to modify
their vision for what they need to build, while remaining
(05:29):
true to their commitment to building something of value.
And I think that adaptability implies the ability to take feedback
and to fine-tune the organization you’re building, the product you’re
building, the go-to-market, many other things, in the face of feedback.
So, for me, this is probably eight or nine.
(05:51):
I’m going to give this a ten [laugh]
. [laugh] . Everything is a ten with you.
Everything is a ten, my friend.
Oh, my God.
Uh, no.
No, I promise you, not all tens.
But this is a ten for me.
And this is actually the yang to the yin of grit, right?
Grit is determination, you’re going to plow through.
And sometimes grit without adaptability becomes
(06:13):
a problem because you just want to plow.
You feel so determined to create success around something.
And, you know, what I always say is that the startup’s
goal is to go from point A to point B as fast as possible,
until they realize point B is the wrong destination.
[laugh]
(06:35):
. Exactly.
And then you have to go to b-prime.
And a great example of this is one of my entrepreneurs Luke Bonney at Redox.
And so Redox, you know, the three founders came out of Epic, and they noticed
that healthcare had a data transferability problem, an interoperability problem.
(06:55):
And they were working for Epic, and they were doing a
bunch of custom deployments for medical applications
that wanted to tie into a particular health system.
And the quandary was, well, why don’t we have
an API that allows it make—make it really easy?
And initially they created this API and sold it to healthcare establishments.
And healthcare establishments really, really have low margins,
(07:18):
they don’t have a lot of technical staff, and you know, their
interests are maybe to hold off on creating medical application
integration because they don’t want to mess up the EHR.
Medical device and medical application companies, however,
have a huge need to basically integrate into a healthcare
(07:40):
system because they get paid when their data gets into the EHR.
Indeed.
And so, they paid, they pivoted, they listened to the market,
and they said these medical application companies like Stryker
or [Wound] Management or, you know, you name it, they all
needed to integrate into the EHR and were willing to pay.
(08:02):
And that adaptability to the market and the
business model revolutionized their business.
All of a sudden, you know, huge amounts of medical applications
companies said, “Well, if we work with Redox, we can tie into this
EHR without learning how to tie into that specific EHR.” And so,
they solved the need for them, and they created a business model. So,
(08:26):
that’s one example, but there are many you know that we can point to.
Well, that’s a great example of a situation where Redox knew—Luke knew—they
were creating value for all the players, but he had to be adaptable
in deciding who was the most motivated to focus on and who would be
willing to pay ultimately, and pivoted his business model in the process.
(08:49):
It’s a great example.
Yeah.
Yeah.
And you know, it’s interesting, two—sided, I don’t want to call it marketplaces,
but two-sided application companies or technical companies—what I found—start
with one side of the marketplace, and if it doesn’t work, they move to
the other side of the marketplace, and it often unlocks a bunch of things.
(09:15):
Because everybody wants to serve the end customer initially, and then they
realize, well, maybe the end customer is the other side of the marketplace.
So, we’ve seen that happen in Capitalize, we’ve seen that happen
with Noah in Ola, where instead of serving the consumer, he
was serving the restaurateur, and it creates a lot of value.
So, okay.
Next one (09:34):
startup experience.
That’s a good question.
I don’t rate it that highly, to be honest.
I have a variation on it, which is, I want people to have worked in
a well-run company, and to know what a well-run company feels like.
And so, that might not have been a startup.
That might have been a company that’s considerably larger in scale.
(09:56):
So, for me, startup experience is, like, a four or five kind of thing.
All right.
We’re on the same page on this one.
[laugh]
. I gave it a five [laugh] . There’s plenty of first-time
founders out there that have made a ton of money.
Noah for example.
Redox for example.
I think in consumer, it actually may be a detractor, and you rarely
(10:19):
see multiple successes on a consumer application with the same founder.
And the reason being is, usually, you know,
it’s like that inherent knowledge of that space.
Like, you know, Zuckerberg, he was at college,
he was like, hey, we should have social network.
I want to meet more people in my university.
(10:40):
And, you know, for him to sit there and say—well, I mean, the guy’s
tremendously successful, so we don’t want to, like, complain, but
like, is he really in touch with the consumer again, at a scale?
Like, you know, Snapchat had to be created.
Instagram had to be created by other people.
Now, he was smart enough to buy Instagram and know that, you
(11:01):
know that they needed something on that level, but—and WhatsApp,
you know, so he’s really astute in terms of basically allowing
founders to create, and he’s got enough leverage to buy, but
second-time, third-time consumer founders are tough, in my opinion.
Enterprise—
Oh, yeah.
(11:22):
Well, so many things have to align from a go-to-market standpoint
and a product-market fit for things to work for consumer companies.
But I think what you’re about to say is that enterprise
founders have a much higher likelihood of repeat successes.
And I think we both know second-time, third-time founders,
or people who are in their second startup and third
(11:45):
startup, for whom a lot of things just come naturally.
And there’s a lot of things they don’t have to think about, and they know what
to focus on, and they don’t get distracted by things that aren’t creating value.
Yeah.
Enterprise is, like, there is a little bit of rinse and repeat there.
Like, once, you know, the buying cycle of particular types of
companies, their buying cycle doesn’t change all that much, you know.
(12:07):
The model doesn’t change all that much.
So, you’re kind of ahead of the curve on enterprise.
The only exception is a ShamWow.
[laugh]
. I think the guy has two.
That ShamWow was fantastic.
This is why he’s really famous [laugh]
. Yeah.
I mean he’s got two.
I can’t remember the second one, but, you know, ShamWow, kind of, ahh.
What a product.
(12:28):
Okay.
Domain knowledge?
To me, this is a big thing, right?
I want to feel in my conversations with an entrepreneur that
they have a visceral understanding of the product that they need
to be building, who it’s for, why that person cares, why it’s
such a priority for them to spend money on solving this problem.
(12:48):
So, this is a ten out of ten, actually, for me.
Domain knowledge is huge, and pretty much all of the founders that
I’ve backed over time, the company that they were building that
we were going to back was the thing that they felt they had to do,
that they knew that only they were the person who could do this.
And you’re aware of our upcoming investment in Lovelace AI, I mean Andrew
(13:14):
Moore, former CEO of Google Cloud AI, Andrew could do lots of things.
Former dean of computer science at Carnegie Mellon, this is
the thing that he has to do is really bring AI to large-scale
data analytics for financial services and national security.
He’s driven by the need to do it.
It’s more than domain knowledge.
(13:35):
It’s visceral.
Yeah, I agree.
You know, I give it an eight out of ten.
I didn’t give it a ten out of ten.
I think smart, inquisitive people can learn,
but it’s all about the motivation to me, right?
So, if you have domain knowledge, you know the pain points and you
(13:56):
have inherent knowledge of why this problem needs to be solved, right?
And you have relationships in the industry.
So, we backed, you know, an HSA company, sort of HSA is very broken.
A lot of people have high-deductible insurance plans, and they’re always
eligible for HSAs, which has so many tax benefits and so much value.
(14:21):
You know, you basically have, let’s say, $1,000
a year that you can spend toward medical.
But if you don’t use it, it rolls forward like a 401[k],
and you can invest that money in a wide variety of
different, you know, vehicles, including stocks and bonds.
But, you know, people aren’t aware of it.
So, Tom Torre, tons of experience.
(14:42):
Not only did he help get the company to a level, but
when we were ready to land the plane, he knew everybody.
Like, he was like—I didn’t do any-I was like, ah.
I just love, like, you have that conversation, “I think it’s
time to land the plane,” and he’s like, “But I got it,” you
know [laugh] ? I’m like, we don’t have to hire a banker.
I’m kind of good.
Yeah, that’s actually a really crucial point.
(15:04):
Domain knowledge often ends up mattering a ton when
you’re ultimately selling or exiting a company.
Those decades of experience in the industry, being known by the players—you
know, I used to do a lot of investing in the storage sector, and I was fortunate
to have a series of CEOs who had all come out of established storage companies.
And they were essentially being—the companies that they built
(15:28):
with capital from RRE, they were essentially being acquired back
by their friends, by people that they had worked with before.
You want people who are deeply rooted in industry when it comes to
partnerships, when it comes to M&A, and a lot of that is about the value unlock.
So, it’s big for me.
I love it.
(15:48):
Yeah, big for me, too.
All right, next one salesmanship?
I mean, nothing happens without
it [laugh] . I think one of the things you realize early on as a
venture capitalist is that companies can basically be distilled
down into people who make something and people who sell something.
(16:09):
And the founder really has to be both, and particularly in
the earliest days of revenue generation because I have yet
to meet the classically-trained salesperson that you can drop
into a startup and have them be really successful, right?
So, founders drive all of the early sales, and if they’re not
actually selling the product to a customer, they’re selling
(16:31):
the company, they’re selling the vision to investors, they’re
selling the opportunity to employees that they’re recruiting.
And this is where, like, force of character, and charisma, and
the ability to be a great storyteller becomes so important.
And I think we can look across the portfolio, we see
a lot of our entrepreneurs who are great at this.
(16:53):
And I’ve met a lot of entrepreneurs who are better at salesmanship than
they are at anything that happens after, to a point where you’re like, okay,
[laugh] wait a minute, like, where does this actually leave us?
Because you’re so persuaded for their vision, but maybe
the execution isn’t altogether there after the fact.
So, I need a number.
[laugh] . Okay, I mean, it’s pretty close to a ten for me.
(17:14):
It’s a ten for me.
Yeah, salesmanship takes a lot of different forms, though.
I think that’s the really important qualifier.
Yeah, it’s a ten.
It’s a ten for me, without question, right?
I never want to walk into a conversation—if I back a company and we
have poor salesmanship by the founder, the next round’s got to get done.
(17:36):
I can’t make the next round happen, right?
It’s the founder that sells VCs.
They sell the early customers, they sell the
employees that they’re trying to recruit.
And so, if you don’t have that panache and that capability,
you know, the company is going to have trouble, right?
Like, I mean, you might be in a situation where
(17:56):
it’s like you hit a slipstream, but that’s rare.
And I think the flip side of what you said, Will, is important.
Awareness is vital because you can be too convincing.
And I know a lot of founders that get ahead of
their skis, they oversell a product, and… I did it.
[laugh]
. I did it.
I don’t want to claim—I mean, I am a sales guy, right?
(18:18):
I mean, I’m technical, but I—not—I’m trying to be a little humble here, but yes.
So, I went, you know, we had a company and, you know,
selling million, two-million pieces of software, and
you know, the product was not up to snuff to solve that.
So, you know, you run into issues where it’s only so
(18:40):
long you can tell customers this stuff’s coming, right?
Or you sell a vision, and just, they’ve got
a tip of the iceberg, they need more, right?
So, you have to have some level of awareness
of, like, when to stop selling or over-selling.
Okay.
So, I think you and I are in agreement that it’s super
important, but that awareness element kind of needs to be there.
(19:01):
So.
Well yeah, and you’re touching on one of my favorite
topics, which is self-awareness, generally, for
founders, and it comes up in every dimension, right?
Understanding what you’re good at, and how people perceive you,
and where your personal strengths lie, and being willing to let
others lead for you in the areas that you’re not, it’s a remarkable
(19:24):
sign of maturity when you see founder CEOs willing to do that.
Yeah.
All right, next topic (19:28):
vision.
I mean, there is no company without the vision.
So, the ability to have a clear vision for what is to be built and
why, and then to communicate that vision takes us back to salesmanship.
You know, to me, this is not hard.
It’s probably an eight-plus on my scale, but the thing about it is
(19:52):
it’s really embedded in a lot of what we talked about earlier, right?
That deep domain knowledge, that need to do something,
if I can’t sit with a founder and viscerally feel
their need to pursue that vision, like, you’ve lost me.
It’s just not going to be worth it for either them or for us.
Yeah, you know, I give it a seven.
(20:13):
Mm-hm.
It’s up there.
But it’s not like up with salesmanship, in my
opinion, or, you know, grit or adaptability.
I think those are super important.
I think one of the things I say to all entrepreneurs is,
like, more startups will die from indigestion than starvation.
I do believe you say that [laugh]
. A lot, a lot.
And it’s true [laugh]
(20:34):
And if you try to do too many—it’s true, it’s true, it’s
true—you try to do too many things, you do all of them
poorly, and you’re better off doing one thing really well.
And the second piece is just as important, and that’s sequencing.
What are you going to do great in step one, and then what
are you going to do great in step two, and great in step
(20:57):
three, not all of them at the same time, but in sequence?
And a great example of a founder that we had
in our portfolio is Luke Schonfelder at Latch.
So, what Latch is doing—and you know, continues to
do—is they make smart locks for apartment complexes.
And so, you look at an apartment complex, and you know, a lot
(21:18):
of keys, and the management company has to keep a bank of keys.
They have to, you know, sort of somebody loses a key, you got to replace one.
They have to have keys for the superintendent to go and fix stuff.
And they move to a smart lock model where, you know, you
sell a thousand doors at once, which is fantastic, right?
So, every room, every apartment has a smart lock.
(21:42):
You can change the locks in an instant by changing the key code or the NFC card.
But the broader vision is to be able to offer services
to the tenant, and services like, “Hey, you just
moved in. Do you want cable?” “Hey, you just moved in.
Do you need a maid?” “Hey, do you need a dog walker?” And you
(22:03):
only can offer those services when you have density. So, you have
maybe 10 or 15 or 20 buildings in a particular zone, all of a
sudden there’s a bunch of service providers that want to play.
Or UPS, or Amazon wants to deliver packages, and they’d love to
leave it inside the building, as opposed to outside the building.
So, that sequence is super, super important, but step one is, get enough
(22:28):
locks on doors [laugh] . And so, I love the vision that he painted, you
know, early on, and you know, continues to be the mission of the company.
I think the thing about vision, and the reason I gave it a seven out of
ten is, as long as you listen to the marketplace, sometimes, if you’re
(22:48):
maniacally focused on step one in the sequence, the second step comes.
And so, I don’t give it a ten out of ten because
everybody doesn’t need to have the end game.
And I don’t even think Zuckerberg had the end game in mind—
No.
—you know?
And so, I think that that can come out of really
being focused, obsessed around the customer.
(23:09):
Yeah, I think you’re completely right.
I do think any discussion of vision has to turn back towards
this topic of sequencing, and you’ve articulated it very well.
I think we both have encountered, and can think of a lot of founders
who are good at expressing a vision of a future state of the world
that they want to help will into existence, but the ability to actually
(23:31):
break down the steps, and then think through the contingencies to
be thinking from an optionality, from an adaptability standpoint,
about every phase of the company-building journey, realistically,
those are the rare entrepreneurs, and we don’t meet enough of them.
Sequencing is ultimately the superpower.
(23:52):
It is a superpower.
Okay.
Next one (23:53):
decisiveness.
I love this.
It’s always the, you know, how much money is left in the
bank [laugh] when you need to make a decision, right?
And decisions made in tough moments with
uncertain information often save companies.
So decisiveness, I think, also often counts a lot more than analytical
(24:14):
rigor, meaning you’ve got to be willing to have just enough information
to make tough calls, and sometimes that means going partly with your gut.
You can’t wait around for perfect information,
so decisiveness counts for a lot in founders.
Is it ten out of ten?
No, but it’s probably six or seven for me.
I gave it a six.
(24:34):
I think we’re kind of aligned on some of these.
I think decisiveness sometimes can be a negative.
Sure.
I think there are some founders that feel like they have to be decisive,
and you know, work without perfect data, so they don’t dig enough.
I think there are moments in time where, like, you’re never going to
(24:55):
get more data, or you have 80%, and you know, the 20% is going to just
take a month to get, and in those cases, yeah, you should be decisive.
But if you feel like you have to be decisive on every single notion of the
company, sometimes you just need a framework and advisors, and you know, sort
(25:15):
of have experts that you can go to and talk to, like your board members or
your advisors, or you know, marketplace experts that help you frame this out.
And I’ve seen founders that are saying, like, you know,
“We’re going to go here,” and it’s like, “Whoa, whoa,
whoa.” Like, you know we haven’t explored x long enough.
(25:39):
You want to go to y. Like, let’s do x-prime, or
x-double-prime, you know, like, before we move to y.
And you know, so I think it’s not as critical.
I think there are moments where it is absolutely vital, and you
have to know when those are, but I think you surround yourself with
the right sets of people to create an impetus on when to do it.
(25:59):
All right, financial skills?
Well, to me, I think founders have to be
financially literate in a sophisticated way.
So, I get frustrated with founders who don’t understand the
difference between sales and bookings and revenue and cash [laugh]
. Mm-hm.
Mm-hm.
Yeah, yeah, yeah.
I don’t have a lot of tolerance for that because it means that, at
(26:20):
some level, they don’t understand the fundamental value-creation
exercise in equity, and that, to me, is sort of, is troubling.
So, I expect a high degree of financial literacy, and I expect a
principled commitment to high standards of financial reporting,
but I also don’t expect founders to live in the models.
(26:41):
In fact, I think it’s a very good discipline for a founder to partner
with a strong finance leader who can be their great FP&A person—Financial
Planning and Analysis person—early on in the life of the company.
A good thought partner in that exercise is
often better than the founder doing it alone.
So, what do I give it?
I give it about a five.
Yeah, yeah [laugh] . Okay.
(27:02):
I gave it a five.
I gave it a five because I think if your intelligence—if you’re
an intelligent person, you’re going to figure this out, right?
It’s not complicated.
There’s lots of literature out there, there’s lots of advisors, there’s,
you know, part time resources that you can get to supplement this.
But it needs to be a five, right?
(27:22):
You have to have just at least an average level of financial
literacy to understand the difference between a booking and,
you know, ARR and cash and, you know, whatever it might be.
But you don’t need to be off the charts.
You don’t need to be ten, unless you’re starting a financial
services company that’s focused on accounting, [laugh] you know?
But you know, it’s worth pausing for a minute, Raju, because
(27:44):
implicit in this conversation is that we are backing businesses.
We’re backing people who are building businesses that are going to have sales
growth, they’re going to have margins, they’re going to ultimately have profits.
And there are an awful lot of founders out there—and we see this
a lot in consumer and media—who are creating new experiences,
(28:04):
they’re creating end-user engagement, they’re definitely
creating value, but whether that value is actually capturable
in money that can power a business is another exercise entirely.
And that, to me, is kind of—that’s a
boundary condition for me with entrepreneurs.
And we’ve certainly underwritten our share of companies that
we’re going to create great consumer experiences, and the business
(28:27):
would have to come later, but you got to be thinking about it
from day one, and that requires a lot of financial literacy.
Yeah.
I mean that to me is… is not financial literacy; it’s just a business
model that you kind of sit there and say, like, okay, you know,
step one of the sequence is, you know, grow at some incredible rate.
And step two, you know, we turn on revenue, but you
(28:50):
have a sort of an insight into, like, that happening.
I just don’t need them to be all capable of
creating, you know, sort of a financial book, right?
I think somebody else in the organization can do that.
Okay, technical skills?
I mean, I think they have to be technically capable, and they have
(29:10):
to be capable at the innovation level in thinking about what they’re
bringing to market and building is fundamentally different and better.
Do they need to be a senior architect, or to have been a senior architect,
or to have been a CTO, or do they need to have their name on patents?
Not necessarily, but they need to be someone who
(29:30):
fundamentally understands the innovation process.
And that, to me, is actually more important than engineering credentials.
So—
So, how big is it?
It’s probably—
[laugh] . You don’t like to give numbers out.
It’s a seven or eight [laugh]
. It’s a seven or eight.
Okay.
I gave it a six, and the reason I gave it a six
is because it really depends on the company.
(29:53):
There are a bunch of companies that can cobble stuff together,
but they’ve kind of figured out some nuance of, either
the go-to-market model, or the friction, or the whatever.
I actually think at least somebody on the team needs to have
technical skills, but it doesn’t necessarily need to be the founder.
If it’s a sole founder and they’re not technical, but they’re
(30:14):
great at salesmanship, they’re going to bring in a CTO that
can actually execute on their behalf who knows this stuff.
Like, that salesmanship is super, super critical to me, particularly
if you don’t have the, you know, technical skills in-house.
And I think it, you know, really depends on the company.
There’s a lot of companies which are grounded in
technology, and so your founders better have that, right?
(30:37):
If you are an AI-first company, you better
have some inherent knowledge of AI, you know?
If you’re doing something like software architecture as a business, you
know, your founders better have an understanding of software architecture.
But, you know, if you’re building something that—sort of like Ola
built, right—like, Noah was there, but I don’t know if he had all
(30:59):
of the technical chops, you know, at the first get around, right?
So, I think he developed that, or hired,
you know, alongside for that kind of thing.
But anyway.
So, there’s another area we haven’t mentioned, where I think
this really matters, and that is in the shape and the scaling of
the organization, understanding what good innovative engineering
(31:19):
teams look like, understanding what good product groups look
like from a technical standpoint, it’s really important.
And you and I have both been part of a lot of companies, some that we started,
we’ve both been around them, and that the great things that happen inside of a
technical organization early in the life of a company are super special, right?
(31:40):
You get these super high-talent engineers
working together, it’s almost like a band.
And if you have a founder who’s not really
rooted in that, it’s not going to happen.
That’s my experience.
So.
Yeah, I’m mixed on it.
But, um… customer obsession?
Most of my founders are completely customer obsessed,
(32:00):
but they’re not so customer obsessed that they get
pulled into the needs of any one particular customer.
So, being able to keep that distance from the needs of customers
and what you’re hearing, and having the ability to shape product.
So, are they customer obsessed to a healthy degree?
It’s a six or a seven.
(32:22):
Yeah, I gave it a seven.
Ok.
I mean, I think we’re just nailing these, man.
[laugh] . I can’t wait to hear what’s a two or three.
I don’t know—there’s nothing that two or three.
These are characteristics of founders, of killer founders.
I’m not going to put in here things that are two or three.
It’s going to go from five to ten.
It’s going to go from five to ten.
I would say seven for that, and I agree with you.
(32:45):
I think that you need to think broadly about the market,
and so customer obsession can get you pulled in, so
that you narrow your scope, unfortunately, right?
You have to sit there and say, like, what’s going to meet the needs—what’s
so important that it’s going to meet the needs of enough customers
(33:06):
without sort of siloing yourself down to one particular customer?
That being said, you know, your first 10 for enterprise customers,
and your first 10,000 for consumer apps or something like
that, you got to listen, and you got to sort of understand,
like, what is it that’s, you know, people are falling off from?
What is it that, you know, gets people to churn?
(33:28):
What is it that people are just unhappy about?
So, I think it’s high enough that you have to have, it has to be a seven,
but, like, incredible obsession for the customer can narrow your scope.
It’s more what a consultant would do as opposed to,
like, a company that is trying to scale at large.
Okay, so the last one is delegation.
(33:51):
This is pretty high on my list.
Again, it’s probably a seven or eight.
I know a lot of founders who are actually kind of lousy at delegation
early in the life of their companies, and I think that can be a
superpower because they need to be close to the action, and that
means they need to be personally involved because every decision is
(34:13):
pretty major early on, particularly when they have limited resources,
but ultimately, they have to pivot to being great delegators.
And as I look at my companies that have scaled smoothly, over and
over again, I see founder-CEOs who were very comfortable and very
confident in hiring great people, people who are better in their
function than the founder was ever going to be, and delegating to them.
(34:36):
So, to me, it ultimately can be a company maker if you’re
good at this, but it’s a seven or eight kind of territory.
I didn’t give it that high.
I gave it a five.
Wow.
I gave it a five, yeah.
I think it’s really important, from my perspective, that early founders
are sort of in tune with everything that’s going on in the organization.
(34:58):
And, you know, I like to back teams; I don’t really like to back
single founders all that often, so you know, I feel like the team—I
use this term smoke jumpers—I think we talked about it in a prior
podcast—I think that founders sometimes can see something broken
in an organization, they smoke-jump in and they get involved.
I think delegation comes later, and I think it
(35:23):
happens when the maturity of the company is there—
Yeah.
—where you’re not really kind of nimble anymore,
and it’s more like a little bit of a battleship.
And so, now you have to get organizational experts.
And you realize, like, hey, these organizational experts are far
better at producing financials, or far better at hiring salespeople,
(35:45):
or far better at hiring technical leadership, and I need an
engineering head that doesn’t necessarily do; they just manage.
And so, I feel like out of the gate, it’s less important to me.
I need somebody that is able to free themselves from this long-term,
(36:07):
otherwise they’re probably not going to be CEO forever, right?
Like—
Well, that’s the thing, right?
Part of retaining the job is actually letting go of this over time.
And so, when I was favoring it, it’s because I still want—you know, you look at
the success rates and in companies that lose a founder—and this is one of the
reasons companies might part ways with their founder—success rates are always
(36:30):
much higher when the founder is on board and in leadership all the way through.
I’ll tell you one quick story about one of my
favorite founders before we turn to the end.
So, my very first company, an enterprise software business called Frictionless
Commerce, a procurement software app, I had come from this world, and when
I first joined RRE, this was my first deal—and the founder of that company,
(36:53):
while the business grew and raised more money and had lots of sales and
customers, and ultimately had a great outcome and a sale to SAP, the career
trajectory of the founder through the organization was downward the whole time.
Alex Moukas went from being CEO, to being president, to being VP of
Business Development, to being VP of sales, to being a bag carrying
(37:15):
account rep [laugh] . And culturally, it was incredibly powerful for the
organization because everyone saw this founder who was doing the right
thing for the company through their own example, all the way through.
He remained captain of the company soccer team,
by the way, [laugh] throughout all of this.
(37:36):
Yeah, yeah, yeah.
You can’t take that title away.
I mean, like, look, when you’re good at soccer.
And he was a phenomenal account rep. And if he had—
What did he play?
Did he play midfield, or what did he play?
I think he played midfield where he could tell everybody what to do.
The interesting thing is that his career
trajectory settled out in a great place for him.
He was an all-star account rep. If he had gone to a big
(37:56):
software company in sales, he probably would have been
an all-star account rep instead of starting a company.
But going downward through the organization
helped the whole rest of the organization go up.
And this gets to founder values, and how people lead, which matters a lot.
Yeah, so for all of this, I mean, I think grit plus adaptability
(38:18):
plus salesmanship plus domain experience, and I am in [laugh]
. [laugh]
. I’m in.
You have those characteristics, come to me.
Man, I will just be so in.
All right, so we’re going to move to the Gatling Gun section.
I knew we would [laugh]
. I didn’t do a lot of preparation, so this is going to be a
simple question (38:33):
what’s the best thing you did this weekend?
Oh, what is the best thing I did this weekend?
You know, it was warm in New York.
I went for a long run on Sunday.
It was great to be outside.
So, what about you?
Oh, my God.
So, this week was Miami Tennis Open.
Oh, Wow.
It was eMerge, and it was Miami Music Week, and I love all of them
(38:57):
[laugh] . Oh, man, I went to some… I don’t know, festivals, I guess it was.
You know MoBla—Mo—I’ll tell you the four favorite.
I’ve been to, like, six, [laugh] so and
a couple of these were at the same event.
But MoBlack and Francis Mercier.
If you get a chance this weekend or this week
(39:17):
to listen to some of their music, amazing.
Great.
Amazing.
Like, really kind of Root-y, but with a nice
vibe, and great, you know, sort of beat.
And then John Summit—you know, John Summit?—
Mm-hm.
Oh, my God.
John Summit was fantastic.
And then there was a mini-SXM festival.
(39:39):
Amazing.
I’m telling you, like it’s—
You were a busy man this weekend.
Wow.
No, it’s a special thing.
Like, well, there was a lot of people in town, right?
Like, a lot of VCs, a lot of entrepreneurs, a lot of business
partners, and so everybody has, “Hey, I got, like, eight extra
tickets,” you know? Like, you know, “Come.” And I enjoyed it.
(39:59):
I enjoyed it a bunch, but Miami is a little
bit of a special place this time of year.
A lot of people are down because of the weather.
So, you went running, I went dancing [laugh]
. [laugh] . Outstanding.
Well, thank you for another great episode of our RRE POV.
Thank you to our listeners.
We love doing this.
We hope you enjoy it, and we will see you for another episode soon.
(40:23):
Thank you for listening to RRE POV.
You can keep up with the latest on the podcast at @RRE
on X or rre.com, and on Apple Podcasts, Spotify, Google
Podcasts, or wherever fine podcasts are distributed.
We’ll see you next time.
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