How to spot a superstar founder: Self-awareness trumps bravado
We all know the scene. The sneaker-wearing tech founder stands there, in front of positive looking charts and graphs.
Before them: five suited, scowling investors with money to spend and razor-sharp questions up their sleeves.
The investment pitch has iconic status, popularised by TV shows like Dragon’s Den and Shark Tank.
The reality, however, is very different. Having worked in the investment sector for close to 20 years, I have never breathed fire. My colleagues and I vet around 600 early-stage tech startups each year, deciding which deserve financing and support via our incubate and accelerate programmes.
The pitch environment is of course stressful and potentially career-defining, but it’s a much more collaborative process than popular culture would have us believe.
Without playing too small a violin, it’s worth noting that there are significant stresses on the side of the investor. Plenty of business plans look very convincing, and it can be hard to distinguish between startups that deserve funding and those that (beneath a convincing pitch) lack substance.
On top of this, there are countless books and self-indulgent blog posts out there for wannabe entrepreneurs. But for me as an investor, the literature is far less comprehensive.
The fast-paced nature of the investment process means that we often only have a handful of short conversations in which we need to assess whether founders have what it takes. We have to chip away at the performative parts of a pitch to really understand entrepreneurs’ authentic sides. Some founders conduct investment pitches with their cards close to their chest, which makes identifying the best talent even harder.
Above all, investors need to keep in mind that an A team with a B idea is better than a B team with an A idea. Amid all the brilliant innovations and ideas that we see, the importance of the founding team cannot be overstated. It’s crucial for us remember that we’re investing our money into people, not products.
So to help investors navigate this startup jungle, we recently worked with Umea Biotech Incubator on something called the Dali Report: a study that attempted to chart the common characteristics that unite successful entrepreneurs.
The results of our report made for surprising reading. In contrast to what you might think by watching reality TV shows, self-awareness beats self-confidence.
Of course you need to believe in yourself and your company, especially to persevere long enough to reap the benefits. But contrary to the behaviour of many tech chief executives in the public eye, our study found that bravado isn’t a key attribute. What is much more valuable is the ability to self-critique.
If you can really understand your weaknesses, and hire to fill in these gaps, you’ll go far.
On top of this, founders need to be able to problem solve, and switch between tasks rapidly. Anyone who has spent time with an entrepreneur will know first-hand that the job requires an ability to mentally dart around and jump hurdles rapidly. Complex thinking at 100 miles per hour is required to build a company.
Interestingly, we also found that IQ was not the ultimate metric of entrepreneurial talent. Successful founders didn’t score especially highly here, but instead demonstrated exceptional verbal ability, empathy, and cultural consciousness. These skills combinations were a far greater indicator of ability than IQ scores. So much for the stereotype of the genius but socially abrasive tech founder.
All these results should make for uplifting reading. They debunk certain tired stereotypes about brashness winning in business. They show that softer skills are crucial if you want to create a successful company.
And for potential entrepreneurs out there considering taking the leap: don’t look at business plans, just look in the mirror.
Main image credit: Getty