Venture Hacks

Michael Wolff on Guess Who:

“Windows knocked him off the main stage for 10 years; then the Internet seemed to sideline him; not to mention that serious business people (along with many others) thought he was nutty; then he had problems with the SEC (and not insignificant ones); then he nearly died.”

They call this resiliency.

This post is by Mark Suster, a serial entrepreneur turned VC at GRP Partners. If you like it, check out Mark’s startup advice blog and his tweets @msuster. And if you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

This is the last in a three-part series about the 10 things I look for in an entrepreneur. In Part 1, I addressed tenacity, street smarts, resiliency, ability to pivot, and inspiration. In Part 2, I discussed perspiration and appetite for risk. I elaborated on each of the topics in my blog series on VC startup advice.

Most successful entrepreneurs have an attractive mix of skills, know-how and personal qualities that separate them from the herd. Today I cover three more of these critical elements and throw in a couple of bonus entries that didn’t make my top 10 list but are important nonetheless.

8. Detail Orientation

One of the easiest ways to rule out an entrepreneur is when he doesn’t know the details of his business. There are tell-tale signs, and discussions about competitors often expose them. You can tell whether an entrepreneur has logged into his competitors’ products, talked to their customers, read news coverage of them and gotten the back-channel info.

You can tell if the entrepreneur has a deep-seated competitive spirit. Can’t go a mile deep on competition? Buh-bye.

Let’s talk about your product, and let’s look at your financial projections. Can’t walk me through them on a granular basis? Did someone else pull your financial model together while you did “your job”? Not good enough. The best entrepreneurs focus on details. They can tell you the square-foot costs of their property, how much they spend monthly on Amazon Web Services, and the 12 features being developed for the next release.

Another big tell is a CEO’s grasp of the sales pipeline. I can’t tell you how many CEOs I’ve met who can’t walk me through the details of their sales pipeline. I want the names of key buyers, when you met them last, who the competition is, and what the criteria is for making a decision. You think we’re just going to talk about your largest lead? Sorry. Let’s go through the whole pipeline, please. I care about the details, but I’m more interested in finding out whether you do.

Along with detail orientation, I have a strong bias for “doers”. When I ask for a quick demo and the CEO suggests a follow-up meeting with a sales rep because he’s not “a demo guy,” I usually think to myself, “A follow-up meeting probably isn’t necessary.” Similarly, if you need your CFO to walk me through your financial model, you’re probably not the right investment for me.

Ask any CFO I worked with as a CEO: They did the hard work, but I edited the spreadsheets cell by cell. In fact, I usually built the first three versions of the financial model (but then my ADD took over, and I needed a great closer to make the model complete). Founders need to be hands-on. As I wrote in an earlier blog post: “You can’t run a burger chain if you’ve never flipped burgers.”

A startup seeking investment from me once put their “president” on a call with me. When I told him that “president” was a strange title for a startup, he announced they also a CEO. When asked about their different roles, the president told me the CEO set the strategy while he traveled to conferences evangalizing on behalf of the company. “So who runs the company on a daily basis?” I asked. “Oh,” he responded, “we have a COO.” The company had under $1 million in revenue and was burning $850k a month. It had a strategy-setting CEO, a limelight-seeking President and a COO who ran the company.

I gave that company one of the cheekiest responses I have given in my two and a half years as a VC: “You don’t want to raise money from me,” I said. “The first thing I would do is fire you. Then I’d fire the CEO. Then I’d cut the burn to a realistic level and build a company.” They got their round done anyway from a big late-stage VC. One of the large parts of the burn was PR, marketing, and conference attendance. There are VCs who are fooled by all of this, but it doesn’t equal success. A year later the president and the CEO had moved on.

Bad VCs funded this madness in the first place and weren’t close enough to the company to see what was happening. When the CEO of an early-stage startup tells me he plans to hire a COO, I’m usually not interested in another meeting. (Funny side-note: The company was recently nominated for a Crunchie Award. Unfortunately, money can buy you awards.)

9. Competitiveness

As I wrote in my previous post on perspiration, good ideas attract competition.

Everybody these days is fascinated by the “private sale” concept offered by companies like Gilt, Ruelala and HauteLook. There are some great companies in this category, but the initial category killer was a French company called Vente Privee (which translates to “private sale”). From what I’m told, the founders were in the Schmatta (Jobber) business selling other people’s excess, end-of-line inventory at a bargain. There wasn’t the same end-of life infrastructure that we have in the U.S. (think T.J. Maxx), so they had an early lead. When the internet part of their business took off, a number of competitors surfaced.

By then, Vente Privee was a powerhouse and they used that market power. They made it clear to suppliers that Vente Privee would stop carrying their products if they supplied the newly formed competitors. This was a bare-knuckle industry, and money was at stake. Good competitors fight.

Just ask Overture about Google (“Don’t be evil”) and how they competed in international markets. It wasn’t all smiles, hugs and “let the best man win.” A lot was at stake, and Google competed fiercely.

Have a nice little idea and think you can carve out a large market niche? Not if you’re a nice guy. I’m not saying you need to be an arsehole, but entrepreneurs hate to lose. They’re hyper-competitive in everything they do. I look for that fighting spirit in the individuals at my table. It doesn’t matter if they’re playing golf, poker, Ping-Pong, Scrabble, or Guitar Hero. Entrepreneurs play to win, and they take losing seriously.

Think Mark Zuckerberg doesn’t have some sleepless nights about Twitter despite having more than 300 million users himself? Steve Jobs isn’t a “nice guy.” Nor are Bill Gates, Steve Ballmer, Marc Benioff, Larry Ellison, Tom Siebel, Rupert Murdoch, or any number of people you’ll find who built empires.

10. Decisiveness

Being an entrepreneur is about moving the ball forward a few inches every day. What astounded me when I switched from being a big-company executive to an entrepreneur was the sheer number of decisions I had to make on a daily basis.

They sound so basic when you’re not the one having to make them. Should you go with Amazon Web Services (AWS) or have your own servers hosted at RackSpace? Should you build in Ruby, Java, or .NET? Should you sign a two-year lease or rent month-to-month? Should you hire an extra developer now or a business development resource? Should you take angel money or just go for a seed round from a VC? Is venture debt a good idea? Should we launch at TechCrunch50? Should we charge for a product or offer freemium? Should we ask for a credit card up front, even if we don’t charge for 30 days?

It never ends. There is no such thing as a startup decision with complete information. The best entrepreneurs have a bias for making quick decisions and accept that, at best, 70 percent of them will be right. They acknowledge some decisions will be bad and they’ll have to recover from them. Building a startup might be a game of inches, but you don’t get timeouts to pause and analyze all of your decisions.

I recently have been considering investing in an entrepreneur in Silicon Valley. He was deciding between taking another senior role at a prominent Silicon Valley tech company and starting his own business. I told him I didn’t think he needed any more resume-stuffers and now was the time to go do something big on his own. Within a week he delivered a deck outlining his strategy for a new company. A day after we discussed the possibility of him flying down to meet with my partners, he was on a plane.

He then booked tickets to China to talk with suppliers and promised to revise his strategy by the time he returned to the U.S. He is getting stuff done in entrepreneur years, which is a step change faster than dog years. By the time we speak again, I’ll be able to judge results by the quality of his thinking about the opportunity. But by that time, I imagine, he will have made so much progress that he’ll question whether he should take my money. I’m certain he will have talked with other funding sources. This is how it should be.

If you’ve been “thinking about doing something” and batting the idea around with your favorite VC more than six months, don’t be surprised if they’re not prepared to back you in the end. Entrepreneurs don’t “noodle”. They “do”.

Now that I’ve addressed the top 10 skills I look for in an entrepreneur before investing in them, I’d like to offer two additional qualities that can be critically important but won’t necessarily hold someone back from seeing success.

11. Domain Experience

This isn’t a “must” for me, but it’s certainly a huge plus when entrepreneurs have it. You can spend a year putting your hypotheses on paper while researching a market. But you never really have a handle in the minute details of the industry until you’ve lived in it. If you are launching mobile application and have sector experience working for Apple, Blackberry, AdMob, or JAMDDAT, then I know your product will have your experiences baked into it.

I learned this lesson when I launched my first company in 1999. We offered a SaaS document management in the cloud (we were called ASPs back then). I had no experience in document management systems beyond being a user, and nobody had SaaS experience because the market was too new. We were forced to make assertions about features we thought people would want, how to price them, and how to overcome objections to managing data in the cloud.

When I began hiring product managers, sales reps, and implementation staff, I benefited from what employees learned working at places like Documentum and OpenText. They brought the lessons they had learned in their companies
 over the previous decade. I know this stuff cold now. So when I launched my second company – which was also a SaaS Document Management company – we already had a vision for what would do well in the marketplace.

Domain experience also brings relationships. If you spent three years building relationships with senior executives at media companies, a starting point for your next business ought to be, “How can I exploit these relationships in the next venture I launch?”

One successful entrepreneur I know wanted to launch his next venture in financial services because it was a bigger industry. Fine. But I pointed out that he would be up against competitors who had spent years building relationships with the big financial services companies (as well as channel partners), and he would be starting from scratch. I’m not sure why you’d do that unless you had to.

12. Integrity

The most obvious attribute that didn’t make my top 10 list is integrity. It is very important to me. If I thought I could make a lot of money backing a dishonest person, I personally would pass. I know many private equity firms that would not. I’m proud that most early-stage VCs I know care about making money ethically. So you should include integrity on my personal list of attributes
 required to raise money from a reputable, early-stage VC.

Unfortunately, people with low integrity can be successful and can raise money from investors. So I left it off the master list. I personally know a billionaire CEO who I wouldn’t put high on the list of people with high integrity. But he built his company from scratch to become a very large enterprise.  He is well respected (but not liked) in his industry and in his company.  He spends a lot of money on personal marketing so the story is written the way he wants it.

But I’ve seen his actions up-close and wouldn’t claim that they are high on the integrity scale.  I’ve heard this about similar technology executives of some of the biggest names in history.

I also know him to not be a very happy man.  Money can buy a lot of things but, as the saying goes, it can’t, in and of itself, buy you happiness.  I believe that true happiness comes from a sense of fulfillment, giving, and doing what your moral compass knows is right.  Better that you be this person, whatever level of business success you achieve in life.

If you like this post, check out Mark’s blog and his tweets @msuster. If you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. – Nivi

This post is by Mark Suster, a serial entrepreneur turned VC at GRP Partners. If you like it, check out Mark’s startup advice blog and his tweets @msuster. And if you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

There are 10 skills I look for in an entrepreneur before writing a check. They are not things that a VC can pick up on in 3 meetings spread out over 6 weeks, which is why I believe that raising VC is something you do over a long period of time, rather than just 2 months of the year. It’s best to meet VCs when you don’t need their money, so they can really get to know you.

In Part 1, I published the first five skills I look for in an entrepreneurs: tenacity, street smarts, resiliency, ability to pivot, and inspiration. I then elaborated on each of the topics in my blog series on VC startup advice.

You need the whole package

Through comment conversations with many of you I tried to emphasize that it isn’t enough to just have one attribute. Being tenacious without the mental flexibility to pivot based on market feedback is a disaster. Having street smarts with no inspirational ability to build teams can yield a great small business but will be difficult to scale into a large VC-backed business.

So we as VCs search for entrepreneurs/founders who have the whole package or as much of it as possible. Few people have it.

These are often amazingly talented people who are really strong in some of the skill areas and there is no shame in this. They often make great team members such as head of products, CTO, head of sales, CFO, etc. Great companies are comprised of great individual point people or functional leaders.

But when I’m looking to write my check I need to look in the eyes of the captain — the maestro who brings the whole orchestra together. And this is where the last post left off — inspiration.

6. Perspiration

Inspiration alone is not enough. We’ve all met inspirational leaders who talk the great talk. They get you all jazzed up after a company meeting but fail to get people to take action or to get things done themselves. Inspiration without perspiration is the equivalent of being a coach — not a CEO. Inspiration is part of what a VC provides, including goal setting, cheerleading, and challenging you. But the CEO needs to move the ball forward a few inches every day. Your VC can’t do that for you.

Celebrity CEOs

As a VC, I also see the apparently great leader who is a great public speaker and networker. He does the conference circuit but is somehow missing from running his company. Someone  else is left back at the ranch minding the shop. Worse yet, internal company decisions often aren’t made without the CEO around and in-fighting amongst the direct reports is not uncommon. Talk to any management team with a “celebrity seeking” CEO and you’ll see what I mean.

If you’re the guy at every conference don’t think that people don’t notice. I notice. I love hanging out with you. I’ll gladly drink a few beers with you. But when it comes time to cut checks I’m backing the guy who’s back at the office getting stuff done. I believe great leaders eschew the limelight in favor of building their companies. (before I get attacked in the comments section I’m not saying ZERO conferences — but you need to be selective.)

I would also say that I found some VCs can’t tell the difference because they haven’t been inside an early-stage company so these CEO’s are usually able to raise money. VC money does not equal success.

99% perspiration

The most poignant quote about perspiration comes from Thomas Edison, “Genius is one percent inspiration and ninety-nine percent perspiration.” For entrepreneurs it’s probably a healthy dose of both. I know you think a VC would take for granted that all entrepreneurs work hard but you can tell the difference between those that see their startup as merely a slightly longer version of their last big job and those that are maniacal and focused about what they’re doing.

My favorite example is Jason Nazar, the CEO of DocStoc. There’s no ‘off button’ on this guy. He’s always open for business. If I’m up super late trying to crank out work, I often get IM messages from Jason at 1am. He attends many social events in the LA scene but he seems to always go back to the office afterward. He’s at TechCrunch50 but he knows why he’s there, who he wants to meet, and what he wants out of those meetings. It’s not a boondoggle. It’s all part of his DocStoc obsession.

Starting a company isn’t a job

There was a recent TechCrunch UK article by an anonymous VC (yes, I think posting anonymously is chicken shit) that talked about the work ethic of European tech companies versus those Silicon Valley. I retweeted this article and got some people in Europe telling me it was unfair to stereotype this way. It’s not. The reality is that many Silicon Valley entrepreneurs/companies are more obsessive and maniacal about their businesses in a way that many others around the world are not. The local culture breeds it. I’m not saying it’s good or bad — it just IS. Europe isn’t the only place to garner criticism for not being driven enough. We get the same criticism in Los Angeles.

But that doesn’t have to be you. If you want a “job”, don’t be an entrepreneur. It’s not a job — it’s your life. I recently posted some VC startup advice about the need for entrepreneurs to have a bias toward action or JFDI (a play on the Nike slogan). Well the second sign I had on the wall of my first startup was SITE. Ask anybody who worked with me how seriously I took it. Sleep is the Enemy.

Success breeds competition — from around the world

For every person who comes into my office with a good idea I respond, “Don’t worry about your failure, worry about your success. If you fail, you move on. But if your good idea pops big time then, trust me, there will be three Ph.D.’s from Stanford sharing a cheap apartment in San Jose working around the clock to beat you. They’ll be eating Ramen or Taco Bell every night and saving their pennies to pour into the company.”

It may be unfair, but it’s the reality of capitalism. It’s the dynamic that drives innovation. In the future, the competition won’t only be in San Jose, but also in Shanghai, Seoul, and Bangalore. I only wish more people in the US Congress understood this as well as Brad Feld does. The Startup Visa is one of our most important innovation movements. You think China can’t build great Internet companies? Have you heard of TenCent? It’s more valuable than Facebook.

In conclusion, if you’re not prepared to be “all in”, then you’re not prepared to build a huge company. You think Marc Benioff built Salesforce.com into a multi-billion company by having a good idea? I can tell you from having been on the inside that even now this guy never shuts off. He’s driven. He creates the success at Salesforce.com. He’s a billionaire and he still works harder than many startups. Are you willing to go that hard for that long?

7. Appetite for risk

Entrepreneurs are risk takers. Not wild speculators, but pragmatic risk takers who have a blind belief that they will find a way to make things work. If you put on paper what it would take to be successful in your company, you’d never take the first step, which is why most people don’t. It is often called a “leap of faith” because you jump from safety into the abyss with only the blind faith that you’ll find a way.

If you won’t take the risk, why should I?

I know it sounds trite to say that entrepreneurs are risk takers so let me describe the normal, rational person who I meet on a regular basis. I was recently on TWiST with Jason Calacanis. A caller dialed in to ask us questions about his startup. He was from South America but living in Switzerland and had launched a startup while holding down a day job at a consulting firm (McKinsey if memory serves). He wanted to raise angel money. I told him to quit his job first. If he wasn’t prepared to do that he wasn’t a real entrepreneur.

I know that 80+% of the people listening to me must have thought that was the wrong advice. But to me if you’re not willing to quit and take a risk on yourself, then you’re not confident enough in your own idea and skills. Why should I be? If you’re idea is so amazing that it warrants my hard-earned angel money then why should I take a risk on you if you won’t take a risk on yourself?

The locked-up entrepreneur who wouldn’t jump

About a year ago I had lunch with a guy who I believe is an amazing entrepreneur. He had built and sold his first company and had good ideas for his second company. He gave me the 50,000 foot idea and he was convinced that this idea would be a monster. The problem was that he was still working out the lock-up period in his big company.

He and his partner told me about this new idea over the course of nearly a year. I finally called bullshit. If this idea was so big then why would they risk not being first to market, not building defensible IP for the sake of a few hundred thousand dollars extra in lock-up money at a big company? I think the mind of an entrepreneur would be far more paranoid about yielding his great next idea than protecting his last 20% payout on the last one. They finally quit. I’m enjoying watching their progress.

The MBA who wouldn’t jump

I run recruiting for my VC firm, GRP Partners. About 18 months ago in early 2008 we hired an analyst (pre-MBA), but wanted to wait until after Summer to hire a post-MBA associate. It was May. I received an unsolicited resume from a second-year MBA student at Stanford. He had exactly the skills I was looking for in an associate. I interviewed him on the phone and in person. I introduced him to my partners who liked him. But we weren’t ready to hire an associate yet so I offered him a summer internship. He told me that, as a second-year student, he could only accept a summer internship if I would guarantee him the job in the fall if he performed well. He wanted an assurance that if he performed well, we wouldn’t go through a recruiting process.

I told him I couldn’t guarantee that. If he was confident in his skills he should take the internship. I told him I couldn’t imagine that a guy performing really well on the inside had anything to worry about from a great resume and interview from somebody we didn’t really know. I told him to join and “become part of the furniture.” Without the guarantee, he turned me down. A few months later he called me back and said he would take the internship. I told him, “Sorry mate, it was a one-time offer. You had the door cracked open and should have taken it.”

Was I too harsh? I don’t think so. I want our associate to have empathy for the customers we serve — our portfolio companies. If the person I hired wasn’t cut from the same cloth as an entrepreneur, then how could I expect him to be able to see inside the mind of entrepreneurs?

My leap into venture capital

I joined GRP Partners in 2007 before they raised their current fund (we closed a $200 million fund in March 2009). They told me not to join until after the fund-raising was done. I told them it was now or never. “Once you’re done raising a fund you’ll hire anybody you want! I want to join now while there’s risk. I’ll help you raise the fund. And I’ll take the risk. Pay me half salary until the fund is closed. I’ll pay my own moving costs and if we don’t raise the fund you owe me nothing.”

I figured that the alternative was that I start my third company with no salary and all risk. I had nothing to lose! And so it was. If I was willing to take risks to get into VC then how could I accept an associate who had no cojones? And how can I fund you if you don’t?

To be continued in Part 3 with competitiveness, decisiveness, and more. If you like this post, check out Mark’s blog and his tweets @msuster. If you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. – Nivi

This post is by Mark Suster, a partner at GRP Partners. If you like it, check out Mark’s blog with startup advice and his tweets @msuster. And if you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

One of the questions I’m most often asked as a VC is what I’m looking for in an investment. For me I’ve stated publicly that 70% of my investment decision is the team and most of this is skewed toward the founders. I’ve watched people who went to the top schools, got the best grades and worked for all the right companies flame out.

So what skills does it take to be a successful entrepreneur? What attributes am I looking for during the process? Having been through the experience as an entrepreneur twice myself, I have developed a list of what I think it takes.

1. Tenacity

Tenacity is probably the most important attribute in an entrepreneur. It’s the person who never gives up — who never accepts “no” for an answer. The world is filled with doubters who say that things can’t be done and then pronounce after the fact that they “knew it all along.” Look at Google. You think that anybody really believed 1999 that two young kids out of Stanford had a shot at unseating Yahoo!, Excite, Ask Jeeves and Lycos? Yeah, right. Trust me, whatever you want to build you’ll be told by most VC’s something like, “Social networking has already been done,” “You’ll never get a telecom carrier deal done,” or “Google already has a product in this area.” You’ll be told by the people you want to recruit that they’re not sure about joining, by a landlord that you’ll need a year’s deposit or by a potential business development partner that they’re too busy to work with you, “come back in 6 months.”

If you’re already running a startup you know all this. But some founders have that extra quality that makes them never give up. At times it goes as far as being chutzpah. And I see this extra dose of tenacity in only about 1 of 10 entrepreneurs that I see. And if you’re not naturally one of these people you probably know it, too. You see that peer who always pushes things further than you normally would. What are you going to get further out of your comfort zone and be more tenacious? It is really what separates the wheat from the chaff.

I once had a debate with a prominent VC on a panel. The moderator asked the question, “if an entrepreneur writes an email to a VC and doesn’t hear back what should they do?” This VC responded, “Move on. Next on the checklist. He’s not interested.” Without much thought I shot back, “That’s the worst advice I’ve ever heard someone give an entrepreneur.” Doh. I almost couldn’t believe I had blurted it out, but what came out of my mouth was so heartfelt that it just rolled out.

If you fold at the first un-returned email what hope do you have as an entrepreneur? As an entrepreneur, people aren’t going to respond to you and it’s your responsibility to politely and assertively stay on people’s radar screen. You no longer work for Google, Oracle, Salesforce.com or McKinsey where everybody calls you back. You had no idea how important that brand name was until you left it behind. Your customers don’t care that you went to Standford, Harvard or MIT. It’s just you now. And frankly if you went to a state college in Florida you’re at no disadvantage in the tenacity column. Persistence will pay off.

2. Street Smarts

OK, so you’re a tenacious person — you never give up. Well obviously that’s meaningless if your startup idea sucks. I don’t think it takes book smart people to build great companies — sometimes it’s a hindrance. But you do have to be a smart person and I personally prefer street smarts. I’m looking for the person that just “gets it.” They know instinctively how customers buy and how to excite them. They have a sixth sense for the competitors’ weaknesses. They spot opportunities that aren’t being met and the design products to meet these needs.

Because they’re street smart, most great entrepreneurs tend to prefer getting out and talking with real customers rather than sitting in a cubicle all day doing beautiful PowerPoint slides. And when they walk in my office and present you can tell that they know what they’re talking about. You can practically hear the “voice of the customer” when they’re presenting their concept.

I often tell people that I’m looking for people who weren’t born with a silver spoon in their mouths. I like people who aren’t worried about the social consequences of doing something they’re not supposed to. That’s why I personally believe many immigrants or children of immigrants fare well in business. It never occurs to them to play by the same rules as everybody else; in fact, I’m not sure if they even know what the “rules” are. It leads many of these people to be more street smart than those defined by convention.

3. Ability to Pivot

I don’t like to invest in people that I’ve never met before who come through my office wanting to have a term sheet within 30 days. I don’t think most VC’s do. Yes, there is the mythical company you all heard about that walked into Sequoia and had a term sheet 24 hours later. I’m sure that happens. But in most situations a VC will want to be able to judge how you perform over time. It’s what prompted my post on how to build relationships with VCs.

VCs often tell entrepreneurs that they want to see “traction” before they’re ready to invest. What I believe they really want is longer to get to know you. And part of what they’re looking for is how you adapt to the business you’re building over time. Every entrepreneur starts with an idea that they believe makes sense. But then your customers start using your products, your competitors come out with new offerings and your business partners decide to launch a similar product rather than working with you. You’re forced to “pivot” on a regular basis. The best entrepreneurs get market feedback regularly and change their approach based on the latest information. The best entrepreneurs seek advice from everybody they need, learn lessons and make minor adjustments on a monthly basis.

This is the reason that I’m personally not that anal about your financial model. I’ve stated publicly that you MUST have a financial model because it serves as your ongoing compass and strategy but it will change on a regular basis during your first 2 years. So much so that your financial model 2 years out won’t resemble your starting model at all!

So, for me, seeing how you respond to market challenges, what you learn and how you adapt is one of the most critical pieces of information I can collect about whether or not I want to invest in your company.

4. Resiliency

I like to say that “being an entrepreneur is really sexy… for those who have never done it.” The reality is that it’s lonely, hard work, high pressure and filled with mundane tasks. It’s a gritty existence. In the grand scheme of things no matter how hard you work and despite your appearance on the TechCrunch50 stage, no one seems to really care. That next round of investment is proving difficult. Customers are harder to sign than you want.  Journalists have just written an article that wasn’t favorable. Your competitors just announced positive news. You’ve got 8 weeks of cash left and one of your employees just asked you to fill out a form so she can buy a house.

Every day you go home and face self-doubt but you’ve got to come back in the morning strong. Your employees are looking in your eyes for signs of weakness and self-doubt. They believe in you and they draw strength from you. You’ve got to be able to come out of unsuccessful VC meetings, pull your socks up, and go into the next pitch. You’ve got to accept customer losses as learning experiences and see how you can improve next time. You’ve got to see your product weaknesses and plug them. You’ve got to hear all of the doubters, and the world is FILLED with doubters, and still not give up. Resilience is one of the tell tale signs of an entrepreneur.

As a VC, if I can tell that you’ve survived tough times and you don’t appear beaten down that’s a huge plus. People always think that the big, successful brands they know were huge success stories from day one. GRP Partners funded Starbucks and Costco. I can tell you both were less than 30 days from bankruptcy early in their lives. They were survivors. One of the most famous case of resiliency in the US history is Abe Lincoln. If you haven’t seen how many setbacks Abe had before becoming president check out the link.

Or, more succinctly, from Sir Winston Churchill, “Success is the ability to go from one failure to another with no loss of enthusiasm.” (quote via David Fishman)

5. Inspiration

As an entrepreneur you’re always under-resourced. You want to hire a crack team of developers but you haven’t raised enough money yet. You want that key marketing resource from Google but he’s on a fat salary that you can’t match. You’re trying to get your contacts to get you that introduction to Ron Conway to sprinkle his legitimacy on your company through an angel investment. All of these things are nearly impossible for most entrepreneurs. And tenacity alone won’t yield positive results.

Often entrepreneurs show me their management team slides with the names of the people who are going to join him once they’re funded. I usually jokingly respond, “maybe you’re not an entrepreneur?” This always gets people to sit up straight 😉 I say, “listen, nearly every successful entrepreneur I’ve ever met has a certain ‘X-Factor’ about them that makes people take notice. I know that these people who you want to join you are in comfortable positions at brand name companies and don’t want to take the risk of joining you. But when the right entrepreneur comes along they think, ‘I’ve got to join this person now. I think this is going to be hugely successful and I don’t want to miss the opportunity.'”

The best entrepreneurs are like that. When you’re around them it’s almost contagious. They are passionate about what they’re doing, they’re confident about their success and they’re driven to make it happen. Sure, they have self doubt when they’re alone looking in the mirror, but you’d never know it from seeing them in the office. And what you need to know is that for every chart you put up with the people who are going to join you when you’re funded, I see companies that have actually gotten the team on board with no more cash in the bank than you have.

Whenever I’m watching someone present to me I’m often thinking to myself, “Can this person inspire others?” And inspiration is so important because not only is it required to hire and lead your team, but it’s required to get customers to work with you when, by all means, they should not. You’ve got less than 6 months cash in the bank and your product isn’t really fully baked. But they have confidence that you’ll get there even if they don’t acknowledge this to themselves. TechCrunch is going to cover you. They probably shouldn’t because you’re a bit more hype than reality right now. But they sense your trajectory. They get a sixth sense that you’re going to pull this thing off. Inspiration goes a long way in business.

To be continued in Part 2 with perspiration, detail orientation, decisiveness, and more. If you like this post, check out Mark’s blog and his tweets @msuster. If you want an intro to Mark, send me an email. I’ll put you in touch if there’s a fit. – Nivi

This is a great slide from John Doerr’s talk at Stanford:

It’s a little hard to read but it’s worth a squint. Or just watch this 4 minute video where he lays it out:

Video: John Doerr on Mercenaries and Missionaries.