A new study by investors debunks conventional wisdom when it comes to the most critical traits required of entrepreneurs.
What traits do you need to succeed as a founder? Usually, we think about the answer as if successful entrepreneurs were quasi-magical beings with skills so extreme and unusual we insist on calling them “superpowers.”
But Basis Set Ventures, a San Francisco-based fund focused on early-stage investments, has spent a year researching this question, and a useful theme emerges from its findings so far: Often, founders succeed not because of a single extreme trait, but rather by achieving a kind of balance. They use the term “nuanced superpowers.”
Okay, that’s a bit of an eye-roller, but the underlying notion is a great one to pursue in 2020: Stop obsessing about the extremes; focus on balance.
The research
Basis Set asked early-stage investors at funds with a cumulative $40 billion in assets under management to “rate 60+ founders on a number of dimensions including demographics, behavioral, and psychological traits, in an effort to understand what makes a successful (that is, IPO, raised substantial capital, large exit) or struggling (that is, shut down, stagnant, small exit) founder.”
This project produced a range of conclusions and assertions — see Basis Set’s fuller breakdown and slide deck here — but the most interesting piece involved an assessment of critical traits in founders. These include confidence, humility, storytelling ability, agile thinking, day-to-day effectiveness, and the like. The surveyed investors were asked to rate founders on each, and the results were used to create six founder “archetypes.”
Some of those archetypes — like the “Humble Operator” — correlate with success. Others, like the “Passionate Outsider,” didn’t. And the fascinating part is that what can separate the successful archetype from the also-ran isn’t the absence of a key trait — but an excess of that trait. Here are three examples of what that looks like.
Storytellers rule — but be careful
Basis Set quotes no less an entrepreneurial hero than Steve Jobs: “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation to come.”
Still, it’s undeniable that some of the great business storytellers do not succeed. (Jobs stan Elizabeth Holmes of Theranos infamy being just one example.) Basis Set found that successful storytellers tended to exhibit not just confidence, but “agile thinking” — basically, an ability and willingness to “test and iterate quickly to incorporate market signals,” even if that meant revising their original vision.
Unlike these “Agile Visionaries,” those in the “Overconfident Storyteller” archetype may be charismatic and seem impressive, but become “too enthralled in their own vision” and “can’t adapt to market needs and often fail to find product-market fit.”
The problem isn’t that they’re not good enough storytellers. It’s that they’re too good for their own good.
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The nuance of being stubborn
As Basis Set points out, some of the most celebrated entrepreneurs — Jeff Bezos, for instance — are renowned for their stubbornness: “They run through walls to make an idea work.” So is stubbornness a good trait?
Only (according to the fund’s research) when it’s paired with traits that temper that stubbornness — like results-driven behavior and fast learning and day-to-day effectiveness. A comment from Bezos actually helps clarify the point: “We are stubborn on vision. We are flexible on details.”
When humility is worth bragging about
The general public loves charismatic founders, but investors often prefer a different archetype — a humbler, hard-working, scrappy, and gritty entrepreneur who just gets it done. Basis Set cites some examples of an archetype it calls “Humble Operators” who pulled off successful IPOs in 2019: Eric Yuan of Zoom, and Olivier Pomel and Alexis Lê-Quôc of Datadog. “Working hard, that’s the only thing I know better than my competitor,” Yuan comments. “There are so many more smart people than me here in Silicon Valley.”
Still, we all know that hard work alone isn’t enough. This brings us back to the group that Basis Set called “Passionate Outsiders” — which exhibited similar levels of humility, resourcefulness, and grit. But they fell short of “Humble Operators” in other key areas, most notably “founder-market fit.” That is, a distinct advantage a founder may have in a market, based on experience or other expert knowledge.
The bottom line: Being a humble, hard worker is laudable — but you’ll also need sector-specific expertise to thrive.
What’s missing?
This theme of finding balance is echoed elsewhere in Basis Set’s findings, and there’s one last example worth noting. The report directly addresses a common assertion that the most important trait to look for in your potential co-founder is technical skill.
Turns out investors disagreed. It matters, but that emphasis is just too simplistic. (For a deeper dive on the subject, read Marker’s guide to “The Secret Alchemy of Co-Founders.”) More significantly, the Basis Set survey encourages pairing up co-founders with more generally complementary traits: “The best founders know their strengths and weaknesses and recruit a complementary team that maximizes the company’s chance of success.” It may not be as exciting as hyping your superpower — but it’s sound advice.
Rob Walker is the Author of The Art of Noticing.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world