The “100 Entrepreneur” test and the entrepreneurs we back

Recently we did some pattern recognition on the entrepreneurs we have met over the years.

Why?

We invest super early and do not pretend to be able to predict the future . All we have is pattern recognition to help us find the black swans that return VC funds so we looked for patterns in both the entrepreneurs we had backed (as well as those we didn’t) and tried to find patterns.

What we Found

We’ve ended up in a simple place — we look for:

1/ Smart and likeable people
2/ They need to be OBSESSED in one or more of three areas (the product, the problem or ‘winning’)
3/ They need to be able to think critically and execute

There are a bunch of other ‘nice to haves’ for us — hustle, humility, domain knowledge etc — but we found these were not universal.

Our Methodology

1/ We took 100 entrepreneurs we had and hadn’t backed over the years
2/ We ranked them based on success (as best we could based mainly on traction and future funding)
3 / We then ranked them on a range of attributes.
4/ We looked at the patterns in the most successful

NB This is subjective attributes , there are others. This is ‘rule of thumb’stuff not an entry into a science journal ;-). Below is a top-line simplified sample (obviously anonimised).

What Now

A lot of this (and life) is about making retrospective sense of our old intuitive practices but we were after the signal in the noise and the main surprise was how critical ‘obsession’ and ‘critical thinking’ were. Here’s our theory as to why:

1/ None of us can predict the future, only de-risk the chance of future success.
2/ A start up is a risky bet on the future.
3/ Every day for a start up is a day less of runway and one step closer to death.
4/ De-risking death means learning the maximum in the minimum time.
5/ The factors that aid this learning are:
a. the founder(s) make a bunch of great decisions OR
b. learning quicker /more than anyone else (as Azmat from CityMapper says “speed is the major competitive advantage” AND / OR
c. Not quitting or losing hope when it gets really hard

It helped us work out why, in general, we encourage our companies to burn low and do a TON of customer testing until they get product / market fit.

Any thoughts welcomed….