Great companies are a mix of science, art and (who are we kidding) luck.
The art is innate but the luck is altogether out of our control. It’s the science part with which we can work. There is a science behind making great companies and we, collectively, are getting better and better at it in NYC and around the world.
This spring we are looking to help accelerate 10 amazing founders and companies in our New York City program. Here are the science bits of what we are looking for in a selected team:
Great Founder: It has become a cliche that VC business is about finding great entrepreneurs, much like the real estate is all about the location. Well, cliche or not, this is absolutely true. Great founders are the key to any great startup. Here are the top qualities that what we are looking for in our founders:
1. Vision – Strong vision for how the future will look. Seeing why the opportunity is big, defining and owning it. In the words of Wayne Gretzky: skate to where the puck is going to be, not where it has been.
2. Passion and Energy - Passion comes in different shapes and forms. It is not about bubbly personality or raw enthusiasm. Instead, it is about deep care and endless stamina. It is the energy you need to run a marathon, not a sprint. This stems from the vision.
3. Intellectual honesty - We are drawn to founders who operate on facts. While it is great to have a vision and be passionate, it is more important for the vision to be backed by facts. Facts like, “this is a billion dollar market” are not interesting. We look for facts from observing users, past experiences and iteration. We look for a disciplined approach to building companies. We look for founders who love metrics and make key decisions based on numbers.
4. Domain knowledge and experience - This is not required, but if present, makes the case a lot stronger. Many of us might have ideas of what a great restaurant should be. It does not mean we should start a restaurant. Having domain knowledge brings instant credibility to the founding team. It also explains the passion for the business and makes intellectual honesty a lot easier. The founder who has been working and thinking about the space for awhile is the founder who likely has the facts straight.
5. Flexibility - The best startups are the ones where founders are not flexible about vision but are flexible about how to make the vision a reality. Every startup is a walk through a path. Every startup should demonstrate proof that their product should exist. There are many paths and more than one way. Being flexible, adaptive and smart about the choices (things that matter and don’t matter) are another important quality of a great founding team.
Big Idea and big opportunity: We are looking for companies that disintermediate inefficiencies and solve problems using a mix of software, people and hardware. We love businesses that are pipes and marketplaces. We are inspired and want to fund the companies that are doing public good, improving education and making science fiction real. We are happy to look at every single amazing idea or product you want to present to us.
When we think about these opportunities, we want to see clear, factual argument for why this is going to be a big company. Often times we run into wonderful ideas that can bootstrap and be a great lifestyle business, but not venture-backed one. Since Techstars is in the business of making money for our investors, we can’t fund these opportunities but we are still very happy to help, in any way we can.
We are looking for companies who won’t necessarily make money on day one but understand and focus on building a real business. Saying, “We will figure this out later.” is fine sometimes, but you can’t entirely shrug off cash. The reality is that every single business needs to make really tough choices about funding. The tradeoffs involve speed of growth and user adoption. We are looking for companies who are keenly aware of these tradeoffs and need help thinking through them.
Perfect execution: Big ideas and big vision are essential but to really win you need to break them down into tiny, executable chunks. The hard part is where to start, what to do, what not to do and when. Experienced and disciplined founders get it. They don’t fall into the trap of open-ended platform, vague product specs and pre-mature scaling. Great founders are razor focused on execution and know that less is more.
When debating UX, backend or monetization at an early stage company, Occam’s razor really helps. Lean startups are all about doing the least among of work to make the most progress. They execute simply and achieve the milestones in the least possible number of steps. Perfect execution requires complete clarity of what the milestones and goals are. The startups that figure out who they are and what they do achieve intellectual honestly and facilitate perfect execution.
If this post is resonating with you, with how you think about your business, we would love to hear from you. Please apply to the Techstars program in NYC for March 2014 . The early deadline is this Friday, December 6, and final deadline is December 31, 2013, 11:59:59 p.m. PST. We would love to talk to you about your business.