Identifying founders with the potential for success is a nuanced process that becomes more intuitive with experience. Recently, a young venture capital firm reached out to me for insights on evaluating early-stage software startups. This firm, which writes relatively small checks (under $500k) and targets pre-seed companies, wanted to develop a method for spotting talented founders before they achieve significant traction. Here’s an excerpt from their initial email:
“Our firm believes there’s untapped potential in very early software startups that might not have lots of traction but are being launched by smart, talented founders who have a higher-than-average probability of figuring out what they need to do to be successful. To capitalize on this opportunity, we want to develop a way of identifying great startup talent before they’ve built a great startup.”
Given my experience teaching entrepreneurship at Duke University, where I’ve worked with many young, inexperienced founders, I agreed to share my observations. Below are the five most common patterns I’ve noticed in founders who go on to build successful startups.
Pattern 1: Early Indicators of Potential
The first pattern I’ve noticed is that, over the years, there haven’t been any surprise successes. By that I mean I’ve yet to have taught someone who I didn’t recognize early as a person with the potential to be a successful founder. To be clear, not everyone I’ve identified as “having potential” went on to build a successful startup (not yet, at least), but the reverse has never happened. I’ve not had someone who didn’t seem like a young startup rockstar ultimately surprise me by building an amazing company. What this tells me is that great founders tend to show themselves early, and this is worth knowing for all sorts of reasons.
Pattern 2: Flexible Persistence
The second pattern I’ve noticed among soon-to-be-successful founders is a dogged amount of persistence. This sometimes gets confused with “passion,” but that’s not quite the right description. The most passionate founders tend to be so invested in their ideas that they can’t take feedback and can’t adapt what they’re building. As a result, they often flame out. In contrast, successful founders tend to be stubbornly persistent, but in a flexible sort of way. They’ll always continue working on their startups despite setbacks; however, as they do it, they’re constantly sourcing feedback, and, just as importantly, they’re iterating based on that feedback without losing enthusiasm.
Pattern 3: Insatiable Learners
Another key characteristic of successful founders is a genuine interest in learning. And not just about things related to their startups. The best school-aged founders are the students who walk into class with an obscure philosophy book just because it seemed interesting to read. Or they’re taking a random, graduate-level neuropsych class that’s way outside their comfort zone just because they were curious about the subject and didn’t mind if it meant getting a bad grade. I suspect this passion for learning is what gives them the agility to make informed pivots and avoid potential pitfalls that less adaptive founders tend to miss.
Pattern 4: Strategic Networkers
Without fail, the young entrepreneurs I’ve met who’ve gone on to become successful founders are always resourceful networkers. I don’t mean they’re shallow schmoozers who make friends with everyone and are just trying to expand their number of LinkedIn connections. Instead, they tend to be great at building meaningful relationships with the people who will provide critical support, advice, and resources along the way. The distinction between vanity-focused networking (what most founders do) and value-focused networking (what good founders do) can’t be overstated. Bad entrepreneurs are often great at building a superficial list of contacts. Good entrepreneurs cultivate a web of relationships that they’re constantly nurturing and enhancing.
Pattern 5: Natural Storytellers
Finally, the fifth — and, perhaps, most telling — pattern of any young person who’s going to eventually start a successful company is a general propensity toward storytelling. When they’re younger, like the founders I tend to encounter, the storytelling manifests itself in unusual ways. For example, I might overhear them telling stories to friends before class about something strange that happened to them on their way to campus that morning. Or they’ll answer a question in class by telling a relevant story about a personal experience. As they get older their stories evolve to be stories about their professional experiences. This propensity for storytelling makes sense when you think about the primary job of a founder.
Ultimately, successful founders are great storytellers because they’re constantly selling their stories to investors, customers, employees, and just about anyone else they meet. Because effective storytelling is so important to entrepreneurial success, it’s not a surprise that great founders would be experimenting with storytelling much earlier in their lives.