“I know quite certainly that I myself have no special talent. Curiosity, obsession and dogged endurance, combined with self-criticism, have brought me to my ideas.” — Albert Einstein
Jason of Maveron and I are starting a new mini series focused around the beginnings of a company through to product-market fit and beyond. We’ll be posting with a new topic every few weeks. If you’re unfamiliar with Maveron, please check out their website and their portfolio here.
In some respects, venture capital done well is about comfort with ambiguity, understanding people and markets, having a partnering mentality with great entrepreneurs and topping it all off with a dusting of serendipity. Jason and I have spent the past few weeks sharing our observations and common understanding of what makes a company truly special. Of the 2,000 decks, concepts and companies we see each year, very few even have the potential to make it to the promised land. From our experience, the giant successes all share FOUR common threads:
- It all starts with an obsessed non-normal founder who displays the character traits Einstein eloquently states above.
- Building a business in an industry where the tectonic plates are shifting. That means it has a why now story — what demographic, technology or consumer behavior changes have made now the right time to start this business.
- The founder(s) serves as a talent magnet that can rope in people way ahead of when they “in theory” should be interested in engaging.
- The founder(s) has structured his/her business in a way where it has the potential to have both hyper-growth and long-term defensibility .
We decided to create a series of blog posts, designed for entrepreneurs still scribbling their ideas on a napkin. After a blog post on each of these areas, we tell a founder story to bring it to life. We, of course, begin with the founder him/herself.
“Let everyone else call your idea crazy… Just keep going. Don’t stop. Don’t even think about stopping until you get there, and don’t give much thought to where ‘there’ is. Whatever comes, just don’t stop.” — Phil Knight
You, as the founder, need to be the absolute best person to tackle your chosen venture. There will undoubtedly be at least 5 other people trying to do the same thing or, at a minimum, going after your customer. Ideas are rarely proprietary, but instead out-executing can create the next Facebook versus Friendster. So, how do you know if you’re the right person? Here are some characteristics you’ll need to display to win:
Obsession. Are you insanely passionate — and why? This has to be more than the next job for you. There will be dark days when the whole world seems to be predicting your failure and when investors and peers will doubt you, but you can’t doubt yourself and your desire to be doing what you’re doing.
Competitive edge over others Why YOU? Why are you better than other founders who may be more experienced, more accomplished or more established?
An extraordinary understanding of your target customer. Are you the customer? Do you have a unique insight into your customer and his/her needs? We’ve seen a lot of founders tackle underserved markets because they were the customer that was forgotten. How will you know to make products that your customers want?
Storytelling Superpowers. As VCs, we are gleeful when we invest in an entrepreneur who can attract employees, advisors and customers into their orbit well ahead of when it is logical for those people to get involved. The best way to do this is with storytelling that inspires, with an ability to make the complex seem simple and to crisply explain why your company needs to exist.
People Magnet. This often starts with either insanely great sales skills or an advantaged pre-existing network. Can you use your network to your advantage, from hiring outstanding early employees to getting previous bosses or colleagues to invest? Can you paint the vision in a way where you persuade extraordinary people to join your company and lead in a way that inspires them to give you everything they have?
Do you have insanely fast cycle time combined with strong convictions, weakly held. McKinsey consultants usually fail as entrepreneurs. They need 99% certainty to make a decision. The best entrepreneurs get 55% of the way there, decide and then pivot quickly if they are wrong.
Have you failed at some point in your life? Often the best founder stories come with many, many tries — they display great tenacity. There are countless stories like this (Steve Jobs, Travis Kalanick, etc.). Failures can often provide some of the best learning experiences.
More practically, do you have personal cash flow needs? It is advised to think about the first year of building a startup as salary-free. Have you saved enough money, and what do you need to live on? This shouldn’t prevent you from starting a business, but it might mean that you need to think about a business that provides revenue sooner, or work on consulting/freelance projects to help pay the rent.
FOUNDER PROFILE: DARRELL CAVENS AT ZULILY
Darrell Cavens at Zulily was an early executive at Blue Nile and co-founded Zulily with Blue Nile founder and CEO Mark Vadon. At Maveron, we were privileged to lead Zulily’s seed and Series A and watch both Darrell and Mark display the characteristics above on the path to delighting millions of moms and creating billions in equity value. Let’s walk through them one by one:
Obsession. In early days at Zulily, order to ship times were excessively long (peaking at over 3 weeks!). Darrell dove into every element of the problem and figured out operationally how to solve it. He has an innate spidey sense when something is going wrong and is like a dog with a bone in solving it.
Competitive edge over others. Very few founders have been part of the executive team scaling an ecommerce business to $1 billion in market value. Darrell and Mark did this at Blue Nile, understood what they needed to build and how to compete against Amazon.
An extraordinary understanding of your target customer. As parents, the Zully founders saw the broken experience of shopping for kids firsthand. From the 1st pitch deck they showed understanding of the psychology of the target customer: “She is an online shopper, that wants the best for her kids. She wants to make the “right” choice, but responds to great value and likes to feel like she ‘beat the system’”
Storytelling Superpowers. Darrell was relentless in selling the Zulily story to vendors and building an amazing supply base of thousands of children related suppliers. The storytelling was possible in part because Darrell and Mark were crystal clear on deeply understanding vendor needs out of the gate — using great photography to showcase brands and sharing data with them to give them value in their broader business. They structured the business to enhance rather than cheapen partner brands.
People Magnet. Darrell and Mark were unusually advantaged, bringing back some people from their Blue Nile days and others, like head of marketing Dave Atchison, who wanted to work with and learn from some of the best in ecommerce. They hired execs who could scale all the way on onto the early team, a luxury few founders have.
Do you have insanely fast cycle time combined with strong convictions, weakly held. “Zulily time” was at the heart of Zulily — the thought that anything could be done an order of magnitude faster than elsewhere. Speed drove the business.
Have you failed at some point in your life? There were lots of bumps along the way at Zulily (hires, customer experience issues, et al). Through all of it, even when there was self-doubt, Darrell publicly led in a way where he focused everyone on solving the problem at hand, moving forward and never looking back.
More practically, do you have personal cash flow needs? Darrell was fortunate to not have cash flow needs.
Due to the right founder/product fit, Darrell and Mark built a seminal ecommerce business. As a founder, your areas of strength and sources of advantage are likely different than theirs, but before embarking on your journey, you need to ask if you have the founder/market fit needed to build the type of company you want to build.
Corigin Ventures is a Seed-Stage fund based in New York City, investing in founders defining the future of daily living. We are active from Pre-Seed to Post-Seed.