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3 Founder Attributes We Look For When Investing
Recently, Stu Landesberg, the CEO of Grove Collaborative shared the story of the struggle he faced in raising his series A round. You don’t often hear a founder speak so candidly about this (especially before the final chapter is written) so it’s worth a listen.
We were co-lead investors in Grove’s seed round and actually doubled down in an intermediate round prior to this challenging series A process. We believed in Stu and the vision for Grove, but this was a really scary time for the company.
When I think of all the value drivers in our portfolio, every single one faced at least one if not several crucible moments like this. They may not look exactly like Stu’s situation, but I think all of these founders have found their backs against the wall, scrambling to find a path forward for their business.
As seed stage investors, we think very deeply about the attributes of founders that we want to back. Increasingly, I’ve been thinking about how founders would respond in these really tough situations and what attributes are required to get through them. There are three that come to mind immediately.
The first is super-human resilience.
The pressure that a founder/CEO faces is incomparable to anyone else in a company, and it’s magnified in moments of crisis. The ability to stay focused, remain clear headed, and grind through challenges is the hallmark of the best founders we’ve worked with. This process is also a significant attack on one’s psyche, which is why I think prioritizing mental health and coaching is such an important investment for any founder.
The second is customer obsession and market focus.
Often, the trigger of a difficult situation is that the founder has misread something about the market or that the sands are shifting underfoot. Being able to anticipate and respond to major market shifts and perhaps identify new tailwinds to draft behind are critical, and will probably need to happen at least several times in the life of a successful company. Founders that are customer obsessed tend to see these coming from a distance and course correct when appropriate more quickly.
The third attribute is courage.
Founders need to make company-altering decisions quickly, decisively, and with imperfect information. The bigger the business and the more you have invested in a particular path, the harder it is to have the courage to change course. It also requires courage to stay committed to a course if you decide that you are indeed on the right track, and that the shifts in the market are more of a distraction than a sign that change is required.
Each of these characteristics is rare, and having the combination of these three is particularly challenging because they can sometimes work against each other. And this is all on top of all the other skills that are needed to assemble a great team, build a great product, and bring a great company into existence.
This is why I’m constantly in awe of the founders that we get to back, and am particularly reminded of that when their backs are against the wall. I’m really grateful for Stu for sharing this story, and for leading Grove through that rocky period with his resilience, customer obsession and courage.