I recently connected with one of the founders in our portfolio. A company where he worked two start-ups ago was sold. He got his check last year. His personal take, which he humbly whispered to me, was $5 million. I asked him what he did with the money. I expected to hear about a new car, a vacation, or a new house.
His answer: “Not much. I invested it and have forgotten about it.” Wow.
I’ve thought a lot about his response. I know many people who would have spent at least some of the money right away. I then realized that his behavior was the norm, not the exception, among founders we know. In fact, the more I thought about it, the more I realized that most founders share some common traits.
So, in this post, I’d like to address the question: what are the traits of successful founders?
First, let me say up front that a “founder” is someone who can create a company from scratch. They need great “executives” to join them along the journey, but the “founder” has the mojo to come up with a great idea and rally resources around it. He/she starts with a blank sheet of paper and goes from there.
So, these are generalizations, and I could be wrong, but I think the best founders share three traits, which are part of what I call an immigrant’s mindset. They may not be immigrants, but they certainly act like one. Here’s why:
They come from nothing. Start-ups require persistence and drive. I’ve found the people with the most drive come from very humble backgrounds. For example, Cheng Wu, our co-founder at Azuki Systems, emigrated from Taiwan. Another founder we’ve backed, Mike Stonebraker, is from a very small town in NH. Together, those two have started multiple companies that have generated $7 billion of value.
The magic of a humble background is that everything in your life is upside.
They have low cash burn. People with great ideas often cannot quit their high-paying jobs. Why? Their personal burn rates are high. They cannot afford to leave their jobs. If they do, they may have only a few months to work on a business plan, but then, they have to go find a job. The flip side is true. Successful founders allow themselves a long runway to test an idea. They dip into savings or do consulting work on the side. A low personal burn rate allows for that. I recently caught up with Katie Rae of TechStars Boston. Early in their marriage, she and her husband set a budget and crafted their lives around it. It freed them from having to chase ever-larger cash comp, and instead, let them pursue careers with equity upside.
In my opinion, the #1 reason why more people don’t start a business is this: a big mortgage.
They have “streamlined” lives. Successful founders tend to live life with few distractions. For example, Steve Jobs after his initial success at Apple didn’t build grand houses, join countless non-profit boards or buy sports teams. He continued to focus on product creation. Our founders at Boundless Learning have a young company, but I’m impressed with how they have “made simple” many personal decisions. For example, co-founder Ariel Diaz buys one style of dress shirt, in varying colors, from one vendor (all of which match the one style of sweater, in a variety of colors, he buys from another vendor). He does this so the “what do I wear today?” decision isn’t one. It’s automatic. Possessions can create complexity.
As a priest in my parish asks, “Do you own your possessions—or, do your possessions own you?”
So, those are my two cents. Would be interested in what others think about this.