It is easier to start with what this is not.
This is not a step-by-step prescription for identifying the elusive "unicorn" entrepreneurs.
This is not a list declaring that the only successful founders are age 34.4, predominately male (but if you are female, please pitch us!), and dropped out of their Ivy League engineering program with 1 week left to graduate.
Every founder is different. Prescriptive approaches are too algorithmic, and history does not repeat itself, but it does rhyme, especially at the seed stage where we primarily invest.
As my colleague Andy Dunn said to me once, “When you have a list of everything, you actually have a list of nothing.”
At Red Swan, instead of having a list of checkboxes we pattern-match to, we have a framework of an iconic entrepreneur in mind, which we aspire to, both in ourselves as well as in the founders we back.
We believe that these founders correlate highly with movements that have large followings of passionate people (customers, employees, investors, advisors) who would follow them to the ends of the earth.
So without further ado, here are the four characteristics, which mnemonically and coincidentally form “MATE.”
Magnetism is the unquantifiable ability to attract people to a cause, despite endless uncertainty and high risk.
This characteristic is especially amplified in the early days of a startup where we invest, where there is the highest level of risk, and very little other signals to rely on.
This is the founder whom people seem to naturally gravitate towards, possibly because they are charismatic, but perhaps also because they are unerringly confident in their beliefs, or that there is an inevitability in their statements.
This is the founder who, prior to raising any capital, convinces two hackers and a designer to work on the startup in their spare time.
This is the founder you have a gut feeling will be successful, because they weave such fantastic yet convincing and realistic stories.
This is the founder who makes you feel empowered, infused with energy, ready to take on the world together.
This is the founder who, while talking to them, you find yourself starting your sentences with “We” rather than “You” or “I.”
In short, they bring out the best in you.
But if it were just about magnetism, we would invest in many things, including many things seen on late-night infomercials (“But wait, there’s more!”).1
Magnetism is compounded when it comes from a place of deep authenticity. This raison d’être is why the MATE founder stays up late because they are too excited about what they’re building, and then jumps out of bed early in the morning, anxious to tackle the next task at hand.
It’s always surprising to me how many entrepreneurs I meet who can’t articulate in a simple way why they do what they do, why it is impossible to think about doing anything else.
A wantrepreneur is an entrepreneur because they seek validation for the status it brings and the title’s implications. An authentic entrepreneur is an entrepreneur because there is no other rational option.2
You can’t fake authenticity. It’s not just about saying the right things. It’s the minute details of why you do what you do. You can say all the right things, but if you’re not authentic, it’s clear as day.
Most entrepreneurs I know have a unified founder-startup identity. They are their startup and their startup is them. So their emotions, whether they like it or not, are highly correlated with the startup’s successes and failures, down to the minutiae.
I’ve been there before. When someone pans the UX of a product I built, or an LP dislikes our approach to investing at Red Swan, it feels like they are directly insulting me.
You have to have thick skin. In fact, some might say that the more naysayers you have, the more likely you are to be on the right track. The most disruptive ideas comes from non-consensus beliefs. Be the mad scientist.
This goes back to the authenticity of the founder; if the founder is only doing it for the money, or because they are more interested in the idea of a startup rather than having an authentic purpose for doing what they are doing, these founders usually lack tenacity. The instant there is risk of losing money, the non-tenacious entrepreneur runs for the safety of BigCo. I still find it incredible (the story goes) that Elon Musk reinvested all of his earnings from PayPal into SpaceX and Tesla.
And back to Andy, he raised his first $750,000 from over 40 investors, for a total of $8M over four angel rounds from over one hundred angel investors. What a slog. If it were about money for him, he would be long gone.
Tenacity is the combination of a high level of authenticity with what I think most people mean when they say that someone has conviction.
Finally, the last characteristic, the ability to evolve, seems diametrically opposed to tenacity. How can someone be tenacious, yet have the humility to evolve?
Entrepreneurship is a seeming paradox, the balance between the arrogance of believing the world should be the way that you envision, and the humility of admitting when you are wrong.
While tenacity and conviction are critical to the visionary entrepreneur, it’s important to know when to step down from your strongly held beliefs.
Easier said than done. But I think there are a few ways of doing this.
One is by knowing what you know and, knowing what you don’t know.
Two is to not let your ego get in the way. This is the idea of strong opinions weakly held.
Three is that “good judgment comes from experience, which comes from bad judgment” (Bill Gurley).
The MATE founder knows when to stand strong, but also knows when to admit they are wrong, evolve, and become stronger from that.
To summarize, it is the confluence of these four character traits that we believe define the founders who are at the center of iconic movements.
No single checkbox of algorithmic pattern-matching can be a 100% predictor of success. So instead, we believe this heuristic is the best way to be in the right place at the right time.
When M, A, T, and E all come together in one founder, the rest takes care of itself.
In fact, some founders, particularly those who are coached through an accelerator program, have become so good at pitching, it is hard to tell the difference between a startup pitch and an infomercial. ↩