From a talk on July 24th, 2014 In Seattle by Dan Levitan, co-founder (with Howard Schultz) of Maveron Venture Capital Fund.
According to Dan, most people have no business being start-up CEO’s. He estimates that only 1 in 100 prospective entrepreneurs are willing to make the sacrifices necessary to be a successful CEO. He has compiled a list of 10 traits that the successful CEO’s they backed had. Below is a summary:
- Genuine, contagious passion for the field and relentless perseverance. Entrepreneurship is not glamorous and you will face a lot of setbacks. If you are doing it just because it is fashionable and do not have true grit you will not make it. Example: Howard Schultz got 300 no’s before he got his first yes.
- Ability to sell the product and vision.
- Has category advantage. Example: The CEO of Trupanion (just had their IPO) had been thinking about and studying pet insurance since he was sixteen. It is no coincidence that they were the first profitable pet insurer in North America despite having 19 well funded competitors and his previous experience consisting of managing a cigar store.
- All star recruiter:They like to see at least one meaningful hire in the first six months for start-ups in their seed program, if they are to do a follow on investment. They decided to start doing seed investments in order to learn more about the team/company over a couple months versus their previous model of starting with a $5 million to $10 million investment, which he now realizes was dumb.
- Data driven decision maker.
- Self-aware and can evolve. A CEO who is not self aware is only interested in the result. When s/he doesn’t get it s/he feels deflated and often blames others. A self aware CEO is also interested in the process and personal growth. After a failure, s/he usually steps back to reflect on what s/he could have done different. He recommends reading the book Mindsetby Carol Dweck
- Can balance being visionary and detail oriented.They have backed a few CEO’s who had grand visions and went around telling everyone that they would build a $1 billion revenue business but couldn’t even get to $10 million because they were not detail oriented.
- Works ridiculously fast. Example: Darrell Cavens at Zulily. He came up with the concept of ‘Zulily Time’ and they built their 500,000 sq ft warehouses and fulfillment centers in 10 weeks whereas it normally takes several months. Part of this, is understanding that this is your moment and there will be no discussions about work-life balance!
- Superior communication skills.
- Prioritizes value creation for employees, shareholders. He talked about this in the context of dealing with co-founders and early employees. Sometimes they are going to have to step aside or revise their original ideas about the business in order to do what is right for the company.
One a related note he said that the biggest lie about early stage investing is “No problem, we’ll just replace the CEO”. From their experience it is extremely costly to do this and there are rarely good outcomes. He added that he would give another talk on “The 10 Biggest Lies on Early Stage Investing” at a later date.