Here’s how I know I met a great founder: he’s at a customer site when we talk, sitting next to the Pepsi machine. Too often, investors look for the wrong things when they meet a founder. Did he go to Harvard? Is he in San Francisco? Is a big name investing?
These things don’t matter. Here are 3 green flags I look for instead:
1) At a Customer Site. Let’s go back to the man by the Pepsi machine.
That fellow was Zach Barney, founder of Mobly.
Zach was carving out time to meet with me in between customer visits. He was clearly focused on his customers, going to their offices in person even though it was almost Christmas.
Any founder this customer obsessed is bound to win.
I invested in Mobly shortly after our meeting. And sure enough, Mobly has grown like crazy since then. In fact, I doubled down recently.
2) Goes to Customer Conferences. Whenever I see a founder gripping and grinning with Mark Cuban at SXSW, I cringe. But when I see a founder who sells SaaS for the trades at a conference of plumbers, I reach for my wallet.
The great founders go where their customers are. Sometimes, that’s their office, like Zach did above. Other times, that’s an industry conference.
For most founders, these boring conferences filled with boring customers are a much better use of time than SXSW or TechCrunch Disrupt. Here’s a rule of thumb: if it’s cool, it’s probably a waste of time.
3) Transparent. The great founders give clear answers to questions.
Me: “Where is ARR right now?”
Them: “We’re at $485k ARR as of this morning.”
See how easy that was? No obfuscation.
These amazing founders don’t just give me any info I ask for. They also have a habit of sending over a link to the data room, which has more information than I could ever use!
It’s not typical to send a data room link to a small angel like myself. And I don’t ask.
But I notice that over and over, the best tend to do it.
They have nothing to hide. On the contrary, they’re proud! They want to show off how much they’ve accomplished.
Wrap-Up
What do these 3 green flags really tell us? They’re signs of a founder who’s honest and deeply focused on his customers.
Not every great founder has all 3. But whenever I meet an entrepreneur, I’m on the lookout for these green flags.
If you’re a founder, try to make these good traits part of how you do business every day. Be forthright. Keep the focus on the customer.
And if you’re an investor, forget about the Stanford pedigrees. Find some folks who have a great product and talk to their customers. Give them money.
The results might surprise you.
Have a great weekend, everybody!
More on tech:
Meet My Latest Investment: Mobly
Five Things Founders Should Never Pay For
Why European Founders Should Move to America
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