Sometime last year during a date night with my wife, I told her that I can decide within the first 15 minutes of my conversation with a founder whether I want to invest in a company or idea. We took a list of those which I have recorded in my own spreadsheet and told her private that I would invest if I have the money and discovered that it was fairly accurate. In fact, the best investments out of my portfolio are done within 15 minutes and the rest which I took time to deliberate and ponder usually never panned out. It’s not based on some emotion or feeling. It also worked for me on startups which I don’t partake in but will have done it if I have the cash.
“In the future everyone will have their fifteen minutes of fame.” — Andy Warhol
How I came to this conclusion is really interesting. For a start, I have heard at least ten thousand pitches from many founders over the past ten years from startup competitions to evaluating investments as an early stage investor or in a corporate role.
Eventually, I reflected and thought about it carefully. It came down to one word: clarity. The ones which convinced me within 15 minutes all shared a few common features:
- Describing the problem clearly and offering a counter intuitive way of looking at the problem: The person articulated the problem very clearly and within his or her depiction of the problem in the first three minutes, he or she will introduce a set of insights that re-configure how the startup would solve the problem clearly and explain why the current perception to the problem is wrong. Communicating this clearly usually involved having experience in the industry and what they have learned from their failures as well.
- Breaking down the solution in the form of a product or service very well that can help the person imagine the future with a product roadmap: It is more than just conveying how the features of your product or service can solve the problem but laying out a clear product roadmap solving the intricacies of the problem, for example, targeting a niche market which can asymmetrically attack the larger market segment of an existing industry where the incumbents are totally helpless.
- Articulating the process of forming a great team to move forward:The person usually discussed his or her team and conveyed where the missing pieces of the whole jig-saw are. Usually, they bring in one or two people with the right experience and at the same time, focus on their weaknesses rather than strengths, and what they are looking for to supplement the right people in the future.
- Intellectually curious and draw you to argue with them and yet stay respectful when you disagree with them: I always assume that they know more than I do, but when I try to poke holes, they will stay respectful when they disagree, but it leaves me thinking after that, whether they might have a point. The power of evidence coupled with logic usually made me take a second look in my perception. It is about trying to convince you why they believe in something but leave it up to you to make up your mind. Within our conversation, they provide clear indicators what they should be focusing to make the business work and not wasting time doing things that are not work.
Usually, what they do are usually counter-intuitive, and the methods of customer acquisition do not scale the company. They usually build up a proper customer base to the product or service through a variety of non-standard methods and are able to pin-point to a set of metrics that are not vanity based. You can also distinguish those who are out to flip a company vs those who are here for the long run.
In conclusion, I often caution myself against the 15 minutes view of things based on logic and try to remove the biases that may come in play, but I have learned to trust my intuition and will continue to kept score to find the anomalies or failures contrary to that. In fact, within that 15 minutes of conversation, the key is to ensure that you are focused in listening to what the other person has to say. Before you start to criticise them on their silly ideas, it is important to make sure that you hear and think critically on the subject at hand. Needless to say, those who won me over within 15 minutes are few and far between, like a needle in the haystack.