Scout #1: "I like Perez."
Scout #2: "He's got an ugly girl friend. Ugly girl friend means no confidence."
The quote above was from the recently released movie Moneyball based on the Michael Lewis book Moneyball: The Art of Winning an Unfair Game. If you haven't seen it yet, I highly recommend it.
The scouts were in the war room with Oakland A's general manager Billy Beane (played by Brad Pitt), and they were discussing which player they liked. Scout #2 didn't care whether the player was tall or fast or could hit or field a ground ball, it came down to whether or not the player had confidence.
I hate to say it, but it wouldn't surprise me if VC's used the same tactic to measure the investment worthiness of the companies that they fund. For those that have taken money or were on the verge of taking money, think back and see the investor invited you to dinner with your significant other just before they wrote the check (or didn't write the check).
It's cliche now in the VC community, but it's worth saying again - we invest in three things: People, Product and Market. "People" or your team comprise about 80% of our decision because at the end of the day you can have awesome technology that's attacking a huge market, but if you don't have the right people to take you from point A to point B then nothing else matters.
Investors use all sorts of methods to understand the founders (including the girlfriend-method above). Paul Graham of Y Combinator looks at a person's history on Hacker News while Dave McClure of 500 Startups gets personal referrals, and others will take the time to get to know the teams before they write that check. I usually will have a coffee or a drink with a team that I'm evaluating and I try to understand the answers to the following questions:
- What are the responsibilities of the team members and how confident are they in their duties? I want to see rock stars in whatever they do. When starting a tech company you should have a business person and a tech person (although I'm not opposed to a single founder). Both of them should show the utmost confidence in whatever they do. While their answer should not always be "Yes", they should have that mindset.
- Have you quit your job to work 100% full-time on this project? If I'm going to give you 100% then I hope you already are giving 100%.
- Has your team worked together in some capacity before? You could have gone to school together, be related, built a web app together, worked at the same place or planned a camping trip - I just want to see if you've accomplished something as a team and understand how you've dealt with internal conflict.
- Do you have any other distractions that could keep you from being successful? This is probably the least important team question and probably the hardest to gauge. I don't think any investor is opposed to somebody having a family even though that could be a time distraction. If you have other dreams such as going to med school, a deep desire to have the large house with a picket fence in the near-term or anything else that could cause you to lose focus then it may be something that your other co-founders and your investors should know right off the bat.
To sum it up, confidence is a key trait that many investors look for. Resourcefulness, determination, smarts and the shear hustle to execute are also in the pile of must-haves. However, it wouldn't hurt before you go to that next pitch event, hacker meetup, demo day or VC meeting that you take a long look at your girlfriend.
(The title of this post isn't necessarily fair. It also applies to having a physically attractive boyfriend.)
You can follow Allan on Twitter @allanscu.
Image from Wikipedia.