50 First Rates
On reading between the lines, listening to the unsaid and finding the next generation of game-changing founders
Last week, I interviewed more than 50 founders in 15-minute, back-to-back sessions as part of the first round screening for the Startmate Summer22 selection process. It’s always a fun, but incredibly brutal process as the mentor community sifts through the almost 500 applications we receive each time to determine our shortlist for Interview Roulette Day. In those 15-minute windows (plus the review of written applications) you are trying to parse so many things at once to determine the ~50 founders who should make the cut to the next stage. Between opportunity space, demonstrated ability to execute, proprietary insight, ability to achieve a meaningful unit of progress within the Accelerator timeframe and general capability and coachability of the founder, it’s fair to say there is no ultimate formula and we are constantly making trade-offs between these indicators as we go.
With the intensity of the last week (combined with the fact that I was also reviewing 100+ applications for roles with Startmate in tandem), I spent a lot of time thinking about what I personally look for, or perhaps over-index on in my decision-making process. There were a handful of pitches where I felt an instant connection and excitement for the founder and the opportunity, and others where I could feel my enthusiasm flatline because of a few fatal flaws in the pitch. But these fatal flaws are a lot harder to codify than a market or model problem, or even a skill gap. They have to do with the connection between reality and ultimate possibility, and the clarity a founder exhibits to mapping a path between the two. I wanted to frame up five traps I heard founders falling into, and some of the ways in which the best founders I’ve met have navigated the path.
1. Say what you mean, and understand what you say
The great enemy of clear language is insincerity. When there is a gap between one's real and one's declared aims, one turns, as it were, instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink.
— George Orwell
Perhaps the greatest asset a founder can have is clarity: clarity of vision, clarity of thought, clarity of strategy. But in the earliest days, this level of clarity can be the most elusive thing of all as even the next step feels opaque and unclear. I think the best founders own this lack of clarity, in some cases even leaning into it to drive their curiosity and frame up their learning experiments. It’s so understandable to want to run in the other direction, and instead try to convey complete confidence in what you are doing, where you are heading, and the impact you hope to make. But on the other side of the table, this plays out as hand-wavy generalisations, grandiose statements like ‘saving the planet’ and other general over-compensations which pull a founder further away from the actual thing they know well and are deeply passionate about. This isn’t necessarily about being articulate, charismatic or being a good storyteller - I have found specificity and clarity shines through even in the absence of those things. Be honest with yourself about where you are, what you know and what you don’t, and clarity will be so much easier to grasp.
2. Over-simplifying a critical piece of the puzzle
If any of you have played Cards Against Humanity, this example might resonate. My favourite card in the deck is the three steps to profit. The reality is that so many startup pitches play out like this: ‘Step1: build magical product, Step 2: magically place in the hands of customers (target market being everyone of a certain age in a certain country), Step 3: profit.’
Never gonna happen.
Lean startup thinking has penetrated far enough into the mainstream consciousness by now that everyone is well aware of the level of customer discovery that needs to be undertaken to properly establish product-market fit (and yet it’s still the number one message we reinforce through the Accelerator program). Founders who get this right bring so much colour and depth to these first two steps, and an awareness that they will be going back and forth between them for a long time before Step 3 is even a consideration.
But product-market fit still relies on a solid distribution strategy to ultimately make that leap. Founders who can bring a unique insight around the problem they’re trying to solve, plus a level of focus around their initial target market will be able to divine more interesting pathways to reach them and expand over time. While it’s helpful to be able to see how this is already playing out through initial traction, it can still be true of a pre-MVP idea-stage start-up if the founder has spent enough time validating the problem being solved.
Let’s be honest, Step 3 is still miles away so you may as well be enjoy the learning and iterating in Steps 1 & 2.
3. Dismissing competition
We try not to over-index on evaluating the competition, as there is always an incumbent waiting to be disrupted by the right emerging player. We just have to be able to believe it’s going to be you.
When founders pitch a business in what is known to be a very crowded, or strongly dominated industry vertical, it’s worth spending some time clearly articulating just where that competitive advantage will come from (spoiler: UX is rarely enough on its own), and how there is a pathway to growth that doesn’t rely solely on SEO and online ads.
This shouldn’t look like a strategically structured 2x2, or a feature matrix that selectively shows your product as the most comprehensive. It should highlight the group of customers that are not being served by the existing players, why they are calling for your solution, and how you can move up the value chain over time (or why this becomes a new category in its own right). At the very least, just avoid overstating the reasons why your team is better, or dismissing the competition out of hand.
4. What you are now < what you could be
Part of the job of the investor to identify talent and potential, and provide support to the founding team to help them reach it. But it’s important that the founders themselves see that same potential and are ready to chase after it. This week, I spoke to many talented and passionate people about what they’re building. What set some of them apart was a recognition and awareness that what they are working on now is not the ultimate opportunity worth chasing, but instead more of a step on the path towards it. For others, the current state was simultaneously the optimal end-state (or at least the current state but at scale), and that changes the conversation.
While Startmate has a proven record at unleashing the ambition of the founders that come through the program, there still has to be an innate sense in the founder of a future possibility worth chasing after, and a compounding benefit to doing so. We love to know what you’ve achieved or learned to date, but we also want to be inspired and excited by the uncapped potential of what might happen if you pour fuel on the fire. Show us the pathway between the two and you’re already a step ahead. We’ll bring the fuel.
5. The ‘silver bullet’ solution
In some ways the reverse of the above problem, we have so many highly intelligent and capable founders that come to us having mapped out ‘a better way’ - to completely flip an industry on its head, to build the new operating system for a generation, to fix systemic inequality. These proposals are always incredibly well-thought out, exhibiting a depth of knowledge that has our best mentors in awe. We want the unreasonable people who are armed to exploit a glitch in the matrix. But it’s only the rare few that are equipped to take this silver bullet solution and take a first step to making it a reality.
These rare founders can hold incredible complexity and ambiguity in their mind, and distill it into practical, tangible next steps. They can comprehend volume and scale with a level of comfortability that would make others sweat. They can see the future, but they demonstrate an ability to execute in the present. And perhaps most importantly, they understand that it will be thousands of tiny shots that accumulate to become the big eventual shift they are working toward, not any one single bolt of lightning.
Because plans are nothing, execution is everything.
This is in no way a comprehensive outline of how we evaluate the startups that should continue to the shortlisting phase of the Accelerator program. There is no perfect formula and we will still miss tens of founders and companies every cohort who will go on to create incredibly successful businesses. Rather, it’s a list of personal observations I had over the course of my 50 interviews, and the hundreds more founder calls I’ve done over the past six months in preparation for Summer22 as I learn to be a better investor.
I love meeting a founder that successfully navigates these patterns, and have been so lucky to have many of them as part of the past few cohorts. But what I love even more is seeing the progress between one program cycle and the next, where a founder reapplies six months down the line and absolutely knocks it out of the park. None of these problems is terminal, all it takes is self-awareness and determination to bring yourself up the curve. And we’re all learning alongside you.