Traits of the best entrepreneurs

(Editor’s note: We asked Ryan Floyd, venture capitalist with Storm Ventures, what the traits are of the most successful entrepreneurs he’s backed. Here is his response.)

I am not sure there is a stereotypical entrepreneur right out of central casting.

The following are some common characteristics of the entrepreneurs that we have funded and will fund in the future. However, these traits may not be the ones that some entrepreneurs think venture investors value.

(1) Gritty determination and commitment. For anyone that has been in a start up, most will have had similar experiences — it can be a roller coaster ride for even the best funded companies. When companies are small, the risks and challenges are tremendous and it’s easy to get discouraged. To expect to grow a company without these obstacles would be a fairytale. Entrepreneurs and founders need to have the gritty determination and commitment to succeed no matter how high the hill. Commitment is beyond passion for a project or idea. It’s about knowing that failure just simply is not an option. The best entrepreneurs I have worked with I know work incredibly hard and are committed to themselves, their employees, and their investors. Up until several years ago, I spent a significant amount of my free time climbing in Yosemite. The concept of commitment in climbing is very analogous to a start up. Once we were on the wall we were committed regardless of weather, injury etc., especially on multi-day routes. We had to put 100 percent of our emotional and physical energy into being successful because, as climbers will tell you, usually the first instinct after going up a wall is to immediately want to come down. Living with gravity has that effect. With startups, many smart people will tell entrepreneurs and founders that they won’t be successful, the bigger companies will crush them, etc. The great entrepreneurs listen, reflect,and keep climbing.

(2) Intellectual honesty and integrity. As an investor, I like to think that I am part of any executive team – an extension and a resource. I see the venture business as a service business where we are there to accelerate growth but not to run companies. As a result, we are sometimes not as close to all the details of the business and are dependent on the executive team to effectively communicate with us about problems and concerns. Entrepreneurs that sugar coat results and do not deliver straight relevant answers are doing a disservice to all of their stakeholders. While some may believe that intellectual honesty is in conflict with passion or belief in an idea, I think that the greatest entrepreneurs find that constantly questioning their assumptions and maintaining a healthy dose of paranoia about competitiveness and value creation pushes individuals and organizations to achieve more with confidence. It also helps to make the never ending small course corrections in a business that lead to success. By the way, entrepreneurs and founders ought to expect this from their investors and board members as well. At one portfolio company of mine, I have found that the two founders often deliver good news about progress with engineering or customers and immediately make sure to deliver a set of thoughtful comments about the risks and issues. They are constantly looking for critical inputs to help them make better decisions. It is a remarkable trait and one that has undoubtedly made them both successful.

(3) Know the details and domain expertise. One of my partners once told me that when he walks out of a board room and feels as though he knows a lot more about the business than the team, he knows he is in trouble. Many entrepreneurs reading this may find it comical that a venture investor could resist trying to prove he or she is the smartest person in the room. The best entrepreneurs I have worked with always make me feel like I am the one trying to play catch up. Entrepreneurs and founders should make it their business to know more about the individuals, the competitors, the customers etc. that make up their industry than anyone else. It may seem obvious. Founders that are investigating new businesses and markets where they are unfamiliar will find it difficult going because there are no shortcuts to building experience. Deep domain expertise is one of the most important characteristics and the most successful entrepreneurs in our portfolio run circles around the Storm team in their specific domains. That’s the way we like it.

Clearly this is not an exhaustive list. This may all seem very obvious to some entrepreneurs and founders. Probably even more so to many venture investors. Notice however that I did not include traits like leadership, ability to build a team business experience, prior successes, or the ability to understand their customers and deliver a compelling product or service. This is not to say that these are not very important qualities – they are indeed – but without the three I list I would argue the founders will not find success on the same scale.