Founders of Paradox
Three traits I like
Ever since I wrote The Gigascale Founder, I’ve continued to triangulate what traits I like in founders. Taste is not universal so I am not claiming that these are the best traits: it’s simply what I like. Cultivating one’s own personal taste is an important aspect of the investor journey.
One thing I’ve realized I’m very comfortable with is paradox. Paradox is something you can get comfortable wrestling with as a person of faith. I’ve also realized that this is a key element in how I think about some aspects of investing.
Three founder traits I’ve begun to index on that contain an element of paradox:
Right-tail of the bell curve
Hyper-ambitious, but hyper-realistic
Pioneers, not experts
Right-Tail
I like founders that excel at traits that are typically anti-correlated at the extremes. Think of the Fields Medalist who can’t write poetry or the Nobel Laureate poet who struggles at math. This is common for people who are truly exceptional at something: they’re overfilled in one area but have a corresponding deficiency somewhere else.
In contrast, right-tail founders are founders who are extremely good at two sides of a coin:
technical builder, but also can sell
an under-socialized, heterodox thinker who can also recruit a team and fundraise
Famous examples of these are Elon Musk, Sam Altman, Steve Jobs, Mark Zuckerberg, Travis Kalanick, Patrick Collison, Palmer Luckey, etc.
The key caveat is that they must be 4+ standard deviations to the right of the middle on these traits, not 1 standard deviation. To go back to the Fields Medalist analog, 1 SD to the right is someone who gets an 800/800 on the SAT, but would never do original, award-winning work in math or poetry. In companies or startups, this is someone who would be a great McKinsey consultant or rock-star Pareto-distributed employee, but not necessarily an extraordinary founder who pushes forward the boundaries of humanity.
One interesting side note is that some of the best VCs of all-time similarly play across these dual axes: very introverted but also extremely charismatic, sharp-elbowed and competitive yet beloved by their founders, etc.
Duality and paradox seems to lead to the most interesting outcomes.
Hyper-ambitious but also hyper-realistic
These are founders who have a 100 year vision, but also have hyper-realism about the intermediary business outcomes are needed on the path to success. Even the failure case along the way is a great business.
Sam Altman:
Ambitious Goal: Build Artificial General Intelligence that solves all of humanity’s economic problems
Intermediate Realistic Target: Build the infrastructure for better business productivity software that does $Bs in revenue
Elon Musk
Ambitious Goal: Solve climate change
Intermediate Realistic Target: Build a successful electric vehicle company
Ambitious Goal: Make civilization interplanetary and colonize Mars
Intermediate Realistic Target: Win government contracts for space missions
Jeff Bezos:
Ambitious Goal: “The Everything Store”
Intermediate Realistic Target: online bookstore that disrupts Barnes&Noble and Borders
Pioneers, not experts
Doing original work is quite different than mastering existing principles. Pioneers invent the future, experts analyze the past.
“Experts come along afterward, where pioneers have finished: beyond rules or special knowledge they’ll say it can’t be done or impossible.”-Henry Ford
Science and progress is the history of great founders and creators ignoring conventional wisdom and inventing or discovering something new. While this leaves investors at risk of backing charlatans, the line between visionary and charlatan can be extremely thin.
"I think Musk drives hedge fund managers up the wall as half of them are short his shares because he exudes so much promotional hucksterism as he asserts reality, and half of them are long because he is actually thinking on a 100-year time scale. It’s very confusing.”-Graham Duncan, East Rock Capital
The key question for investors to ask before they back someone claiming a different possible future: is this person high-integrity?
As long as the answer is yes, it was a good investment even if the person turns out to be wrong about the future. VC is a power law game, the only thing matters is the “what can go right?” case. If that’s large enough, you can make investments in an uncertain future without regretting the downside.
As an experiment, I’m going to try to write a few shorter pieces like this over the next couple months. The idea is to publish more ideas that are percolating in my head and get feedback. And if they’re less than fully baked, contact with reality can help flesh them out. Let me know what you think!
And if you’re a founder who has some elements of paradox to your story or company, get in touch at pratyush [at] susaventures [dot] com.