1. Product Vision / Competency
2. Quality Recruiting and Team Building
3. Ability to Execute and Get Results.
4. Ability to Pitch and Raise Financing

1. Product Vision

Founding CEOs are responsible for product vision.  They are architects of products or services that don’t yet exist. In the beta stage of DL, I worked primarily with one designer to create all the pages in Photoshop and a wireframe program. Basically, I was a pixel pusher. “Pixel perfect” became my mantra. Then the founding team collaborated to create the product experience together. Along the way, the founding team contributed immensely to help mold the final product, but I still care about every pixel that goes into production.  All of our people in tech and design have heard me say our product needs to be pixel perfect! This obsession is the basis for refining our product.

2. Quality Recruiting and Team Building

I have met quite a few entrepreneurs who think they can do it by themselves. But having had some failed business partnerships over the past 10 years, I know that the most important thing is to build the right team from the start. You must have the right business partners! Building a great team isn’t just about credentials. There are intangibles that are difficult to identify but even so it’s critical to identify them.

3. Ability to Execute and Get Results

As a startup if you don’t get results quickly, raising money from investors can be difficult. The longer you have been executing, the more data investors have on your performance. By contrast, if you show a mixed bag of execution over a long timeframe, the investor may be doubtful. If you don’t perform well, investors will question your ability to execute, your level of commitment or both. Along these lines, it’s really important to continually update investors so they have the big picture. Is there a story behind a certain result in the numbers? The investors need to know.

4. Ability to Pitch and Raise Financing

Some entrepreneurs are gifted at communicating their vision and seemingly raise financing effortlessly without great vision, people or results. I wasn’t blessed with this gift, so I’ve had to prove #1,#2, and #3 in order to raise financing.  But in the grand scheme of things, the first three are more important for long term success and financing will be almost automatic if those conditions are met. I think Ben Silbermann of Pinterest falls into this category. Ben’s a great entrepreneur but many people declined the early opportunity to invest in Pinterest because the company had yet to hockey-stick. In my opinion Ben isn’t necessarily a showman. He’s more of a quiet, thoughtful guy. I think this affected his ability to fundraise early on. But eventually those tangible characteristics - #1, 2 and 3 – won the investors over.

By contrast, there are going to be companies that burn through investors’cash without ever creating substantial value. And there will always be investors willing to gamble on companies that lack fundamentals because some of them do succeed even with poor fundamentals early on.

As mentioned in #3 above, having bad results can turn investors off. But at the end of the day, people invest in the team and the story, not the data or the PowerPoint. So while bad data is never a good thing, investors know that the data can and will change. But regardless of the data, investors will never get behind a bad team because it’s possible to have good data in spite of having a bad team.