"Why Founders Fall"
Welcome to Nathan’s Newsletter by me, Nathan Killebrew. All things investing
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Founders are great minds with staggeringly innovative ideas. These are some of the bravest individuals who can bear a lot of risks. The profile of a founder is charismatic, driven, charming, and has the attitude of a true competitor. That sounds like quite a phenomenal person. People tell them that they are a winner. They refuse to lose and have a feel for the business.
Maybe that is the problem, founders are so highly thought of that they do not feel burdened to test their hypothesis. They go away from fundamentals. They assume they have the vision, the drive, the sheer will to push this idea forward. They quickly start drinking their own Kool-aid. They have an outstanding hypothesis that could easily be tested, but they just assume because they can see it everyone can. For example, a company does not want to test for product-market fit on a scale where you can gather much data. The founder also rejects the question: “why haven’t your competitors thought of this?” The founder found that crazy. They don’t register the potential that this idea may, in fact, suck or that someone else could have already thought of this.
I like the founders that can be coached, that want to test their vision, and that takes calculated risks. Let’s not assume anything in business. Let’s gather the best data possible that can give us an idea of how this product works in the market. I want to know those things. Most of the time, the founders make a problem in the market that is not there. However, by gathering this data they are likely to find the inefficiency in the market and can determine a likely path to exploit it.
Founder’s greatest asset can also be their biggest flaw. They have all those skills of a star athlete and a rockstar salesman. However, founders have to understand that the market ultimately makes the decision not them. The greatest founders have all those creative innovative characteristics, but they also recognize the need to test their own hypotheses and gather solid data about their user x.
In the meantime, tell your friends!