Venture Psychology
Assessing people and execution over ideas and markets
TLDR: Early-stage investing isn’t about betting on a business—it’s about betting on a founder.
Early-Stage Venture is About Evaluating People, Not Just Companies
At the earliest stages of a startup, most investors look at the business: market size, product, competitive advantage, and traction. And while those things matter, they are not the most important factor in an inception-stage investment.
What matters most is the founder.
Because the business will change. The product will evolve. The market will shift. And what determines whether a company makes it through those transitions is the person running it.
At this stage, we are not investing in a well-oiled machine. We’re investing in a person or a small team that may not yet have proof of execution.
The challenge is figuring out whether that person is the one who can actually build a billion-dollar company.
Paul Graham, co-founder of Y Combinator:
"The most important thing to look for in a founder is determination. If you imagine them trying to get their startup going and obstacles keep appearing in their path, do they drive through them and keep going? Or do they give up?"
The best founders don’t stop. They are relentless, unemotional about their own ideas, and willing to do whatever it takes to succeed.
Just listen to Mr. Beast, the legendary 26 year-old YouTuber—who is reportedly now a billionaire—describe his approach:
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What We’re Actually Looking For in a Founder
Most founders think they know how to talk about their business. They know the market size, the customer problem, and the basic story of why their company should exist.
Maybe that’s needed to apply to an accelerator, but that’s not what we’re testing for at inception.
In fact, most of those founders sound pretty naïve describing their business in the early days. They struggle to be succinct, they overcomplicate the story, the work, and the product, and most are quite delusional about how easy (or hard) it will be.
Instead, here’s what I’m after:
1. Will This Founder Outwork Everyone?
Steve Jobs once said:
"I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance."
A startup is not a part-time job. It’s not a 40-hour-per-week job. It’s not even a 60-hour job. It’s an all-consuming obsession.
This may all seem basic, but these are just the first layers of the onion that need to be peeled back when assessing a founders actual psychology and commitment.
One sign of obsession you can look for is whether or not the founder pays attention to details.
You might’ve heard that Mercor recently raised $100m at a $2B valuation, and Harry Stebbings even reported on their “9-9-6” culture, 9am to 9pm 6 days a week.
When he asked the founder about it, his response was essentially that the team loves the work so much that they just can’t wait until Monday to make progress. They had to put some guardrails in place to take a break.
Think about that for a second. When I said 9-9-6, you probably thought something like, ‘wow that’s intense.’ But the way the founder sees it, is that the team needs to be forced to take a break on Sunday.
It’s not the hours and schedule that matters, it’s the framing the founder provides that tells you how their and culture brain works.
Here’s another example, look at their website—do you see what I see?
“Mercor rasies $100m to find your next job.”
Startups always put these little banners, but most of them talk about the firm that led the round or the valuation, or some other fancy metric — in this case it could have been that Mercor got to >$70m in ARR in 2 years — faster than any company in history.
But no. Instead, Mercor raises $100m to “find YOUR next job.”
They are talking to their customers—not to the media, not to other VC’s—to you.
There is a person on that team who, as they were coding in the banner, turned around to the team—or maybe on their own as a byproduct of culture—and said you know what, this banner should be about our customers, not about us.
That is the kind of attention to detail so many people miss as founders, and as a VC, you need to pick up on the seemingly tiniest elements, because how a founder makes any decision is how a founder makes every decision.
There is no doubt in my mind that Mercor’s culture is to build a customer-obsessed business, which is one thing that almost always begets durability.
2. Will This Founder Refuse to Quit?
Building a startup is a long, painful, high-stakes game.
Brian Chesky, co-founder of Airbnb, famously described the early days of the company:
"We started by selling cereal just to keep the company alive. We couldn’t raise money, we maxed out our credit cards, and we were eating ramen every night. But we refused to give up. The only way to fail is if you stop."
The difference between success and failure in a startup isn’t external factors. It’s whether the founder has an unshakable commitment to keep going.
Ask any founder you want—they all have stories about times when they could have, or arguably should have, given up.
Reasonable people let doubt creep in. They let it create entropy and destroy their personal psyche, fortitude, and ambition.
Resilient founders let their ego and their imposter syndrome battle it out. They outwork their imposter syndrome to deliver on their ego—working insanely hard to realize their core belief that they are destined for more.
You have to find ways to understand whether or not a founder has this mentality. If they deeply believe that they are capable of something great in this life, and if they will approach it with the truest form of the “failure is not an option” mindset.
3. Will This Founder Do Whatever It Takes?
Stripe co-founder Patrick Collison once said:
"The most successful entrepreneurs I know are extremely adaptable. They are obsessive about outcomes but flexible about how they get there."
Some founders get emotionally attached to their vision and refuse to adapt. The best founders see their company as a mission, not a personal project.
If a founder is more attached to their original idea than they are to success, they will fail.
Brian Armstrong, the founder of Coinbase says, “action creates information.”
At LinkedIn, we called this the system & sub-system thinking.
At Antler, we call it having a first principles approach to building.
The best founders are not emotional about decisions. They only care about making the company work. The system. They take action to create information, and they react to that information objectively in order to make progress, regardless of their own emotion.
Perhaps this section should be the test of the stoic.
The ultimate question to the founder is, are you willing to send your baby down the river if you need to? Are you willing to give up what you love most right now, in order to save it later?
Founder Psychology is the Core of Early-Stage Investing
You might see where I’m going with this one. When true inception stage investors evaluate founders, we aren’t just assessing their industry knowledge or product vision. We are assessing their psychology.
You have to design your systems and process to deeply understand the human being behind the company. You have to ask questions, not to understand their answers, but to learn from the entirety of their output.
You have to look beyond the words, and peer into the details. The emotions. The actions.
Sometimes, every once in a while, you meet a person and it all clicks. You see every ounce of potential they have. A beautiful mix of insanity and intellect. A magical combination of intuition and intensity.
And when you find them before there’s anything to back, you back them. That’s when you get the best price. That’s when you have the most upside. That’s when you are rewarded for the risk—and the funny part is, that’s also when the risk is the lowest. Your judgement isn’t clouded by metrics and misunderstood competition, and your price isn’t inflated due to hype. It’s just you, the founder, and the ground truth of who they are as a human being.
At inception, you have to back the people, not the product.
See you Monday.
Thank you for this article. It was right on time. As a founder this part particularly resonated with me.:
"Resilient founders let their ego and their imposter syndrome battle it out. They outwork their imposter syndrome to deliver on their ego—working insanely hard to realize their core belief that they are destined for more."
Cheers to the battle.