Investable or employable: what kind of startup founder are you?

As a startup founder, would you consider yourself to be investable or employable? There’s a big difference in terms of being nice, consistency, passion and attitude.

After going through a few rounds of raising funds with numerous startups, I’ve come to realize that investors use two universal, yet unspoken, categorization of founders pitching to them: “investable” or “employable”.

The terms are quite self-explanatory and are antonyms of each other. That being said, it doesn’t mean that an investable founder will definitely get funded or that an employable founder cannot. I believe that the fundamental differences between these two are their characters and the different end results they get.

This is especially so when investors encounter a startup is in the twilight zone — where everything (i.e., traction, revenue model, target markets, etc.) is unknown yet intriguing. At this early stage of funding, investors can’t determine anything from the data, so they base their decision on the person who is doing the pitch. Here, the investors need to feel a connection before parting with their money to the founders.

The consistency of an employable founder

The “employable” founder is usually Mr. Nice Guy or Ms. Nice Lady — the kind of person you would love to have as an employee. This will be someone who will try to find a consensus with people in the most trying situations. Always saying the nice things, they are unlikely to burst out emotionally or physically by doing most things the slow and steady way. Like a blue chip stock, the “employable” does what he does with regularity – perform unremarkably but consistently.

“Employable” founders don’t lead investors to take a position on them. They would favour or agree to going through a hand-held process with a domineering investor or an incubator program. They agree that they do not know everything in the world and hence open to mentoring up for guidance.

Taking advice is a common theme in most meetings will get many people on their side, though not money. While performing consistently above average is a good to have, at the early stages, investors are looking out for potential. After all, their goal is to make money – so having mild positively results at the onset will not set the startup on the express lane.

An “employable” example would be Andrew Mason of Groupon. An all-round nice guy, Mason set out to create a social initiative platform, which was eventually stripped down to Groupon. While creating a steady growth and investment to create the group buying phenomenon, Mason was named “Worst CEO of the Year” by Herb Greenberg of CNBC, due to his “goofball antics, which can come off more like a big kid than company leader, almost make a mockery of corporate leadership.” At its height, Groupon was valued at US$1.35-billion before tanking miserably and Mason was fired. Even in getting ousted from his company, his farewell note was rather bittersweet than bitter.

Another for your consideration is Jerry Yang, the co-founder of Yahoo!. His was “Chief Yahoo!” at this new frontier of the Internet where he built a warm fuzzy culture around being nice. But his tenure as CEO seemed to be one of avoiding difficult decisions. Not making hard choices in terms of organizational structure or product direction, Yang too was removed from his own firm.

Investable founders: love ‘em or hate ‘em

On the other hand, “investable” founders create love or hate relationships with almost everyone. With an “all or nothing” attitude, there is little grey area with this group. The commonality here is passion. They care so much about everything they build – pouring in their heart and soul into creating the best product they can.

However, the drawback is that “investable” guys often care too much for perfection that they can’t hold back. They would rather kill the product than put something out into the open if it weren’t up to their high standards. Blowing up at developers, sales staff and even investors would not be too extreme. Also, unlikely to take advice due to a cocksure attitude, they are likely to be un-coachable and unemployable.

As “nice” is not in their lexicon, this leads to creating many difficult and from success to failure and at the final hour, the process starts all over again. Many early stage investors do not easily stomach this instability.

Through pivoting or starting a new startup, there is no way to stop these determined individuals. Riding to the anthem, Tubthumpin by Chumbawamba, “Investable” founders get knocked down but they get up again, no one will be able to keep them down. Like 500Startups “dying to win and daring to get beaten” attitude, there are investors who believe that the best entrepreneurs aren’t nice.

As long as they know what they are doing and deliver spectacular results (or die trying), investors will take a punt on them. These investors and angels will come in at the early stages, as they believe in the reason behind the founders’ madness.

Facebook CEO, Mark Zuckerberg or “The Zuck” comes to mind. Managing to be sued by the people who hired him to build their social network and also by his best friend for watering down his stake unfairly, Zuck doesn’t play nice. For him the ends definitely justified the means with 1-billion users and one of the biggest tech IPOs ever.

Elon Musk of PayPal, SpaceX and Tesla, is the epitome of the yo-yo syndrome of “investable” founders. Cashing out to approximately US$700 million from PayPal, he gets divorced to lost half his cash stash. Next, Musk puts the rest into SpaceX for space tourism and Tesla to develop electric sports cars. He goes on to get divorced another time. Now with little to lose, unlike his relationship, you can bank on him to send his business into orbit.

In truth, all the founders that were mentioned cashed out in the millions. Their approaches though different all yield the results that startups yearn for – to be successful. So as a startup founder, ask yourself: are you “investable” or “employable”?

---

This guest post by entrepreneur and Dropmyemail founder John Fearon originally appeared on e27, a Burn Media publishing partner.