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Venture capitalists back entrepreneurs who work hard to build meaningful organisations. They contemplate them execute on a single mission, support each one of them in their own way by leveraging as much as possible what they know, observe, and learn from their comfortable position of having many chips in different pots.
Don’t mind me saying that I have the best job in the world, especially with a single investor, Xavier Niel, who enjoys taking risk, has the means to undertake them, and more importantly in my position, trust the people he works with. I often reflect with humility on how incredibly lucky I am to be in that position, what it means in terms of responsibility towards the founders we back, and how I can try to win the race of backing the best French founders in the tech world.
Every time I take this step back, I remember that my job is to be right against an early consensus full of doubts and concerns by building a very strong conviction under high uncertainty. And the only way to actually do that consistently and accurately is to detect and project as vectors of success or failure the faintest signals we observe from the founders we interview.
My ability to very quickly (few minutes only) detect signals within a situation comes from my introverted nature. When I was 8, during class, a good friend of mine at the time, Quentin, announced that his parents were getting divorced. My immediate response wasn’t that I was sorry for him, but a more defensible reaction: “My parents love each others so much, they will never divorce !”
Few weeks after, the news broke out. My sister was not even one year old, we were seating with my brother on the floor, in their bedroom, at the bed end, my mother was announcing us that they were splitting up. My strongest conviction at the time had just collapsed. How could I have miss the signals of their upcoming breakup!?
I don’t know if this event was a catalyst or an amplifier, but I do remember that from this moment on, I became more of an observer than an active participant in conversations and get together.
I came to realise over time that this posture had become a powerful skill, even instrumental in my ability to decide in a short period of time whether or not to invest in a team, through a limited set of data and history, but also to develop genuine, honest relationships with people.
My introverted nature allowed me to nurture my ability to detect quickly the faintest signals and to extrapolate them as vectors of future enablers or blockers towards success or failure.
When we talk about signals, there are some easy ones, linked to the language, to the behaviour, to the execution:
All we need is 150k to hire a developer so we can develop a more robust version of the product… All we need is to develop this feature, all we need is to start selling, all we need is one percent of the market… “All we need” is always a clear red flag, it demonstrates the short-sighted approach of an entrepreneur, his inability to work around a problem, the fixed boundaries of his thinking, his prospective idealistic view of certain things…
How much time does it take for a founder to get back to an investor with a piece of information that was discussed during a meeting ? Short & Thorough: incredible signal / Long & Fuzzy: red flag…
Sometimes, it just takes a simple observation…
One day, an entrepreneur came to the office with her co-founder. She sat, straight, on the sofa, determined, focused. He sat, with a slightly nonchalant attitude, relaxed, very sure of himself. In less than a minute, I knew they would split up. They did… 6 months later.
A couple of weeks ago, I met with a founder who looked a bit susceptible. It was the slight aggressivity with which he was approaching some of my questions that puzzled me. I decided to test whether it was grit or misplaced feelings. I told him bluntly: It looks like there is a weakness in the way you execute but I am struggling to figure out what exactly, what do you think? He shook for a micro-second, the ton of his voice changed, his answer lacked self-awareness and reflection. He was obviously offended. Well… When you’re a founder, you’ll get mad, offended, disappointed a lot. Better deal with it.
An entrepreneur who is able to learn fast while protecting their singularities is always a no brainer to fund. I remember, back in May 2015, we were reviewing the very first pitch deck of Payfit. The practice of reviewing a deck is tricky because it requires to merge the best practices of building a deck with the singularities of a team and a company. That’s why most decks are simplified, in order to avoid a Frankenstein effect and therefore disappointment. Anyway, that day, I quickly explained to Firmin, the CEO, how to articulate his deck. The next day, he came back with a revised version that was a perfect combination of our previous discussion and his own views/learnings regarding what to present and how. It was brilliant. That day I knew they had to be funded. It was my first deal at Kima Ventures when I arrived in September 2015. (One day I will share both decks)
The short memo I sent to Xavier for validation in September 2015…
The discreet signals are the ones I prefer. They seem undetectable at first, but when you point them out, they become so obvious.
The first example is an easy one… A founder who leans towards you when they are pitching with a certain tone of voice, in a clear attempt to seduce you rather than to convince you. Those individuals get stuck in their own ideas of the world and are way too concerned about the impression they’re trying to make.
The crazy eyes. Some founders, in the way they look at people, clearly demonstrates their vicious needs of domination and control. I warned two times co-founders about the foreseeable conflicts between them and their co-founders. It always took more than a year, but eventually it ended up pretty badly, as I had unfortunately predicted it.
An example that is hard to miss if you actually watch closely the one who is not speaking, it’s when a co-founder has a slight smirk of disappointment when the other is speaking, then you know it’s not going to last, especially at the beginning of a venture.
To finish on a joyful note, days after we had committed to invest in Impala, we flew to the west coast with Ben, the CEO. Between two meetings, while we had just 15 minutes to spare, he was on LinkedIn searching & contacting new talents to hire. Those are the behaviours that speak for themselves !
Of course, all those examples are mere samples of the many observations we can make, but they all demonstrate that in just few minutes we can detect valuable signals and extrapolate them. They can be misleading, invisible, wrong sometimes, yet they remain my sole explanation about predictability over uncertainty, and I like to believe that they serve us greatly at Kima Ventures :)