Good founders

Paul Graham who co-founded Y Combinator (YC) together with his then girlfriend, now wife Jessica Livingston recently wrote a post about how Jessica’s involvement was crucial to Y Combinator’s success. I strongly encourage you read the whole piece.

The post carries many important takeaways. One is that although quiet people may not get that much public attention, they may actually be among the greatest contributors to the success of an organization. Another is the importance of women in creating a more considerate and cooperative professional environment.

However, the most important takeaway for me was regarding Jessica’s social radar. Jessica’s ability to identify people with bad character helped YC pick the good people who are most likely to build enduring successful companies. This is a key skill for startup investors. As Paul describes:

“As we later learned, it probably cost us little to reject people whose characters we had doubts about, because how good founders are and how well they do are not orthogonal. If bad founders succeed at all, they tend to sell early. The most successful founders are almost all good.”

Good people don’t succeed more often than bad people in all environments. My belief is that either can succeed in the short run, but that good people win out on a long enough time horizon. If this is true, the fact that startups are long journeys that require years of dedication to build and scale makes them an example of a specific context in which good people have a comparative advantage.