Going fishing

Conviction is a very important trait in a founder. A founder needs to fully believe in what they’re doing to have a chance at overcoming all of the roadblocks that they’re going to run into while trying to build their business. Otherwise, they’ll simply give up when things aren’t working. And when building a business, things aren’t working, or at least it seems like they’re not working, for long stretches of time.

The opposite of conviction is indecisiveness. If a founder is indecisive about what they’re doing, they won’t succeed. It’s therefore important for investors to discover whether a founder displays conviction or indecisiveness before investing.

One way to do this is to poke holes at the founder’s idea. Whether you really believe in these holes or not is less important. What matters is the founder’s reaction to the concerns you raise. Does the founder stick to their guns, or are they easily swayed? If they display the former, this doesn’t necessarily mean that you should back them. Their reasons for sticking to their guns must also be well researched and well thought out. However, if they display the latter, this very likely means you shouldn’t back them.

Indecisive founders enter investor discussions with the goal of raising money. When an investor pokes holes at their idea, they go fishing for adjacent ideas with the hope that an adjacent idea attracts the investor’s interest. Their goal isn’t to build a business that they believe people need, but to get funding. While being open to changing your ideas is a good trait, doing so in the course of a few minutes on an issue around which you should have thought about long enough to conclude that you can build a successful business to address the issue isn’t.

Founders with conviction enter investor discussions with the goal of finding the right partner. They’re fully convinced that their idea is the right one, and know that being turned down by an investor benefits them because it helps them avoid the wrong partner. Their idea is rock solid, so it’s the investor that needs to change, not the idea. This simply means moving on to the next investor.