Most of our investments are in companies with traction. We’ve invested in a handful of companies at the product stage, and an exceptional few pre-product.

For those companies where we’ve invested at the product stage, and to a somewhat lesser extent those companies where we’ve invested based on traction, the product is one of the most important factors in our decision. I place it right up there together with the identity of the founders, the company’s approach to its target market, and, if it exists, demonstrated traction.

The reason why a company’s product is so important is because it gives me a glimpse of how founders think and their ability to execute. For example, is the product intuitive to use, does it have a clean design, does it have any bugs, can I find all that I’m looking for, does it overwhelm me with features, or does it surprise me with elegant solutions to problems that I hadn’t even thought about? Most importantly, how does using the product make me feel?

The company’s product is the output of the thousands of theoretical decisions that founders and their teams make together, and the team’s ability and motivation to execute on these decisions in practice. As such, it reflects the team’s intelligence, common sense, work ethic, ownership, and cohesion.

This doesn’t mean that a startup with a sub-par product at a specific moment in time can’t be worthy of investment. Products are continuous iterations and as long as teams see their product in this way, they’ll be able to build better versions in the future. There’s a big difference between a company with a sub-par product 3 months after it has been founded and one with the same product 3 years in.

In addition, there are many examples of very successful companies which have what I believe are sub-par products. One person’s view of a product can be very different from that of the majority, and sometimes a product fills such an important market need that it can succeed even if most people agree that it’s sub-par.

However, despite these caveats, a product tells you a lot about the startup behind it. Understanding why a product is the way it is lets you get into the minds of the founders and their team, and develop a view on their combined ability to turn their ideas into reality. As such, it’s a very important factor for investment decisions.