Top Israeli tech executives talk.
(photo credit: Courtesy)
I wholeheartedly believe that the founding team, and, most importantly, the lead founder, is the most important factor in every company. This is true not only for young, fragile startups, it is very much the case for big, mature companies as well. Moreover, the founding team is not only important for a limited period of time, it remains the most pivotal variable in the long run, years after the establishment of the company.
I am always intrigued by the founder’s role in industry leading hi-tech companies. Apple is a great example. Apple was founded by a brilliant entrepreneur, Steve Jobs, who some argue is the greatest that ever lived. The positive elements of his character are very clearly ingrained in the company’s products, culture and even its P&L reports. The company’s unparalleled capability to innovate and its undeterrable drive for perfection are a clear derivative of Jobs’ extreme personality. In the same way, Jobs’ less positive characteristics are also evident at Apple—the need for control over every minute detail and all aspects of product usage are a testament to those aspects of Jobs’ personality.
This phenomenon is not exclusive to Steve Jobs. It’s the same for Bill Gates and his unprecedented capability to create an ecosystem tailored towards his success. Same for Jeff Bezos with his boundless creativity as well as his eagerness to achieve operational perfection. The list goes on and on. The identities of founders and companies are virtually inseparable. Tell me who you are and I will tell you what kind of company you have, the way it operates, and its areas of strength and weakness. In other words, tell me what the founders’ DNA looks like and I can easily understand the DNA of your company.
Most investors, particularly those who invest at early stages, already understand this concept. Like me, they focus on the founding team as the most important element when it comes to their investment decision-making. As mentioned earlier, when you make the ultimate decision to invest, you have a pretty good idea of the DNA makeup of the company, just by examining the DNA of the founding team. Here are a couple basic examples for clarification—
a team of super smart techies with high IQ and limited EQ is a strong (almost trivial) indication that the company will likely develop a very complex technology but will be limited by their marketing deficiencies. A lead founder with a history of jumping from company to company is more inclined to start a venture eager to become the “next big thing”, sometimes abandoning a potentially successful business too early.
It’s not about finding (or being) the perfect founder because, of course, none of us are. It’s about understanding the pros and the cons from day one and having a good sense of potential future challenges. If you are an entrepreneur, it’s your job to shape your company’s destiny, but of equal importance is adding co-founders that can add the right characteristics to your DNA, people who compliment your strengths and excel in areas where you are less experienced. This changes the discussion from mapping your DNA to engineering it, shaping the DNA to fit your company’s needs. A great example is one of Glilot’s successful portfolio companies where two founders came from a strong consulting/service background. I liked this DNA because it indicated close interaction and in depth knowledge of the market as well as a tendency to better understand market needs. Still, I was initially worried about the potential downsides of this company’s DNA (mainly, the inability to create a viable product/IP that will create a lasting customer base for the company) and I suggested adding a third partner with a strong product background. They took my advice and the results have been overwhelmingly positive.
Israeli entrepreneurs in particular have a unique DNA. Most are alumni of elite military technology units and they all have that Israeli “Hutzpa”. They combine those attributes with advanced analytical skills that are used to solve complex challenges with simple, yet creative solutions and a fearless attitude where they allow nothing to hold them back. However, the Israeli DNA is not all positive. Many Israelis still run into the problems of last minute marketing and a tendency to try and cut corners among other things. Still, if you are familiar with the DNA and understand its potential issues, you will be able to control it in order to create great companies. Ultimately, the special Israeli DNA is what makes many entrepreneurs in this country so successful.
A company’s DNA is the most critical element in determining its success. Because DNA is primarily derived from the founding team, it is very difficult to change once it is established. I encourage investors to analyze company’s founders’ DNA in order to generate a clear understanding of the company’s future potential. More importantly, I encourage entrepreneurs to carefully build the best founding team in order to engineer your company’s DNA from day one, giving yourself the best chance for future success.
Kobi Sambourky is the Co-Founder & Managing Partner, Glilot Capital Partners
Glilot Capital Partners is a member of IATI (Israel Advanced Technology Industries).