As investors, we are always careful to evaluate each opportunity by its own merits. Every company is different, with different opportunities, points of differentiation, and team strengths and weaknesses. That said, we definitely do look for and see patterns as investors. And for as long as we’ve been in this business, the patterns have become more and more clear to us.
Every experienced investor has common things he or she looks for in a great opportunity. The top criteria seem to consistently be the three Ts: traction, team, and technology. In addition to these three, I have begun to hear more frequent conversations regarding specific attributes of founders that are the most compelling to investors. Increasingly, a word that I hear being thrown around is grit.
At an instinctual level, we probably all know what we think grit means: the willingness and ability to stick it out through good times and bad; to fight through the inevitable setbacks and near-death experiences that come with being a founder. As it turns out, that’s only part of the story.
The United States Military Academy at West Point is a notoriously tough place to be a successful student. By the time a person is admitted to West Point, he or she has arguably already “made it.” The selection criteria are very rigorous, including not only academic performance but also leadership capability and a very, very difficult physical fitness assessment. Most West Point cadets were competitive athletes if not team captains in their high school sports. The best of the best are admitted to West Point. They’ve prepared for at least 2 years to be successfully admitted. Yet, one in five entering cadets don’t make it to graduation. Failure to graduate can be a common problem in public higher education. But at West Point? Why?
As it turns out, a substantial fraction of the cadets that drop out of West Point do so in their first summer during a very intensive seven-week training program called Beast Barracks, or just Beast for short. Beast is the ultimate sorting mechanism, including a very intensive and structured physical and mental training schedule, very little sleep, and no days off. It is designed to prepare cadets for the challenging life they will lead throughout the balance of their time at West Point and in their future military careers. That this experience is a sorting mechanism perhaps shouldn’t be completely surprising. The more important question is this: why do cadets that are so successful, so accomplished, and so advanced compared to their peers drop out less than two months into their program?
In selecting candidates for West Point, the admissions staff generate a proprietary composite score for each applicant called the Whole Candidate Score. The Whole Candidate Score takes into account admissions test scores, high school rank, an expert appraisal of leadership potential, and a set of objective measures of physical fitness and capability. The Whole Candidate Score is the single most important factor in driving admissions decisions. You would think that drop outs during Beast might be cadets in the lower ranks for Whole Candidate Scores. You would be wrong. No correlation.
Angela Duckworth, a professor at the University of Pennsylvania, began to develop an interest in this problem.* She collaborated with leadership at West Point to begin to research the true root causes of dropping out. She started with interviews. Those interviews led to sufficient insights to develop a survey mechanism that ended up with two major sets of questions. The first set centered on perseverance – the “never give up” attitude that we so admire in successful people. The second set of questions related to passion, seeking to determine how much people’s interests changed from year to year in addition to assessing obsessive tendencies and whether those “obsessions” were durable over the long term or whether they tended to be transitory. Out of these questions, Duckworth developed what became the Grit Scale. She administered the instrument to an incoming class of cadets at West Point, right as they were starting Beast. She then watched who dropped out and looked for correlation to the Grit Scale scores. The result? Almost perfect predictive capability. Interestingly, Grit Scale scores bore almost no relationship to Whole Candidate Scores. Whole Candidate Scores are very accurate in predicting talent, but there is essentially no relationship between talent and grit.
So what is grit? Simply stated, it’s the magic combination of perseverance and passion. Perseverance is what we all intuitively think is synonymous with grit – fighting through the hardest of hard times in order to see success. But perseverance doesn’t explain why people persevere. Some of it is wiring, to be sure. But more importantly, the “why” comes from a deep, passionate caring for the thing one is trying to accomplish. At West Point, how this manifested itself is simple. Those that made it through Beast simply wanted to be soldiers so badly, so passionately, that they were willing to do anything to become one. Stated another way, passion was the enabler of the perseverance. Without the passion, it’s all too easy to take one’s “assets” in perseverance and apply them to some other problem.
How does this relate to entrepreneurship? Great founders have perseverance. Tough times do tend to separate the sheep from the goats, and some of our most successful companies are those where the founders had to persevere through existential threats, in some cases surviving through times when the company was within days – or even hours – of full shut down. That said, perseverance is table stakes for starting a company. What we look for and invest in are founders that have a deep, abiding passion for the problem they are solving. We are talking about a passion that borders on (or is) obsession. They live, breath, eat and sleep solving this problem.
And, most importantly, that passion is not going to die out in three or four years. For passion to be at the level that can be considered part of “grit,” it has to be at a level that is important enough for a person to dedicate a substantial portion (if not all) of their professional life to solving. We’ve seen this many times. A great founder will tackle a piece of a problem in one company, only to exit and tackle another piece of it with a new angle and solution, seeing new successes and new opportunities. They become experts in the truest sense of the word, not only because of experience, but because they care about what they are doing more than almost anyone else.
* Duckworth’s research on grit was recently published in a book called Grit: The Power of Passion and Perseverance. It’s a great read. I highly recommend it.