Naval: I use Warren Buffett’s three-part test for qualities you want in a partner: high energy, high intelligence and high integrity.
Startups are the Olympics of business
High energy is obvious. You have to work hard, because startups are the Olympics of business and you’re competing against the best in the world. To paraphrase “Glengarry Glen Ross”: first prize gets a Cadillac Eldorado; second prize gets a set of steak knives; and third place gets fired. If you’re going to win, you need people who put in everything.
There’s a meme on Twitter that you should work 9 to 5 all the time, and that’s work-life balance. That’s fine; not everybody should kill themselves at work. But then I’d argue that you shouldn’t be an Olympic athlete or a founder of a winner-take-all technology startup.
If you’re doing a startup, you and the rest of the core team will have to work your tails off.
Be a snob about intelligence
High intelligence is important, because you need good decision-makers. Intelligence isn’t just about broad judgment; it’s also about moment-to-moment judgment.
If you invest in people who aren’t of the same intellectual caliber as you, then you’re essentially investing down, talking down and thinking down. You’re picking the wrong people.
Integrity gets tested when the stakes are high
High integrity is critical. If you don’t have that, you end up with a smart and hardworking crook who can easily cheat you—and there’s so many ways to get cheated in this business.
Integrity takes a long time to figure out. It’s hard to assess someone’s integrity if you haven’t worked with them for a long time, which will be the case with most founders. You can observe how they treat people around them, including prospective investors
, co-founders and employees. Someone who self-deals with others eventually will cross you.
Founders don’t necessarily need to be nice people. Niceness is a signal that’s easily faked. It’s not enough of a filter. Technical people tend to know that, so they don’t overemphasize niceness. It may be important to you, because you’ve decided it’s more enjoyable to work with someone who’s nice. But there are plenty of successful business people who are not nice.
Seek integrity over niceness. Integrity means living up to an internal moral code of ethics. It’s being reliable and honest. Niceness often is just politeness or someone sending off signals that they have integrity when the stakes are low. Integrity gets tested when the stakes are high.