Nivi: Let’s discuss how judgment applies to evaluating teams, product and market, traction, and social proof.
Every great founding team has a great technologist
Naval: This is the technology business; you want to invest in technology teams. Every great tech startup is highly likely to have a great technologist on its founding team. If they aren’t the most important member of the team, the technologist must be sufficiently compensated and motivated. Their name and accountability must be critical to the project.
If there’s no strong technical person on the founding team, either it’s not a technology business or the company has outsourced that function—which is not just a yellow flag; it’s a red flag. For example, I don’t consider Dollar Shave Club a technology business.
Of course, you can make money investing in non-technology businesses like Dollar Shave Club or Chipotle, but that’s not what we’re talking about here.
If you’re not building, you’re selling
Anyone on the founding team who’s not highly technical should be great at selling: to end users of the product; to investors while raising money; and to potential employees to recruit talent.
A community builder is another character that can be incredibly useful, though good ones are rare. They sell, too. Only, they’re good at mass sales instead of one-on-one sales. Like growth hackers, they’re a unique combination of building and selling.
Great community builders are high leverage, but they’re also extremely difficult to find. They’re probably the rarest thing right now. Everyone claims they’re good at community building, but you need to see the results.