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Naval Ravikant left Dartmouth College for Silicon Valley and after helping a few start-ups succeed found his passion -- connecting investors and entrepreneurs. A key Ravikant insight -- personality is destiny when it comes to start-up success.
As he explained in a January 30th interview, Ravikant earned degrees in computer science and economics at Dartmouth before arriving in Silicon Valley in 1996. He was an early employee at internet service provider, @Home, helped Intrinsic Graphics which became Google (GOOG) Earth, and started Epinions.com, that went public in 2003 "via Shopping.com." In 2005, he started Vast.com -- a classified advertisement marketplace.
After a brief and unsatisfactory stint in a venture capital firm, he raised an angel investor fund that provided capital to some very luminous companies -- including Twitter, FourSquare, and SnapLogic.
While Ravikant enjoyed investing in start-ups, he found the process of meeting with potential investments to be inefficient. He often found that in the first five minutes of meeting an entrepreneur, he had decided that he had no interest in investing in the start-up.
However, to be polite, he had to sit through at least another 55 minutes.
In late 2009, Ravikant founded AngelList to connect founders and entrepreneurs more efficiently. And his progress has been considerable -- AngelList has 25,000 start-ups, "estimates that hundreds have been funded" via the site, and it has accepted 3,300 participating investors.
During those first five minutes Ravikant makes snap judgments based on questions such as:
- How smart is this entrepreneur?
- How committed is she to making the venture a success?
- How good is the start-up's team?
- How much mastery does she have for the market?
- Is she passionate about the start-ups business opportunity?
- Does she have integrity?
- Is she hard-working?
If an entrepreneur can pass these tests -- the last two require significant due diligence -- Ravikant digs into the details of the start-up's capitalization table and conducts reference checks of the entrepreneur and the team.
If an entrepreneur says one or two things that strike Ravikant as false or not bright, he loses interest. And if the entrepreneur has not accomplished great things in the past, her future does not bode well either.
In looking back on the investments that failed, Ravikant often sees what he calls "failure mode." This includes missing the market -- being right about an opportunity but wrong about the timing of when it will develop; doing too much or too little -- e.g., focusing on a feature of a feature instead of an entirely new product; and a dispute among co-founders.
When it comes to what makes a start-up successful, Ravikant thinks that it's important for there to be a good fit between the founder's personality and the skills required to be successful in the start-up's market. Craig Newmark, a very patient and detail-oriented person, was an excellent fit with the requirements of building up Craigslist slowly over time.
By contrast, Zynga (ZNGA) CEO, Mark Pincus is a very aggressive person in Ravikant's view. Before founding Zynga, Pincus tried to compete with Craigslist but he did not have the patience of Newmark, and Tribe.net failed.
By contrast, Pincus's success in social gaming is a direct result of his aggressive nature -- a trait that helped him wipe out all the competition in this highly fragmented industry to take over the top spot in the industry.
Ravikant reveals a critical insight for start-up CEOs and the people who invest in them -- success and failure hinges heavily on getting an objective assessment of the real strengths and weaknesses of a founder and how well that personality fits with the skills needed to grow the venture.
And Ravikant is a good example of this principle -- AngelList's success flows from his passion for connecting investors with entrepreneurs.
