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What Makes A Unicorn Founder? Not What Silicon Valley’s Conventional Wisdom Says.

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Venture capitalist Ali Tamaseb is working to do away with some classic tech founder tropes. The college dropout. The classic sales-minded and technical co-founder tandem. The visionary who creates a new market out of sheer will. Years of research — and 30,000 data points on today’s herd of billion-dollar companies across 65 criteria — has convinced Tamaseb they’re good stories, nothing more.

“A lot of our perception about what successful founders and companies look like comes from the more famous examples,” Tamaseb says. “People think success or failure looks like the five or 10 examples they have seen.”

For the past four years, Tamaseb has worked to test those assumptions through a new book, Super Founders. The results, he says, can hopefully dispel some myths about what to look for entrepreneurs, thus helping remove biases that keep only founders that look the part receiving venture capital millions.

A partner at DCVC, Tamaseb, who is of Iranian descent, moved to Silicon Valley to be an entrepreneur himself after attending university at Imperial College London. In 2018, having switched to venture capital, Tamaseb published a viral Medium post that detailed early results of his research on unicorn founders. That formed the backbone for the book project, highlights of which Tamaseb shared with subscribers to the Midas Touch newsletter over the weekend.

In addition to interviews and personal accounts from leading startup co-founders, the book added something critics called for after his initial findings went public, Tamaseb says: a control group. While every startup that raised VC and reached a billion-dollar valuation was eligible for inclusion in the unicorn data set, Tamaseb added a baseline of several hundred startups that didn’t reach that milestone as a random sample comparison point.

What Tamaseb found: the number of co-founders a company has and the age of its founders are not correlative to its likelihood of becoming a billion-dollar business eventually. Neither were non-technical co-founders pairing with technical partners the most popular combination, as Tamaseb’s research showed that non-technical and technical co-founders tended to pair off with partners of a similar background.

Other highlights of billion-dollar startup founders:

  • 85%: the percent of such companies that had competitors at launch.
  • 30%: the percent of founders who had worked in the same industry before.
  • 17%: the percent of unicorns over the past 15 years that outright failed.
  • 4%: the percent of college dropouts, less than the number of PhDs.
  • 1.6x: how much more likely a founder with a previous startup failure was to reach a $1 billion valuation compared to a first-timer.

While Tamaseb’s research demonstrated that repeat founders were more likely to reach unicorn status, he says investors who take away that they should only back serial entrepreneurs with big exits will miss the point. Building anything, even a side project or non-profit, correlates with later success, he says: “Practice makes perfect, even in entrepreneurship.”

As an investor himself, Tamaseb says the process has taught him not to let pattern-matching discourage him from a potentially exciting startup opportunity. “If a founder or team, or this idea, is exceptional on one axis, let me not let these biases come into the way of me backing an exceptional company,” he says.

Some of the data was less encouraging: when it came to venture funding, unicorns were likely to have raised lots of capital from big-name firms, fast. Unicorn companies tended to raise nearly twice as much as non-unicorns in their first round of funding ($4 million to $2.2 million) and more than triple their second round ($15 million to $4 million). And while 60% of unicorns had raised a seed or Series a from a “tier one” VC firm, only 18% of the random sample of startups had. “It shows how hard the job is as a venture investor if you don’t have the brand name of a Sequoia or Accel,” he says.

And Tamaseb says he didn’t track gender or race among founders after quickly realizing the data would be bleak enough to be counter-productive. He was still shaken by the lack of socio-economic diversity among unicorn founders as a group. “Your history, your family, a lot of these things are factors in what schools you go to, if you can fail forward, if you can start a company right after college, if you don’t have to care about paying back your student debt or can start a company right after your MBA,” he says. He plans to donate at least some of the proceeds of his book to causes promoting upward social mobility.

Overall, Tamaseb hopes his project will encourage entrepreneurs to “go out, build, repeat,” he says. As for investors: “these proxy rules that we think are correlated with success, let’s forget them.”

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