Back in 2023 I wrote about How We Do Tech Diligence at Seed. TLDR, the people matter far more than the tech. Effectively underwriting people at inception comes down to assessing a founder's self-awareness, leadership maturity, learning ability, and authentic motivation rather than just business metrics.
Doing this well is more art than science, but there’s 10 questions we consistently seek to answer (sometimes directly, sometimes indirectly) that help us understand the core of the person we’re backing.
While it might seem like we’re giving away all our secrets, the questions are only half of the equation. Judgement of a founder’s answers and the ability to (quickly) evaluate their authenticity is where the true alpha lies. Doing it well takes practice, experience, and a strong network.
Here’s the 10 questions:
1. What's your personal connection to this problem?
2. Tell me about a time you had to convince someone much more experienced than you that you were right.
3. How do you think about hiring people who are better than you at specific things?
4. What's something you believed strongly that you completely changed your mind on?
5. How do you handle it when things aren't working and you need to pivot quickly?
6. What would your previous teammates say is your biggest weakness as a leader?
7. Why are you the person to build this vs. someone with 20 years in the industry?
8. How do you know when you're wrong about something important?
9. What's the hardest conversation you've had to have with a co-founder or key employee?
10. If this company fails, what would be the reason, and how would you know it's time to shut down?