Hear from Annie Luu, Global VP, Fingerprint for Success (F4S) as we learn about the top strengths and blindspots of successful and unsuccessful startups based on 20 years of evidence based research, and how Tech companies like Canva use the data to grow from a $3M company to $40B. Learn directly how you can benefit from this data either as a startup founder or an Angel investor.
Check out the session in this video!
Transcript of Webinar
0:03
Teck Moh: Excited to be able to host this session. We have Annie with us today. Annie is a Global VP for strategic partnership at Fingerprint for Success (F4S) which uses analytics tool to figure out high-performance individuals and teams in a startup environment.
She has got tremendous experience in this space for many years in Investible, which started in Australia and is now a global fund. They have invested in more than 90 companies. And one of the success stories they have done is Canva, which is already a unicorn.
I’m going to start off with two polls. Let’s start with the first poll. Guess what founder traits are correlated to venture success? There are a number of choices. You can choose one: big picture thinking, financial metrics, trusting their gut in making decisions, enjoying power and control, or high initiators.
As we know, the founders are a huge part of our evaluation of the startups we should invest in. This is the outcome of the poll, about a third said that it is big picture thinking, one third said high initiator and close to a third chose founders who trust their own gut making decisions. Let’s go to the second poll.
2:51
Teck Moh: Guess which traits are correlated to venture failure? Are the founders too focused on details, planning, rules, foreign procedures, or external stakeholders and research?
It seems that close to a majority chose the founders who are too focused on following procedures. And the other bigger one is on founders who are too focused on rules.
Let’s have Annie talk about what she learned from the analytics tool and how she uses it for due diligence. We’re going to start off by having Annie share her learning experience, and then we will have a fireside chat. Alright. Annie, over to you.
4:18
Annie: Thanks, Teck Moh. Firstly, I will run through a short presentation to reveal the answers to those first two polls. Very interesting what everyone’s just chosen. This is a topic that I’m very passionate about, data for success, and some may even say I’m a bit obsessed with it. So, I’m very happy to be with you and share some of my learnings as an early-stage investor for the last 10 years on learning the key founder qualities that will help de-risk your investment.
A bit of background about me. 10 years ago, I met two of the most successful early-stage investors in Australia. In fact, to everyone, known as a super angel, Trevor Folsom. Together we started an angel investor club called Investible. At the back of the investor club, we then started an early-stage fund, which they have also now raised a second fund on climate tech businesses now in the angel club. I, then came to Singapore six years ago, investing across the region and looking after the deal flow across Southeast Asia. So, some of you I have already met, during my time travelling across Asia trying to invest in early-stage startups.
I’ve personally run 22 accelerator programs myself, 300 different types of pitch competitions and events, and trained thousands of startups. One of the investment tools or due diligence process was using data, we had 16 different data points we were collecting on every single early-stage investment that we had. Fingerprint for Success, this due diligence tool that I was using, I got to profile all the people in my accelerator programs. While I got to profile all of our early-stage, investment portfolio, everything from starting to exiting.
My background is actually an engineer, so I was very sceptical of any tool. And it wasn’t until probably the sixth program, that I was running these accelerator programs. These were 3 to 12 months of incubation acceleration programs. So I got to watch not what you say you do, I actually got to watch what did you do in these startups. And so it’s been really interesting and fascinating to me on behaviours, these traits.
So, as we know, some of the global statistics are that 97% of startups will fail. 70% of those will fail in the first 20 months. And I’ve been very lucky in the last 10 years, I was able to see the tool and the data. The top three reasons why a lot of founders are very passionate about creating but creating a product at a time when the market doesn’t need it. That’s the number one reason why it failed. The second one is they either run out of cash or failed to raise the funds. Lastly, the third one is not having the right team.
7:39
Annie: A bit of history and background on the CEO and founder of this tool. The two co-founders that I worked with, she was their coach. She coached them back in 1998 and they exited in 2008. And that’s the reason they retired as founders and they’ve been early-stage investing for the last 15 years. She also sat on their board.
So Michelle Duvall is one of the world’s first early coaches back in the late 90s. She’s personally coached thousands and thousands of entrepreneurs, CEOs, leaders, writers, producers, athletes, you name it locally and internationally. In fact, she has coached many companies to multi-billion dollar IPOs from around the world. I’ve been working directly with her in Investible programs.
At Investible, we were her first angel investors, when she completed the 15-year research, which has now turned into a 20-year research where you said you need to capitalize on this research and turn it into a platform, which is what it is now today. This was launched at the back of her research in 2016. Making the analytics and the research accessible and affordable for everyone. So if you’re an investor, you should jump in and profile your portfolio in this.
There are three key engines to this platform. The first one is the analytics engine that looks at what motivates the person. When they go to work, where does their natural attention go to? Is it people? Is it tools? Is it money? Is it systems? It gives you some insights into where do you like to focus your energy.
The second engine is the benchmarking engine where we go out and study high performing teams. That’s my role right now. I joined the company two years ago, I retired from investment as I found that wasn’t my top passion. My top passion was helping founders grow and scale. That was the bit that I love. All the due diligence, all the investment committee meetings and all the different reporting and MAS reporting, I actually did not like, so I retired from Investable and joined one of the portfolio companies helping people helping leaders and founders basically grow and scale. I now laid out all of the strategic research and partnerships inside the tool. I build a lot more utility. As every single founder grows and scales, every single role that you’re going to hire, I’m actually going to study, continuing my data research patterns.
The last engine inside this platform is, it doesn’t matter based on the benchmark report card, and what it tells you, when you have the awareness, you can get coached. We have a built-in AI Artificial Intelligence coach doing exactly what Michelle did for over 25 years, and also a platform of global human coaches.
Users now come from 195 countries and we have helped everything from accelerated programs, we are currently helping more than 90 accelerator programs from around the world. Everything from a startup to an enterprise customer inside the platform.
The first investors of the platform were the founder of Zappos and I’m going to talk through a bit of a case study, which is the co-founders of Canva, an Australian tech company that we’ve been coaching since 2017, have come back and all three founders are now lead investors for us, because they’ve seen the power of the tool, ex-founder of Google Maps, and obviously Investible who had Michelle as a coach, and also the ex-Prime Minister of Australia.
11:57
Annie: It has been great to have a portfolio company and be on their journey. They started using F4S, in 2017. Being on a journey to grow them from a 3 million company to a 40 billion, to exponentially help their people strategy, help every single person level up. We have seen phenomenal results year on year being able to hit their valuation targets. We are also very instrumental in their onboarding teaming leadership. We have developed their own internal coaching program. So they have won multiple awards, launched their own foundation, and also winning a great place to work in terms of culture.
Now, I’m going to talk in this session mainly about the research and how I’ve used the research. I accidentally became an expert at the tool because I was profiling so many founders. So the key thing inside this tool is we have a built-in benchmark. Inside the benchmark, we studied over 20 years, the most successful companies that started and exited between 6 million and 1.2 billion within five years. We studied and scaled more mature stage businesses that were profitable over a 10 to 15 year plus period. Inside the tool, there’s a startup benchmark and a scale-up benchmark. It’s been very useful as early-stage founder to see inside that startup benchmark. So the first evidence-based approach to the study that Michelle studied over 15 years, founders who all the different correlations related to venture failure and all the correlations related to venture success. She completed and published that white paper research.
The second study was studying a combination of startups and scale-ups across 55 cities. Now the wonderful thing about the second study was it validated the first study. Which was I’m going to reveal to you 10 critical things that are key to the founder’s qualities in that early-stage startup. So the second study also validated the 10 key things and what it validated was, it did not matter if you are a founder across the 55 cities, whether you’re in Singapore, Shanghai, Sydney, Berlin, or New York, those 10 key qualities were the same. That was very exciting to validate that in a global study.
In this session, I’m going to reveal the key findings of this research and how I’ve been using it as an early-stage investor. The research is a 15-year correlative study, we have not published the study. We have also done another study in the last five years and two-year quantitative study. It was peer-reviewed by two different universities on all of the data that we were able to collect across all of these entrepreneurs that were studied. Now, the study looked at the number of founders in the company, the number of investment exits, investment events, number of successful exits, the exit side, number of failures and profitability.
15:35
Annie: So what it measures or what it first measures, is not a personality tool, or a psychometric test. We hate anything around personalities, we hate anything around labels, because we feel like when you label something, it limits your understanding and your ability. I’m like I’m an introvert or extrovert, I’m a people person. No, we’re ’50 Shades of Grey’, there are lots of degrees of how we approach things.
And so what we’re measuring is what we call attitudes and motivations. What do we mean by that? Coming back to when we talk about what gives you energy at work. When you’re naturally at work, where does your attention go to?
As an investor, every time you’re meeting a founder, or when we are about to invest in a company, what is the number one question that you ask? Do you ask about the financial model? Do you ask about how did your co-founders meet? Do you ask about what’s the big picture? What’s your exit strategy? That immediately tells us your natural filter for things, what’s your natural preference and focus.
That’s what we measure, we look at the platforms represented in different size bubbles. It’s very simple. The bigger the bubble, the bigger your natural motivation for that area. Through this tool, we are able to understand how founders prioritize and make decisions. We are able to see what is the dynamics of that co-founding team and we encourage founders to also profile their investment board, their board members, and mentors. This way, you get a full picture of the strengths, the big strengths in the team, and how to leverage each other’s strengths.
So this is what the platform looks like. You can put any founding team, whether it is three or ten people, and it will immediately tell you, based on this group of people, what are their top motivations? What is the culture? What are the top things they like to focus on? On the right hand side, it also will immediately tell you, what are the top blind spots based on the 20-year study that we’ve done. Then here in the benchmark report, it’s able to easily show you in three categories, what we call the green zone, orange zone, and red zone.
Green zone, meaning your motivation is aligned to the 20-year study. Orange zone, it is just on the shoulder of the ideal range. And red zone is, hey, this could be a big blind spot, in terms of your investment risks. So after studying thousands of entrepreneurs and business leaders, this is the reveal. So this is the research, this is the most critical part of the research for all of you investors.
The poll questions on which quality is correlated to venture success, all five are correlated. So for those I notice, 7% said money. In fact, money, the financial metrics is the most important one. You will see, successful entrepreneurs at early-stage investments are 43%, higher focused on financial metrics than the working population. The next one is they are very high and initiation. They start things, follow through on things. They are able to think on their feet. They also trust their gut feeling when they make decisions. So they are not waiting for someone to validate it. They really trust and believe what they do. They’re also high on personal power so that they have control over what they do. And they feel like they have control over what they do. And the last one is big picture thinking. It’s very interesting. 0% of you on this call, selected personal power, and only 7% selected financial metrics. All five are super important.
Now, the answer is yes, all five are also correlated to venture failure. So we found successful entrepreneurs were super, super low minus 17% in the working population on following rules. Minus 24% focus on details. Minus 28% following procedures. Minus 41% on externally referencing others and research and minus 42% on structure and planning. In the seven years that I’ve been profiling across the region, guess what Singapore is the highest on?
20:10
Annie: It is structure and planning. Singapore is said that you need to be super, super low for a successful entrepreneur, but it is structure and planning. In an entrepreneurial context, the high motivation that I found in Singaporean founders, is planning, making sure everything is right, it has the process and everything else. It’s is too much focus on planning, and it should be more on execution. From an entrepreneur’s perspective, it’s not great.
From a global health pandemic, as soon as you know COVID happened, we saw QR codes, social distancing, masks, and vaccination. So from a planning perspective, that’s great, because it is so organized. But from an entrepreneurial perspective, this is a real, real definite blind spot.
Now I’m going to reveal the statistics around that high initiation. We found those who were able to achieve more rounds of funding series A, B, and C and beyond, with 40% higher initiation. We also found in the research was correlated, they also were able to hire more employees, so they were able to scale faster.
Also an interesting fact, anyone who had parents or friends who are entrepreneurs, was another 15% higher for initiating. I don’t know any investors on the call that grew up in a family business or had friends who are entrepreneurs, you’re also more entrepreneurial, so that also influenced. And, for those, we found with very low initiation, we found many of those founders were bootstrapping, without funding, or found to have a much lower preference for initiation.
The second significant statistic, we found those entrepreneurs who are 30% higher in big picture thinking we found correlated to have much greater ambition. They were starting a growing global first versus local, we found those were also able to hire a higher number of employees because they got funded.
Fun fact, for the females on the call. On average, the female founders were found more motivated for bigger picture thinking than males. When I was at Investible, I was able to profile our portfolio companies. Out of the 90 companies we invested in, we had nine exits, and six of them had female founders, which I found very interesting. And all the ones that were unicorns that returned anywhere from 200 to 1,000X, had female founders.
Then also, we found those who were successful, were 24% less focused on the details. We found that those founders were able to hire more employees, they were the ones who were able to do Series B and beyond funding rounds. They had greater ambition to scale a product globally, and be the world’s first in that product. We found those who were focused on the details were too focused on the details, which we found was directly correlated to early-stage venture failure. And then, again, we found those successful entrepreneurs were also 44% less focused on planning. We found a low structure was correlated again, two more rounds of funding series been beyond. We found successful tech founders, even another 36% lower for structure. And then we also found male founders on average, 17% lower in structure than females. We found again, high structure was directly correlated to early-stage venture failure.
Participant: May I ask what you mean by structure?
Annie: The motivation for structure and planning is that it’s the importance of knowing every relationship of every single thing, and how it all fits together. The structure, the planning, the resources. Planning something so I need a strategy, I need a plan. I need to know all of the relationships, the steps, or the planning part. So the high focus on that planning part, we found, is correlated to venture failure.
When we look at from that startup phase to the scale-up phase, when we moved from that startup to now we want to scale into new markets, what are some of the findings we found in terms of the motivations? We found entrepreneurs, compared to that scale-up phase, were 18% more focused on money. We found them 21% more indifferent to following rules. And we found them motivated for effective communication, which is higher on emotional intelligence, 21% higher. We found another 15% more motivated for initiation. So starting a project and putting their ideas into action.
Now, business builders, as we move from that startup phase to the scale-up phase, it is critical, for them to be successful. They need to be 37% higher motivated for structure and planning. So really, that scale-up phase, it’s different for everybody. But we see that series B and beyond, it’s usually, that’s when you kind of break-even. We start to become profitable to start focusing on the structures that you have placed or the planning, having procedures in place, motivated to check the work of others, so higher motivation for consistency, and also being able to prioritize and use time. Those are the four key differences we see at those different stages.
That’s the end of my presentation. Happy to now go through and do a Q&A and answer any questions that you have.
23:19
Teck Moh: So, why don’t I start off? It’s interesting for you to describe the founder’s motivations at the early stage and the building stage. So how can you identify the founders, which got the learning agility to transform the capabilities and the motivations at different stages of the conference?
27:02
Annie: Yes, it’s a really good question. I mean, it is a very hard question to answer because it’s really those 10 critical things that we found, that combination in that co-founding team, so it’s not any one founder, it’s the team. When we see they have across the teams, those 10 key things, we know that in the early stage, they have the key things are that going to propel them. But around the learning agility. I’ve met lots and lots of founders that are not coachable.
Doesn’t matter how much awareness they have, if they are not open to the feedback, or have any awareness, they could still be stuck on the same stage. I cannot tell you how many founders I’ve met, who are still at the same stage as where they were when I met them eight years ago, and they are starting a new thing and a new thing and a new thing. But they’re just using the same methodology that they have because they don’t have that learning, agility, or awareness. They may do a different industry or a different product, but they never go past the seed round or the series A. So having awareness, a good question I like to ask as an investigator is how do you know you did a good job on something? How do you know? Is it because someone told you? Is it because there’s financial metrics? Is it because you just internally feel good about it?
That’s the one key indicator going, how do they think they have done a good job? The second one was, I asked, well, what sort of feedback? What’s the last time you implemented the feedback? And what was the impact of implementing that feedback? And most of the time, they can’t think of any feedback that they ever received, or they don’t even ask for feedback. You know, when it was like, when’s the last time you received negative feedback or good feedback, and was like, I haven’t received any feedback. I trust what are you doing? You know, I’ve done this before. And so gives you some indicators on, do they know their learning ability? Do they notice when they change?
The key thing I’m always looking for, it’s just awareness. If they don’t have any awareness, it’s going to be very hard to learn when you’re not aware, because you think you’re the greatest person doing this thing right now. You’re also not aware of how do you work with your early-stage investors, work with mentors, work with advisors work with people who’ve done it before?
The next thing I like to see is when you flip it around, what sort of questions do they ask you every time you give them feedback or advice as an investor, you may have done what they’ve done before, or you have connections in that industry. But I’m also always curious, the founders that asked questions, let’s say you may have an opinion on blockchain. I’m always looking out for the founders going, oh Teck Moh, why do you think that? Interesting, you know, and so I’m always looking for what questions that they are asking because that gives me insight to what type of learner they are. And do they have the learning agility? If they don’t ask any questions? That’s when I kind of, huh. Interesting.
30:18
Teck Moh: That’s right. Okay. There is another question. With this metrics. How do you use a script to get the information from founders?
30:30
Annie: Oh, yes. So it’s scripted. It’s just a 15-minute questionnaire. It’s 40 questions. And each of the questions forces you out of five areas, it forces you to just put in your order of preference, what do you prefer to do when you’re at work? So it’s the same questionnaire that we’ve been using for 20 to 25 years?
30:53
Teck Moh: So how can somebody get the list of this kind of question? So they can definitely ask the right questions.
31:02
Annie: So it’s not a list of questions. It’s the actual algorithm of the assessment tool itself. So it’s been developed specifically by a cognitive behaviorist. And it was originally for just assessing what motivates people from a recruitment perspective. But we’ve used it in the context of looking and studying successful founders at startup phase and scale-up phase, I’m using the same assessment tool, and I’m studying software engineers. Now. I’m also studying HR leaders, salespeople, and also people who are neurodiverse, dyslexia, all sorts of studies, but it’s the same questionnaire.
31:45
Teck Moh: Okay, so there is another question. So actually, look at your slide, one of the slides says that entrepreneurs who are successful, 18% focus on money. So how do you focus on financials in the early stages? Or before they are profitable?
32:02
Annie: Yeah, so it’s not so much profitable. It’s looking at metrics, so the founders that are obsessed with metrics, what are the unit economics the founders who are looking at? What are the numbers? Is it the number of people, the number of users? So those who are very, very focused on numbers and metrics, we have found correlate to early-stage venture success. Also, we studied the ones from scale-up to exits, the ones that were able to exit ran another 18% higher focus on money. So even more focused on the metrics, we also found the ones that have exit was also another 21% higher on EQ and another 15% higher on negotiation. So they went out, look for who would be an ideal buyer work through is that is IPO the exit strategy? So again, from that startup phase to the scale-up phase, to that exit phase, we found very different motivations for all three phases.
33:05
Teck Moh: Here’s a follow-up question from me. When you look at different spaces, we look at different KPIs. With different metrics, what are the typical metrics that you would look at, which the founders would need to focus on?
So successful entrepreneurs? Right, normally, they will say from point A, from when getting a seed fund, by the time I raise an A round, I should be able to hit these KPIs. Whether it’s revenue, number of customers, or churn rate. So depending on the kind of business model, what are the typical KPIs that you look for?
33:51
Annie: Yeah, so we all again, just come back to those it’s not those KPIs whether or not the specific KPIs we just found those 10 motivations in that early stage, that combination, were the ones who are able to get from a seed round to A to B. So it didn’t matter what industry or what KPIs is that you have but those low motivations and those high Innovation is that combination in that founding team, were the successful kind of combination.
34:22
Teck Moh: This is an interesting question. What is the definition of success? I think you mentioned it slightly in the beginning. Is this what you define as success?
34:33
Annie: Yes. So the venture those, what we defined was successful was either profitable and the ones that we studied that were profitable, were on average. Revenue was growing 20% year on year. On average, revenue was somewhere between 20 and 40 million, and the ones that were able to exit within five years between 6 million and 1.2 billion. Inside that platform, that is the criteria of success. Using this criteria, the companies that were able to coach. Using Canva, for example, we use this metrics to coach them going, Hey, out of you three founders, this would be a number one blind spot, this is what we should work on, based on this definition of success.
35:20
Teck Moh: So who is the primary customer for this solution that you just described?
35:27
Annie: Both its investors for guidance and startups for reflection and assessment. Like I said, the awareness for a founder. One of the things that I talked to Tech Moh and Shao Ning about this is that there are some founders who are just brilliant at the startup phase. In fact, they’re not suited for the scale-up phase, because they get bored, they don’t want to be systemizing, and they don’t want to be following procedures and rules. They are actually really great at starting things. And you know, being able to be very agile and do things on very little resources. So at that scale-up phase, they start to get bored, and they’re disruptive.
When you know that upfront that you’re only really good at that phase, we are able to coach founders. For this scale-up phase, you may hire an ideal, corporate type of CEO to take on the business because that part is about just systemising and scaling. They either take a step back, sit on the board become a chairperson, or they actually start a new innovation arm or a venture arm or a new product, that’s a sister to the product. It’s been really good when you know, upfront from a founder perspective, that that’s the bit that you are super genius. Also for investors who are not trying to force you because that’s the stressful the burnout. Cause you’re now or you actually get coached to know, this is what the scale-up phase, which is, a lot of the founders that we helped. We are able to coach them on that journey so that they have the awareness that this next phase is a different focus.
But for investing from my perspective, I was very skeptical, I was like, I need more data, I need more data. And one thing I’m super grateful for was there’s an amazing deal. On paper, this founder had two exits out of the UK, he co-founded the next was a property tech business. And on paper for three years, their traction, the numbers, everything was perfect. We’re about to invest half a million dollars. However, in that meeting, I don’t know many of you like investments or people business, all of us had a weird feeling about this co-founder relationship, they just didn’t have the chemistry that we were used to. And we’re like, there’s something weird, we’re not sure. So we said, Okay, we really want to invest, let’s stay in touch, give us an update, give us an update on your traction in two months. And then let’s just say we are very, very interested. But you know, we’re not in a rush. And true to that, four months later, they split up.
So the tool, we are able to click the additional data points, we just saved half a million dollars, we almost invested half a million dollars, but our gut intuition, we all just weren’t 100% convinced at the time. From an investor perspective, that was great, because the data just backed up our intuition. But sometimes all of us have very, very different. And the great thing for me was in our investment committee, I was able to also see what were our investment biases. All of us had such a high focus on money that often if we couldn’t see how the money would fall out in that business, we weren’t interested. Then if we looked at the best deals that we’ve done, most of them didn’t have revenue for the first five years. All of the unicorn companies didn’t have that and so it was very interesting. Also the founders who were first-time founders were more successful than any of the exited founders and so all of these, like, at the end of the day as an investor, I was interested in collecting the data on that guy. That is also one of the things I shared with Tech Moh in our investor club.
We have over 100 angel investors and the reason that they joined the club was, that they were a large percentage of exited founders. As soon as they exited, they started investing. However, in the first three years of investment, on average, 9 out of the 12 deals that they invested in would fail. They didn’t understand why they were investing in businesses that they understood. They’re investing in people, founders that sounded like them, that they liked. Because Oh, this is like a younger version of me, this person’s hungry. It was actually just not the right investment metrics.
It was really good, just from an investor point of view when you know, what is it that you like? And I learned a lot about myself, because I was exactly that profile is like, how are we going to make money? It’s been really good to just also reflect as an investor, what are some of your biases, and also, whatever questions that you ask in that investment, due diligence process, that will give you some insights on what you like to focus on.
40:18
Teck Moh: In the conversation you just made, it’s quite interesting when you say that the unicorns are typical people, which don’t have revenue for five years. Does the data show that is the kind of success metrics differ from different regions? Because there is definitely a focus on revenue. Very early stages in Southeast Asia. So does your data show? Is it the same in China, the same in Europe, the same in Silicon Valley, Australia, Southeast Asia?
40:51
Annie: We haven’t done that next level of analysis or correlation. I mean, the startups in the scopes that we studied about the 5000, were across all tickets, like across all industries. It’s kind of a wider study, and not just tech or regional. But so the correlations kind of collective across all the different industries, the one that we want to release in the next five years is tech unicorns that we’ve worked with. We want to look at decacorns, is there a big difference? The ones who are able to build 10 billion plus companies versus unicorns. We are doing lots of interesting studies at the moment, but we haven’t done that sort of analysis I like.
The hardest thing in the world is to get an entrepreneur or a founder to sit down for 15 minutes and do this questionnaire. Look, I’ll confess, like, I’ve been trying to get Shao-Ning and Der Shing to do this for like, five years now. And so I haven’t succeeded yet, maybe one day. But that’s the thing, right? Even though we want to do the studies, and we want to do the correlations, they’re so focused and so busy and doing so many different things to get that 15 minutes.
I’ve been very lucky because we used it as our seed round. I was able to profile people who make accelerated programs and in my investment because you would get investment. So that was strong enough as an incentive. And I know that cocoon capital here, they profile all of their portfolio companies, and they do DD with that too. So that’s definitely a want to do so many different studies.
I think I saw a question here around socially impacted. I have been trying to look at social enterprises across Southeast Asia. I have been trying to get this project going because I want to study the motivations and the culture of these founders and see what are the gaps, the differences between social enterprises and successful entrepreneurs. When we know what that gap is, when we look at mentoring programs or advisory. I am actually pretty burnt out as a mentor because when I’m working with founders, I’m saying the same thing over and over again. But when you look at these blind spots, when they have that awareness, we know what the gaps are. Then we can do really precision, what I call laser focus coaching.
So that’s one thing I’m very proud of. Using this tool, I was able to coach first-time founders, who were the opposite to any of the entrepreneurial traits. So answering this question if you don’t have any of the entrepreneurial traits, but with that awareness, they were able to accelerate and grow. They work on their blind spots. So some of the best female founders that I coach started the biggest FinTech companies in Australia. It’s been really good to now see my alumni when you note but the first part is just having the awareness.
43:51
Teck Moh: There is a same question about social impact. Social Impact companies right, they normally have two bottom lines. So do you see any differences in the success of businesses which have two bottom lines?
44:11
Annie: Again, I haven’t studied enough of those profiles to know if there are any differences. One of the things in a very small sample that I’ve studied is that a lot of these social impacted typically have the same blind spots, which is a low focus on financial metrics. That again, that’s a key one where they either you know, struggle or they rely on grants or research or funding like that financial metrics, every founding team needs to have a high focus on it.
If you’re an investor or advisor, that’s the number one thing I would recommend, sit with them once a fortnight and start to build that blind spot. They know how to see and understand how the numbers work, and why the numbers are so important. That’s definitely one I’ve seen in the small study that I’ve done on the social impact entrepreneurs I’ve seen across Southeast Asia.
45:07
Teck Moh: There’s a question. Which is very similar to this conversation we had about the founders? How do they grow or their inability to grow? How do they look to professionalize the organizations? And maybe, can you make a comment on this this question that is raised in the Q&A?
45:29
Annie: Yeah, what is the correlation between startup success against founders being CEO after a certain period? In other words, can a founder whose dreams and has a vision in building a startup to its full potential? Absolutely. So I think the first part is that I mean, what I’ve known in the work that we do at Fingerprint for Success is we have coaches to help you through the different stages and know what is required at the different stages. We have been able to successfully do that with a lot of first-time founders. In fact, they’re even better than founders that we found who have exited out of corporates or other places because they already have an experience or a view of what good leadership is. Good leadership with their previous experience may not be the good leadership for building the startup or the tech company or the company that you’re running.
We have learned, that one of the things that we measure is leadership styles. There are three leadership styles that we measure we look at, are you the one high on power? Which is very critical to the early stage. Are you motivated for affiliation? Which is your lead through building relationships, you care deeply about relationships at work. Or do you lead through what we call achievements, you like the results or your achievements to speak for itself? You could be a combination of the three, having that awareness of what that leadership style is, you will resonate with the different people that you’re leading. Knowing that up front, you were able to help coach you through the different phases.
But yes, absolutely. We found those who were coachable, knowing what the different phases, what you need to focus on, were more successful versus, you know, this is how I am this is going to be at the different stages. We have seen a lot of companies fail, because of the lack of awareness of what is needed at a later stage, and how you lead five people versus ten versus twenty, fifty, a hundred, a thousand, two thousand plus can be very different. You also need different communication channels, to have that same impact. It’s not going to be the same as you all sitting together with just the 20 of you. And you know, every single person’s name, you may not remember 2000 people’s names and so, so yeah, very different correlations.
47:56
Teck Moh: It is interesting for you to say that you are going to do the study on different kinds of success. Because when you define your success, it is quite a wide range, right? From ten million to hundred millions to billions. It’s a huge range. They are looking forward to your study. When you think you will finish these studies?
48:20
Annie: When can you give me more data? Can you? That’s the number one thing. Yeah. So once we get a decent-sized sample, is when we’ll be able to release it. I mean the studies that were done in the three to 5000. And so, you know, that’s what we’re working towards. I’m also doing a study at the moment on studying cultures of companies. So I’m studying companies that do a four day work week, and I want to be able to study, are they more productive or efficient than a company that works five, six or seven days? Or who knows these days? And depending on what company you’re on, most founders work 24/7 But I’m studying that as well. So yeah, it’s really dependent on how much data we’re able to get. And like I said to you, getting incentivized thing, founders to do the assessment is the key part.
49:23
Teck Moh: There is a question and comment which aligns with our investment thesis, we like founding teams with complementary skills, right? So it’s not a one-man show. So how do you measure this right team? So we can work with less structure which is aligned with your success of startup? Which early motivations, were there structure?
49:50
Annie: Yeah, we kind of measure the right team. The great thing about the tool, it is that you’re able to put real-time analytics, anyone who’s done the assessment, you are able to look them into the benchmark and see whether they are in the ideal range or not. It’s not saying that, at the early stage, less structure is better. Because if you do have a key co-founder with very hard structure, they’re always going to go, Hey, Teck Moh let’s not do this, yes, let’s do more planning because the investor wants to see this report, or let’s do more planning on this.
Then the decision making gets slowed down. It is all about speed at the end of the day, that those combinations. So the right team, it really depends. But for a role, let’s say you’re in the events business, where there’s lots of planning required, you are going to need someone in your team who is hard in structure, it really dependent on the stage, the context of people’s roles. So it is not ideal in the founding team, but it may be in the operations team or a person that’s key to their role. And so we look at those two contexts as to where are you? In what stage? What is your role? And then what is your business?
One of the things we are able to uncover with Canva, we studied the whole company, and one of the core values is collaboration. We measured their top number one motivation collectively, not just the founders, but the whole company had share responsibility. Through that motivation, where they are all naturally like to share and work together, it means they have got the right people working in the company because Canva is a collaboration tool. It is a design collaboration tool, you can come in, and you can design. They have already got people with the right mindset to build a product and it doesn’t feel like work because they naturally go there anyway.
So really, when we talk about the right fit is even the right role. I mean, that is the biggest thing I realized, what I didn’t like in my investment role, is because I was low compliance, low rules. Whenever I was looking at deals or the legal paperwork, I hated all that stuff, and so when we say, you know, the right team, that’s what we’re looking for. Is this person in the right role? And is this the right motivation for the stage that you’re at? And if you have too many people in the team that are high focus on the ones that you need to be low on, then it could really be a blind spot. You could take a really long time to go to market. By the time you go to market, maybe there are like five other competitors, even though you had the idea or the original execution first. This is how it impacts that business.
52:27
Teck Moh: There is a comment that investors are attracted to short term gains, there is a difference between short term gains and profitability and what we call revenue. There is definitely a stronger focus in Southeast Asia on revenue models. But that doesn’t mean that you need to be profitable in short term. You can be profitable over the long term, as long as your unit economics are strong. Right? So yeah, can you make a comment on this question and comment?
53:04
Annie: It is a shame because high buyers and I fall into that category as well when I learned. It could be detrimental to that business, this high-pressure focus, on these short term gains, could mean they don’t build a product or build the validation or have the right metrics to go that long term profitable. But it is very dependent on what their business is. A B2C is very different from B2B or B2B to B2C. It’s all different.
Most of our unicorn companies were just getting the validation right, was getting the users right, was getting the product right, was making it sticky, was making retention. So it depends on the metrics that you have. What is it dependent on? And I’ll come back to that metrics again, you have to be obsessed with it. Because if it cost you $100 to get that one customer on board and then that you know you lose that customer because your product is not good enough or sticky enough. So that revenue focus may not be the right metrics.
If it’s a B2C product, we also know the B2C ones that we’ve invested in, that have gone all the way, they need so much money at the start to do their validation and testing. So if you don’t raise enough in your first, that 3 to 5 million, even in your seed round, you’re probably not going to have the right people or have the funding or have the resources to build the right product. And obviously, the region everywhere else is very, very different. So it just depends, definitely can be short-sighted around that, you know, we need revenue.
Revenue is a good validation of the people that will pay for your product and so if you can repeat that and scale that, those are the metrics that you’re looking for. How do we do this even more efficiently? How do we now not rely on humans to get customers into the product? How do we now self serve so our revenue comes in when we’re sleeping? It just depends on the business and the revenue. That some businesses you’re looking for. That’s what you’re looking for the validation.
55:44
Teck Moh: Thank you for your sharing, we learned so much from you.
56:28
Annie: You are welcome. Thanks for having me. I just want to say I save everybody time and energy because I’ve been through that process. If I can help you in any way in any of your investment companies or portfolio companies, I’m more than happy to meet and do debriefs on any of your teams or the leaders that you have invested in.
56:52
Teck Moh: Wonderful, thank you so much for your time. And thank you to all the participants who join us today. Thank you.
About AngelCentral
AngelCentral is the most active and fastest-growing community of angel investors in Southeast Asia. We organize regular pitch sessions, angel education workshops, and provide syndication services. Since Inception, AngelCentral has trained >500 angels and our members have invested >S$20m into the startups.
If you are a startup and would like to raise funds from our members, send in your application here!
If you are an investor and would like to find out more about Angel Investing and what AngelCentral does, we have a coffee session hosted by the AngelCentral team. These informal chat sessions are held twice monthly where we will share about what we do, our membership offers, and/or what Angel Investing is all about. Secure your slots here.
