Y Combinator’s Sam Altman has been teaching a class called “How to Start a Startup” this fall at Stanford. The 20-session course has an amazing list of guest speakers, including early Facebook investor Peter Thiel, Y Combinator co-founder Paul Graham, and LinkedIn founder Reid Hoffman (all lecture videos are available for free).
One of the recent speakers was Ron Conway, the legendary founder of SV Angel, who’s best known for making small investments in a bunch of different early stage startups. For example, he invested in Google back in 1999, before the search engine became the behemoth it is now.
How does he start his investment process? “Usually the first question I ask is, ‘What inspired you to create this product?'” Conway told the crowd.
He said he expects the product to be a solution to a problem the founder personally experienced. The founder has to be able to describe the product “in one compelling sentence” so that the investor can immediately understand what it does, Conway said. Through that first one-minute conversation, Conway tries to answer, “Is this person a leader?” and “Is this person rightful, focused, and obsessed by the product?”
He also pointed out that it’s important that founders be decisive, whether it’s making an HR or a product strategy decision. Conway believes “procrastination is the devil in startups.” Another point he made was that it’s always good to bootstrap for as long as possible, meaning it’s better to not take money from a venture capitalist or angel investor; startups should strive to be self-sustaining at first.
Perhaps, this is the kind of thinking that’s made Conway one of the most successful VC investors in Silicon Valley. Conway says he’s invested in over 700 companies and spoken to thousands of entrepreneurs since 1994. On average, SV Angel invests in about one startup a week, and one out of every 30 companies it looks at.
The most successful investment of those? “The investment in Google in 1999,” Conway said.