Redbud VC is an early-stage venture capital fund and studio investing monetary and social capital in early-stage tech founders. Reach out to Brett Calhoun, Managing Director & GP at Redbud VC, at brett@redbud.vc to learn about Redbud, and subscribe to our newsletter here.
TLDR
At Redbud, we believe that the driver of success or failure with tech startups is the founder’s personality traits, characteristics, and habits. Ideas pivot, but the founding team does not. Using the DiSC assessment, we can evaluate founders on a deeper level, assessing their personality traits & gauging the founding teams’ compatibility with one another. The DiSC personality assessment helps heighten self-discovery and highlights one’s strengths & weaknesses as a builder.
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DiSC
The DiSC personality assessment is a behavioral assessment tool used to help deepen one’s understanding of themselves and others in the workplace. DiSC measures dimensions of personalities by assessing one’s reaction to challenges, influential qualities, the pace of work, and responsiveness to rules and procedures.
The four personality profiles that DiSC measures are: (D)ominance, (I)nfluence, (S)readiness, (C )onscientiousness.
Those who exhibit characteristics of:
D) Tend to be confident, competitive, and strive to see results I) Tend to be open, emphasize influencing others, and have high situational awareness S) Tend to demonstrate high situational awareness, dependability & value cooperation C) Tend to work alone, show a high level of discipline & expertise
When testing your DiSC personality traits, there will be two profiles given one for a natural personality blend and the other for an environmental blend. The natural style is what is most comfortable to a person, but the environmental style is the personality blend that displays how a person adapts to their surroundings. Depending on your career, the environmental style can change as you adapt to new environments. The environmental style is a more conscious personality blend because it involves more calculated decision-making than naturally acting.
Dominance is characterized by the ability to take on challenges and compete to see results. This is the “winning at all costs” personality. People with this personality solve problems quickly and assertively but may lack open-mindedness. An extreme level of dominance becomes problematic if it is not offset with compatible traits like influence. People with high dominance thrive in leadership roles like the Chief Commercial Officer or CEO of a company.
Influence characterizes people who are open and talkative and emphasize interacting with others. People within this category are motivated by recognition and personal relationships. Because They constantly seek approval and fear rejection, problems may arise when they lose social influence. When paired with other personality traits like Dominance, this person may be successful in social roles like a Sales representative.
Steadiness describes someone who prefers organization, paced environments, and a consistently controlled workload. Like people with high levels of Influence, those with this personality are people-orientated, which helps them cooperate and work well in teams. They tend to worry about loss of stability and may have trouble in fast-moving, highly-variable work environments. Pair this trait with conscientiousness, and you will likely find someone who is diligent and follows through on tasks making them highly suited for analytical roles like an accountant.
Conscientiousness places emphasis on accuracy, quality of work, and discipline. Those with this personality tend to work best alone and are motivated by diving deep into problems to find solutions. People with this trait may show low situational awareness, leaving them limited by critique and criticism. Conscientious people are analytical and make thoughtful decisions based on data. Product managers, COOs, and engineers must have some level of high C.
Use Cases
Core use cases for the DiSC assessment are raising worker self-awareness, improving teamwork, fixing conflict, developing stronger skills, and managing & training more effectively.
At Redbud, we use this assessment to learn more about our founders. It helps us to understand founders’ strengths better so we can help them improve within the places we find gaps. Combining personal questions like “What’s the current habit you’re building, and why?,” with DiSC gives us an objective measure and subjective understanding of the founder’s personality. As “founder due diligence,” this provides us with a strong indicator of whether a person will thrive in a tech startup environment.
We also evaluate founders based on their personality traits. When it comes to investing, the use of DiSC, it’s an objective data point to assess a solo founder driving a business or a founding team working together with a compatible personality blend. At Redbud, we ensure proper risk assessment in our Due Diligence process through the use of DiSC and other evaluation criteria.
Everyone will have a combination of all traits and, after taking the assessment, receive a score within each category. Based on our experience, certain combinations are more apt to thrive in the fast-paced and volatile environment of an early-stage startup. A few especially unique profiles include:
The Self Motivation profile: When one’s Dominance trait is higher than their Steadiness trait, they may display a high level of self-motivation. People with this combination can produce new ideas and create a plan for themselves. They work well within a team, often leading the team to hit targets and set new goals. A downside of this profile is excess dominance which can lead to impatience and conflict.
The Persistence profile: This profile is seen when one’s Steadiness trait scores higher than their Conscientiousness trait. This person is determined and can focus on accomplishing a goal no matter what obstacle may lie ahead. This combination becomes a weakness when multitasking is necessary but allows them to thrive in positions others may be fearful of taking on.
The Enthusiasm profile: This profile is characterized by the Influence trait being more dominant than Steadiness. What we see in this profile is a bright outlook on life, outgoingness, and uplift of energy. This person is a motivator who can bring enthusiasm to teams. Of course, with too much enthusiasm, there may be an inability to think through situations and miscommunication during times of conflict.
Some personality styles are best suited for specific positions, such as leadership or management roles. The below personality combinations are viewed as best for efficiency and effectiveness:
Influence & Conscientiousness
Steadiness & Dominance
Influence & Steadiness
Dominance & Conscientiousness
Conscientiousness & Influence
These combinations do come with given gaps in skills; each set of combinations is fit for certain positions.
Redbud Founder Personality Data
The selection of companies accepted into our cohorts is based on DiSC and other criteria. We make sure founders are compatible in ways that would benefit not only them but also suit their areas of interest.
For example, from Cohort II, we have two founders who display a high level of compatibility based on their assessment. Founder 1 showed a high level of Dominance, Influence, and Conscientiousness as their natural style, while founder 2 showed high levels of Influence & Dominance. They both have confident personalities and can emphasize the accomplishment of tasks. At the same time, they are both influential, meaning they communicate openly and care highly about their relationship. Not only do they both display the ability to accomplish tasks in the fast-paced startup environment, but those personalities serve as a strength within their given industry.
In our newly announced cohort III (check out our amazing founders here), high compatibility levels were displayed across the board. We even have a team that is not only highly compatible but fills in the gaps for each other’s missing categories. For example, Founder 1 scored high in Dominance, Steadiness, and Conscientiousness. While founder 2 scored high in Conscientiousness & Influence. Founder 1 can provide the confidence and leadership needed to move the business forward, and founder two can provide motivation and influence to the business. When it comes to pushing the team forward and interacting with customers & partners, this combination is important. They are both heads-down hard workers, which is a great quality to both possess, especially in their industry.
When looking at the founders from across our first three cohorts, there was a coefficient of variation of 22% (lower means less variation, i.e., high correlation) for natural and adaptive personality blends containing a high dominant trait for all founders. As seen below, out of the 36 founders tested, 21 had dominance as the most prevalent trait, while influence was the second highest. Overall, over 40% of founders had dominance as the most prominent personality trait. What is interesting is that as the founders adapt to their environment, their dominance greatly increases and steadiness slightly increases, while influence slightly decreases and caution drastically decreases. This indicates that founders will be more results and will continue to push things forward while allowing discipline to decrease. This makes sense for an environment where you must move quickly and break things.
Check out the personality data here
Other Persona Indicators of Success
We do not rely solely on the criteria from the DiSC assessment. Although it is useful and highly reliable, we also use other criteria to evaluate and help founders. Some further criteria include:
Ability to Articulate: Often, founders have high levels of expertise in their domain, but when it comes to selling to customers, a highly important factor for their success, they need to know how to articulate (be simple with their intentions). Founders must also be able to express their ideas coherently to raise capital and inspire others. Expertise is very important in the startup world, but so is simplicity.
Technical Skills: We look for founders with great technical skills, as we think this is a very important ability for the founding team to have in the early stages of their company. Based on Super Founders, 50% of unicorn startup CEOs are technical, and over 70% of co-founders are technical, indicating that 70%+ unicorn startups have a technical founder. Not only has displaying technical talent on the team proven to increase the chances of outsized returns but having that talent also means founders do not have to outsource technical work. Founders need to be the product managers and owners in the early days. They need to be building and talking to customers 24/7, not outsourcing. Outsourcing is very expensive, can create tech debt, and creates long-term difficulties with transitioning the dev work in-house. When raising capital from institutional investors, it’s almost required to have atleast a working MVP or some level of traction. As opposed to fundraising to pay a dev shop to build the initial product.
Passion: Motivation and competitiveness can only take a company so far. Companies must be rooted deeply in solving the problem they face and have the itching need to continue until that problem is solved.
Durability: At Redbud, we believe that the greatest driver of venture returns is the selection of founders strengthened by struggle. Founders must have the ability to persevere through adversity and stay optimistic in the darkest stages of early growth. Optimal durability will allow founders to be optimistic and realistic, further enabling proper decision-making and drive.
Mindset: Today, mindset is everything. At Redbud, we strongly believe founders must have the highest of bars for their own company. They must truly believe that they are building for the long term. They are building the next multi-billion dollar solution that will be of use to many.
Successful Habits: This may be the most important outlying criteria we evaluate. The trajectory of our lives is based heavily on our habits, and so is the trajectory of what we put our energy towards. We find the habits our founders display very important to the success of their business, and that is why we evaluate them so predominantly. Our friends at TwoStory have outlined the habits of successful founders. Their platform gives founders a score based on their habits, which can indicate entrepreneurial success.
Below are the top 7 habits assessed:
Discipline: Founders who are disciplined are focused and very efficient. They can manage many high-level and intricate tasks by staying thoughtful and organized.
Competitive: This habit is very beneficial because those who stay competitive not only beat the competition but are also able to drive growth through times of adversity.
Emotional Intelligence: The emotional intelligence of a person is very important, but so is their ability to regulate their own emotions. A founder must stay focused during times of stress or criticism.
Motivation: Past the ability to compete, a founder must also have their reason for continuing on their path and growing their business. They must have the courage to change and adapt when the time comes and continue moving forward.
Situational Awareness: Not only is this a very important factor in the compatibility of a founding team, it is also important for one’s self. It is important to evaluate one’s own decisions and behavior when it comes to the long-term viability of a company, and situational awareness takes a huge role in that ability.
Interdependence: Founders must be able to drive growth and believe in themselves independently. They shouldn’t have to rely on third parties to move them forward solely. There must be a mutual relationship between an investor and a company. One in which both parties provide value.
Balance: Burnout is real, and so is the mismanagement of capacity. Sleepless nights and constant stress are very common in the fast-paced world of startups. This underrated skill is highly important for a founder to have. They must be able to play the long game, which is creating a balance between growing your company and yourself. Effectiveness increases when one has time to rest and enjoy their own life as well.
Cohort Application Questions We assess many of the traits above using our application questions. Some of these questions include:
Tell us about your side hustles. What are you tinkering with today and why?
How do you define your life’s greatest struggle to date?
Can you give me an example of a situation where you used creative or innovative thinking to eliminate frustration with a product or process? What were the problem and solution?
What is the last thing you read or listened to, and why did that interest you?
What’s the current habit you’re building and why? (if it’s not too personal)
What have you been learning about in your free time over the past year and why?
In addition to these questions and the DiSC assessment, we interview founders and ask for a 60-second video of the founder explaining their idea. While watching this video, we evaluate the founder’s articulation skills. We also tend to keep our interviews as short as 20 minutes and fire questions off to see how the founders react to pressure. This criterion is important to us because we believe that there is a lot to tell from a founder when they are under pressure.
DiSC is a very useful tool for investors and managers alike because it assesses the skills and traits of founders & employees. It can be used by managers to maximize workplace efficiency and is very useful in evaluating one’s abilities. DiSC can predict the strength of founders & teams by assessing the compatibility of different personality profiles. We use DiSC, in addition to other criteria, to ensure we are making proper risk-adjusted decisions when it comes to investment, as well as helping our founders work towards improving on their weaknesses.
Although the DiSC assessment can be very useful, it is not always correct. This is why we evaluate other data points and use multiple other forms of assessment when looking at founding teams.
Reach out to Brett Calhoun, Managing Director & GP at Redbud VC, at brett@redbud.vc to learn about Redbud, and subscribe to our newsletter here.
Co-Authored by Brett Calhoun and Yahav Sal!
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