Spotting Grit in Leadership Teams: An Investor's Guide - Unveiling Resilience and Recognizing Grit's Kryptonite

I met Angela Duckworth around the time her book "Grit: The Power of Passion and Perseverance" was hitting shelves in 2016. We were at an event in Philadelphia to support Vetri Community Partnership , a non-profit organization that provides nutrition education through cooking to more than 30,000 people every year. The pairing of Angela and Vetri was brilliant - Vetri’s approach to nutrition education complements the spirit of perseverance and passion that Angela writes about. That evening and meeting Angela (even only briefly), stands out for me as Angela’s book Grit sparked a shift in the way I thought about what I valued in teammates at Xfinity Home at Comcast and ultimately impacted my approach to evaluating investment opportunities.

As I delved deeper into assessing leadership teams, I saw the importance of placing equal weight on scrutinizing the company's business and the individuals driving it forward. This became particularly evident when considering a startup CEO whose narrative aligned perfectly with my investment thesis—an industry ripe for disruption, a clear problem to solve, promising technology, seemingly happy customers and a pathway to profitability. However, when faced with adversity, they stumbled, lacking the grit needed to steer the ship through rough waters.

In contrast, let's talk about RapidDeploy and its CEO, Steven Raucher . When I first learned about RapidDeploy I was captivated by their mission: revolutionizing emergency response. But it was my breakfast meeting with Steve in Washington D.C. that truly solidified my admiration for him and his company.

Over coffee, Steve shared his remarkable journey—a journey marked by personal tragedy, professional burnout, and a profound desire to make a difference. Formerly a successful Wall Street trader, Steve's life took a dramatic turn after the tragic loss of his brother. It was this pivotal moment that ignited his passion for supporting those who save lives.

RapidDeploy wasn't just a business venture for Steve—it was a calling born out of adversity and fueled by a relentless drive to improve emergency response systems.

He didn't shy away from the challenges; instead, he embraced them, pivoting the company when necessary and restructuring the team to ensure their mission remained intact.

In Steve's story, I saw the embodiment of grit—a quality I prioritize when evaluating CEOs and their leadership teams. Inspired by Angela Duckworth's research, I've refined my approach, seeking out those who not only have a compelling vision but also the unwavering determination and character to see it through, no matter the obstacles they encounter.

This focus on grit has led me to explore investment opportunities in companies like Recycle Track Systems , Newfound and Anonos: Data without the drama , where leadership teams exhibit resilience, passion, and a commitment to making a positive impact.

By aligning ourselves with individuals and organizations that embody grit, I believe we can drive meaningful change and create lasting value for investors, stakeholders, and society as a whole.

As we navigate the ever-evolving landscape of entrepreneurship and investment, let us remember the words of Angela Duckworth: "Grit is living life like it's a marathon, not a sprint." 

Spotting Grit in Leadership Teams: A Guide for Investors

When evaluating investment opportunities, one crucial factor that often separates successful ventures from the rest is the presence of grit within the leadership team. Grit, as defined by Angela Duckworth, is the combination of passion and perseverance in the pursuit of long-term goals. Here are some key indicators I look for to identify grit in leadership teams:

1. Deep Understanding of the Problem: Successful leaders possess a profound understanding of the problem they are solving, rooted in both personal experience and a comprehensive analysis of the issue at hand. This understanding goes beyond superficial knowledge and extends to a visionary perspective on how to address the problem effectively. Leaders who listen attentively to diverse perspectives and continuously refine their vision demonstrate a commitment to solving the problem in the most impactful way possible. Consider a healthcare startup with a doctor on the founding team. They would have firsthand experience with the challenges patients face in accessing affordable healthcare. Their deep understanding of the problem stems from years of clinical practice and patient interaction.
2. Bias Towards Action & Execution: Gritty leaders do not succumb to analysis paralysis; instead, they have a bias towards action and execution. They possess the ability to break down complex decisions into manageable steps and are adept at making swift decisions even in the face of uncertainty. These leaders understand the importance of momentum and are not deterred by setbacks or challenges along the way. In the early stages of product development, most leadership teams face several critical decisions. Rather than getting bogged down in endless deliberation, gritty leaders break big, irreversible decisions into little bets, rapidly prototyping, testing and iterating their product.
3. Financial Chops: Successful leaders must have a firm grasp of financial principles and practices. This includes an understanding of unit economics, cost containment strategies, and effective financial forecasting. Leaders who can effectively manage burn, identify trends, and allocate resources, strategically demonstrate the financial acumen necessary to drive sustainable growth and profitability. A gritty executive can lead her startup through a successful fundraising round even in the midst of economic uncertainty, securing vital capital to fuel expansion efforts. Her deep understanding of financial principles, combined with a track record of prudent financial management, instills confidence in investors and stakeholders. She regularly analyzes key financial metrics, identifies areas for cost containment, and develops robust forecasting models to guide strategic decision-making and ensure long-term profitability.
4. Data Driven: In today's data-driven business landscape, successful leaders rely on metrics and data to inform their decision-making process. They understand that what gets measured gets improved and actively seek out data even when it may not be readily available. While intuition and gut instinct are valuable, gritty leaders balance these qualities with a commitment to data-driven insights, ensuring that their actions are grounded in evidence and analysis. Consider the approach of Jeff Bezos’ tenure at Amazon, where data-driven decision-making was ingrained in the company's culture and drives its relentless focus on customer satisfaction and operational efficiency. Amazon single-handedly changed pricing models across consumer products. Their commitment to data-driven decision-making enabled them to adapt quickly to changing market conditions and stay ahead of the competition.
5. Respect and Followership: Effective leadership extends beyond any individual capabilities and must include the ability to build and lead a cohesive team. Leaders who command respect within their community demonstrate strong interpersonal skills and a track record of effective leadership. I look for teams that exhibit professionalism and cohesion during presentations, with each member contributing thoughtfully and respectfully. Small cues like talking over one another or correction, translate quickly into larger issues. And when pressed, I’m faster to trust a startup CEO who is comfortable with their team answering key questions vs. taking the wheel every time. From corporate to retail to family, a leader’s reflections on previous experience is a valuable indicator of a their ability to navigate complex team dynamics and drive success.
6. Understanding Scale: As ventures grow and evolve, leaders must adapt to the challenges of scale. Gritty leaders possess a nuanced understanding of how to manage growth effectively, recognizing the shifts in strategy and approach that are necessary as the organization expands. Growth is exciting and upending - flexibility and nimbleness suffer. As a consumer product prepares to scale its operations, the leadership team recognizes the need to invest in scalable infrastructure and processes. They proactively implement systems for customer relationship management, automated reporting, and scalable customer support, laying the groundwork for sustainable growth. This understanding of scale enables them to navigate the challenges of rapid expansion while maintaining operational efficiency and customer satisfaction. From scaling team dynamics to managing operational complexities, leaders who demonstrate an understanding of scale are better positioned to navigate the challenges of rapid growth and sustain long-term success.
7. Self Awareness: The ability to recognize one's own strengths and weaknesses is paramount in effective leadership. Leaders who are comfortable admitting they don't have all the answers and are willing to surround themselves with individuals who complement their skill set demonstrate humility and self-awareness. Mark Cuban 's decision to sell his majority stake in the Dallas Mavericks highlights this principle. By acknowledging that someone else may possess greater expertise in a particular area, Cuban demonstrates his understanding of the importance of leveraging the strengths of others for overall success.

Beware of Grit's Kryptonite

By focusing on these key indicators, investors can identify leadership teams with the resilience and determination necessary to navigate the challenges of a growing business and drive long-term success. However, all of the indicators I outlined don’t matter if a leader fails the Self Awareness test.

The kryptonite of grit is hubris.

It’s absurd to believe that you can battle through everything alone, that your expertise is limitless. You will need help, none of us are omniscient.

Excellent long term leaders achieve repeatable and sustainable success through self awareness, and with that comes respect and followership.