Positive Sum helps founders build their companies and tell their stories. We devote time to meeting the most talented entrepreneurs and investors in the world, and we strategically deploy our network on behalf of our portfolio companies.
What we look for in companies
The creation of new businesses, especially those fueled by technology, can lead to Positive Sum outcomes: where companies, customers, and investors all win together. Our team searches for such companies, with the following criteria guiding our way.
- Life’s Work: We look for founders doing their “life’s work.” We always ask how the founding team came upon the problem they are solving and assess the alignment between that problem and their own path in life. We find that these founders tend to be driven and obsessive, they tend to build domain knowledge quickly, and they tend to be disagreeable, with their own clear point of view for how things ought to be. We love these qualities. Ultimately, we find that founders doing their “life’s work” become magnets for talent and have the perseverance necessary to survive and thrive in difficult periods.
- Synchronized Team: Speed is an unbelievable advantage for young companies. Teams that communicate well ship products faster. We look for smart and efficient team communication, chemistry, and the right mix of business and technical talent.
- Market Signal: We can evaluate teams directly, but markets help us evaluate products. We look for clear signals from customers that a given idea or product is valuable. We deeply respect a market signal even if we don’t yet understand what is behind it, but then seek to understand the customer’s motivation in a deep way.
- A Compounding Customer: The question “will customers use this product often, and will the product get better and more valuable as they do?” is at the center of our investigation. Products that get embedded in their user’s lives or workflows tend to be more defensible. Compounding has to start somewhere, and our experience suggests that companies focused on “one thing” early on maximize the odds they can do more things in the future, because the customer grows to love them for the original solution.
- Profit Persistence: We want to invest in companies that can earn enormous profits over time. The odds of this happening go up when 1) a business demonstrates (or we can foresee) positive unit economics, 2) the business model can scale with demand and 3) the product gets harder for others to copy as it grows. We look for all three components.
- Timing, Alignment, and Impact: We focus intently on why now is the right time to build this company. New technologies, changes in regulation, cultural shifts, and other enabling factors create opportunities for unnatural growth in a business. We always look for alignment between a company and the world at large. We also want great alignment between our two teams. We hope to have decades-long relationships with the companies we support, so the fit between Positive Sum and the founding team is paramount. We make fewer investments than many comparable funds so that we can be closer with portfolio companies and spend more time with each of them.