What Naval Ravikant looks for when investing in a founder

In a Tim Ferris interview from seven years ago, Naval outlined the four things he looks for in the founders he invests in:

#1 Intelligence

“You have to be smart, which means you have to know what you’re doing to some level… do they have insight? Do they have specific knowledge? Have they thought about this problem deeply? It’s not about age or how many years they’ve spent, but just how deep their understanding of what they’re about to do is.”

#2 Energy

"Being a founder is brutally difficult. It takes a long time, and in the long-run, the people who succeed are just the ones who persevere. So if someone runs out of energy or if they’re looking for constant positive feedback or if they’re easily thrown off course, then they’re not going to make it to the end—especially in the highly competitive startup context.”

#3 Integrity

“If you have someone who is high intelligence and high energy, but they’re low integrity, what you’ve got is a hard-working, smart crook. In the startup world, things are very dynamic and fast moving. People are very independent. So if somebody wants to screw you over, they will find a way to do it. And fundamentally, ethics and integrity are what you do despite the money. If being ethical was profitable, everybody would do it. So what you’re looking for is a core sense of values that rises above and beyond the pure financial incentives.”

He gives an example:

“If I’m talking to a founder and they offer to do something that is slightly unfair to another shareholder or employee or founder in exchange for making me happy, that’s a red flag. If they can do it to them, they can do it to me.”

He argues that integrity is the hardest one to figure out because it requires longitudinal relationships. As a result, he’s become hyperaware of that piece over time.

#4 Do I enjoy spending time with this founder?

“When you invest in or work with somebody, you’re signing up to spend the next decade of having them in your life. So you just have to make sure you actually genuinely like these people. You don’t consider it work to have to answer a phone call or take a meeting or spend time with them. If it’s exhausting, if they’re downers, if they’re negative, if they’re difficult, no amount of money is worth it… it’s not about money at this point. It’s do I want to spend my scarce time, resources, mental energy, spirit interacting with these people? My favorite founders are actually the ones who I learn from. So every time they call me up because they need help with something, I jump on it because I know that walking around the block with them for an hour, I’m going to walk out much smarter.”

Full video: Tim Ferriss “Naval Ravikant — The Person I Call Most for Startup Advice | The Tim Ferriss Show (Podcast)” (Oct 2015)

P.S. We’ve put together a YouTube playlist with every Naval Ravikant insight we’ve ever shared. You can watch it here: "Best startup advice from Naval Ravikant"