The Right Kind of Asshole

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“Put me anywhere on God’s green earth, I’ll triple my net worth. Mother$u#ker. I will not lose.” —Jay-Z

A unifying trait among the best founders I know is that they are assholes. They are highly opinionated, passionate perfectionists, unable to live with less-than-brilliant ways of doing things. Inside their souls is an itch, a constant, low-volume whining sound that tells them this could be done better.

A unifying trait among the worst founders I know is that they are also—you guessed it—assholes. They are opinionated perfectionists, too.

It is accepted wisdom within Silicon Valley that, as Marc Andreessen puts it, “agreeableness is a problem for innovation.” In my own studies of famous technology entrepreneurs, I have found this statement to be true. To build world-changing companies, to have extreme levels of success, does seem to require an extreme personality. 

What I can’t find anyone saying, and what there appears to be no larger discourse about, is how to harness these personality traits. Used correctly, they can create Steve Jobs-esque personas that enable billion-dollar, long-lasting businesses. Used incorrectly, they can be toxic and ruin startups (and, more importantly, employees’ lives). 

I know of one founder who slept with several of his direct reports and was booted from his own company (though his backers successfully kept his sins away from the press). Naive fool that I am, I thought that would surely spell the end of his career in tech. To my surprise, I ran into him at an industry event last year, once again receiving praise and millions from venture capitalists.

When I back-channeled about why he was involved, his investors said he had the “right type of personality for a founder.” Good grief. His signals of sociopathy were confused for signals of greatness—and, last I heard, his new company had collapsed.

The funding of the wrong type of assholes is an urgent problem, especially as the companies we build gain greater cultural influence, and, with AI reshaping the industry, the stakes seem even higher. If we can better understand that, we can quit giving capital to people with a history of bad behavior and sinking companies, and instead give it to the people who deserve to—and actually can—build the future.

So, what patterns should we look for in identifying the best entrepreneurs? I will warn you, I don’t fully know the answers. However, by open-sourcing what I do know, maybe we can find ones who are slightly better than the assholes we already have.

Signals of grit

I split these characteristics into signals of grit and signals of grift. You may dislike some of these people, but they’ve built great companies.

1. Makes money young: Warren Buffett was 11 years old when he bought his first stock in Cities Service at $38 a share. Great founders learn to make money at an early age. Whether out of need or just plain curiosity, it seems to indicate a sixth sense of how money can be made. They don’t have to build a big business, but there will be some early evidence of market interest. Landscaping businesses, car detailing, and SAT prep classes are common early companies gritty founders have built.
2. Makes money fast: If this person needed to make $30,000 in a pinch, could they? At age 21, Alex Tew, the cofounder of meditation app Calm, built “The Million Dollar Homepage,” which sold pixels on a webpage for $1. While his initial goal was to raise enough money to pay for college, 1 million pixels and six months later, he was a millionaire. The important thing about this attribute isn’t the money. It’s the belief that you can just, sorta, do stuff. If you are high agency, you can make companies happen. If a person naturally intuits that the world is malleable, that money is available, then they are set up to be an entrepreneur.
3. Doesn’t hedge: After Elon Musk exited PayPal, he invested every dollar he had into SpaceX, Tesla, and SolarCity. Can you imagine the insanity of that risk? If he had done nothing, he could’ve lived a fat and comfortable life. Instead, he chose to push his chips in and bet on the things he believed in. Great founders believe so strongly in what they do that they don’t bother to hedge because they think victory is a sure thing.
4. Holds unpopular world views: They can be religious, political, or personal, but the ability to believe and follow beliefs that have high social costs are strong indicators of the conviction required to be successful. Especially as founders face industries with large incumbents, no existing market, or near-zero odds, they’ll have to get used to going against conventional wisdom to figure out the truth. Peter Thiel—love him or hate him—has a variety of strong beliefs, ranging from the value of Christianity to right-wing politics to how nicotine could raise IQ. Despite, or perhaps because of, some of these counter-mainstream views, he’s been enormously successful.
5. Builds toward an ultimate cause: The cause may be as simple as “prove someone wrong” (a classic that I love) or something as grand as righting a wrong in the world. It can even be as selfish as making as much money as possible. But whatever it is, the goal is explicit and obvious. Patagonia founder Yvon Chouinard had a mission to save the environment, and he made that mission the centerpiece of his company. His love for the outdoors started in his childhood, playing in California’s wilderness. He was guided by that vision, despite the many deterrents that stand in the way of a consumer goods company.

Unfortunately, grifters have similar characteristics, making it difficult to distinguish one from the other.

Signals of grift

1. Makes money young: The point of the early money isn’t that they built a big business. While that does sometimes happen, it’s to demonstrate an interest in making and selling things. If anything, it’s a bad sign if they taste the easy success of too much money young. The bigger the high school business and the more the founder brags about it, the more likely it is that they are fabricating history or learned the wrong lessons from their success. Barry Minkow is the classic example: At 16, he founded ZZZZ Best, a carpet cleaning company. However, he scaled it so fast that it turned out to be a massive Ponzi scheme, defrauding investors out of $100 million.
2. Makes money fast: If this person sold a crypto token in the last five years, you should most likely run away. Crypto isn’t all bad, but a fast way to make money is to separate retail investors from their capital. Similarly, founders can learn the wrong lessons if they make quick, easy money through summer door-to-door sales, Ponzi schemes, or day trading. Making money fast is hard, but making money fast in an unethical way is much easier. If someone did the latter, they’ve learned the wrong lesson.
3. Doesn’t hedge: This is the founder who won’t quit their job until they’ve raised venture dollars or who pays themselves a six-figure salary as soon as the business starts making money. They take money off the table at every chance and build their personal brand as a launch strategy (thereby derisking their career because they’ll have social clout to use on their next venture). WeWork’s Adam Neumann is the obvious example. As I’ve previously written, Neumann extracted money from his investors whenever he could, such that he ended up a billionaire even though his company ended up in bankruptcy. This is good for Neumann, but bad for investors and for the vision of building a world of coworking spaces.
4. Holds unpopular world views: Within Silicon Valley there is a set of so-called contrarian views that are popularly held—the 2021 move to Miami, the 2022 creator craze, the 2023 nerd-cult of effective accelerationism, and the current American dynamism movement. In isolation, none of them are bad. But when someone makes it their entire personality, and uses the status of that social circle to build momentum and funding for their startup, it’s a signal that something is off. Riding buzz to win clout is the opposite of contrarianism.
5. Builds toward an ultimate cause: This is a hyper-specific example, but I’ve seen it happen four times now. If a founder says they are building a company to eventually donate the money to help kids in Africa, they’re (probably) full of shit. I don’t know why this is the case. Kids in Africa really could use our help, but every single time I’ve heard a founder say that, they’ve turned out to be a massive grifter. 

Why the grit/grift divide matters

When a startup is just a hope and a dream, investors have nothing to go on except intuition. Venture capitalists have been mostly supplementing this instinct with dashes of sexism and racism. Black founders only raised 0.5 percent of all venture capital last year; women raised 23 percent. While this funding differential is partly to blame on honest-to-Dixie racism and misogyny, the more likely answer is that in the absence of traction, VCs have to rely on more typical signaling mechanisms: where they worked, what schools they went to, whether they pattern-match in their minds to previously successful founders. People hire people who look like them, those with similar résumés, and who share similar stories. 

In Y Combinator co-founder Paul Graham’s essay on traits of successful founders, he says:

“When we're talking about startups we think are likely to succeed, what we find ourselves saying is things like ‘Oh, those guys can take care of themselves. They'll be fine.’ Not ‘those guys are really smart’ or ‘those guys are working on a great idea.’ When we predict good outcomes for startups, the qualities that come up in the supporting arguments are toughness, adaptability, determination.”

These characteristics can exist in anyone’s background, so we should let go of some of the more obvious pattern-matching with schools, gender, and race. What we need is a filtration mechanism for the qualities that create the right type of asshole—and the wrong one.