Adeo Ressi’s Theory of Quantified Entrepreneurship
If someone touted a secret formula for creating successful start-ups, you’d probably tell them to go back to selling snake oil.
That’s not what Adeo Ressi is claiming, but it’s close. Ressi says his Founder Institute doesn’t have a formula for creating start-ups, but instead for identifying and nurturing people who create start-ups.
“We make entrepreneurs. We take people off the streets and turn them into entrepreneurs,” Ressi said in a recent interview about the four-month mentorship program he founded.
As compared to start-up accelerator programs like Y Combinator and 500 Startups, he said of the Founder Institute, “We mine diamonds; other programs make jewelry.”
The organization now has chapters live in 32 cities, with 650 companies graduated in the past three years. Graduates include the founders of start-ups like Udemy, CakeHealth and Explorence (which I just profiled).
According to Ressi, the secret behind such a massive distributed system is an internal dashboard that scores every interaction between mentors and entrepreneurs.
So just like some people measure their workouts, their sleep and everything they consume — what’s sometimes called “the quantified self” — Founder Institute uses this Web-based dashboard to try to measure everything about what it takes to find and coach a successful entrepreneur.
The dashboard starts at the admissions stage, helping to process some 10,000 applications per year. This is not just your standard “I’m smart and I hustle and I have a cool idea” essay question; the Founder Institute requires a personality test.
The test scores applicants on their “fluid intelligence” for entrepreneurial ability on a scale of 0 to 5. So someone might be internally branded as a “3.87” — a relatively good score. This score gets fed into the dashboard, and is permanently associated with each accepted participant’s profile.
Ressi took me through the dashboard last week, being careful to screen out actual names. Which was only proper, given the system even includes “personality flags” identified by the test. One student was accepted into a recent batch along with the internal flag that he or she had “predatory parasite” tendencies. Yikes.
Throughout the program, participants are graded on their interactions on that same scale of 0 to 5. Each meeting with a mentor — people like Mint’s Aaron Patzer and Evernote’s Phil Libin — yields a new score to factor into the running average.
Success in the program means beating your entrance score. Ressi said that over the lifetime of the program, 86 percent of accepted founders earn ratings the same or above where they were evaluated coming in. (The founders aren’t told their personality score, but can see their average performance scores.)
It should be said that from what I saw, there didn’t seem to be a ton of variation in the scores. Many of the accounts we looked at were rated in the vicinity of 3.5. But here’s an anonymized class so you can see for yourself:
In keeping with the philosophy that everything can be measured, mentors get scored within the dashboard as well. And the ratings actually count for something. If a Founder Institute start-up is bought, cash associated with 3.5 percent of the company’s equity is split between the Institute, other start-ups in the class and the mentors — weighted by their mentorship scores.
An entrepreneurship factory isn’t going to be for everyone, and though the initial Founder Institute cost is $900 per person, there’s a non-trivial mess of fees associated with using the program to get funding. The Founder Institute has its lovers and haters — you can read more testimonials on Quora.
Ultimately, entrepreneurs are measured by what they build, so the final section of the Founder Institute dashboard tallies their start-ups’ progress. At the time Ressi and I talked, of 619 companies who had graduated over the past three years, 92 were dead, 125 were “hibernating” (often because the founder still had a day job), 258 are funded, and nine of those had raised Series A funding or were profitable.