Tag Archives: winning

What I Look for in an Entrepreneur

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  1. Uncanny drive in a clear direction. Conviction.  
  2. Knows his/her companies secret sauce and guards it, grows it.
  3. Complete integrity.  His/her past decisions and actions should be evidence of this.
  4. Manages leanly.  Avoids waste.  Manages time and money well.
  5. Builds and inspires his/her village:  employees, investors, advisors
  6. Minimizes risk.  An entrepreneur is by definition comfortable with risk; but the best ones don’t seek risk, they seek to minimize risk
  7. Business ability.  There is no free lunch.  The usual qualities of successful business people are important:
    • Intelligence
    • Decision making skills; particularly knowing when its time to wait and assess, and time to decide and act
    • Organization and time management
    • Leadership; motivating and managing people
    • Education (of note, First Round reviewed their 10 year history, and found that their portfolio companies with one or more founders with a degree from an Ivy League School, Stanford, MIT, or Caltech, performed 220% better than other teams).
 Red flags
  1. A cavalier attitude to failure. Failure is not a virtue, despite what you might read or hear.  Failure has no inherent value and is the worst outcome for investors.  Of course, many monumental successes have been born out of failure — it can create time to think, learn, change, and be brilliant — but its what you do after a flop that counts.
  2. A lack of relevant experience and skills, especially when you don’t appreciate what you don’t know, and don’t build a “village” to compensate.

Winning

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Winning.

A path to market leadership.   I look for this in every investment I make.

“It’s a big industry…there will be many players…we just need a x% slice and we will be a success.”  What b.s.   That a prescription to be one of the 9 in 10 early stage companies that fail and fail soon.

A great idea is the first step, but  there are lots of smart people out there and their attention is often focused on the same problems at around the same time.  At the dawn of search, there was Infoseek, Alta Vista, Dogpile, Excite, Lycos and others.  Now google dominates.  When it comes to profitability, the winner takes it all, and the runner ups are burning cash trying to catch up.

number one“Winning isn’t everything; it’s the only thing.”  So said Vince Lombardi.*

Information and intelligence can spread like wildfire. Network effects are an accelerant.  The biggest network quickly becomes the most useful and shortly the only one needed.  Market share and profitability correlate.  The premium to being #1 is increasing all the time.

Sure, there exceptions, like when the relevant market is just your local neighborhood, and there is a dry cleaner on every block.  But the most attractive markets are national and global.

 

What does this mean to an early stage investor?  That is a full topic for another day, but I’d rather hear “We want to be #1 and here’s how” instead of seeing an entrepreneur wave a giant red flag with “We just need our share.”

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*And UCLA’s Red Sanders…read “What it takes to be Number One” if you are interested.