I’ve never met a founder or fund manager I deeply respected say, “Beggars can’t be choosers.” Or “It is what it is.”
While it wasn’t the first time I’ve heard of the phrase, I liked the way a fund-of-funds GP put it yesterday. “I invest in GPs who can run through walls.”
As an early-stage investor — be it in pre-seed/seed startups or in emerging managers — there is literally no metric, no number, no amount of traction that can truly convince us just by themselves to invest. If there are, you’re too late. The truth is it’s about people. And that failing to get conviction, most of the time is we haven’t find the right person yet to execute against the vision.
It’s about people who move fast.
It’s about people who learn fast.
It’s about people who wow you in ways you don’t expect.
It’s about people who are so smart and learn so quickly that outpace your ability to absorb said information.
It’s about people (at least in the early days) rarely, if ever, hedge.
It’s about people who make us question if our thesis really matters.
It’s about people who compel us to write an angel check for an off-thesis investment.
It’s about people who will succeed whether we back them or not.
It’s about people who are ambitious enough to take on the world, but humble enough to know they don’t know everything.
There’s this line I heard in a recent Tim Ferriss podcast with Martha Beck that I really like. “I don’t know where we’re going, but I know exactly how to get there.” If you have frequent flyer miles on this blog, you know one of my favorite heuristics is Mike Maples’ line. “90% of our exit profits have come from pivots.” The ideas we invest in don’t often look like the ideas that generate us there is literally no metric, no number, no amount of traction that can truly convince — pardon my French — shitloads of money.
In fact, “It is what it is” is a function of ambition. The greater one’s ambition, and the greater the recognition there is for the work it requires to get to that level, the less likely that statement and that mentality will come to fruition. Visionaries question the status quo and challenge it. And no matter what, they’ll figure out a way.
On the flip side, as James Stockdale once put it, “You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they may be.”
The discipline of reality
I’ve never seen a great founder or a great investor not be able to intimately explain how amazing their direct and indirect competition is. How they wouldn’t be here if not for others paving the road. In either career and personal growth. Or changing the customer mindset. Or who validated the market for them. Or who created the business model before they did.
After all, it’s extremely easy to share in one’s reality distortion field how everyone else sucks, and that you are the only one who’s doing things right. Failure to recognize what got your competition to where they are today and why their customers and fans love them is a failure to understand and truly appreciate the market you’re serving.
In closing
I spend a lot of time thinking about a Jim Collins’ line, “It is not that beauty is hard to find, it’s that it is easy to overlook.”
It really is. For smart people with degrees in finance and business with C-something-A’s attached to their title, it’s really easy to see what can go wrong. Hell, most companies are default dead when they pitch to us, early-stage investors. As Roelof Botha and Pat Grady put it, “it’s not about figuring out what’s wrong, it’s about figuring out what’s right.”
Photo by Jezael Melgoza on Unsplash
Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!
The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.