SubscribeMore Investment Tips from My Father
In my early years of learning the venture capital business, both my father and his business partner instilled upon me to beware of the entrepreneur who names the business after him or herself.
Entrepreneurs are motivated by many things but if we want to over simplify a bit we can put them into three buckets. Ego driven, money driven and those simply incapable of working for others. I'll throw out the last group in that series because they are such an odd lot that I still have not figured out how to deal with them. That leaves ego or money driven entrepreneurs.
Every entrepreneur needs a healthy dose of ego. Ego enables bold moves and offers a coat of armor from naysayers, skeptics and competitors. But an overdose of ego blinds entrepreneurs from reality and can come in conflict with decisions that are best for the company as a whole, not necessarily for the leader.
Money driven entrepreneurs realize that to maximize their benefit, they have to make decisions that are right for the entire business. Sure, they can play loose on the margin but the real wealth is going to be created if the business is successful and they know they are inextricably linked to the business.
My father and his partner started initial meetings with entrepreneurs with the question about goals. If the answer was around creating technology, growing the business, making a difference they made a note of concern. If the answer was to 'make a boat load of money' they proceeded with further discussions. They got burned by a founder who raised money from them (who had already named the company after himself). When they attended the first board meeting at the company they noticed the sign in the parking place saying "Reserved for the CEO" and a 7 series BMW parked in the spot. Once bitten, twice shy.
Entrepreneurs are motivated by many things but if we want to over simplify a bit we can put them into three buckets. Ego driven, money driven and those simply incapable of working for others. I'll throw out the last group in that series because they are such an odd lot that I still have not figured out how to deal with them. That leaves ego or money driven entrepreneurs.
Every entrepreneur needs a healthy dose of ego. Ego enables bold moves and offers a coat of armor from naysayers, skeptics and competitors. But an overdose of ego blinds entrepreneurs from reality and can come in conflict with decisions that are best for the company as a whole, not necessarily for the leader.
Money driven entrepreneurs realize that to maximize their benefit, they have to make decisions that are right for the entire business. Sure, they can play loose on the margin but the real wealth is going to be created if the business is successful and they know they are inextricably linked to the business.
My father and his partner started initial meetings with entrepreneurs with the question about goals. If the answer was around creating technology, growing the business, making a difference they made a note of concern. If the answer was to 'make a boat load of money' they proceeded with further discussions. They got burned by a founder who raised money from them (who had already named the company after himself). When they attended the first board meeting at the company they noticed the sign in the parking place saying "Reserved for the CEO" and a 7 series BMW parked in the spot. Once bitten, twice shy.