Back the Right People
That’s easy to say, and hard to do
The woman in Eugène Delacroix’s painting Liberty Leading the People is leading her compatriots to either a glorious resolution or a military debacle. Which it is will be obvious after the fact.
In searching for the next new thing, Belinda Lanks said,
I am looking for one gobsmackingly clever idea executed with awe-inspiring skill.
Nothing describes the next new thing better than “gobsmackingly clever.” The challenge is in Version 1.0 “gobsmackingly clever” isn’t obvious and likely needs a lot of work though before it’s ready for prime time.
Veteran venture capitalist Thomas J. Davis said,
The principle for picking a winning investment is simple⎯back the right people.
The sum total of my scars is that is easier said than done.
Legendary venture capitalist Arthur Rock reinforces Davis’ insight,
Nearly every mistake I’ve made is picking the wrong people.
Did I mention my scars?
Thomas Friedman quoted former Chairman of the Joint Chiefs, Martin Dempsey,
In the past we would have said we want men who are physically fit, educated, and disciplined. Now, what we say is that we want someone who wants to belong to a values-based group, who can communicate, who is inquisitive, and who has an instinct to collaborate.
I’ve spent lots of time with principals of venture capital firms who reinforced how important picking the right people is. I’ve also spent lots of time with analysts on Wall Street representing KEMET, a New York Stock Exchange company I worked for. I found it curious how seldom analysts focused on the people running the company. This wasn’t because the analysts didn’t think leadership was important, but because in a large, professionally managed corporation strong leadership was a given.
But there’s another reason for the difference. Transformational ideas don’t spontaneously combust out of the ether of the universe, but spring from the informed intuition of passionate people. In the beginning, an investor is betting on the leader’s informed intuition about what new customers value and how to deliver it to them. This knowledge is inherently personal.
Those with intuitive insights about new business opportunities often are not the stars of your current business. They likely are not technical experts without market knowledge, nor market experts without an understanding of capabilities.
Straddling the edge of your organization, you can find experienced, intellectually curious people with diverse relationships who often are the first to see the emerging intersections of evolving customer needs and advancing technical capabilities. People who successfully convert insights into opportunities are usually very passionate and tenacious about their ideas, which is essential to overcoming the inevitable naysayers and setbacks in pursuing an uncharted path.
People often experience informed intuition as “connecting the dots.” Their insights are not dataless, but their knowledge initially is informal, personal, and not fully formed. Others are not as prepared as the experienced people with the insights to see the emerging opportunity.
South Carolina Governor's School of the Arts and Humanities founder Virginia Uldrick emphasized,
Being out-of-the-box does not mean being unaccountable. It means being more accountable because you have the privilege of coloring outside the lines.
In an emerging market, getting the product and the business model right is an iterative process. Mistakes will be made.
Jim Anthony, the founder of the high-end resort Cliffs Communities, learned some of his biggest lessons from projects that failed.
I will never forget when we had this community where we were going to have horses. It went over like a lead balloon. I wound up giving the horse stables to the property owners, and they didn’t want them.
All of us are going to make mistakes at the beginning. When you make a mistake, make it small enough that you can overcome it and don’t make it twice. None of us have been around the curve, so we can’t look around the curve and see what the danger is.
Take responsibility for whatever happens, because taking responsibility is really the first step to learning from your mistakes.
Because informed intuition is a personal form of knowledge, a great deal of trust must be placed in the person with the intuition. This only works with people who inspire a high degree of confidence because they adhere to strong, core values.
Especially early on, backing the right people is very easy to say, and very hard to do. But backing the right people is essential to success.
