Losing Money for a Living
Yes, you read correctly.
It is possible to make bad calls and still make money. It is possible to invest companies that will fail and make money. Lots of it.
People have to be honest and acknowledge that some of their investments will fail and will become worthless — and that is okay. As soon as you become comfortable with this, you are one step away from becoming a great venture capitalist.
Not long ago, I had the opportunity to meet Janet Bannister, founder of Kijiji — the most popular online classified service in Canada. Prior to Kijiji, she worked at a few other amazing companies: P&G, McKinsey & Company, and eBay. In 2014, she became a venture capitalist at Real Ventures. Needless to say, she had lots of great and sound advice to share about the many things she has learnt throughout her career and about what it takes to build great companies.
The special part about this encounter was her take and unique perspective on the world of venture capital. She said:
As a VC, your mistakes are out there. You are going to invest in companies that might fail and everyone is going to know about it.
Being able to cope with failure is critical in the world of investments, you cannot let emotions and irrational thought take over. Not only that, but as a VC, in order to innovate, push boundaries, drive economic growth, and create wealth — you must fail. Over and over. Until you hit the sweet spot.
There will be an opportunity that will enable you to offset your losses through a generous return, but for that to happen, one has to keep looking. There has to be a strategy of course, but most importantly, you have to be comfortable with having everyone stare at you while you fail.
Venture Capitalists lose money for a living.
