I started the series talking about what I consider the most important attribute of an entrepreneur : Tenacity. I then covered Street Smarts, Ability to Pivot, Resiliency, Inspiration, Perspiration, Willingness to Take Risks and Detail Orientation.
The list is getting quite long. Funnily enough I was at the Twiistup conference yesterday and I was chatting with an engineer whom I really like and he told me that he enjoyed reading this series but that now he wasn’t sure he was ready to see me because he wasn’t sure that he scored highly enough on all attributes. So I thought I better set the record straight. First, I personally am not super human – I hope I’ve never implied that. I’m just a normal person with strengths, weaknesses and idiosyncrasies - just like you.
Nobody can be super human all all fronts. Mark Zuckerberg seems to be me to be one of the most talented young technology professionals of his generation and seems to have an amazing vision for technology and product. He has a willingness and ability to both pivot & take risks in a way that is astonishing to me. Yet I don’t find him to be personally inspirational nor have I heard that he is from those who have worked around him. So I’m personally not looking for a 10/10 on every front. You need to be extremely gifted on some fronts to be enormously successful as an entrepreneur – but still human.
OK. I had to say it.
9. Competitiveness - One attribute that I believe most VCs look for in entrepreneurs is competitiveness. I know I do. I like to work with people who hate to lose. Anyone who has ever been around me when I’ve lost at anything I care about will tell you I’m not pleasant. I’m not a poor loser at all. It’s just that I stew on it. I don’t recover easily. I lose sleep. If I have any angle of changing the outcome I will. I replay things in my mind about why I lost and I try to correct my mistakes. If you haven’t read my post on the topic it’s here –> why you need to embrace losing to learn.
I look for people who share this obsession about winning. If you stumble on to a really good idea believe me it will get competitive really quickly. It amazes me how quickly a modest success story gets replicated and any initial product / market advantages get narrowed. You can’t accept simply ceding part of the market to someone else because it’s big. You need to fight for every inch. Every win.
The trait spills over from personal life to business and back again. My wife finds it curious. Family scrabble games are fun – but I still want to win. We played against her parents and I was focused. I wanted to take them down! Poker night is social, but if I’m playing, it’s to take your money. GuitarHero is seriously chilled out way to hang out with friends. But even more so if my score is higher than yours. I ran a marathon with my colleague in 2003 – I’m still bummed that he beat me even though he was clearly more athletic. For me winning IS the fun.
I know that people who aren’t competitive always find competitive people slightly distasteful. They feel that there’s something egalitarian about everybody getting a trophy. They complain that trying to win at everything is in being over zealous and is unnecessary. Maybe. Anyway, I’m sure this will play out in the comments section – it won’t be the first time I’ve heard it.
It is what it is. But I want to work with people who thrive on winning. I look for that fighting spirit in those that present to me. Entrepreneurs play to win and they take losing seriously. Think Mark Zuckerberg doesn’t have some sleepless nights about Twitter despite having more than 350 million users himself? Think Yelp doesn’t wake up daily thinking about how to crush FourSquare? Think Marc Benioff is content with being a billionaire? I’m sure he seethes at any losses to Larry Ellison.
Steve Jobs is famously known for being obsessive about people not leaking Apple information prior to announcements (unless it’s intentional.) It is rumored (and much debated) that Jobs dropped McGraw Hill (the book publisher) from any iPad announcements because their CEO went on CNBC the day before and talked about the iPad. Certainly sounds plausible to me. You don’t like leaks? Send a message and people will think twice next time.
Don’t take it from me. Take it from Leo “The Lip” – “nice guys finish last.” Steve Jobs isn’t a “nice guy.” Nor are Bill Gates, Steve Ballmer, Marc Benioff, Larry Ellison, Tom Siebel, Rupert Murdoch, Barry Diller or any number of people you’ll find who built empires.
I’m not looking for people to be mean and certainly not unethical. Just people who play to win – every time.
Simple example. We were once looking at a very hot market segment (which I can’t name or the people I’m speaking about will be obvious). We were considering funding one of the players in the category – call them Company A. I knew the CEO of one of their competitors – Company B. I called her to talk about her business and disclosed that I was talking to one of her competitors so that she didn’t feel compromised talking with me (we also disclosed to Company A that we were talking to multiply parties before reaching a decision).
Company B had already lined up a significant funding round ($20 million) from some of the most elite VCs on Sand Hill Road but hadn’t signed the term sheet. She asked if she could fly the next day to meet with me and my partners. I didn’t understand why she wanted to do this if she already had lined up such A-list investors but it was in a segment where GRP Partners is very strong so I it sort of made sense to me. We rallied the troops to do a 6-8pm session the next day. She brought her key team members and emphasized why their strategy was so much better than Company A and other players in the market. It was very compelling.
In the end we decided not to invest in either company (retrospectively a good decision as the market is no longer “hot” and both companies have struggled). I later reflected on why the CEO of Company B was so eager to meet my firm and at a moment’s notice was willing to fly her team to LA to take an evening meeting. We’ve never discussed this but I’m convinced it was her competitive juices. She couldn’t stand the thought of her main competitor locking us (or anybody else) up as an investor. My gut says that she came 70% as a spoiler for Company A and 30% because GRP has a great reputation in this space. I only say this because if you’re close to closing with A-list VCs – why rock the boat? Closing funding of her own wasn’t enough – she wanted to affect the ability of her competitors to raise funding.
This competitive streak paid off. We backed off our investment consideration because we were convinced that Company B was going to be a very fierce competitor (amongst other reasons). Company A never raised their round. 6 months afterwards they laid off 75% of their staff and are existing on fumes to protect their IP to this day. Brand name Silicon Valley firms had put in about $20 million into Company A. Company B is struggling, too. But they’re a viable business today and they have one less fierce competitor to contend with.
Another example. Everybody these days is fascinated by the “private sale” concept offered by companies like Gilt, Ruelala and HauteLook.
There are some great companies in this category but the initial category killer was a company called Vente Privee (which in French literally means private sale) from France. From what I’m told the founders were already in the Schmatta (Jobber) business selling other people’s excess end-of-line inventory at bargain prices before there was an Internet angle. There wasn’t the same end-of-life retail infrastructure that we have in the US (think TJ Maxx) so they had an early lead. When the Internet part of their business took off there were a number of initial competitors.
Vente Privee already had market power. They made it clear to suppliers that if they supplied these newly formed competitors then Vente Privee (by then a powerhouse) wouldn’t carry their products. This was a bare knuckle industry. It wasn’t good enough to win the largest market share – they wanted to crush their competitors. Money was at stake. Good competitors fight to win (within the boundaries of legal practices, of course).
Just ask Overture about Google (the “do no evil” company) and how they competed in international markets. It wasn’t all smiles, hugs and let the best man win. A lot was at stake and Google competed fiercely. And won.
*** oh, and to close with some Leo Durocher quotes that are fun:
“As long as I’ve got a chance to beat you I’m going to take it.”
“Buy a steak for a player on another club after the game, but don’t even speak to him on the field. Get out there and beat them to death.”
“How you play the game is for college ball. When you’re playing for money, winning is the only thing that matters.”
“Show me a good loser in professional sports, and I’ll show you an idiot.”
“What are we out at the park for, except to win?”