Back in November I agreed with Nivi over at VentureHacks to do a series on the ten most important attributes of a successful entrepreneur. This is the last post in that series.
This is actually an addendum to my list rather than “on” my list. That in itself will be controversial, I know. When Nivi published the series he titled it “the top 10 things I look for before I write a check.” As a result I felt compelled to add this final attribute because it matters a lot to me. Unfortunately, I don’t believe it is perfectly correlated with what it takes to be a successful entrepreneur.
12. Integrity – The most obvious attribute that isn’t on my original top list is “integrity” or honesty. If I thought I could make a lot of money backing somebody that made money through low integrity I would personally pass.
I know that sounds trite but that is exactly how my firm talks about things in partner meetings. If we’ve seen a company present where we feel that the CEO is shady. It becomes a large part of the conversation in our partners’ meeting afterward. A few months ago we saw a CEO present who had personally made hundreds of millions of dollars in a financial services business and had a plan to capitalize on the current market conditions. A large part of our post meeting conversation was how we felt the individual seemed to be of low integrity. We thought he might actually find a way to make money again – but we decided he wasn’t the type of individual we could work with.
Another CEO presented to us from a company that was growing at a tremendously fast clip. We were super excited by their offering – they had patented technology in a field that we believe will continue to grow massively. During the final pre-term sheet due diligence we discovered that the CEO had had a felony arrest for a significant crime that he hadn’t disclosed to us. When confronted with this he told us, “Oh, I thought I told you. We certainly told every other investor we had spoken with. It must have been an oversight.” I called two other firms we knew he had been speaking with – he hadn’t disclosed it to either of them but both of them had found it during their due diligence.
As usual it wasn’t as much the initial crime that bothered me as it was the bending of the truth afterward that he felt comfortable with. I’m not sure how we would have responded if there would have been an initial disclosure – I’ll never know. Perhaps VC isn’t the vest route for this individual. It’s a shame because as a person I really liked and felt connected with him and his business seems to still be thriving.
I’m proud to say that most early-stage VCs that I know really do care about making money ethically. So consider integrity on my personal list of attributes required to raise money from a reputable, early-stage VC. I know that many media outlets would like to portray this in a different way but knowing many of these individuals I believe it is true for most. When companies start to make huge sums of money it’s always easy for the media to question the integrity of the company.
Unfortunately people with low integrity can be successful and can raise money from investors. I personally know a billionaire CEO who I wouldn’t put high on the list of people with high integrity but he built his company from scratch to become a very large enterprise. He is well respected (but not liked) in his industry and in his company.
He has a lot of money to spend on personal marketing so the story is written as he wants it to be. But I have seen his actions at close range and would not claim that they are high on the integrity scale. I’ve heard this about similar technology executives of some of the biggest names out there in history.
I also know him to not be a very happy man. Money can buy a lot of things but as the saying goes it can’t in and of itself buy you happiness. I believe that true happiness comes from a sense of fulfillment, giving and doing what your moral compass knows is right.
Better that you be this person, whatever level of business success you achieve in life.
(any guesses what the image is from?)
