By: Paul A. Jones
Many high impact entrepreneurs have outsized personalities. They combine a big ego with incredible creativity, drive and energy. Pretty much all of them that I have known have had at least one serious personality… quirk. That said, there are quirks and there are flaws, the latter being defined, for my purposes here, as traits that rub most venture capital investors the wrong way. Herewith, some of the entrepreneur archetypes most venture investors try to steer clear of.
The Defensive Entrepreneur: Defensive entrepreneurs take everything personally. When an investor asks them a probing question, they assume they are being asked to justify their existence. And that tells the investor that the entrepreneur is more concerned with proving himself than his vision. These are the folks who fear just one thing more than they fear that their startup might not work: that it might work with someone else calling the shots.
The “There is No Competition” Entrepreneur: If, perchance, a bona fide entrepreneur comes along someday who really doesn’t have any competition, I’ve got a very important piece of advice for her: make something up. Entrepreneurs who insist they don’t have any competition almost never get funded. There is always competition for the customer’s dollar. A good entrepreneur understands that every potential customer ultimately must be won with a better value proposition. Better than what? Better than the competition. Sometimes the competition is obvious; sometimes less so. But it is always there.
The God Complex Entrepreneur: The prototype here is the tenured well-published academic. Having made a name for themselves in the very demanding, cutthroat world of academia, these folks assume they must perforce be capable of building the next Merck in their spare time. Alas, as even Michael Jordan found out, different sports are, well, different. Being good at running a research lab is no more a proxy for building a business than being a basketball superstar is for being a major league baseball player.
The “I Can Do It All” Entrepreneur: A cousin of the God Complex entrepreneur, the I Can Do It All entrepreneur doesn’t understand that even if he could do everything himself actually doing everything himself is always a bad idea. Great entrepreneurs know that they need to focus all of their energies on those mission critical things that they are best at, and find and empower other folks to do the other stuff. Like the captain of a ship, an entrepreneur is responsible for everything that gets done (or not) on the ship. However, they don’t actually do everything.
The Big Business Entrepreneur: A lot of personal regrets with this one. If you think that someone who can run a billion dollar business can necessarily run a startup, think again. And again. There is not all that much overlap between building a successful business from scratch and managing an established successful business. Being good at the one is thus not a very good predictor of being good at the other. In fact, being good at running a big, established business is more likely to have a negative correlation with being able to build a high impact startup business. Beware of any entrepreneur who needs a personal assistant.
The Uneducable Entrepreneur: This can be a tough one to spot, but in an age when most startups need to pivot at least once on the road to success, it is an important one to spot. What makes this a tough entrepreneurial species to identify is the fact that most successful entrepreneurs are “often wrong, but never in doubt.” And that trait can too easily be mistaken for a lack of learning ability/willingness. Really good entrepreneurs may not always acknowledge their mistakes (though many of them do) but they clearly learn from their mistakes.
No doubt there are rule proving exceptions to each of the above paradigms. But all other things equal, if an entrepreneur can be fairly fitted into one of the above categories, they will find raising capital from smart investors more difficult than it would otherwise be – even if they are one of those exceptions. So why make it tougher than it has to be. Just stay out of the “bad attitude” neighborhood.