Investors know that trying to pick the right startup to fund is a hit and miss affair. We do a lot of due diligence and analysis, but the truth is that it’s usually a gamble because it’s impossible to predict which one will succeed, and which one won’t. After all, at such an early stage, there are very few metrics one can analyse so we are forced to go by our gut feel.
This is why the rule of thumb is that you should back the founder – which is why the bet is always on the jockey and not the horse. This is why we try to assess the founder’s charisma. Is he capable of selling his dream? Attracting the right team? Does he have the X Factor which blows you away?
Passion Is Key
That’s why we pay so much importance to how passionate the founder is. This is key because running a startup can easily consume all your energies. It needs to be the most important thing in your life if you want to be able to pull it off successfully, which is why single-minded focus and passion is so important.
However, as with all things, too much passion can backfire too. The trouble with someone who’s too passionate about his solution is that he may get obsessed with it. He may start believing that his product is the only correct answer for the particular problem that he’s addressing. He has spent years researching the market, and cannot understand why other people don’t get it – why they don’t understand his vision.
He is frustrated when customers aren’t willing to buy his product. How can they be happy to muddle along with whatever suboptimal jerry-rigged solution they have been using for many years when his is so much better? Why aren’t investors willing to fund him? Can’t they see how superior his product is as compared to the competition? He gets trapped in his own thinking, and his passion becomes a prison which affects his ability to be able to think clearly. He can no longer understand the way the rest of the world thinks because he is no longer on the same page as them.
Luck Matters Too
Now, he may still get lucky (I’m using the word very deliberately, because a lot of startup success depends upon being in the right place at the right time). He may be able to get someone to buy into his vision and succeed, even though the odds are stacked against him. This is the reason why people like Steve Jobs and Elon Musk are such heroes for today’s young entrepreneurs – because they have been able to translate their passion into reality.
However, they are outliers, and trying to model your startup on them is doomed to fail. Passion is definitely not sufficient for startup success – and may not even be necessary. In fact, it can backfire, because the founder is so convinced that his vision is the only right one that he refuses to listen to reason. He is not willing to accept advice from anyone else. He becomes a bit maniacal, and this is one of the reasons why startups fail.
While being passionate is fine, you need to marry it to calm reason if you want to create a successful company.
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
