Early stage venture is a lot about the entrepreneur - who that person is and what she or he is capable of. Through my investing career, I've identified the must-have universal attributes that define great entrepreneurs, and recently found them all embodied in an unlikely entrepreneur far from Silicon Valley.
Early stage venture is a lot about the entrepreneur--who that person is and what she or he is capable of. As an investor, my filter has become quite honed in terms of what to look for in the best entrepreneurs.
On a recent trip to Ireland, I participated in a guided hike of the rugged Cliffs of Moher. The hiking guide was Pat Sweeney, an Irish farmer. About seven years ago, Pat took it upon himself to convince 39 farmers who own land along a beautiful section of the Cliffs to work together to build a hiking trail. After much hard work and negotiation, the Doolin Cliff Walk trail opened to the public two years ago.
Listening to his story during the hike, I thought of how many similarities there are between Pat Sweeney and the kind of technology entrepreneurs we invest in.
Be passionate about your vision
Pat was clearly passionate--obsessed, really--about wanting to build this hiking trail and improve his community by doing so.
Our best entrepreneurs are obsessed about the problem they are trying to solve. The great entrepreneurs constantly think, talk and work on the problem they are solving. They continually look for value creation opportunities for their company wherever they are and with whomever they talk, and continually drive their company, team and product forward.
The quote on my bio on our website reads: "We invest in entrepreneurs who can see a path to disrupting large markets that most of the rest of the world doesn't see." I strongly believe that focus, passion and deep engagement to a vision are critical elements of effective innovation and company building.
Pursue a big, bold opportunity
Pat knows that the farmers don't have any use for the edge of their farming land by the cliffs, so he figured they should all share the beauty of some of the most dramatic cliffs in the area while at the same time attracting tourism to the area to help to support the local economy post-recession. Pat rallied the farmers by talking about the opportunity for them to pass along a new source of income to their children and to many future generations.
"Success" will mean different things to different people. Some entrepreneurs want to build a lifestyle or a self-sustaining business without ever raising money, some are happy with smaller outcomes, and others want to really swing for the fences and aim to build a business that grows relatively quickly to $100Ms of revenue. There is nothing wrong with any of these possible paths, but know which one best suits you and only raise venture capital if you are truly going to swing for the fences against a large market opportunity.
Tell authentic stories
As Pat talked about the Cliffs of Moher and the general Doolin area along our hike, I found myself drawn into his story of building the path. Pat pointed out the swim holes and fishing areas he frequented while growing up, and how he learned from his father how to stay safe while swimming and fishing in the "Devil's Hole." He told stories about various large stones along the trail, including a two-ton stone that was thrown to the other side of the trail by a recent hurricane.
Jennifer Aaker, a Professor of Marketing at the Stanford Graduate School of Business, says that authenticity and empathy are two critical elements of effective storytelling. Like Pat, our best entrepreneurs connect with people emotionally and rationally. They sell their vision in an authentic and often endearing way, which enables people to understand and remember the main points these entrepreneurs want to make. Through authentic stories, these entrepreneurs inspire and empower people to help make the company successful in whatever way they are able.
Learn how to negotiate and problem solve creatively
Pat told us how he had to negotiate differently with each of the 39 farmers whose land is along the hiking path, according to their varying interests, concerns, and personalities. The Irish government also thought that the hiking path should go along an old dirt road inland a little ways, but Pat believed that the path should be closer to the cliffs for better views. So, Pat got the farmers together to ask for their support and when the government asked for a vote, the farmers all voted together to get the hiking path closer to the cliffs.
Effective entrepreneurs figure out a way to influence those around them, even when they don't have direct authority, which is one of the most challenging kinds of negotiation. Some entrepreneurs attempt to blunt force their way through problems. This works for some, but those who don't have the rare charisma of Steve Jobs end up alienated and causing more harm than good through this approach. The most skilled entrepreneurs I know remain objective when problem solving and negotiating. They focus on getting to an outcome that creatively maximizes value for all, and they don't make it personal or emotional.
Reward those who play a key role in helping you realize your vision
Pat built an ecosystem to help get the trail built that included the local farmers, community, and the government. He also wasn't afraid to reward those who helped make it possible to get the trail built. For example, the farmers get a stipend for allowing hikers to use their land for the trail.
I encourage entrepreneurs to give small amounts of equity to strengthen buy-in and support from key stakeholders in their particular ecosystem, whether they are helpful advisors (typically a small amount of options that vest over a two year period) or key initial customers who are willing to be patient while the entrepreneur is building product/market fit and who will be a strong reference customer (typically in the form of warrants). The saying, "It takes a village..." can equally be applied to raising children and to scaling startups.
Listen to feedback
Pat listens to others who have suggestions about how to improve the hiking trail and the hiker experience.
Likewise, our best entrepreneurs listen to feedback from the market, their customers, relevant advisors and board members. They don't just blindly follow what they are told; however, they synthesize all of the input, make the best decision they can based on what they've heard, and then act on it. Entrepreneurs who don't listen to relevant sources of input often make strategic mistakes, which set their company back.
Do what you say you're going to do
Pat built a strong reputation for doing well by the farmers and the local community. He also set expectations and communicated clearly with all involved in the project.
Just as we try our best to do what we say we are going to do, we expect entrepreneurs to do the same. Whether it is related to hiring, firing, raising money, product building or growing revenue, we expect our entrepreneurs to communicate with the board, set clear expectations, and then deliver. This goes a long way towards building trust and a healthy partnership between the entrepreneur and investors as the startup scales.
If you're like Pat Sweeney and you are pursuing a large, unmet market need with a disruptive product or service, you've taken a giant leap towards setting yourself and your company up for success. And you're the type of entrepreneur that I would want to back.