Wednesday, September 14, 2011

Envelope for Risk: What's the Mindset of Your Investors?

Just got off the phone with a CEO friend of mine. He'd just finished a board meeting that left him exasperated and frustrated. Yes, I played therapist.

The root cause?

His investors are surprised by pivots, are focused on the downside, lack political will in their partnerships, and inject insecurity and fear into the company rather than serve to relieve it.

I am very lucky to have investors (Sequoia Capital, General Catalyst, Hummer Winblad, NCD Investors) who are committed to building durable, stand alone businesses, who recognize that all overnight successes are born from years of hard work, persistence, and obstacles over come, who are comfortable with a large envelope of risk and volatility.

Too many venture investors focus on plan A and are shocked to hear there is a need for a plan B - the best are surprised if there ISN'T a plan B or a need for one. Too many investors shrink from risk and encourage safety and certainty over ambiguity and daring.

Mindset...find out the mindset of your investment syndicate and recognize that their ability to live with risk, ambiguity, and change may well be a key determinant in whether you create a stand-alone, enduring business or are forced into a quick sale or, worse, liquidation.

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