Contrary to popular belief, there is no such thing as an absolute “good trait” or an absolute “bad trait”. There are times that being aggressive is a good thing and there are times that being selfless is a bad thing. Context matters.
To this end, I wanted to share my thinking about a particular Entrepreneurial trait that most people believe is universally good and is without exception considered one of the must-haves of a backable Entrepreneur. As an Investor you look for signs of its presence through references and direct conversations. As an Entrepreneur you tell tales from your past with pride in an attempt to prove its existence. Many times it’s the reason an Entrepreneur succeeds. And unfortunately, I also believe that it’s frequently the reason behind many failures. The trait I’m referring to is “tenacity”.
Many of you may be thinking “how can being tenacious be a bad thing?” The answer is simple. Tenacity can easily transform into stubbornness and stubbornness can blind an Entrepreneur to the truth. And since the truth is almost always dictated by a business’s customers, an Entrepreneur should know how to launch, listen, evaluate, adjust and re-launch without compromising his or her greater mission. But many can’t do this and it can lead to downfall.
My advice to Entrepreneurs is:
While this sounds simple, it’s actually difficult for many strong personalities to accept. They obsess about a problem and can articulate facts about the competition, the market need, and why conditions are finally right for a solution to emerge (good tenacity). But sometimes they believe that their initial solution is the one and only answer to the problem (bad tenacity = stubbornness). They can easily get over-invested in the work it took to get from Point A to Point B and want to move on to Point C to show continued progress. But sometimes when a business arrives at Point B the current plans need to be scrapped because the market isn’t reacting the way you want it to. While this can hurt quite badly, many times it’s better to re-trench than march forward.
And the same blindness exists within the Investor community. Just last week I was talking to an Investor about an early stage company and in our conversation they confidently told me the following: “I don’t trust the Founder because he’s changed the business’s model already. If he doesn’t have the tenacity to stick with his model and get it to work then I can’t back him.” For context, the company we were discussing is precisely 9 months old and its mission hasn’t changed one iota since inception. What has changed is how they plan on attacking the problem they’ve identified and these changes were made based on conversations with prospective customers and experts in the field (including me!).
The tricky balance that’s grossly mismanaged more frequently than not is to make sure that a business is capitalized enough to allow for changes. If an Entrepreneur only gets one “at bat” then luck is playing a pretty big role in the success or failure of the business. If you get multiple “at bats” then an Entrepreneur has a realistic chance to pull together a winning business model.
While I’ve met many brilliant Entrepreneurs in my journeys, I’ve never met one that’s 100% right 100% of the time. The best you can hope for is that they’re 100% right about the problem they’re attacking and that they’ll figure out the solution on the way. And as an Investor you have to realize that change is precisely what you want because counting on the Entrepreneur to be perfect is a fantasy standard.
So, don’t forget that it’s essential to stay true to your mission but NOT to the solution.