More than just big ideas
By Gabey Goh April 11, 2013
- Veteran entrepreneur Gary Vaynerchuk ‘amazed’ at rise of impatient, unrealistic expectations among some founders
- There are those who believe they can sprint to success but not willing to take entry-level jobs to develop their skills
I HAD the pleasure of attending a 500 Startups Demo Day in New York earlier in the year, which showcased over 30 companies to a roomful of investors.
For those wondering, 500 Startups is an early-stage seed fund and incubator program that invests primarily in consumer and small to medium-sized business (SMB) Internet start-ups, and related web infrastructure services.
It was certainly an eye-opening experience, it being my first exposure to how the “big boys” do things State-side, and served as a stark reminder of how much more work needs to be done with Malaysia’s own start-up ecosystem.
In case you were wondering, yes, the pitches were more polished. Yes, each start-up had a unique hook or twist to brighten up its presentation. And, no, they weren’t all American, with start-ups from India, Brazil and Taiwan also in the mix.
And yes, all the start-ups had at least 50% of the money they needed already in the bag before they even walked onto that stage.
Most amusingly, almost all of the start-ups with a user-centric model displayed that wonderful ‘hockey stick’ line graph which charts their explosive growth — just after they joined the incubator.
It would probably make for an interesting discussion about the advantages of joining a ‘named’ incubator over not joining one at all — but let me save that for another week.
Instead, the message I wanted to share this week is the main observations that came out of the closing segment of that demo day — an interview conducted by 500 Startups founder Dave McClure with investor and entrepreneur Gary Vaynerchuk.
It was an extremely informal chat, complete with F-bombs liberally sprinkled, focused on Vaynerchuk’s views on the American start-up scene.
If there was one overarching message from the entire talk, it was this — it almost doesn’t matter what the start-up’s idea is about; it’s the people driving it which serves as a better determinant of success for investors wanting to take a chance.
“There have been plenty of people who blew having a lot of users because they didn’t know what to do with them,” he said.
In his view, most investors make the mistake of looking at a start-up’s idea and projecting its success based on how they themselves would grow the company and not on the people who are actually doing the work.
“In my case, I’m truly obnoxious and believe I can make it work but you realize that not everybody is like you.”
And in a space typically dominated not long after by clones and ‘wannabes’ once a breakthrough concept has been launched, it boils down to how good the executers you’ve picked, really are.
“We think too much that we have Nostradamuses in this industry,” he said. “We don’t. We have fast followers and then they execute. That’s what a lot of us should be paying attention to.”
Vaynerchuk (pic, Wikimedia Commons) talked a lot about looking into the people behind a start-up and what they’ve done to better evaluate an enterprise — and it’s not about which university you graduated from.
If you don’t have a degree, then the question becomes what you have executed in the past, be it setting up previous companies to selling ice cream for extra cash when you were 14.
What was most interesting was his observation about Number Ones versus Number Twos or Threes.
“I’m investing in things now with the thought, ‘I think this person is going to fail, realize it, and then I’m going to hire them to do something for me’,” he said.
“And I’m not saying this in a bad way, there are a lot of people who just kill it when it comes to operations. To be the number one, the entrepreneur, you have to be wired a certain way. It’s a different kind of pressure where you’ll need to hold your breath until just before the train hits,” he added.
With more and more people now founding their own companies, he has come to observe that while many make good CEOs, the bulk of them make fantastic CMOs or COOs.
“I have a big appetite for number twos and threes right now because I think they are grossly under-rated and undervalued. I can make a ton of people boatloads of money now instead of them wasting their time starting a company and then seeing it fail,” he added.
And it’s not just seasoned operators who need some perspective on where they sit in the hierarchy. Vaynerchuk also expressed his amazement at rise of impatient, unrealistic expectations among some founders.
“I met a 23-year-old who wants to live this dream we’ve been selling in this space, that’s nuts. They talk like they’re running out of time and I’m like ‘dude you’re 23, chill out and work till you’re 26, have a couple of hundred thousand in the bank then go do something you’re really excited about,” he said.
While his beef is with the US-based youth, it is a pet peeve that I myself have addressed in previous editorials concerning the local scene.
And Vaynerchuk also took issue with those who believe they can sprint to success but are not willing to take entry-level jobs to develop their skills at companies that have been successful.
“I’m blown away by how infrequently newcomers don’t do whatever it takes to work, be it for free or for a much lower salary, for those in the major league startups that have made it. You can’t learn any of this in books, you need to get in there and see it,” he said.
To watch the full interview with Vaynerchuk, check out this link.
This column originally appeared in the Metro Biz section of The Star and is reprinted here with its kind permission.