Jim Collins on Startup Communities

I watched this very powerful talk between Jim Collins and Brad Feld. It’s well worth the 45 min. Lots of food for thought. Most interesting to me:

  • “Who-s” drive startup communities not initiatives.
  • Return on luck – everyone get luck, good and bad, what is important is what you do with the luck you get.
  • You approach life as either a series of transactions or a series of relationships.
  • Doer-ocracy vs meritocracy – meritocracy maintains the status quo through an establishment evaluating acts, where a doer-ocracy disrupts the status quo through the networked interactions increasing doer nodes.

Startup Phenomenon | Brad Feld talks with Jim Collins from 23rd Studios on Vimeo.

The 5 Traits of a Born Entrepreneur

Like every investor, I think a lot about how to evaluate opportunities. For me, it’s all about the founder. But what makes someone worthy of an investment? Why should I think an individual can succeed? I look for someone who has an abundance of five traits: intelligence, drive, sense of mission, appetite for risk, and optimism.

He has to be wicked smart. Smart enough to see what others miss. Many successful endeavors just need business school smarts: like tracking demographics and identifying when to open a franchise or new small business. Owners of Dry Cleaners for instance have a higher percentage of millionaires than any other business. But starting a high growth tech startup needs additional smarts. An ability to “see around corners” is required for creating something that hasn’t existed before and represents a large new market. It’s not something that is taught. Predicting the future and developing an intuition for “what can be” is a rare intelligence. An innate ability honed over time.

He needs fire in his belly: an irrational drive. Creating something out of nothing is fundamentally an irrational act. If it were rational, like the dry cleaner, an existing business or MBA would already have seen it and done it. Doing something fundamentally different in a way that can make a lot of money, involves extraordinary effort: identifying market opportunities; developing offers; executing a plan; convincing people to help; raising capital; attracting partners; and selling early adopter customers. But most importantly it involves hearing “no” over and over again in all its forms. Continuing the effort requires entrepreneurial drive. Plus, success depends on distinguishing the nay saying from meaningful feedback. Someone who merely thinks he has a good idea isn’t showing the drive. They need to be so obsessed with an idea that they can’t sleep at night. Drive is hearing “no” for the n’th time and still not sleeping at night.

To create something from nothing requires missionary zeal. It requires translating intuition into a positive world changing vision. And the belief that no one else can make it happen. A successful entrepreneur convinces everyone that it’s worth their time and money to join him because it will benefit them and improve the world. Like the Dry Cleaner, there are a lot easier ways to make money than a tech startup. But those on a mission change the world.

It’s cliché that entrepreneurs are risk takers. Making something from nothing involves taking an unquantifiable risk. Successful entrepreneurs thrive on the risk of a startup. Proving the naysayers wrong gratifies them. It seems to them to be riskier not to pursue their venture and be haunted by “what if”. Quantifying and mitigating risk can be learned. But, I’m convinced an appetite for risk is innate.

A startup is built on upside. It has a mission to improve things. Entrepreneurs bet on themselves and bet on the future. They have to be eternal optimists. If they aren’t optimists they may as well go into dry cleaning and hope for spills and stains. The direction for a startup entrepreneur always has to be up and to the right.

A successful entrepreneur needs an abundance of all these traits. Having some but not others can be disastrous. Wicked smart driven people without mission or optimism are competitive assholes who just need to be the smartest in the room. Those without an appetite for risk will never manage to build anything substantial. Mission and optimism without the smarts and drive yields the dreamers that never get anywhere.

These characteristics combine as entrepreneurial passion. Bijan Sabet and Union Square states this well in his litmus test for an investment. “I try to picture myself working at the company. Can I imagine working for the founders every single day.” You know when you see a successful entrepreneur, because you want to be around them. You want to be around the people around them. The combination of these traits is contagious and magnetic. The combination builds successful disruptive companies.