5. The most dangerous lies are the ones we tell ourselves
Lots of CEOs will say we had a great quarter even when everyone around the table knows that is not entirely true. This is part of why companies have boards: to help keep everyone honest.
This, however, isnt the real problem. The real problem is when someone lies to themselves. When a CEO honestly doesnt think churn is a problem because he doesnt know how to fix it and has convinced himself that all is ok because he believes so passionately in the overall plan, we have a problem. Being a start-up CEO is a labour of love, and those emotions can cloud our judgment and cause us to lie to ourselves.
6. Love hurts
The investors that truly have the best interests of an entrepreneur or start-up at heart are usually those that ask the tough questions and demand more from founders and CEOs.
In my experience, the best way to practice the kind of tough love that actually benefits a start-up is to be honest. The CEO and founding team may not agree with the VC, but they deserve to know where their investors stand at any given moment in time. By the same token, CEOs and founders should communicate honestly with VCs about where they might disagree (i.e. I realise that you think we need a new VP of sales, but I am absolutely convinced that the current one is performing very well and the metrics will show that in the next quarter. )
This honesty is what tough love is all about. Its the only way to build long-term effective teamwork between VC and entrepreneur.
7. Don’t judge an entrepreneur by his hoodie!
Most VCs (myself included) are guilty of pre-conceived notions of what a highly successful entrepreneur or start-up is supposed to look like. We tend to expect male founders, aged 25-32, in teams of two or four’s. We tend to expect logos on t-shirts or hoodies. We expect a certain way of speaking, a certain look to the presentation, even a certain set of key metrics. None of these, however, are actually indicators that a company is likely to be successful.
One of the best start-up CEOs Ive had the privilege of working with defied every possible stereotype. Ive made the rookie mistake of judging entrepreneurs on external factors in the past, but I didnt make that mistake in this case and I try hard to avoid this kind of error now. Ultimately, we are looking for great entrepreneurs not people that merely look and sound like great entrepreneurs.
8. Start-ups live on the edge
Experience can sometimes be a detriment to success. By definition, start-ups are doing things that have not been done before. It is not a coincidence that Microsoft, Facebook, and Snapchat were started by founders in their early twenties. When it comes to disruptive business models, it’s sometimes inexperience that drives success.
Im not at all suggesting that experience doesnt count. It does and it counts a lot. The trick is, however, that startups live on the edge of experience. Startups live on that fine line between the zone of execution where experience counts more than anything else and the zone of innovation where radical new ideas, products, and strategies create big winners. Figuring out where to innovate, where to rely on deep experience, where to do both, and how to combine all that together is the great challenge that both VCs and entrepreneurs face.
Gil Dibner joined DFJ Esprit, one of Europes most experienced venture capital investors, after eight years of VC experience in the United States, Europe, and Israel. DFJ Esprit is helping entrepreneurs build ground-breaking technology companies.