My belief is that investors and entrepreneurs should spend more of their time looking up than down.
I certainly feel, as an investor and how I evaluate and work with companies, that up is much more important than down.
By “looking up” I’m talking about thinking about the true potential of a business and how you’re going to get there. I love the idea of thinking about where you would like to be in five years’ time and working back from there. What would you need to get there in terms of people, funding and other resources? What milestones will you need to hit along the way? How will your strategy evolve?
I think US companies are much better at doing this and then really “living it” in terms of believing in the vision and that you will do what it takes to get there. This includes taking on the right people and partners and generally having the right attitude to make it happen.
For me “looking down” is more about protecting what you have and limiting the downside for a business. This involves you looking at things in the more immediate future – things like budgets, cash reserves, and major risks. It’s also about worrying about the effects of a new strategy on your existing business or of having your shareholding diluted to bring in new funds.
These things, of course, have their place and there is nothing more important than making sure you don’t run out of money. But if you become preoccupied with them, you often do it at the expense of the true potential of your business.
There’s a famous quote by Paulo Coelho as follows:
“There is only one thing that makes a dream impossible to achieve: the fear of failure.”
A fear of failure will hold you back in whatever you are doing but especially in building a business. This fear exists much more in Europe and it very often prevents companies and people really taking risks or “swinging for the fences” as the Americans would say; but this is the way you really build big companies.
Having lived in the US for many years now, I have seen first hand how the attitude to risk and failure is so different. How every failure is an experience that will make you better the next time. How there is genuinely no negative bias towards people who have failed and, if anything, there is admiration.
As an investor, I’m prepared to take risks in search of big outcomes. If you think about it, if you’re obsessed with protecting your downside you will only ever protect the money you have invested. But if you focus on the upside, on the potential, and really drive towards a big vision a few years down the road, that’s how big businesses are built.
And for me that’s how big returns are achieved.
If a business doesn’t work out then I lose my investment. But if a company becomes a true global success story my money could be multiplied by ten or even 20x.
I certainly know where I’ll be spending my time.
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