Category: Leadership

After publishing a post yesterday stating that the main reason applicants to Shotput Ventures are turned down is due to not meeting our published requirements, some people naturally defended the entrepreneurs as rule breakers (e.g. here). Thinking about it for a bit, I believe it is important to note that there is a serious difference between a rule breaker and fitting our thesis.

Is the reason we have the requirements for Shotput Ventures to make it easy to turn away applicants? No.

The reason we have the requirements is that we have a specific investment thesis that goes something like this:

• We’re only scratching the surface as to how the Internet is going to change our lives
• Never in history has it been so cheap to create a technology company
• There is a segment of entrepreneurs that can afford to live on next to nothing and would like a group of mentors, and a small amount of money, to help see them through getting a prototype built

We have the requirements in place because we’ve already funded eight companies and have learned from that experience. Things we require, like having a technical co-founder, and preferably two, have directly correlated with company success. Combine our experience with our investment thesis and you have why we enforce the requirements.

We’ve all heard the saying that entrepreneurs should focus on working on the business instead of in the business. I’d like to add that in a similar manner entrepreneurs should think about incremental vs instrumental changes. What I’ve found is that a company can only handle so much change in a period of time, say 6 – 12 months, before the change is viewed as leadership testing new theories without enough thought to providing some semblance of rhythm or continuity.

I’d encourage entrepreneurs to always be bringing new ideas to their company, but pay close attention to which changes are incremental vs which ones are instrumental. Like many things, it probably falls into an 80/20 paradigm where 80% of the time should be spent on incremental improvements and 20% of the time should be spent on major, instrumental changes. Each company is different, with its own respective threshold, and it is tough to find the right balance. Through it all, never stop bringing about change.

One aspect of entrepreneurship that isn’t talked about very often is the personal growth path. What I mean by this is the necessary progression management progression during the lifecycle of a startup that scales from nothing to tens, hundreds, or even thousands of employees.

Here are some sample inflection points:

• 0 – 10 employees – doer and manager
• 11 – 20 employees – mostly manager and some manager of managers
• 21 – 50 employees – mostly manager of managers and some manager of manager of managers
• 50+ employees – manager of manager of managers (e.g. manager of an executive team)

There’s a book just about this subject — Leading at the Speed of Growth. My advice is for entrepreneurs to be cognizant of this path and to prepare and understand it as best they can.

I’m continuing to read the Richard Branson book Business Stripped Bare and am nearing the end. For me, I usually only read a few chapters (e.g. the first, last, and skim the middle) in a book before moving on to the next one (usually several books a month). Here are a few more pieces of information that caught my attention (text verbatim from the book):

• Virgin’s normal rate of return in business around 30 per cent [what’s your target rate of return for your business?]
• This is the point at which entrepreneurial functions become separated from management functions…Suddenly, innovating is seen as something extra, something special, something separated from the activities the company normally engages in.
• Virgin’s management style is unique, designed to both empower employees and avoid a culture of fear.
• …there is a fundamental difference between an entrepreneur and a manager…Although I’m sure there are entrepreneurs who could make good managers, my advice would be: don’t try to do both…Entrepreneurs have the dynamism to get something started…Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business.

Richard Branson ranks up there as one of the most influential entrepreneurs ever, and I enjoy reading his thoughts.