building a business

Building-blocksOften people ask me why did you invest in that company.  I have been
spending some time thinking about the people I have decided to invest in and the businesses they have built.  Maybe by asking myself some
questions I will see a pattern in regards to what and why.  It is
certainly easier to ask myself some questions after a few months of
being involved.  I am asking myself, do I still have serious respect for
this entrepreneur, what is the biggest flaw or problem this business
needs to overcome, have I helped them, was this what I was expecting. 

Most
of the time my respect level for each entrepreneurs soars.  I have more than likely
helped them, each in a different way. There are obviously some flaws in each business model but there are also some
surprising shifts that end up being better than before and most of the
time it is not what I was expecting because every business is different
and every entrepreneur is different. 

What I have witnessed,
through my own experiences and living vicarously through my husband for
many many years is that it isn't simply about how brilliant the idea is.  If the
entrepreneur is not able to use the support system around them and be
willing to listen to honest feedback (doesnt mean they have to take it)
and be transparent about what is happening in the day to day operations
then a board or any investor or employee can not help a business grow in
the right direction.

I have recently been involved with a company
that just took a turn down a bad path.  Personally I have found it to
be frustrating, upsetting and everything else under that category.  No
herculaen effort on my part was able to fix the problems that were
created.  Those problems were created for several reasons and one was the lack of transparency about the reality of the state of the business. They did not
lean on others who are involved with a different set of experiences that
might have been helpful. There is something to be said for others who have seen that movie and know how it ends.  Their information can sometimes help for a better ending.

I am a fixer.  It is something that I
am well aware of and have attempted not to use that as a measurement for
making an investment decision.  I believe I have done a very good job at
that but whe my back is up against the wall, I tend to go into fix
mode.  That somehow my super hero powers will get everything to the
right place. 

As any investor, each investment takes on a life of its own yet each time I learn something new that helps me be a better investor next time.  Reflection is key but reality is even more so. 

Comments (Archived):

  1. Brittany Laughlin

    “If the entrepreneur is not able to use the support system around them and be willing to listen to honest feedback (doesnt mean they have to take it) and be transparent about what is happening in the day to day operations then a board or any investor or employee can not help a business grow in the right direction.” <- spot on.One of the themes that comes up in recruiting new people leaders is: Is this candidate coachable? If a candidate won’t allow the people around them to help them, it will likely be a poor fit in the long run so they won’t hire them, no matter how skilled they are.

    1. Gotham Gal

      that is why super bright quasi-coachable entrepreneurs always get the advice from me to see a ceo coach. it is a HUGE help and in the long run i believe will help in having a better change at success.

      1. Christine

        GG, are you able to recommend a CEO coach or suggest a way to find a really good one?

        1. Gotham Gal

          I believe there is a place to find them. Let me look.

        2. takingpitches

          @JLM!

      2. John Fazzolari

        As I was reading this post I actually copied and pasted the exact line Brittany commented on for future reference. Couldn’t agree more it is absolutely spot on. One of the most important lessons I’ve already learned is all great entrepreneurs know that they’re not always right. It’s OK to be wrong!

  2. John Revay

    If the entrepreneur is not able to use the support system around them and be willing to listen to honest feedback “I struggle/get frustrated w/ this sometimes as an employee CFO providing feedback to the CEO…and not wanting to understand and use that feedback.

    1. Gotham Gal

      frustrating is an understatement.

  3. falicon

    The fact that you are a fixer (and there is plenty of data anyone can look up to back up that claim) is *exactly* why you are such a coveted investor…you add serious value across the board, but especially at the crucial trouble spots.So keep doing what you’re doing…frustrating experiences and all…I think it’s working. 🙂

  4. Lisa Abeyta

    Spot on. Asking for help not only brings a wealth of experience and knowledge to the CEO; it also means several more people are now taking some emotional and mental ownership of solving the challenge at hand. I have seen first-hand how this can change not only the speed of resolving an issue but also the quality of solutions available.

  5. Stuart Willson

    sorry to hear. from reading press/bog reports, i’m curious, in addition to not utilizing a support network and the lack of transparency, how much of the mess was a function of not having people running the business who understood managing cash.

    1. Gotham Gal

      the list is long and wide.

  6. Wabi Sabi Ecofashionconcept

    Sorry to hear about this bad experience. However, if this is the only one you have that is worth writing about then I think you are still doing pretty well. I am not sure so many angels out there can boast the same track record of success. Eventhough it is frustrating, some venture are successful and other fails. I kind of thought that was part of the angel investing thing. That is why it is investing and not a loan.

    1. Gotham Gal

      There are always failures. It is painful.

  7. Brandon Burns

    No one wins them all. Think about the percentage of your portfolio that’s doing well and cheer up! :-)I know, easier said than done. But still…

    1. Gotham Gal

      i know, i know.

      1. LE

        There is an analogy I like to use with respect to giving credit terms in business.If you are to restrictive in who you issue credit to you will lose out on sales. If you are to loose you will go out of business. Obviously it’s a balance.I had one year in business years ago where the only bad debt I had was from a few customers.After I thought about it a bit I realized that I had made a mistake.I was to restrictive. To worried about not getting paid.If I had taken more chances I would have been able to sell more and cover some losses. In theory in the end I would make more money. (Hard to quantify this exactly).I guess the analogy is if everyone of your investments is a winner you are probably passing up on some opportunities.

        1. Gotham Gal

          you are right. it is all about risk and reward and if they all turn out then something must be wrong.

  8. LE

    If the entrepreneur is not able to use the support system around them and be willing to listen to honest feedback (doesnt mean they have to take it)I have seen that pattern many times as well.I had a case within the last few years with a woman entrepreneur (3 kids and working out of the house) who I had met at Starbucks (when I was single). She was in her 20’s and we struck up a conversation about what she was doing at the time. Whatever I told her she would scribble down on a moleskin pad. Later she would come to the SB with questions and thoughts and once again each and every time she would write down ideas I gave her or answers to questions.She ended up becoming quite successful my point being that she was open and willing to seek and listen to advice if it made sense. (I’d like to think I played a small role she invited me to her house when she made it on TV and told my wife (who got a bit jealous) really complementary things which was nice to hear. I felt as if I hadn’t wasted my time).I’ve seen to many cases of people doing well (and people not doing well) to see the pattern of how successful people (of course the definition of this varies obviously) are not closed off to the thoughts of others.

  9. Cynthia Schames

    I was thinking of this blog post, and you, while reading this article from Stanford Biz this morning. Thought I’d pass it along in case you have t read it yet: http://stanfordbusiness.tum

    1. Gotham Gal

      thanks Cynthia. Will take a look.

  10. TanyaMonteiro

    a little gold nugget for me to re-use, “Reflection is key but reality is even more so”. thank you