So 2014 is drawing to a close. I have been fortunate this year to have been a seed-stage investor in two companies that had “exits”. I have had a good dose of high-fives and congrats. I have hugged and congratulated the founders.
We are just a bunch of awesome founders and awesome investors, that are just, well….awesome. Nothing like an exit to make you think you are growing a long horn out of your forehead. 😮
While there is certainly some truth to that (the awesome part, not the horn). It’s easy to get caught-up in the mythology surrounding these kind of successes (and the even larger successes we all read about). To perpetuate the fairy tales of “unicorns”.
We like to deify people: awesome, unstoppable founders; super-smart, prescient investors. In retrospect, our stories of success sound great. Easy even. We tell hockey stick narratives that easily connect the dots from seed to success to exit. Hindsight and ego stroking are AMAZING……sadly however, they’re just not that useful, especially to others.
Here are a few thoughts and realizations that are hopefully more valuable (at least more valuable than me doing another victory lap around my ego).
First, death to “UNICORNS”! Not the kind that my 7-year old daughter likes (although I got to say I hate them too), but death to the kind with names like Facebook, Uber, WhatsAp, and Instagram. The ones with names like Andreesen, Musk, Thiel, Wilson (Fred), and Conway (Ron)….Well, I don’t actually want them dead. These companies and people are awesome and interesting. But we need to kill off our hero worship, and our breathless focus on the “fairytale rise” of the company/founder. This stuff is candy. Tastes good. This stuff is like reading the NY Post or watching Kardashians. Entertaining. Makes you want more. Can even fill you up. But fundamentally…..empty.
There is nothing actionable that you can take away from studying Zuckerberg’s rise. Or Uber’s story. Why? Well, you are looking at the outliers of the outliers. The exceptions, to the exceptions, to the rule. They just don’t say much about the “rule” e.g. the core forces at work in business and tech, or suggest what you can actually do in the real world. Perhaps if you could have Peter Theil as a real advisor. Certainly, if YOU actually lived through the rise of Instagram from the inside. Then you would extract real value. But, you don’t (know Thiel) and you didn’t (live inside Instagram); me neither.
Nope. I’m not a unicorn. Neither are you.
None of the founders I know are. Certainly not the founders and investors involved in my two “exits”. These two companies wouldn’t be fairy tale stories. They would be more like first-hand accounts from the soldiers in the trenches, victories and defeats, the fog of war, the deaths of close friends, the lessons learned, and ultimately…. redemption and a major battle won.
So what are some other take-aways?
It takes a long time. Really. A long road for both founders and investors. And often the exit isn’t even the end of the road, the road just continues. Both of these two exits were from seed investments I made in 2007. So from seed to exit: ~7 years. Do you even remember what you were focused on 7 years ago? The founders for each will continue on with their companies or with the acquirer for years longer. Given the earn-out structure of one, it will be several years before I see all of my return on investment. These kind of timeframes are the norm. Live for today, but realize you are playing the Long Game.
There are a lot of ups and down. There were major fallouts among founders. Founders that were kicked out. There were (multiple) near-death experiences with cash flow. There were things we passionately believed (maybe even KNEW!) to be true…. that were later thrown out with the garbage. There were many, many, many, pivots, adjustments, disappointments, and mistakes. As a result, I have new found appreciation for perseverance. It’s a just a must have for founders (and the investors that back them). It’s the shock absorber and endless fuel supply that enables you to somehow power through all the bumps and detours.
So……FU to the unicorns. Live in the real world. Learn from real people and real stories.