“Once you start issuing ‘make it so’ commands, it’s broken.”
If taking a leap of faith to start your own business is what stops most of us from becoming entrepreneurs, it’s what comes after that determines the success of those that do. No small amount of resolve is needed to back your business all the way, and sometimes that means fighting your corner against the very people funding it.
The perspective of a venture capitalist is perhaps not quite as explored as that of an entrepreneur, but a lot of the principles remain the same. A strong business idea and a clear gap in the market are some of the most obvious ones, alongside the need to make sure every step of the is accounted for.
Rarely, if ever, is that a straightforward process. Different perspectives offer different aspirations, and John O’Sullivan, General Partner at Act Venture Capital, said that can often be the quickest way to find a resolution that suits all parties:
“You want people to push back, because it’s not like we have some incredible crystal ball that we have all the answers to all the questions.
“What we have is an advanced form of pattern recognition. It comes from the same process, we’ve built companies from zero to 30 or 40 million several times. We know not all are the same, and we’re obsessed about market context. We’re very interested in how you do it in that particular context.”
“It’s incumbent then on the VC (venture capitalist) to articulate the why of what they’ve just said”
The expectation that a business’s flight path will be smooth from takeoff can be a dangerous one. Inevitably there will be times when different members of the team will disagree with one another, and having the experience of dealing with these scenarios can be the making of a company.
As John said himself, two-way communication between venture capitalists and entrepreneurs can ultimately lead to a much healthier company:
“Equally, they should push back on you, if they firmly believe that what you’ve suggested is not the best way, well actually what you want them is to articulate the ‘why’ of that. What you don’t want it to break down, and it’s incumbent then on the VC to articulate the why of what they’ve just said as opposed to ‘make it so.’
“Because once you start issuing ‘make it so’ commands, it’s broken. You might think it’s OK because everything is running fine, but you haven’t seen the problem emerge.”
The warning signs might not be glaring to you or I, but it is certainly a red flag for anyone with capital invested in the company. All of a sudden even the most seemingly minor differences of opinion can cause major upset, and John said it’s only a matter of time before things begin to fall apart:
“Once it goes off, and it will go off the rails, you don’t have the underlying communication patterns in place, for people to appreciate ‘well, what’s been going on here?’
“People will just be offering edicts to each other and wilfully ignoring them at the same time.
“And for a VC that’s… the amber light’s gone on now. You might not have seen this show up in the business, but you’re constantly trying to bring that back into some kind of normal zone.”
You can listen to the full episode below to find out more, as well as hear from Brian Caulfied of Draper Espirit about the disconnect between investors and entrepreneurs.
