Don’t Let an Investor Run Your Startup Business
A failed business venture taught me to play to my strengths
A failed business venture taught me to play to my strengths
Those who can, start businesses, and those who can’t, invest. Entrepreneurs and investors are not one and the same. It took losing €12,000 in a failed business venture to understand the critical difference. It’s money I couldn’t afford to lose — it hurt having to make loan repayments for a business that had already failed.
In 2011, two of my friends and I decided to open an internet café in Harare’s city centre. It’s incredible to think these used to be viable businesses. Yes, we should have foreseen the popularity of smartphones, but we didn’t. Anyway, that wasn’t the cause of our demise — incompetence sunk us.
It wasn’t for lack of trying; we had a great business plan. However, things in the real world never go according to plan. The computers didn’t arrive on time. We ended up opening an internet café with no computers. It was just a taste of things to come.
All these unforeseen problems exposed our inability to adapt on the fly. We frankly lacked the skill set required to solve problems inherent in any startup business.
Play to your strengths
If your report card shows 2A’s, 2B’s & 1 F — what result gets most of your attention? What subject will you look to improve first? Most people focus on the subject with the F, and that leads to mediocrity.
According to Buckingham, a researcher and founder of the strength revolution, it’s far better to identify and improve your strengths rather than bothering with your weaknesses. Your strengths derive from your talents. He defines talents as:
recurring patterns of thought, feeling, or behaviour that can be productively applied …If you are naturally assertive you will be more likely to succeed in sales than someone who shies away from confrontation.
Put most of your energy into improving your strengths while staying away from activities that require frequent use of your weaknesses. For me, it’s staying away from starting businesses.
Training and coaching can improve your weaknesses, but not enough to turn them into strengths. Buckingham says it’s due to the fact that “the neural pathways that help you learn — grow where the most synaptic connections already exist”. You can’t teach an old dog new tricks — so, it’s better to work on your strengths over your weaknesses.
Entrepreneurs are problem solvers
In hindsight, the internet café hadn’t a chance to succeed from the very beginning — the launch team was full of ideas but inept at executing them in the real world. If you struggle with rapid, unexpected changes, startups are not for you. Nokia used to sell paper, and Wrigley sold soap.
You need to ask yourself, do your strengths help or hinder how you respond to change? Can you solve problems and adapt quickly to changes that come your way. Jim McKelvey, the co-founder of Square, says, “entrepreneurs solve problems that haven’t been solved before. They don’t just start a business”.
Elon Musk, the quintessential entrepreneur, is fond of telling people, “he’s not an investor”. He thrives in the melee of change. Big problems do not faze him. He wants to help transition the world to sustainable energies — that’s a big problem.
Investors allocate capital
Since the failure of the internet café, I haven’t tried to start another company — I pivoted to investing. It allows me to invest in exciting startup-type companies without requiring me to have an entrepreneur’s skill set. Deciding where to allocate my money plays to my strengths and has been rewarding so far.
Warren Buffett, the expert compounder, says his investing style is ‘lethargy bordering on sloth’. In his 1990 shareholder letter, he discloses that he ‘neither bought nor sold a share of five of his six major holdings’. His main job is to allocate capital. It is very different from having to solve problems daily.
Similarities
The many similarities between entrepreneurs and investors are undeniable. For instance, they are both adept at managing risk. Yet, these similarities must not be used to minimise the differences. You do that at your peril.
What would happen if Warren and Elon swapped CEO roles? Can you imagine Warren at Tesla and Elon at Berkshire Hathaway? I’m sure both men will do fine, but they won’t excel. Elon loves daily problem solving, and Warren loves the daily reading of annual reports. Each to their own.
Success has been a by-product of focusing on their strengths — telling them to work on their weaknesses will be to handicap them.
Honest assessment
A couple of years ago, I had my strengths and weaknesses professionally assessed. The report confirmed what I had already learnt from the failed internet café.
Major Strengths
Calm — quite laid back, remains composed in typical working environments, not prone to overreaction or losing control of his emotions.
Sound thinking style — very comfortable working with numbers, able to spot trends and patterns in data.
Likely Limitations
Persuasiveness — doesn’t assert himself, needs to learn a wide range of influencing skills, needs help engaging with people on an emotional level, not just intellectually.
Adaptive Capacity — tends to play it safe, not wanting to rock the boat and upset people. He needs to get outside his comfort zone.
I can beat myself over my limitations — this is the name they give to weaknesses to make them more palatable or focus on improving the strengths. The strengths of calm and sound thinking are great for investing.
A similar test will help you figure out your strengths and weakness — which will let you know whether you are an entrepreneur or investor. Yes, I do know some people can be both, but let’s be honest, those individuals are the exception, not the rule.
Not a zero-sum game
One is not better than the other; either of them has the potential to make you plenty of money. It is about figuring out what suits you best — is it entrepreneurship or investing? Major issues arise when you mix them up.
An entrepreneur trying to invest is called a day trader! They execute trades when they should be doing nothing. An investor trying to run a business leads to failed businesses. Startups are hard enough; don’t make the task harder by your weaknesses. You need to learn what you are good at and play to your strengths.