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Why I Don't Really Care About Your Product

Freaking Heck's picture




 

By: Chris at www.CapitalistExploits.at

I've just gotten off the phone with a gentleman who runs a radio show dedicated to entrepreneurs. He reached out to us as he thought it'd be interesting speaking with me, as an entrepreneur, and as an Angel investing in entrepreneurs.

He wanted to know what we look for in a company that is pitching to us. He wanted to know what type of product or service we'd be interested in. These seem like reasonable questions and while we do have certain industries that we like more than others, the answer I gave was that at the end of the day I don't really care about the product half as much as I care about the people.

If you're an entrepreneur pitching your deal to me know this: I care about how and why YOU will make your product/service work, and how it is going to make you and I a lot of money.

Last time I checked, products don't make companies succeed and thus enrich early investors..it's PEOPLE who do so.

I was also asked about the most important element or characteristic an entrepreneur needs to have for me to get interested. My answer was plain and simple: passion.

In a recent post about passion I said the following:

Passion is the single fastest way to spur yourself to massive success. This is what makes it is possible to get up early, stay up late, remain inspired and engaged and to forgo other pleasures. It’s what keeps you going when from the outside looking in, the decision appears foolish.

So, I'm looking for PEOPLE to invest in. People with PASSION.

I'd like to clarify this answer somewhat. Passion needn't be centered around a product or service. Is Richard Branson a passionate guy? Hell yeah. But hang on, you might say, Virgin is involved in multiple business sectors. That's exactly my point! This is a businessman who is passionate about business. Heck, I'm passionate about business. I'm passionate about multiple businesses, about doing the deals, about negotiating, structuring and so forth. I love business... Period. I'm not necessarily passionate about that latest product launch. However, I AM passionate about the business case for the product launch!

Similarly, I look for business owners that have a skill and a passion for business. Loving your new widget and at the same time having no clue how to market, distribute and sell that widget is worthless to me, and it's equally worthless to you. Implementation is everything.

In the article referenced above I also said:

In other words, typically the "Unicorns" come from passion. What are unicorns? They are the investments that run thousands or tens of thousands of percent… Companies like Uber, Facebook, LinkedIn, The Body Shop… They are investments where a $10,000 stake changes your life, and your kids', and grandkids' lives…

Passion, together with a sound business mind, is where the cocktail mix gets heady.

I was gratified when a member of our team sent me a link to an interview with Daymond John. What caught my eye was the following:

BI: Does it come down to the person selling themselves more than their product? If you don't like a person, you're not going to want to work with them?

DJ: A hundred-and-twenty percent. We're not investing in companies. We're investing in people. There's nothing that we've seen, that you will ever see, that is brand new. It's always going to be a new form of delivery or a new angle on it. Instead of working in seven minutes it works in six. So it's not going to be what you like. You are going to have to potentially talk to the person on the other side of that pitch every day for the next 20 years. Can you deal with that person?

Daymond brings up a very good point. He's investing in people. The product is not as important to him. Obviously I agree.

Now that we've determined we're after passionate, driven people I think it's definitely worth mentioning that finding an industry, country and/or sector that is ripe for investment greatly reduces investment risk. It reduces investment risk simply because it decreases business risk.

What am I talking about?

I'm talking about macroeconomic factors. I'm talking about geopolitical factors and I'm talking about large fundamental trends that are shaping up. Technology adoption in emerging markets is one such trend. Favourable demographics in South East Asia is another one. Rural to urban migration in most emerging markets is yet another one. On a more granular scale I previously spoke about coconuts.

What sort of growth am I talking about?

Coconut water sales

Through a (still) ongoing due diligence process, where we thoroughly researched a business in the coconut water space, we found some significant opportunities in the sector. This meant that any investment we potentially made was grounded in an incredible opportunity based on supply and demand and real economic numbers.

The trick then is to find a passionate, smart business person that can execute on such an opportunity. Mix one part incredible opportunity with one part great management team with an ability to execute and you've just reduced your investment risk substantially.

Nothing is ever guaranteed, especially in early-stage private equity. If I've learned nothing else, THAT is one lesson I've DEFINITELY learned. You need to learn to eliminate risk at every possible opportunity.

So there you have it... Two ways of eliminating risk are by identifying those passionate founders/managers, and finding a sector with strong demographic/economic tail winds behind it.

- Chris

 

 

"Maybe the bike is more dangerous, but the passion for the car for me is second to the bike." - Valentino Rossi

 

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Fri, 10/31/2014 - 14:47 | 5399300 theyjustcantstop
theyjustcantstop's picture

if you have a politicaly correct, govt. usable co. these days your guarenteed sucsess.

you'll never find three more passionate people schmit,(google), gates, (microsoft), and zuckenberg, (facebook), their only rivaled by the rothchilds, rockafellers.

besides the fed., these 3 co's are most responsible for the facist american govt. we have today.

i'd like lower, and middle income families who are forced into living in the inner-cities, why the fbi, cia, and nsa, combined with the 3 afore mentioned co.'s can tell you where an ex-military person took his last shit, but the drug cartels, and dealers thrive in your communities.

are they invisible, or are they acceptable, in your community?

 

Fri, 10/31/2014 - 19:13 | 5400049 NickVegas
NickVegas's picture

Come on man, they pay they the right people. It's just that simple.

Fri, 10/31/2014 - 14:25 | 5399187 kaiserhoff
kaiserhoff's picture

Bull shit, filler.

I've done plenty of small business tax returns, and seen lots of passionate people go broke.

Fri, 10/31/2014 - 14:10 | 5399139 WTFRLY
WTFRLY's picture

Facebook to mine, sell user data on political issues to ABC, clickbait distraction site Buzzfeed
http://wtfrly.com/2014/10/31/facebook-mine-sell-user-data-political-issu...

Fri, 10/31/2014 - 12:44 | 5398764 TruthHunter
TruthHunter's picture

"....I'm getting another coffee"

Not another coconut water?

 

 

Fri, 10/31/2014 - 09:41 | 5398010 Orwell was right
Orwell was right's picture

This article details exactly what went wrong with American business.    NO FOCUS ON USEFUL PRODUCTS......ALL FOCUS ON BULLSHIT MARKETING IDEAS.     Big bucks quick for some "Kardashian concept" is all these retards want.       A useful company, making a useful product, with sustainable growth.....need not apply.

.....(it is too early in the midwestern morning for this bullshit....I'm getting another coffee).

Fri, 10/31/2014 - 14:03 | 5399108 MrButtoMcFarty
MrButtoMcFarty's picture

Pocket Fisherman!

 

Fri, 10/31/2014 - 09:24 | 5397917 swmnguy
swmnguy's picture

The basic assumption here is that the system works.  But it doesn't.  So everything people think they know is wrong.  Sure, people are more critical to a business' success than the specific product.  Hard work and passion are more important than talent; lots of people with talent who don't care or work hard never get anywhere.

The problem is that our debt-based economy, where debt is money and money is a commodity to be bought and sold...like coconuts...requires infinite supplies of money, energy, resources, and markets.  We live in a finite world. Only money can be made infinite, and that only by making it abstract and that has its own consequences, as we see all around.  One of those consequences is that actual productive work doing concrete things is devalued and punished, and the only lucrative venture becomes abstract manipulations of abstract money.  

Back when I was an employee, I worked for a string of small businesses.  All were very successful when I got in the door.  All embarked on massive expansion efforts.  I left every one of them when I asked "Why?"  Why were they risking something that worked, satisfied their customers, paid all the bills, and paid all the people involved a living and growing income, to take huge risks by expanding?  Nobody ever gave me a coherent reason, nor a plausible scenario in which the expansion would actually work. And every one of those companies is now out of business, with their former owners choking on the debt they incurred in the effort to expand.  They had no idea why or how to do it; they just knew they were supposed to for some reason, and of course they had people wanting them to sign their lives away to get the seed money to expand.  They did as they were enticed to do, and lost it all, every one of them.

So now I am self-employed, and a single-member LLC.  I trade on the contacts I made as an employee.  I'm busy enough to make just into the 6-figures. When I get super-busy people tell me I should have an office and a staff.  When I'm not busy, I don't have to pay for them, do I?  I'm feeding a family (my own, not my boss's) and paying my bills (my own, not my boss's).  I'm not looking to expand in any way.  I don't need venture capitalists and they sure as hell don't need me.  I need people who need something done, and I do it.  It works great and it's a model built for the long term.  It's all a part of my "Get Rich Slow" scheme.

Fri, 10/31/2014 - 17:04 | 5399754 theprofromdover
theprofromdover's picture

" every one of these (expanding) businesses" has gone under ..

the reason is almost always the banks came in and talked them into taking on huge debts. The bank didn't care if they succeeded.The bankers wanted fees and suckers who would sign up and trigger their bonuses..

The banks didn't want these companies to grow organically, they only wanted a deal.

Even when the upcoming crash wipes the banks out, they'll set up again with the same mindset, and even more desperate greed. This financial system has to be crushed -like coconut shells into carbon filters- or we'll be right back where we started.

 

William K. Black, calling WIlliam K Black.

Fri, 10/31/2014 - 05:03 | 5397332 JoJoJo
JoJoJo's picture

Tim Cook is compassionate about his gayness. Will that help Apple? No.

Fri, 10/31/2014 - 04:51 | 5397325 cheech_wizard
cheech_wizard's picture

>They are investments where a $10,000 stake changes your life, and your kids', and grandkids' lives…

I suffer from insomnia. I read this and now I won't sleep.

I see you reworded this a bit from the last time. Now they are "investments"? The last time the claim leaned more towards these companies got off the ground on $10K. Even as an investment, $10K (even if the stock went up 10x or even 20x) is hardly life changing. I cashed out that in under 6 months in stock options...Paid down the mortgage, bought a BMW for it's engineering and the fact the drive train lasts more than the cheap American crap that fails at 100,000 miles.

So I'll respond the same way I did the last time and call out your bullshit, because not a single one of those companies you name started out with a mere $10K.

I've worked in the software/electronics industry for so long now, it's easy to recognize and seperate the good from the bad. You want to fund me to the tune of say $10,000,000? I could easily bring down Google in under a year. Already worked out the better search engine user interface.And those I've shown the mock-up to are dutifully impressed.

Again let's get back to that monetary figure, $10K is what I make in a month writing test programs for the antiquated components that the military uses. It's not life changing, it's means you get to drink better beer and a good bottle of single malt once in a while.

Fri, 10/31/2014 - 09:33 | 5397978 Graph
Graph's picture

10K a month gest you "better beer and a good bottle of single malt once in a while".

WHO are you people?

Thu, 10/30/2014 - 23:05 | 5396741 kchrisc
kchrisc's picture

Coconut water?!

Don't we have enough coconut heads with water on the brains already?!

An American, not US subject.

Thu, 10/30/2014 - 22:59 | 5396722 robertocarlos
robertocarlos's picture

I'm coo-coo for coco-nauts. It's good stuff.

Thu, 10/30/2014 - 20:47 | 5396238 lasvegaspersona
lasvegaspersona's picture

These ideas are possible only in the world of near infinite money. Everyone looks like a genius in a bull market, especially one driven by a currency that must expand to survive. As the dollar continues to fail coconut water may still make it but that's not where most people will be spending their money.

Thu, 10/30/2014 - 22:39 | 5396548 shovelhead
shovelhead's picture

Coconut water may be a growing industry or it may turn to a passing fad but the coconut itself makes many other products that are growing to become major industries beyond the most obvious and well known coconut flakes.

Coconut oil is growing as a substitute for cooking oils because of it's health benefits and high smoke point. Many people take it daily as part of a health regimen and it's use in organic cosmetics, hair and skin care products is growing as people become more 'chemical conscious' and seek natural replacements.

Coconut coir or the hair on the inner shell is harvested for the growing (pun) hydroponic industry because of it's lightness and moisture holding capabilities which allow nutrients to be stored and made available to plants in a bio-friendly organic way without the habitat stripping that harvesting sphagnum moss produces. Coir could replace the moss industry essentially using a former waste product in it's place.

Coconut hulls, another former waste product, can be carbonized, crushed, washed and sieved to make bio-friendly activated carbon air and water filters, superior than that of mined coal or wood charcoal. They sell it by the ton. It will probably be working in the next fishtank you see or filtered water you drink.

There are more uses for coconuts but those are the uses I know of offhand. There's probably about 5 things the outer husk could make to replace or augment marketable products already in use. Clever minds can create new uses from former waste. A challenge for a passionate nut lover. Nature provides opportunity for those who look for it.

Not to mention that the renewable coco plantation would provide jobs and steady incomes in some of the poorest places on Earth.

Why buy just the milk? Buy the whole damn cow. Ain't much sense in leaving money on the table for others to grab.

Thu, 10/30/2014 - 21:15 | 5396351 mojofabuloso
mojofabuloso's picture

I really hate this post. It DOES matter what you are passionate about. F snapchat and all the other worthless crap that passionate dickheads are funding and making money on.

What's the point of being passionate if you don't give a shit what you are passionate about. These people are souless.

Thu, 10/30/2014 - 20:14 | 5396078 Duc888
Duc888's picture

 

 

Yea, "product doesn't matter".  Asshole.  I'll sell you a widget that will break the third time you use it.

 

Thu, 10/30/2014 - 19:10 | 5395883 NoDecaf
NoDecaf's picture

 

I can be a unicorn. Send me some money.

Thu, 10/30/2014 - 18:53 | 5395838 NoPension
NoPension's picture

So you would have spotted Zuckerberg? He's a passionate little prick, now isn't he?

Saw Steve Case on the tube this morning.
Made me think, how is AOL still in business. And oh , we just found out, realized, discovered that AOL has been taking a fee for service. We haven't had it for over ten years. Nightmare talking to Joe in India to get it resolved. And admitted, we were wrong to not have caught it. But so many "services" are set up to autopay, I believe we are not alone in that realm.

Now really, how many of these "New" business opportunities are little more than pump and dumps?
Facefucking has made a Billionaire out of that douce. Give me a break. An online coupon company? Amazon doesn't even make a profit. But it sure has killed THOUSANDS of small businesses that supported families, so a few bankers, investors and Bezos can be billionaires.
Cocksuckers.

Thu, 10/30/2014 - 20:02 | 5396029 indio007
indio007's picture

You said it brother.

Pump and Dump + Fraud = Modern American business model.

I mean seriously the product or service doesn't matter?

 

He's probably correct and it is quite the indictment of the current economy.

Thu, 10/30/2014 - 18:23 | 5395736 RaceToTheBottom
RaceToTheBottom's picture

I am passionate against stuff.  Does that count?

 

Thu, 10/30/2014 - 18:00 | 5395649 limacon
limacon's picture

Those days of the Big Thing are past .

They screwed it up because of greed .

Now it's going to be lots of small things that cannot be summated into a Big Thing .

Live with it .

A phase change .

See 

 

https://www.academia.edu/9031355/The_Were-Sheeples_Almanac

http://andreswhy.blogspot.com/2014/10/were-sheeples-almanac.html

 

Thu, 10/30/2014 - 17:37 | 5395561 Bemused Observer
Bemused Observer's picture

So what is it you're selling? Coconuts?

"You keep saying that, but you don't say HOW!..."

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