Commitment, Decision Making and Fear In Entrepreneurship
- Posted by Jeff Carter
- on September 5th, 2013
Are you committed? How does your team make decisions? What keeps you up at night? These are the questions anyone gets when they are raising money. Everyone answers it differently. Sometimes, they are really hard to answer. People can make stuff up pretty easily.
Actions are a lot more meaningful than words. When I started trading, I gave up everything to trade. I did everything I possibly could do to learn. My wife and I put off buying things, traveling. Instead of moving downtown and partying through our twenties, we rehabbed a house on the side. We lived in the house while we rehabbed it.
When I bought my membership, I borrowed half, paid a point over prime for the other half, and that payment came before any other payment. In 1989, I sold my car to pay my taxes rather than do anything else, or cut into the trading capital I had.
When you trade, every day is different. Every situation different. But, a disciplined approach to making a decision helps carry you through. Each time you trade, you measure risk/reward and go.
Fear gripped me often when I traded. Years into trading, I let fear and ego get the best of me. I lost $350,000 in ten minutes. Had to take out a mortgage on my seat, just after I had paid it off.
Entrepreneurs aren’t a heckuva lot different than traders. Except, unlike traders, once entrepreneurs (and VCs) enter a trade, there isn’t a liquid market showing them the out door.
Entrepreneurs can be successful the first time. I think to be a good VC, it pays to have a little gray hair and have tasted defeat. Unless you have ridden the roller coaster ride, it’s tough to help someone out of it.
There are lots of stories about entrepreneurship. Sometimes, we glamorize them. The co-founder of Brilliant.org, Sue Khim doesn’t seek attention or glamour. She goes about building her business every day. In reality, the day to day humdrum isn’t the stuff of novels. Novels get written when the journey is over.
This is from her Tumblr blog, and when you read the whole thing, you’ll know why I invested in her, more than once.
This is an excerpt highlighting her commitment, but you need to read the whole thing. Sue talks about more than just commitment. She covers decision making, fear of failure, and climbing the entrepreneurship mountain. I think you will be surprised at how it finishes.
Shortly after graduating from this accelerator, I was flat broke.
And I decided it would be a good idea to live in the office. Even though I had just finished raising money for my company, it seemed wrong to take other people’s money and pay myself lavishly enough to make my student loan payments, financially support my parents, AND have an apartment. The fact that I had unusual obligations for someone my age felt like my cross to bear.
So I got a cot and put it in a corner of the office, and set up 2 bookcases side by side to hide the cot. Then I stuffed my clothes and personal effects in a corner by the bookcases and bought a membership to the gym down the street so I could shower.
I thought nobody would find out. I told everyone that the cot was just there in case anyone stayed late and wanted to crash. I made a point of getting up early, making the cot look as unslept-in as possible, hitting the gym shower, and starting my day before anyone else got in.
Of course, everyone knew. The clothes were what gave it away, I think.
Needless to say, this was not my most shining moment of executive decision making.
I tell this story in order to suggest that your sense of what you have personally at stake in your business will affect the decisions that you make for your company.
For me, what was at stake was a sense of financial stability. I didn’t have it in my personal life, and I wanted it more than anything for my company. So powerful was this motivation that during this period, I focused my company on creating niche products that we could get people to pay for, setting aside our grand ambitions for the time being in order to get to cash flow as quickly as possible. I raised a million dollars, and then half a million more, and still refused to pay myself a few hundred extra a month to get an apartment.
How will you answer the questions to potential investors? To your team? To yourself? When FEAR comes calling, and most certainly it will, will you bend to it? Fear is a filthy master. Once you bend, it’s terribly hard to come back. Decision making breaks down and becomes ineffective. Death becomes a self fulfilling prophesy.
Love that Tumblr post by Sue. I hope you do too.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)
Becker Posner Blog
Ben Horowitz Blog
Betting the Business
Black Line Review
Blue Sky Innovation
Both Sides of the Table
Business News Network
Chicago Booth Graduate School of Business
Cooler By The Lake
Daily Economic Release Calendar
Doug Ross @ Journal
Economics of a POW Camp
Foundation for Families
Garden and Gun
George Stigler Institute
Good Beer Hunting
Great Food In Chicago-Steve Dolinsky
Hyde Park Angels
Illinois College of Business
John Taylor's Blog
Legal Issues in Angel Funding
Macroblog-Federal Reserve Bank of Atlanta
Microbrews in Chicago
Mike And G
Milton Friedman Institute
National World War Two Museum
Notes From Underground
Ronald Coase Institute
Senate Banking Committee
The Alpha Pages
The Big Picture
The Clubber Fund
The Daily Crux
The Grumpy Economist
The Jack B Show
The Minimalist Trader
The Musings of The Big Red Car
The Polsky Center
The Streetwise Professor
Tough Love Marketing
US Federal Reserve Bank
US House Financial Services Committee
World War Two Blog