Most companies fail. There are an infinite number of reasons why. Spend time contemplating any new business, and you will quickly find what looks like fatal faults.
The hardest part of early-stage investing isn’t finding great entrepreneurs. It’s saying “yes” to an entrepreneur despite an endless number of reasons for why the business won’t work.
Jeff Bezos recently wrote that “most decisions should probably be made with somewhere around 70% of the information you wish you had.” In early-stage venture this is maybe more like 10% or 20%.
Venture investing requires you to suspend reality, focusing on what could go right despite the huge number of things that are likely to go wrong. Those who can’t do this won’t ever pull the trigger, because the number of things that can go wrong is nearly endless.
Good venture investors seize opportunities. Bad ones fail to trust their instincts.
Ironically, the more experienced and sophisticated an investor is, the tougher this can be.
Later-stage investors in particular are used to having more data, which gives them comfort that they’ve quantified all the risks and can avoid known obstacles.
Venture investors don’t have that luxury.
Training yourself to listen to the voices that can see hope and opportunity is critical — while channeling the ever-growing voices that are shouting not to proceed.