This post originally appeared at www.chrisamarks.com in 2011
Entrepreneurs tend to be confident by nature. They believe in what they’re doing, and, despite often overwhelming odds, are fairly certain of their success. There is really no other attitude that would justify a start-up endeavor.
What I have found over the years, however, is that there are two kinds of confidence. The first is a confidence that one is always right. It is a heads down, out of my way, no time to slow down mentality. While this type of mindset can be efficient when a launching a new business, it can also be very destructive. It tends to limit a company’s ability to adapt to changing circumstances, is not conducive to team building, and rarely leads to a good outcome.
The second type of confidence is a confidence in one’s ability to get to the right answer. A confidence to analyze the alternatives and make the right choice. As investors, this is the type of confidence we look for in founders.
When someone starts a company, they are taking a giant leap based on a series of assumptions. In the transition from idea to company, every one of those assumptions will be tested. There will be all kinds of challenges, hurdles, and curve balls that were never anticipated when writing the business plan. The ability to deal with those challenges requires a unique combination: the humility to accept that you may have been wrong, and the confidence that you can still get it right.
I was reminded of this again over the past couple weeks, as I watched the CEO of one of our portfolio companies completely re-evaluate his target market. The business has been growing well, and, by all accounts, his initial assumptions have been validated. But the market was telling him something else. There is a potentially bigger opportunity, and better idea. Rather than shy away, he embraced the notion. He dove into it. He raised it with his investors and his Board. He set up meetings with potential customers and industry executives seeking feedback. He became driven to find the right answer, and to validate his new assumption.
Only time will tell if the new opportunity is worth pursuing, and if it is, whether this company can be successful. I don’t know the answer. The CEO doesn’t know the answer. But I rest easier knowing that he knows what he doesn’t know.