Randy Komisar’s The Monk and the Riddle is a great book discussing the reasons for entrepreneurship, weaving lessons he learned during a successful career at companies including Apple, WebTV, and LucasArts within a (fictional, I assume) story of helping an entrepreneur who struggles with securing funding for his business idea. I really enjoyed the book as I kept challenging my own business idea and motivations through what was being discussed. While the book was written over a decade ago, its lessons absolutely remain relevant today.
Highly recommended, and here are ten notable things I would like introduce from the book, with my notes in:
1) VC’s like to target markets with big potential, especially tiny markets growing quickly into big markets, like the Internet. If it’s a small market, the chance for a portfolio-levitating reputation-making home run isn’t there. A VC’s portfolio return is an average of all its investments, so he’d rather have a huge winner and some no-ops than a bunch of minor successes.
2) The principal use of the plan [for new startups pitching their ideas] comes at the beginning, I explained, to show that the founders are intelligent, capable of structuring the business concept and expressing a vision of the future. Later the plan can help track problems that may reflect on the startup strategy itself.
3) [This is true from my experience in Vietnam] …most VCs (even if they insist otherwise) simply don’t have the time to give close management attention to the companies they’ve funded. In addition, in contrast to the original VCs, who often gathered years of operating experience prior to becoming venture capitalists, many partners in today’s firms have no executive management experience. They could be working on Wall Street as easily as on Sand Hill Road.
4) You have to be able to survive mistakes in order to learn, and you have to learn in order to create sustainable success. Once the market is understood and the product is fully developed, then move fast and hard.
5) Passion pulls you toward something you cannot resist. Drive pushes you toward something you feel compelled or obligated to do. [I must work hard to make lots of money and be financially secure for my family] If you know nothing about yourself, you can’t tell the difference.
6) Entrepreneurs, in my experience, don’t like to be told they’re wrong. It isn’t in their dispositions to sit and listen to that kind of critique. That’s why many ideas in this Valley happen against all common sense. It’s good when entrepreneurs are a little bit deaf and blind, but if they’re completely deaf and blind – and many are – they’re unlikely to learn enough from the market and their advisors to make their vision a reality.
7) Management is a methodical process; its purpose is to produce the desired results on time and on budget. It complements and supports but cannot do without leadership, in which character and vision combine to empower someone to venture into uncertainty. Leaders must suspend the disbelief of their constituents and move ahead of even with very incomplete information.
8) This was a quintessential “Brave New World” company. Despite its rapid growth, WebTV’s business model was still largely undefined. No one knew how it would finally make money. The hardware was far costlier to make than our wholesale price to distributors. Profits would have to come from services provided through the box, but which services and at what price were still unclear.
9) Where’s what I tell founders in the companies I work with about business risk and success, and what Lenny needs to understand: If you’re brilliant, 15 to 20 percent of the risk is removed. If you work twenty-four hours a day, another 15 to 20 percent of the risk is removed The remaining 60 to 70 percent of business risk will be completely out of your control.
10) Work hard, work passionately, but apply your most precious asset –time- to what is most meaningful to you. What are you willing to do for the rest of your life? does not mean, literally, what will you do for the rest of your life? That question would be absurd, given the inevitability of change. No, what the question really asks is, if your life were to end suddenly and unexpectedly tomorrow, would you be able to say you’ve been doing what you truly are about today? What would you be willing to do for the rest of your life? What would it take to do it right now?