Saturday, November 09, 2013

As a manager, the default is trust

As a manager or CEO, what is your reaction when someone proposes a plan of action?

Most of us feel like we need to "improve" such proposals. It's hard to say why. Perhaps that helps us "look smarter." Perhaps we feel like we want to help. Or maybe we're worried that if we don't offer changes, it will seem like we don't care.

Stop it.

As a manager, the default is approval, not nitpicking. This doesn't mean to swallow legitimate feedback. If you think the plan is crazy, say so. But you better have a good reason.

When you tinker, you're not saying, "Management adds value." You're saying, "I don't trust you. In fact, I trust you so little that I'm going to slow you down and make more work for everyone."

Trust is shown with actions, not words. Make trust the default and you'll build better relationships and make your startup move faster.

Networking outside your comfort zone

It's critical to network in situations outside your comfort zone, otherwise your skills might erode.

Here in Silicon Valley, it's pretty easy to network. People are very casual and open, and if you're an investor, it's even easier. People constantly seek me out because they want me to invest in them, or to introduce them to other investors. I'm smart enough to realize that I'm taking advantage of structural factors, not my winning personality.

The real challenge, especially for entrepreneurs, is to network with your customers. No one feels the need to butter up a prospective vendor; if you can win your customers over, then you really are demonstrating your skill.

I recently went to an event where I was an outsider; the people there were potential customers, but definitely didn't want to be sold anything. If you can build relationships under those conditions, then you do have a valuable skill.

Don't wait until it's make or break; as with anything you do, networking is a skill that improves with practice. Seek out challenging situations so that when the time comes where you have to go into such a situation and get results, you'll be ready.

Mastering Rapport

I hate traveling for work. It's not that I mind the mechanics of travel; I pack light and optimize everything from my clothing to my snacks. I also have the advantage of being able to sleep any time and anywhere, including on planes while surrounded by crying babies. Rather, I hate being away from home.

As a result, I practically never travel for work unless it's for a major event where I can meet a whole host or relevant people. When I do go, however, I always come back with a thick stack of business cards and a ton of new friends.

Here are my secrets for rapidly (and sincerely) building rapport.

1) Do your homework in advance. Whenever I attend an event, I prepare a mini-dossier of key people and facts. I even include their Twitter or LinkedIn profile photo so I can identify them from across the room, rather than having to rely on badges.

The key though, is not to seem creepy. It's not a college test where you need to show your work. My two tactics are either to ask leading questions that will surface the facts I know I want to discuss, or to play Columbo. "Hey, I've got a vague recollection of hearing about X. Was that you?" That sounds a lot better than, "I was looking at pictures of you last night in my hotel room."

2) Jump on in. This isn't dating, and you don't need a fancy pickup line. Just find someone who is temporarily by themself, walk up, and say, "Hi, I'm Chris."

Be calm, relaxed, and comfortable, and the people you talk with will feel the same and open up.

3) Be patient. Rookies are way to eager to cross people off their list, and will join the scrum around a popular person. It doesn't work in picking up a date, and it doesn't work here. You look desperate and make people feel awkward. Wait for your chance; it will come.

Similarly, when you start talking with someone, give them your full attention, even if they aren't on your target list. First, they might be a great contact. Second, it's rude to stare off in the distance, looking for someone more "important". Third, if you have an animated conversation, full of laughter and energy, it will draw other people over, foster new connections, and show you in a good light.

4) Always focus on the other person. Nothing is more interesting to folks than their own concerns; nothing is more pleasant than being able to hold forth on something they love. Be sincere and curious. Don't worry about delivering your message; reciprocity and the desire to help you will practically compel them to ask what they can do for you.

5) Cozy up to the staff. Show sincere appreciation to the stressed-out organizers, and they will generally want to help you with intros, VIP passes, and other helpful goodies. This includes the assistants and tech people, who will really appreciate the rare attendee who reaches out to them.

6) Participate. At any event, there are opportunities to participate, such as volunteering to come up on stage, or asking questions during Q&A. My secret is to always be ready to go. No one ever wants to be the first volunteer or ask the first question, leaving you a massive opening to exploit. You have to be good, of course, but you can help yourself out by thinking of questions throughout the presentation then loading your best one on the tip of your tongue.

Don't get too greedy though; people who hog the airtime look like assholes. That's why volunteering when no one else dares is so effective--people are grateful you fell on the grenade for them.

At this most recent show, I employed all my tricks. I was able to reach about 75% of my target list, I met tons of other people, many turned out to be stellar contacts, and by the end of the two days, people who had known each other for years, and to whom I had been a total stranger 36 hours before, we're repeatedly referencing me in their presentations and comments.

Now it helps that I love the spotlight and taught public speaking, but these techniques can work for anyone, even shy technical entrepreneurs.

The customer is always right (but not in the way you think)

One of the big frustrations that startups face is the disconnect between the customer-facing and product-facing sides of the company.  From time immemorial, engineers have complained about the wild promises Sales makes, while salespeople complain that engineers have no idea what the customer wants.

The thing is, both sides are right.

Sales doesn't understand the engineering tradeoffs. Engineering doesn't understand the sales tradeoffs.

The traditional approach is to use Product Management to bridge the gap. But far too often, this simply interjects an intermediary that *neither* side trusts. The Apple solution is to give the product people dictatorial powers, by it's not clear that this approach works if your name isn't Steve Jobs.

I'd like to argue for a different approach. The customer should be the source of information, but not the way you think.

Customers don't know what they want. They only think they know what the want. Every entrepreneur has had the painful experience of giving a customer exactly what they asked for, only to hear, "Yeah, I don't know why, but that's not quite it."

Instead, what you need to do is to gather input from customer behavior, rather than customer words. Whenever I've done usability testing, I always record both the screen and the tester. This lets me highlight the clips that show interesting behaviors.

When Sales says something needs to be done, work with them to record and test the customer behavior, then have both teams watch the highlights. Then, lay out a discussion and evaluation framework so people have to focus on principles, rather than opinions.

This takes time, but it saves it in the long run. When everyone sees why something needs to be done, and agrees on the principles, it's far easier to deliver a good result.

You get the job you train others to give you

People have this concept of a Dream Job.   Yet they go about getting their dream job in exactly the wrong way.

Most people chase their dream job like the protagonist in a romantic comedy chases their "true love": A frantic effort to find The One.

Yet getting a job doesn't determine your job. Rather, you get the job you train other to give you.  Every interaction you have with bosses, coworkers, and direct reports helps shape your job.

My wife and daughter like to watch "The Dog Whisperer." Invariably, Cesar concludes that the dog isn't a bad dog; rather, its owners trained it (inadvertently) to behave badly. The same thing happens on the job. But instead of training a chihuahua to yap, you're training people how to treat you.

If you make it easy for people to work with you, more people will want to work with you. When I was younger, a got a lot of plum assignments and autonomy from my bosses because I made it easy for them to work with me. I treated them like a Chinese landlord, and got desired results (and rave reviews) accordingly.

There is a downside; people may want to work with you so much that they'll overload you. My wife has this issue at work--she's so good at bailing out troubled projects that she's constantly deluged with pleas for help. But the good news is that her company will do just about anything to keep her--she currently works 4 days a week, 3 of those from home, but still gets a full-time salary. Just pull a Nancy Reagan and learn to just say no.

Conversely, it you make it hard to work with you, people will avoid doing so. One of patterns I see a lot is that graphic designers feel underappreciated and complain about being pulled into projects too late. This complaint is generally true, but most of them fail to realize that the situation is one of their own making. Most designers are highly opinionated and don't appreciate all the tradeoffs involves in building a product. As a result, they train their companies to shut them out of the specification phase; dealing with complaints is bad, but dealing with the pain of getting them involved early on is even worse.

Channel you own Cesar Milan and figure out how you're training the people around you. The good news is that if the problems you face are self-inflicted, there's a good chance they can be self-repaired!

The best way to get your dream job, like your dream dog, is proper training.

Why an entrepreneur has to be the chief recruiter

Ask any entrepreneur, and she'll probably tell you that her most important job is getting the right people on board.*

* It's not; the most important job is to not run out of money. But people is a close second.

Yet despite his fact, many entrepreneurs offload hiring to others as quickly as possible. This is a big mistake.

Consider the following: Why would the best people want to work for your company?

Perhaps they think the company will make them rich.  What happens when times get tough, and that IPO seems like a remote possibility?

Perhaps they like working for a hot company. What happens when, inevitably, you stop being the new shiny thing and the trendies move on? Remember Friendster? Not many do.

Perhaps you're willing to pay them big bucks, or provide killer benefits. What happens when someone outbids you? Google paid one employee $100 million to reject another job offer.

Perhaps you're working on the coolest new technologies? What happens when Hacker News stops covering you? Java was the coolest kid on the block at one point.  Someday, node.js will be the new Perl.

The only sustainable, reliable way to convince people to join your startup is to make them love the work itself, and that means building a culture that people want to be a part of.

Culture isn't a slogan on a wall, or a bunch of TED Talks. It's how people interact with each other day by day.

The two biggest determinants of culture are how you act, and whom you hire. That's why the entrepreneur has to be the chief recruiter. You have to be the spearhead so that candidates understand how people treat each other at your startup, and to make sure you don't hire anyone with incompatible habits.

A CEO who models the company culture and strictly enforces it has a massive advantage when it comes to recruiting a compatible candidate, even if other companies can offer more money, hype, or technology coolness.

Don't think you have time to do this? That's short term thinking. Think about how much less time you'll need to spend resolving conflicts and arguing about priorities if you build a compatible team that loves working together.

Teams that are compatible give each other the benefit of the doubt and each issue they resolve together increases their confidence in and bonds with each other, resulting in a virtuous feedback loop.

In contrast, teams that aren't compatible hold grudges and grow increasingly irritated with each other; every conflict spirals out of control as it dredges up old scores and scars. Ultimately, the team falls apart.

The ultimate reward isn't just a better performing, more productive team. The ultimate reward is getting to work at a company you love, with a team you love. When you have that, financial rewards are unimportant (though still very nice to have!)

Always follow up the first day after a conference or event

For the final post in my series on attending a conference and event, I think it's important to focus on something that most people neglect: Follow-up.

Assuming that you've attended the event, built relationships, and collected business cards, your final step is to "fix" the value of those new contacts by following up.

In-person events are special because of how they affect us.  Being in a new place, disrupting all of your standard routines, and spending all your time with the same people all contribute to a sense of intimacy, which is what allows attendees to quickly build bonds.  These are the same principles at work in summer camps, offsites, and vacations.

But as with summer camps, offsites, and vacations, the new bonds you build during a conference or event can be as fragile as soap bubbles.  When you get back to your regular office routine and daily life, the experience you went through seems to evaporate.

I like the analogy of old-school chemical photography.  You have to develop the film and fix the prints, otherwise any light will destroy the pictures you've taken.

That's why I always schedule time on the first day after a trip or event to send follow-ups.  The goal is to set up 1:1 calls or other interactions to "fix" the relationship and keep it from evaporating into nothing.

It's all too tempting to tell yourself things like, "I'll just wait until Monday or Tuesday, so that people have a chance to catch up.  I don't want to be a bother."  That's just your brain's inherent laziness, trying to convince you with rationalization.  By the time a weekend has passed, you and all your new best friends will have forgotten each other.  Start following up immediately, or at worst, the next day.  Set aside time on your calendar; this isn't optional.

You might have spent thousands of dollars on conference tickets, airfare, and travel, not to mention the value of your time.  It's worth taking 2 hours the next day to follow up and actually consolidate potential gains.

Friday, November 08, 2013

Why collecting business cards makes sense

Even though I believe that one good conversation beats 100 business cards, collecting cards still has its place.

First, while people won't necessarily remember you after a single encounter, my philosophy is that you need three casual encounters to build familiarity.  Even if a person doesn't remember you after an initial meeting, it still counts towards that three meeting threshold.

Second, collecting business cards lets you pick which folks to follow up with. Simply sending an email or even a LinkedIn request doesn't build a relationship. Rather, you need to schedule a call or in-person meeting (assuming mutual interest, of course; if someone dodges your request, accept it for the rejection it represents, rather than going stalker on the poor sod). Surprisingly few people follow up! When you do send your request, offer some specific times so that you don't force and endless and annoying back-and-forth for scheduling.

Remember, collecting cards is just this first step; the real work is in building relationships.

Network at small events, not big ones

I'm on my way to an VIP advisory board meeting in another city. The annual meeting stretches out over two days--Wednesday evening and all day Thursday--which means that many people won't get in until Thursday.

Networking newbies probably think, "I need to be there on Thursday, when there are more people."  But I know that the key is to be there on Wednesday, when there are fewer people.

As I've written, networking isn't about who you know; it's about who trusts you. I'd rather develop one solid relationship than collect 100 business cards. Being there on the least crowded day helps me do that. Smaller groups are more comfortable, and encourage a deeper interaction. The opening night of a conference is usually the best time to have a leisurely, relaxed, relationship-building conversation.

(This was written on the plane--as it turns out, the opening night was a great time to develop relationships, both before the dinner, during it, and with casual drinks with the folks staying at the same hotel)

Design Your Products for Delight and Growth

The Verge recently ran a great longform article on the birth and death of Everpix, a startup that created a product that its users loved, but which couldn't grow beyond its cult status:

The always-insightful Andrew Chen penned a great analysis of what went wrong from a growth hacking standpoint:

"The problem with hyper product-oriented entrepreneurs is that they often have one tool in their pocket: Making a great product. That’s both admirable, and dangerous. Once the initial product is working, the team has to quickly transition into marketing and user growth, which requires a different set of skills. It has to be more about metrics rather than product design: running experiments, optimizing signup flows, arbitraging LTVs and CACs, etc. It’s best when this is built on the firm foundation of user engagement that’s already been set up. In contrast, an entrepreneur that’s too product oriented will just continue polishing features or possibly introducing “big new ideas” that ultimately screw the product up. Or keep doing the same thing unaware of the milestone cliff in front of them. Scary."
Andrew's advice and analysis are sound.  I've seen far too many startups chase feature development as the answer to business problems, rather than really understanding the business.  That's the beauty and the danger of features--they can change a company's fortunes overnight, but they can also be a siren song that never delivers any results.

But the nuance I'd like to emphasize is that growth is, at its core, a product function.  As an entrepreneur, you have to design your products for delight and growth.  As I read The Verge article, there was a single passage that, for me, sealed Everpix's fate:
"At one point, the team considered requiring a user's friends to create an account to download any photos that the user shared with them. It was a surefire way to boost signups — but also felt like the sort of ugly, needy design choice that the team prided itself on avoiding. The idea died."
I hate products that are engineered using "dark patterns" to encourage spamming.  But I feel like the Everpix team settled on a false dichotomy.  People love sharing photos (see: Facebook, Instagram, Snapchat, etc.).  There ought to have been a way to engineer a viral dynamic.  But by rejecting the whole concept of engineering growth, rather than just the specific feature of requiring account creation, Everpix turned its back on the one thing that could have driven the growth they so desperately craved.

This of course is Monday morning quarterbacking; issues are seldom so stark.  But it's important to draw the right lessons from any cautionary tale.

Tuesday, November 05, 2013

The Silicon Valley Luxury Trap

I'm torn about what to write about IfOnly, a new service I ran across last night:

IfOnly is an incredibly cool service.  It allows you to purchase unique experiences like a group swim clinic for up to 10 of your friends with Olympic champion and TV broadcaster Summer Sanders--a mere $8,000.

I immediately looked up Kobe Bryant, of course, and found that I could get signed, game-worn shoes for $8,000, or request a quote for a post-game meet and greet at a Lakers game.  Of course, being a cheapskate, I doubt I'd actually go for it, but I love knowing that it's possible.

I also think IfOnly has done a good job of providing a high-end experience.  I could get those same Kobe Bryant shoes on eBay, but the experience isn't nearly as classy:

And eBay is practically Rockefellerian in comparison to Hollywood Is Calling, which, for the low low price of $19.95, lets you hire the guy who played Mr. Belding on "Saved by the Bell" to wish your friend a happy birthday.

Plus, because 70% of the purchase cost goes to the charity of the celebrity's choice, I get to help out a good cause, rather than simply enriching a collectibles dealer.

The issue is, IfOnly has raised a staggering $15 million from a who's who of investors.  $15 million is a bet on a mass market, not a niche.  I'm afraid that IfOnly will fall into the Silicon Valley luxury trap.

Silicon Valley investors (aside from me) are rich.  Many have been rich long enough to forget that most people don't have worries like, "Will the contractors finish my new 7-car garage before the rainy season?"  As a result, they end up backing companies that appeal to them...and no one else.

In the dot com era, Jim Clark of SGI and Netscape fame tried to start a company called MyCFO to provide financial services to the super-wealthy (average net worth: $150 million) who thought a $25K/year retainer was a bargain.  He raised almost $70 million for a company that didn't have a prayer of serving a large market.

MyCFO ended up getting sold to a traditional wealth management firm after burning through that $70 million (!) and coming under Federal indictment for dodgy tax shelters.

I want IfOnly to succeed and be around (I've got a long bucket list!) but feel skeptical of its mass appeal.

You Can't Balance Your Life By The Decade

I recently ran across an awesome New York Times editorial by Erin Callan, who was the CFO of Lehman Brothers in 2008 (she had the foresight/luck to resign a number of months before the financial crisis brought down the firm):

In particular, I'd like to draw your attention to two passages:
"I didn’t start out with the goal of devoting all of myself to my job. It crept in over time. Each year that went by, slight modifications became the new normal. First I spent a half-hour on Sunday organizing my e-mail, to-do list and calendar to make Monday morning easier. Then I was working a few hours on Sunday, then all day. My boundaries slipped away until work was all that was left."
Sound familiar?  This kind of creeping workaholism is endemic in the startup world; just tonight, my wife noted that I was so absorbed in my reading that I failed to acknowledge when she asked me a question (I was reading the Keith Rabois Twitter exchange about blogging entrepreneurs).

No one is going to maintain the boundaries between your work and the rest of your life other than you and your immediate family.  You and you alone have to take responsibility for making this balance work.
"Sometimes young women tell me they admire what I’ve done. As they see it, I worked hard for 20 years and can now spend the next 20 focused on other things. But that is not balance. I do not wish that for anyone. Even at the best times in my career, I was never deluded into thinking I had achieved any sort of rational allocation between my life at work and my life outside."
I find this passage both touching and instructive.  Back when I worked for D. E. Shaw, one of my mentors told me that of all the people he knew who said, "I'll work for Wall Street for 10 years, then retire and do my thing," none of them ever did.

You can't balance your life by the decade because the actions you take change you, even if you don't realize it.  Callan seems to have been more self-aware than most, yet even she ended up trapped in a situation of her own making.

Monday, November 04, 2013

Happiness Doesn't Depend on Events

The research finding of the day comes courtesy of Eric Barker and Bakadesuyo:
"Ed Diener and Martin Seligman screened over 200 undergraduates for levels of happiness, and compared the upper 10% (the “extremely happy”) with the middle and bottom 10%. Extremely happy students experienced no greater number of objectively positive life events, like doing well on exams or hot dates, than did the other two groups (Diener & Seligman, 2002)."
We always envy the fortunate.  We see what they have, and think, "If only I had what she had, I'm sure I'd be happy."  But the fact is, we're wrong.

Whether you have the luck of Gladstone Gander, the endless wealth of his Uncle Scrooge, or the constant misfortune of his cousin, Donald Duck, your circumstances don't determine your level of happiness.  You do.

P.S. Man, did I love my Donald Duck comic books when I was growing up.

Trusting Too Much Is Better Than Trusting Too Little

Here's a great item from Eric Barker's Bakadesuyo blog:
"People were asked how much they trust others on a scale of 1 to 10. Income peaked at those who responded with the number 8.

Those with the highest levels of trust had incomes 7% lower than the 8′s. Research shows they are more likely to be taken advantage of.

Those with the lowest levels of trust had an income 14.5% lower than 8′s. That loss is the equivalent of not going to college. They missed many opportunities by not trusting."
The finding that one should trust, but not too much, fits with a lot of other human principles.  The Losada Ratio for positivity, shows that teams which are mostly (but not completely) positive perform better.  Analysis of romantic relationships show that couples who are mostly (but not completely) positive are happier.  And optimists do better with a dash of pessimism for realism.

I believe strongly in trust, which I've called the fundamental operating system of Silicon Valley:

Yet I've also counseled entrepreneurs to plan for the worst to minimize the risk and impact of being fired by their investors:

It's nice to have a simple, absolute rule to follow.  But as usual, the optimal strategy is more complicated.  My own recommendation is to give people the benefit of the doubt, but always contingency plan for betrayal.

Should entrepreneurs blog?

Keith Rabois touched off a mini-Twitter firestorm the other day when he posted a tweet saying, "I don't know of a single successful CEO or entrepreneur who blogs regularly."

Sadly, as I often note, 140 characters isn't enough for a nuanced response, which this topic deserves.  Here are my (often conflicting) thoughts about whether entrepreneurs should blog:

1. There are definitely entrepreneurs (and wantrepreneurs) who substitute blogging and commentary for actually getting things done.

The Valley and the startup world are full of people who seek notoriety, which has little correlation with success:

Just this morning, I had breakfast with a very successful entrepreneur who shall remain nameless; we talked about how the Valley was full of people who weren't that successful, but who managed to build the appearance of success (yours truly is a pretty good example!) based on their notoriety.

The worst are the posts which present little original thought, but instead spew random quotes (to appear learned or hit) and brogrammer jargon.

2. On the other hand, there are entrepreneurs for whom blogging is a critical part of their success.

I pointed out to Keith that brilliant entrepreneurs like Dharmesh Shah (HubSpot) and Rand Fishkin (Moz) are both great bloggers and great leaders.  Part of this is that they are natural writers.  The other is that both sell content marketing software; blogging is a critical part of eating their own dog food.

Even if you're not selling content marketing tools, I like entrepreneurs who write sincerely, and share authentic stories, like Joel Gascoigne (Buffer).  That kind of blogging adds value, as opposed to being yet another blowhard tackling the issues of the day (once again, yours truly is a good negative example).

3. Blogging for the sake of "blogging" is almost always a mistake.

Writers write because they have to.  When I don't write, I feel miserable and intellectually constipated, and my wife has to suffer through my verbal overflow.

But if you're not a natural writer, and you decide to blog because "successful entrepreneurs blog," you're as guilty of cargo cult entrepreneurship as any n00b.  Blog to share ideas, not to have blogged.

4. It's really hard to blog when you're CEO.

I first started blogging after I had brought in an outside CEO to run my first startup.  When I was CEO of Ustream, my blog was essentially on hiatus.  The point is, I've never tried to be a blogging CEO.  I've always found being CEO to be nearly all-consuming.  I have to tip my cap to folks like Rand and Joel who manage this feat!

5. There's a difference between blogging and having a corporate blog.

One of the key distinctions Keith drew was between a real blog and a corporate blog.  If you want to blog, write it yourself, in your distinctive voice.  A corporate blog that puts words in the CEO's mouth is inauthentic and ineffective.

Hopefully, these thoughts don't turn you off of blogging; I continue to believe that entrepreneurs should blog--but they should do so for the right reasons, and in the right way.

Sunday, November 03, 2013

Networking *isn't* about who you know

The classic saying about networking is that it's not what you know, it's who you know.  Sadly, this gives people the impression that networking is all about who you know.

The true master networker isn't someone who knows a lot of people; it's someone whom a lot of people trust.

If a "master networker" can't get things done, is he or she really worthy of that title?

In the end, it's not what you know and it's not who you know.  It's what you can get done.

Don't Mistake Notoriety for Reputation

I've been writing a lot about reputation lately.  But one thing I've neglected to do is to point out the key difference between reputation and notoriety.

When people talk about "reputation," they often mean notoriety.  Notoriety is what people who don't know you think of you.

You get notoriety from being written about in TechCrunch and appearing on TV shows.  Notoriety comes from the impression you make on the people who are in your audience.

Reputation, on the other hand, is what people who do know you think of you.  Each time you interact with someone, even if no one else is watching, you're building your reputation.

Notoriety feels good.  Many people (me included) love being the center of attention and soaking up the adulation of an audience (even if that adulation is fake--a fact that everyone who invests money for a living understands is a real danger).  But reputation is far more important.

Reputation is what convinces an investor to take a chance on you.  Reputation is what convinces a former co-worker to quit her job and join your startup.

Don't worry about developing your notoriety; a good reputation is far more helpful to success.

Why You Should Focus On Building Your Reputation

After writing about the importance of reputational capital, I realized that in many cases, it's more important to focus on building your reputation.

The key insight is this: As an entrepreneur, your control over the financial outcome of your startup is limited.  Luck is a necessary but insufficient factor in nearly every startup success.

On the other hand, your control over your reputation is far greater.

You can spend your entire career starting companies and doing the right thing without ever hitting that home run.

Yet if you're working hard, helping others, and adding value whenever you can, you will definitely develop a good reputation.

As an investor, I learn a lot about my entrepreneurs along the way.  I won't lie; when you deliver a great return on investment, it certainly helps me feel good about you.  But the correlation is weak; there are "unsuccessful" entrepreneurs that I love, and "successful" ones that I avoid.

Doing the right things will sometimes result in a great outcome.  It will always result in a good reputation.

The Performer and the Script

The very wise and very successful Saad Khan says that he only invests in "badasses."  I'm on board with that; given the likely length of the investor/entrepreneur relationship, life's too short to waste on people you don't like.

Yet like many simple rules, it's incomplete.  Investing in great people is a critical part of being a VC or angel investor, but I liken it to casting a great actor--even the greatest actor can't overcome a bad script.

Meryl Streep has been nominated for an Oscar 17(!) times.  She also provided the voice of a queen ant in "The Ant Bully."  Scripts matter.

The thing is, even though scripts matter, the performer matters more.  Meryl Streep can make even middling scripts (e.g. Mamma Mia!) look pretty good.  The greatest script in the world can't win Megan Fox a Best Actress Oscar (sorry, Megan!).

The ideal thing for a movie studio or an investor is to find a great actor who has a knack for finding great scripts.  Clint Eastwood won fame starring in the TV Western "Rawhide," and could have spent his entire career playing cowboys.  Instead, he formed his own production company, and created a long series of great works, including Best Picture winners "Unforgiven" and "Million Dollar Baby" (both of which also won him Best Director Oscars).

You should definitely ask if an entrepreneur is a badass, but it also pays to ask if she knows a good script when she reads one.