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China’s rapid growth over the past ten years has made it the largest consumer of industrial metals (steel, copper and zinc). In 2011, China accounted for close to 50% of global consumption for base metals. However, recent studies have cautioned … Continue reading
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“China’s trade with Africa has also grown steadily during the past decade reaching USD160 billion in 2011 from just USD9 billion in 2000. China’s share in Africa’s total trade has been phenomenal, rising to 13% from 3% a decade ago” Continue reading
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The recent rebasing of the GDPs of a number of African countries, including famously the doubling of Nigeria’s economy to half a trillion USD in 2014, has also raised interest globally in Africa’s data Continue reading
So here are some other great ideas to successful business ideas in Africa following Serie 3 blog which was my most clicked blog of 2013. Some of you emailed me to expand so here we go: Path #4 – Closely watch … Continue reading
What does “Audi Partem Alteram” mean to entrepreneurs (eternal founders of companies), and start-ups?
Yes, if you guessed that was Latin – Well! You’re right. I took two years of Latin years ago. Not that I had any thought about what this ” Audi Partem Alteram” meant but I ran into it in an in-flight magazine article. It means “Hear the other side” and is attributed to St. Augustine. Here’s why it struck home and why I believe it applies to those of us eternal entrepreneurs and start-ups founders or executives:
By definition, entrepreneurs have to be driven to believe in their vision, beyond the point of logic. Because logic says that by far the most probable outcome is you will fail, and fail badly. That’s just a reflection of how hard it is to start and grow a successful enterprise. Every start-up has to essentially say to itself (or ignoring reality not even think about…) that while “thousands of other equally bright, equally driven and passionate people have traveled this road before and died along the way, that won’t happen to me.” So it is with all explorers, and start-up founders are the explorers of the business world.
For venture capitalists, the reverse is true. There, we (I’ve been on both sides asking for financing and attempting to fund other’s projects) know that after sorting through literally hundreds of business plans and smart teams, and doing countless hours of diligence on a new deal, the default answer on yours is we should pass – because history says that if we invest at least two out of three times we are either somewhat wrong, or completely – totally – embarrassingly wrong. So, as part of diligence, we are looking for all the reasons the new enterprise might fail, and then trying to see if the risk of failure is maybe just a little less than normal and the rewards if successful are maybe more than just a little better than normal. This, in the face of data that tells us no matter what we think,that the most likely outcome is that yours is to die along the road also. That’s what make private equity firms and venture capitalists (2 sources struggling entrepreneurs and start-ups always turn to) the explorers of the investing world.
So, what can we learn from each other? How do we audi partem alteram?
First, start-ups need to recognize that PEs/VCs have the advantage of pattern recognition. We (PEs/VCs) have seen many thousands of potential deals, have done maybe hundreds, and so have our pattern recognition engines loaded with case studies that form our collective judgment. We are far from always right (see the 2 out of 3 misses above), but we are way better than average (versus about 1-2% success rate for all start-ups). Therefore, when we hit you with questions and concerns, accept them as perhaps the best free consulting you’ll ever get. We are asking you questions you need to be asking yourself. If you can hear our side, go back and then return with good answers to most of our “objections”, you will head down the perilous road with a far higher chance to survive – whether you take our money or not.
But PEs/VCs need to hear the other side, too. It is very easy in our line of work to end up jaundiced. We see failure so often we get numb to it. Sometimes, we forget the power of a high-performance team, operating with intensity, and how much a small set of people can accomplish when driven by a shared goal where they must succeed to survive. Sometimes, we can temporarily forget that our investors have paid us to suck it up and take those leaps of faith along with the entrepreneur. I know this from personal experience as I remember everyone I knew in my close circle telling my first venture was going to fail. You see it’s more than OK for you to not just tell the story, but share your passion for it. In fact, one of the best ways to get a polite “no” from a VC is to show up with a polished PowerPoint, but an uninspired delivery. Make sure we hear not only what you plan to do, but why and why it matters to you, personally.
Hearing the other side comes from a fundamental belief that none of us has all the answers. And that hearing the other side, as annoying as it may be at times, is the best vaccine against preventable mistakes. It is why smart executives know to reward those who come to them with bad news, rather than shooting the messenger. It is why smart entrepreneurs and PEs/VCs know that often the best gift they can get from each other is a well-reasoned argument.
Finally, I’ll leave you with one of my favorite “Latin” expressions.
After all the deep analysis is said and done, it describes the keys to success in start-up business.
“Veritas per intestinem intuitionem”
(Truth through gut feel)…go figure!
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Start-ups: Just say “No” to PTO No, I am not talking about some Parents-Teachers Organization. I am no parent to any kid out there. You see more and more companies are offering a benefit to their employees usually referred to … Continue reading
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