Each year, NBA scouts devote their time to finding flaws in players. Landry Fields lacks athleticism. DeJuan Blair is too short. And each year, those scouts misfire badly, as players like Fields and Blair end up thriving in the NBA.
The scouts fail because they’re too focused on what players can’t do, rather than understanding what they can. If you’re a brilliant rebounder or a great shooter, but are below average in other aspects of the game, that’s a lot better than being average at everything.
The same applies to investing in startups. It’s easy to find reasons not to invest in a company. The founders are too inexperienced. The space is too crowded. The technology isn’t unique enough.
But simply avoiding flaws isn’t enough. Startups don’t succeed because they demonstrate broad adequacy. They succeed by being insanely great at something, even at the cost of sucking at others.
If you want your startup to succeed, figure out your business’ elite skill and focus on honing it. This isn’t to say that your startup’s flaws don’t matter. They do. But being flawless yet mediocre is a recipe for indifference.
Conversely, if you’re contemplating a potential investment, focus less on what it can’t do and more on what it can. A great product that meets a critical need can convince people to overlook myriad flaws.
"A great product that meets a critical need can convince people to overlook myriad flaws."
People/investors won't say so, they'll just turn you down … but this is dead on. Dead on. Because these same people will buy the latest iPhone while explaining that the next one will be so much better. Tools.
Absolutely dead on.
This is a good point. Steve Nash and John Stockton were good (first-round picks). They went to small colleges in small conferences. They were were scorers back in their college days, but they knew that they had a bigger calling in the NBA. They learned that dishing it off and moving the ball around were the keys to success in the League, and Stockton is already a HoF'er and Nash will soon be.
Zappos is a good example. Lots of places sold shoes, so why would somebody invest in another shoe store? Zappos was really good at customer service and they beat everybody. Now they sell everything, and their customer service is so much better.
Allan
@ycreject
is it good when you know the risk of investing?