The Passion Principle

Though I have spent nearly 20 years now investing in private businesses and their teams, I still find myself spending a great deal of time trying to unravel why some teams / executives succeed, some tread water, and others fail.  Of course, the attributes and dynamics of the business, the business model, etc. all matter a great deal – and can often make or break the probability of success.  But, once you’re in, if you’re going to succeed, more often than not you need a great leader and team.  And in the case of venture capital, where I spent the formative years of my investing career, the business or business model may not even exist.  In that world, you really are backing people with ideas.  So why do some succeed where others fail?  Increasingly, I believe there is one attribute that can make a huge difference – passion.

I started listening to a new (to me) podcast recently called StartUp by Gimlet Media, and in episode 1, the “founder” meets with Chris Sacca, a legendary early stage VC.  Chris talks about passion as one of the key differentiators he looks for in a founder and team.  I also happen to be re-reading Poor Charlie’s Almanack – a compilation of writings mostly by and about Charlie Munger, Warren Buffett’s partner (I won’t go into detail here about Charlie, but here’s a link to another post).  Charlie also says “I would argue passion is more important than brain power.” If you step back and look at it, these two guys couldn’t be investing in more different types of business. One was an early investor in Twitter, Air B-n-B, etc. and the other wouldn’t likely touch a tech start-up if a reincarnated Steve Jobs walked it into his office with Bill Gates by his side. And yet, despite their stage focus, and all the other differences one can draw between a seed stage company and a large, established business, these two legendary investors in private companies have a very common high level screen – passion of the leader.

My own experience, obviously on a much smaller scale, reinforces this view.  It’s not easy in our world to find passionate owners who want to stay on, or passionate new leaders in the event the existing owners do move on, but we talk about it, and worry about it, a lot.  Perhaps you should too…