It never ceases to amaze me how many smart people don’t seem to understand this one topic. It’s basic MBA stuff, but even MBAs don’t get it. Perhaps this is symptomatic of an era of easy financing and business models that make no sense, but I run into this issue even when speaking with colleagues seeking advice as to how to get their businesses charged up.
Already I have posted about knowing whether or not you are starting your own gig for the right reasons, and knowing whether or not what you have is a product or a business. Both of these items are critical to the success of any venture, but there is one factor that is at the top of my list of importance. Talk to any other venture capitalist and they will tell you that the very first thing that they want to know about the investment opportunity is the management team. I want to extend the axiom beyond simply those who are directly involved in the day to day operations of the business to the notion of the right team.
One of the more interesting conversations I have with entrepreneurs is whether or not what they have is a product or a business. It’s a tough conversation because most entrepreneurs are very passionate about what it is they want to pursue, and believe that they are on the cusp of building a multi-million dollar business. Sadly, many would be entrepreneurs cannot make the subtle distinction between a product and a business.