After five years in the world of venture capital, Jeff Jordan has seen hundreds, if not thousands, of startup pitches. In fact, Jordan jokingly describes his job as “professional pitch receiver.”
While Jordan is now a general partner at Andreessen Horowitz (a16z), he used to be the CEO of OpenTable — and before that, the president of PayPal — so he knows a thing or two about running a company.
“We’re charged with picking the people who see the future correctly,” Jordan says of his role as a VC.
So what does it really take to start a successful company and “see the future”? Jordan shared his do’s and don’ts of being a startup founder.
1. Know when to panic — and know when not to panic
While Jordan looks for other things in a startup — like the market they’re attacking and their product — it’s the founder that makes or breaks a company, he said.
“The most important skill ends up being perseverance or courage,” Jordan said. “They will run into challenges, we guarantee. There will be huge hurdles that leap up. The monster success stories all had days where it looked like it would be their last.”
2. Market size isn’t everything
Market size hasn’t been the best determiner of good outcomes for a16z, Jordan said.
“I can think of three companies off the top of my head where their initial market was tiny and they became huge companies,” Jordan said. “One would be eBay, second would be Facebook, third would be Airbnb. All those you would have dinged on market size if that was the main criteria.”
3. Most founders have no idea what they’re doing, and that’s OK
Jordan said he once sat down with Mark Zuckerberg when Facebook was in its early days. Zuckerberg said one thing that stuck out to him: “A lot of people know I’ve never run a company before. Not a lot of people know I’ve never worked at a company before.”
What’s more important than experience, Jordan said, is a willingness to learn.
“It’s hard. Running a company is hard in a number of ways,” he said. “You’re the last line of defence and if something goes wrong on your watch, it’s your fault. You’re almost always in a situation in a rapidly growing business where you’ve never done this job.”
4. Not everyone is cut out to be CEO
Some people hold on to the title of CEO for the wrong reasons, Jordan said. Not everyone is a great operator, just like not everyone is a great founder. Jordan said he wishes more people realised that their “baby” might be better served by a different CEO.
5. Don’t be an egomaniac
“There is a really thin line between being a decisive, visionary, dedicated leader and being megalomaniacal,” he said. “Do they know to stop the car before it runs off the cliff? Those two present almost identically, so it’s a really interesting talent to try to tease out which you have.”
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