I got my start as an investor. It made me a better entrepreneur

Joshua Kaufman · February 6, 2024 · Short URL: https://vator.tv/n/57e9

If the dreamers and the realists can fuse their strong suits together, it’s an electric combination

“A jack of all trades is a master of none” is often quoted without its ending: “but oftentimes better than a master of one.”

I began my career as an investor, called by the excitement of breathing life into passionate, creative ideas. It was a fulfilling and stimulating endeavor, constantly reviewing new ideas in various domains. But like some investors, I got the itch to build.

So, I dove head first into entrepreneurship. Now, I’m currently a co-founder of a startup – Atly, a social mapping app that helps everyday users find the places and experiences that are best for their particular wants and needs.

Considering that around 75% of venture-backed startups fail, the successes and failures of VCs and entrepreneurs are intrinsically intertwined. Both have ample room to learn from one another, especially as funding tightens and business decisions across the board are made under rising scrutiny.

I carry both mindsets with me – an angel on each shoulder, weighing in on every decision I make. The sum of these experiences has proven invaluable to me, and I have come to realize that neither side needs to come at the expense of the other. Rather, each angel shares a unique and valuable perspective with the other, and both of them continue to inform every decision I make.

Here are some of the lessons I have learned from my past as an investor that have been critical to the way I think about business today.

Pick a lane

Ideation is central to entrepreneurship. Creative, prolific founders always have a breadth of new business propositions swimming around in their minds. As a result, they are often motivated to solve as many problems as possible with the technology and solutions they are creating. With a big enough stone, you should be able to take out a whole flock, right?

But investors often prefer solutions that focus on one big idea or a specific market, with the goal of executing a single solution successfully before moving onto other things, in order to generate a stable, consistent return on investment. 

When the creative dynamism of a founder mindset is complemented by the market-savvy discipline of seasoned investors, companies are more likely to stay focused on reaching the finish line without losing their ability to constantly evolve as markets change and technology develops.

If the dreamers and the realists can fuse their strong suits together, it’s an electric combination.

Stay the course

Career investors have the benefit of seeing many startups undergo the full lifecycle from ideation to market. It’s one of the great joys of the job. They understand that every company goes through the motions of a motivation curve – starting with the excitement of launching a fresh, new idea, dipping as subsequent work becomes more routine and mundane, and peaking again as market entry comes within reach.

It’s easy for entrepreneurs to glory in the adrenaline surge of a new challenge or idea – I know and love the rush. But the most successful founders place an emphasis on perseverance, dedication, and consistency. These founders are able to stay focused on long-term goals, even in the middle of the bell curve, without losing motivation. And the numbers don’t lie – 20% of businesses fail within the first two years of opening, 45% in the first five, and 65% in 10 years, leaving only a quarter of businesses making it to 15 years or more. Yikes.

Take it from the angel investor on my shoulder – investors tend to seek out this exact quality in the founders they invest in. It’s also why founders with previous startup experience sometimes get preferential treatment as they are already familiar with the logistical hurdles and motivational fluctuations they will have to overcome.

On any given day, staying the course may not be as glamorous or exciting as what calls people to entrepreneurship in the first place. But in the long run, it’s the act of doing the necessary things over and over again with grace, determination and aplomb that sets extraordinary entrepreneurs apart.

Fail fast, fail cheap

Investors dread the word failure. When one venture falls flat, it’s more than just a one-off setback – the performance of the overall fund takes a hit.

Nonetheless, investors are very accustomed to failing ventures. Failure is built into the model of venture capital. The expectation is that most startups will not generate wild success in the long run, but rather, a small margin of companies will generate a large profit, thereby making up for the rest of the less successful ones.

Once entrepreneurs understand that there is a much higher propensity towards failure than success in the startup ecosystem, they can then learn that failing quickly is failing best. When failure strikes it isn’t the end of the road – rather, it’s just one exhausted option. Therefore, entrepreneurs mustn’t get hung up on one single idea. Failing fast presents an opportunity for founders to accelerate towards successful ideas more quickly – and with invaluable experience under their belts. 

Being overly invested in one idea only to have it fail is where entrepreneurs often stumble. Instead, it’s the art of letting go that enables founders to move on to a subsequent iteration that may have a better chance at succeeding. Swiftly pivoting from one idea to the next also means less time and capital invested – in other words, less sunk costs.

The faster founders grow accustomed to this process and learn not to dwell on failure, the sooner they will find success – to the benefit of both their company and their investors.

Be the best of both worlds

Investors and entrepreneurs are both critical pieces of the innovation puzzle – their fates and fortunes have always been intertwined. My experiences on both sides of the coin have taught me to fail fast and regroup faster, remain focused and discerning without compromising creativity and flexibility, and be prepared to hunker down and hang in for the long-haul.

Business leaders worth their weight in great ideas would do well to strike a balance between the mindset of an investor and the mindset of an entrepreneur. I feel so lucky that I’ve been able to wear the shoes of both.

At the end of the day, both are made better by working together.

(Image source: driving-tests.org)

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Joshua Kaufman

Joshua Kaufman is the Co-Founder of Atly, the user-generated social mapping platform revolutionizing location-based knowledge sharing, leading the company’s product division with his immense passion to build and create.

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Joshua Kaufman is the Co-Founder of Atly, the user-generated social mapping platform revolutionizing location-based knowledge sharing, leading the company’s product division with his immense passion to build and create.