The InSITE breakfast series wrapped up 2014 at Lerer Hippeau Ventures with Principal, Taylor Green. Given Lerer Hippeau’s position as a seed fund and Green’s prior operating experience, the conversation focused on how to develop an eye and feel for companies. There were three key points that came up in our conversation that I think form a great guideline for entrepreneurs and aspiring investors alike:
Taylor Green, Principal at Lerer Hippeau Ventures
1. As an investor, you’re really investing in the person. This point seems obvious though it gets at one of the intangibles of investing. As founder, you are responsible for building the momentum for your company; this can be driven by your own compelling conviction that your idea will succeed, by a track record of successful companies, or by an unfair advantage. This unfair advantage is the reason why you, and not someone else, will be uniquely able to succeed in solving a problem that others most likely have thought about. Has your family been in the industry for generations? Have you worked in various jobs that all encountered the same problem? Do you have a network that others are unable to recreate? While some of these attributes are out of our control, the factor that can most directly lead to both powerful idea generation and validation for that idea is industry experience.
2. Building on that idea, gaining operational experience is critical. In Taylor’s experience, industry and operational experience helped him to generate ideas and build credibility for those ideas. It also led him into investing. For both founders and funders, industry and startup knowledge is irreplaceable. For founders, it helps you develop that unfair advantage. For funders, it helps to prepare you better to recognize the intangibles that make up a strong management / founding team or a compelling product.
3. A big picture vision for a company must be accompanied by a clear understanding of the path that company intends to take to accomplish it. For me, this thought challenged a notion I had had about the importance of experimentation in early stage companies. Specifically, I wondered about the difference between smart exploration and throw-enough-sh**-at-the-wall experimentation. When I posed this question to Taylor, he noted that the difference is actually quite simple: he looks for entrepreneurs who have a set of pre-mapped “lighthouses.” While this path will inevitably change and may even be the wrong path altogether, having the confidence and ability to set a course with limited information demonstrates comfort with ambiguity and decisiveness – a critical attribute in any founder.
InSITE’s breakfast series will resume in February.
Elizabeth Bildner is a second year MBA student at Columbia Business School. She is the founder of Sharitive, a loyalty application designed to create hyper local cycles of giving and improve local awareness of nonprofit need.