Why venture capitalists should be CEOs first


VC Venture Lessons Best Practices

By Mike Janke, DataTribe

I have been a venture capitalist for more than three years, and before that a serial entrepreneur and startup CEO and angel investor.

The difference between the two positions is huge. And the experience I developed as a CEO became invaluable when I moved over to the VC side.

As a VC you are carefully selecting a promising startup, then financing and guiding it, rather than leading and managing it from the ground up. A VC is a mentor with a broad perspective.

A good VC is not a bystander. He or she offers startup CEOs immediately applicable help. VCs must develop a deep understanding of microeconomics, fund management, investment economics and business-building strategies — disciplines that a startup founder is seldom exposed to.

In venture capital, it’s not enough to be just a good leader or disciplined individual. Too many economic and market variables are at play. It takes more than just leadership and deal flow to succeed at the venture game.

Best Practices VC Venture Guest Column
Mike Janke, co-founder and manager, DataTribe.

A good entrepreneur, by contrast, is an intensely focused go-getter who immerses himself or herself daily in the battle to build a disruptive business that must compete with more prominent players. This executive is building an airplane while it’s in flight.

All good startup CEOs have strong egos. They are experts in their spaces and experienced and they fully appreciate the challenges they face and how best to try to overcome them.

But the really good ones have a sense of modesty as well. They must be good listeners and be willing to seek improvement. They must recognize that nobody has all the answers.

Many of DataTribe’s CEOs are first-time founders coming out of various intelligence agencies. They have strong technical skills but almost zero business skills.

One of the hardest things to learn, and teach, is how to embrace a different way of doing things. As one example at DataTribe, a CEO of one of our startups is considered the world’s top expert in a certain security discipline. Yet breaking away from 20 years-plus of doing things a certain way is hard to do, let alone execute on.

What I did as a VC was to continually show and demonstrate what I did wrong as a CEO as opposed to what went well. This became a key leadership training point and provided great value.

A ton of books and ideas are available to tell new chief executives what they should do — and almost nothing about what they shouldn’t do.

With this perspective, here are the five key traits I believe fit the best CEOs.

  • Build Self-Discipline: Hundreds of people are watching and listening to your every move. Building self-discipline is critical to your ability to perform under stress and control your emotions, physical fitness and behavior. Further, your personal and professional self-discipline is a powerful enabler, setting the tone and creating the culture for everyone else.
  • Have Real Humility: As a leader, you win when you surround yourself with smarter people. If your ego constantly needs to be stroked, your people will tell you only what you want to hear. Be humble and interact with humility and your team will feel empowered to disagree with you. Remember: They are probably right.
  • Plug Your Gaps: No VC can be an expert in all things. Take the time to learn what you don’t know.  If you’re weak on sales knowledge, take a course, read books and spend time learning more. If you don’t get financial strategy, spend extra time with a CFO or mentor to dig deeper and strengthen your working knowledge.
  • Focus Sniper-Like: As a VC, you set the culture and the goals. If you lack focus and are all over the place, your investments and culture will languish.
  • Embrace Risk: An excellent VC works with his or her team and allows them to make some bets on intuition over data points. Build a team that has confidence and isn’t paralyzed by fear of failure. Risk is part of life and those organizations that over-correct on risk mitigation will never innovate. A leader needs to embrace, not fear, risk.

Mike Janke is a co-founder and manager at DataTribe, a technology startup studio that’s co-building the next generation of commercial cybersecurity. He is also a seven-time company founder, executive chairman and co-founder of Silent Circle, and a former member of U.S. Navy SEAL Team 6. Reach him at [email protected].

Photo of cogwheels with strategic business key wordings courtesy of joakimbkk/iStock/Getty Images.

 

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