When business, innovation and money meet
Answered => “Why do I always feel like I’m too late for all the startup trends, how can I be at the front of the trends, executing?” on Quora.
=> My answer…
I’m certainly not going to disagree with the mighty Robert Scoble, but I’d like to point out one thing that perhaps might add some much needed context:
Mr. Scoble said:
“1) Study the money. Investors see everything before other groups. So, watch what they talk about.”
While this is true, it also breeds a self-fulfilling prophecy effect.. That is, once those at the forefront decide direction, direction tends to head that way. (Just as the RS answer foretells.) The Press says, “Wow! Scoble’s in, it must be genius…” and leans that way. The punters too, they say, “Wow! Scoble’s in, it much be genius…” and follow suit. And so on.
Keep in mind, investors have been making phone calls, emails and the like. They want that push. It’s essential for ROI. What good is a company / product if no one knows about it? Cutting through the clutter is essential. Top-shelf investors understand there’s plenty of noise and therefore use their reputation as leverage for influence and marketing. Investing is about mitigating risk. Attracting attention aimed ultimately at traction in the market is part of mitigating risk. Duh?
What we also see – even at the highest levels (e.g. Jobs, Gates, Ellison, etc.) – is the politics of solutions and investing. “Product blocking” if you will ;)
The point here might be best made with a fictitious example. Let’s say Robert Scoble makes a sizable investment in Company X with Idea Y. The buzz of the commitment spreads, the press releases go out, etc. Idea Y is on its way to conquering the wheel, as well as sliced bread itself at the top of Mount Greatest Thing Ever :)
Then 6 months later a potentially superior Company Q whips up Idea F. Raise your hand if you think Scoble & Co. come out and say “Oh…Wow…Looks like we made a big boo-boo.”? Typically, the spin is, “No threat here. We’re still on target for the top of the mountain…” But that’s what they’re supposed to say. Ok, I get it, innovation is part of the process. In fact, it is the process. Something also gives way to something else. However, just the same, people are people and investors are going to naturally “defend their territory”. Investing fuels innovation but it also adds friction.
Yes, watch those who are the foil. But also be aware of the broader dynamics of what you’re observing. All is not always what it seems. There’s as much info between the lines as on the lines themselves.
Put another way, Mark Cuban once said:
“If you’re looking where everybody else is looking, you’re looking in the wrong spot.”
Read more: Mark Cuban Interview – Quotes from Mavericks Owner Mark Cuban – Esquire What I’ve Learned: Mark Cuban
Also be willing to trust you own judgement as a filter. If you’re in consumer markets, ask yourself, “Would I buy this? Is this really something I want or need?” If you go back to the first dot-com bubble you’ll find plenty of god-awful irrelevant ideas that plenty of money was invested in. Have we learned our lesson? Really? Are you sure?
I hope I didn’t get too off topic and too long-winded :). My apologizes to Robert Scoble if I’ve misused his name in said examples. No offense intended. Ideally no offense taken.
As a side note I’d like to add that I see plenty of question on Quora about why an Incubators, what a good Angel Investors should bring to the table, etc. Sure, your idea might be brilliant. Go ahead! Go it alone. You can do it. Knock yourself out.
On the other hand, the second Y Combinator, TechStars, etc. taps their magic wand on your pretty little overwhelmed head, the market listens. The noise and clutter gets less noisy and less crowded. No doubt, it can be done without such resources. It happens all the time, eh? The point is, having someone with cache and influence on your side is rarely a bad thing.
Bottom line…A “black book” can have just as much value as a cheque book.