The 6th P

For many years, i have responded to the question "What factors do you consider in makinga venture investment/" i have responded, "The Four Ps."  These arose from a discussion I had with John Doerr in the late 1980's.

The Four Ps are:

People - I want the entrrepeneur to be someone I'd enjoy working with, intellegent,  honest and hardworking.

Products - the product (or service) should have a large market.

Plans - The entrepreneur should have the ability to make and execute plans
and
Profits - this should all lead to obscene profits.

Starting about 1996, when I was a lead investor in Idealab, I was inspired by Bill Gross to add a Fifth P.

Passion - the entrepreneur must exhibit real passion for the idea, since he or shee will be giving up some of their personal life to make it happen, and needs to believe strongly in what they're doing.

More recently, as I've begun to reflect on the Way Too Early theme of my investing career, I've added the 6th P

Persistence - the ability to stay with it through all the many setbacks that happen during the long time it may take from idea to profitable execution.

"a foolish consistency[persistence] is the hobgoblin of small minds" goes the old saying, but the emphasis should be on foolish - since true persistence is what has kept me in various investments, and kept those entrepreneurs going, for 3, 5, 10 and even 20 years.

How do you tell if an entrepreneur has the passion and persistence? Passion usually shows itself in the first few minutes of the relationship. The quality of their voice, the animation with which an idea is presented, the rapid response to any questions, all can elicit the passion.

Persistence is harder to judge. How much follow up do they do.  How long did they stay with their last idea?  Jeff Hawkins has persisted in his study of how our brains work for decades, and I think he's getting somewhere.  When he's brought that persistence and passion to ventures, he's had great success.  I've been equally persistent with Franklin Electronic Publishers, working with them for 24 years, and in the electronic book arena for over 17 years.

Comments

[Martin Wells]

Great advice, especially for a first blog entry.

I wish you luck on this new venture. :)

[Kelly Choo]

I agree with you that it's tough to judge the 6th "P" persistence.

I guess only time will tell whether an entrepreneur has it or not.

But where does one draw the line of being just plain stubborn VS persistent?

[Rex]

Great advice.But I am often wondering, some people are just excellent talkers but not good executors, how to tell?

[Peter Cranstone]

I would offer one more - it's not a "P" but an "A". In 16 years of being a serial entrepreneur this was perhaps the hardest lesson of all to learn (comprehend).

The A stands for alignment. You cannot focus and execute on a common plan under one leader unless you are in alignment.

In the beginning alignment is usually pretty easy - as the company grows and builders and capitalizers are added to the team alignment becomes very difficult.

The 6 P's are all required - however without an A they will remain unsuccessful.

[gandon françois albert]

it is always a pleasure to discover a blog at its early stage.

Good luck!

[David Tebbutt]

Maybe the A could be a P - partnership. As in a good marriage.

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