Just read a very insightful blog post by Mark Suster (Why I Look for High Conviction, not Consensus, in Venture Capital Decisions)
My biggest takeaway from the essay is around having the courage to build conviction and intellectual honesty around an investment opportunity.
It’s relatively easy to understand if an investment opportunity is good or not from pure intellectual reasoning (as i wrote about previously). However to build real conviction around a team, it is often a very emotional decision. The challenge here then is try not to fall in love with an idea / team / market or whatever it is, but at the same time once there’s conviction you as an investor will need to be passionate and committed to see it through with high conviction.
In some sense, one almost needs to have the ability to hold conflicting ideas (and emotions) in your head at the same time, and have the discipline to recognize that if data and signs show that things are not likely going to work out, have the intellectually honesty to say no.
More and more I believe that brutal intellectual honesty is one of the core ingredients of building a great venture capital firm. It is extremely difficult, given that venture capital is such a relationship and more importantly human business. (Again, borrowing from Suster’s great post here), and it definitely goes against human nature to be saying no to smart, driven founders, most of the time.
Much to learn and do, indeed.