How do you pick future champions while they are still young and developing? How do you identify a talented team of entrepreneurs at an early stage? How do you measure the real potential of a startup business?
In the world of sports it has long been a quest to pick the future champions from among the young. There are DNA tests, muscle tests, enzyme tests, psychology/personality tests, but in spite of a lot of fancy technology no one has really figured out how to do this effectively. It comes down to a gut feeling about the innate qualities of a competitive athlete. Yes, there are physical issues to consider, but once those basic criteria are met, then it comes down to the spirit – the mental game. How tough a competitor is this kid really? In sports you will sometimes find kids who are big – bigger than the other kids their age – and therefore better at their sports. Will these kids be the top performance athletes later? Most of the time the answer is no. Look for the little guy who has had to work twice as hard as the bigger kids – the one who has an unstoppable attitude – and you will find the future winners.
I have recently been asked to be the President of the Selection Jury for the 2009 European Venture Awards and I am thinking a lot about selection criteria. Over 700 startup companies have competed in this year’s competition. They are all smart people. They are all talented in some field. They are all entrepreneurs seeking assistance to give birth to their companies, but how can we pick the real champions? Hint: It’s not about the technology. It’s not about the products or the services or the implementation and adaptation of science… It’ about the people.
Find the little guys with unstoppable attitudes and you will find the future winners. I saw a report by the US Venture Capital Association last year where they had statistics on the valuations of early stage investments by Seed and VC investors. Only 10% of the value was attributed to IP, patents and technology. 5% was attributed to the actual market that the company was targeting. What surprised me most was that 85% of the valuation was attributed to the team. It’s all about the people.
Author Jim Collins (http://www.jimcollins.com) has proposed THE BUS THEORY. It states that if you can just get the right people on your bus and get them into the right seats, then you will figure out how and where to drive the bus in order to succeed. Your business is your bus. Get the right people onboard and you can easily fix a faulty business model. Get the wrong people onboard and you will quickly drive it into a ditch. Picking winners is all about the people.