How Mike Maples and Ann Miura-Ko Are Opening the Floodgates on Early-Stage Tech Entrepreneurship
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particular niche. But at the end of the day, it’s a consensus insight. The place you make a tremendous return for an investor is when you find this one insight that no one else believes, but you believe, and it turns out to be right.
MM: In fact, the more people who think you’re wrong, the better. By the time the rest of the world catches up to you, you’ve made huge progress and created sustainable competitive barriers.
We have also found that our success is almost inversely correlated to how many people want to jump into a deal. If you really look back on it, there aren’t many hot deals where everybody is crowding around that end up being great companies. There are hot deals that have modestly good outcomes, but very few have the truly epic plate-tectonic-shifting outcomes. Usually the ones that do really well are the ones that you have to defend for the first couple of years.
AMK: The reason I love this sector of investing is that it’s a privilege to work with these types of entrepreneurs who have that kind of belief in their vision. Mike has had a longer career in investing than I have, but I have even experienced this. To have the opportunity to work with the Kogers from ModCloth, or with Leah Busque from TaskRabbit, or Gurjeet Singh from Ayasdi, who are all disrupting their industries, is just a privilege. Mike has had similar experiences with Kevin Rose and Ev Williams. They all took a chance on us. Our belief is that we have to pay it forward.
X: You used the phrase “lean startup” earlier. To what extent do you believe in the whole Eric Ries-Steve Blank methodology of agile software development and customer development and product iteration and all the rest? Do you believe there’s a science to being an entrepreneur?
AMK: This is the fundamental misunderstanding around lean startups. People think that it’s an algorithm, and that being a lean startup allows you to gather data to make entrepreneurship into a science. That is fundamentally wrong. The ability to discern where to go with your company is a vision, an art.
Mike understands this much more viscerally than I do, but I’ve always been frustrated by the notion that just because you’re gathering data, your decisions are necessarily clear, and that if there are a bunch of naysayers, you should switch gears. We are looking for that fundamental balance between tenacity and sticking to your vision and being able—when you no longer have faith in the vision—to completely scrap the revenue that’s already coming in the door and scrap code you spend weeks building and head in a new direction.
MM: A visionary entrepreneur will generally have an insight about a huge potential market, but they are not dogmatic about how to actualize that insight. That is where the iteration comes in. Neil Young at Ngmoco decided that the iPhone was going to be a huge platform for games. That was at a time when the conventional wisdom was that phones had not been good gaming platforms, and Apple had not even come out with an SDK [software developer kit] for the iPhone. There was no evidence that it would be any better for games. But he said, “Looking at the iPhone and knowing what I know about games, I think this is going to be an enormous market.”
Ngmoco never stopped chasing that opportunity to sell games on the iPhone, but they pivoted from selling apps to free-to-play. The really good entrepreneurs, in our experience, never really alter their core vision, and their fundamental advantage doesn’t even change that much, but the way to maximize that potential in the market could change in a pretty radical way.
AMK: That said, there is a very thin line between the “visionary entrepreneur” and, as we say, “the entrepreneur who is having visions.”
X: How do you know which is which? When do you trust that the entrepreneur is right about something like the size of the potenital market?
MM: That is the hardest one to answer. A potential market is like potential energy in physics. You can’t see it converting to mechanical energy. If it was an obvious market, big companies would go after it. So it has to be a huge potential market, and then you have to have a visionary entrepreneur who is better equipped to go at that market than anybody else, through their proprietary insight. As they explore, they might make a lot of course corrections. Christopher Columbus didn’t land in the part of the New World that he thought he was landing in, but he was going after a huge potential market, so even though he was off course, he landed somewhere compelling. We are looking for markets that have such huge potential that we have a lot of opportunities to course-correct.
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