Whenever I meet a founder team, I always ask about their objectives and motivations.
Given all the things they could be doing with their time and energy, why spend the next several years of their lives on this particular business? What do they aim to accomplish, what outcomes do they aspire to achieve? How will they define success, and how will they gauge whether they are on track, stuck in the weeds, or wandering off course?
Similarly, I teach my Innovative Social Enterprises students at Tufts to ask themselves and their stakeholders why questions as an active and continuing practice, to understand as clearly as possible their own and others’ motivations, hopes, and fears.
Likewise in my role as mentor with MIT, WPI, Majira Project, and other programs, I guide mentees to frame strategically actionable questions that enable them to make soundly considered and contextualized decisions in light of their end goals.
It’s astonishing and frankly more than a little bit disheartening how often founders tell me that no one has ever asked them these questions before.
If you don’t have a clear destination, you’re just on a random walk. Where will you end up? Who knows. Maybe even who cares. As the saying goes [whether attributed to the Cheshire Cat or John Lennon], if you don’t know where you’re going, any road will get you there.
But as a founder, CEO, or even team leader, it’s your prerogative and obligation to set your team’s navigation.
So this week I was delighted when someone asked me about my definition of success, for the first time since I can’t remember when.
What’s in a destination?
As we like to do in these posts, let’s clear up some widely held misconceptions.
Success is neither fully nor actionably defined by target financial projections, market share, or audience size — there exists a semi-infinite number of trajectories going through each of these points. Even if the points themselves aren’t at least somewhat arbitrary — which let’s be honest, they usually are — the endpoints of the trajectories intersecting them, and the organizational cultures and experiences described by those trajectories, can be wildly divergent. Which of those trajectories do you want to be on, and where do you want to end up?
It sometimes helps to put complex concepts like this in simple, even crude terms. So let’s say you are building a new agtech company. How will you decide whether your company will improve yields for the tobacco sector, or how will you set pricing models for smallhold farmers? If you are only aiming for big numbers, and you don’t care what kind of company you build, who benefits, or who suffers, it hardly matters — just figure out how to maximize your company valuation.
You might, as the cliché goes, create the next Uber. If that’s what you want, mission accomplished. But what if you don’t want to build a scandal-ridden, toxic, extractive empire? Your “success” may haunt you. This isn’t hypothetical. I have known too many founders who regretted the shape of the companies they built this way, only realizing too late in the game that they had inadvertently created a robust culture of harm.
Far more likely is that you won’t achieve Uber status, but will struggle with ambiguous decisions, attempting to choose the best course of action among locally indistinguishable options, never entirely sure of your navigational headings other than an axiomatic imperative to demonstrate momentum up and to the right.
What is best?
As a former engineer, I know how much engineers love a good whiteboard / marker wall argument: each person competing to make their case for the most compelling, soundly derived, elegantly structured solution to a particular problem.
These can be fantastically productive disagreements, in which the superior solution emerges because it is the one that most effectively addresses the problem. Often new ideas coalesce in the course of the argument, as differing concepts collide, combine, and give rise to new ideas in the exchange.
But there’s a catch: the only way you get to have a productive argument is if you have a clearly understood set of criteria for defining best.
Without a shared understanding of success criteria, there are no parameters by which to gauge which ideas are worthy of further exploration and which should be discarded. Under these conditions, in place of a productive disagreement there is merely a brawl. The winning idea is the one that is most forcefully asserted, or the one with the most political support, or the one which is easiest or most widely practiced or most obvious. Worse yet, under these conditions the chosen decision generally leaves a wake of thwarted ingenuity, internal disaffection and friction, or even active ill will.
If you’ve experienced productive and unproductive arguments, you know the difference is not subtle.
Moreover, whether you’ve participated in or observed them, you know which one consistently produces more creative, innovative, and rewarding outcomes.
It should be intuitively obvious, then, that defining success and the criteria for achieving it are among the most important questions for founder teams to be asking and answering on a continuing basis — especially when they are raising capital to fuel growth.
That’s why I find it so disheartening that these questions are so rarely asked, and even actively discouraged by many of our conventional venture peers.
So how did I answer?
For me the ultimate objective is very simple: we will have succeeded with Reinventure when:
- instead of ≤3% of US venture capital going to BIPOC and/or female founders, the number is more like 65%, on par with population demographics;
- the success stories we celebrate are the ones that solve real problems, improve social / economic / environmental resiliency, and generate widespread value rather than extract or concentrate it;
- enterprises, GPs, and LPs alike are evaluated in terms of both positive and negative impacts on all constituencies and stakeholders, rather than a few.
For this particular fund, our success criteria are far more immediate and concrete:
- every one of our portfolio companies hires, promotes, and compensates equitably at all levels, and sources equitably wherever feasible, creating and disseminating wealth and opportunity;
- each of our portfolio companies builds value by executing on its own clearly defined strategic impact objectives, generating intentional and measurable net-positive impacts;
- the majority of companies in our portfolio contribute to generating a top tier fund return, rather than one or two, expanding the set of narratives around who is investable and why and providing a counter model to the hegemonic 1 in 10 mindset;
- the fund serves to attract more capital — both equity and debt — to BIPOC and female founders in our current and future portfolios, and to other BIPOC and female GPs’ portfolios as well, driving a virtuous cycle for transformative change.
Your turn. How do you define success?
I’d love to hear your answer.
What is your ultimate goal? What are the outcomes you are spending your time and energy and attention and other resources to attain? What does it look like? How will you decide if you have been successful or not?
What is nonnegotiable to you, and why does that matter?
Eyes on the prize.
When your success criteria are clearly defined, decisions become much clearer: everything either contributes to achieving those aspirations or detracts / distracts from them.
Because we define success in terms of wealth and opportunity creation in service of racial / social / gender equity, Reinventure invests exclusively in US-based companies led and controlled by BIPOC and/or female founders, at breakeven, and poised to grow profitably. This is not a niche or philanthropic play. We’re investing in the ≥$4T opportunity pool that conventional VC persistently overlooks, and that represents a $16T delta to the US economy. We enjoy vigorous, high quality deal flow, our nascent portfolio is already outperforming projections, and our predecessor fund returned 32%, soundly disproving the threadbare complaints of higher risk, lower returns, or a “pipeline problem.”*
If this resonates with you, please contact us to explore how we can get up to good trouble together. And please let’s share so others can join you as well!
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Photo credit: Vasile Stancu on Unsplash
*While there’s no such thing as a guarantee in investing and no one can reliably predict the future, Ed’s prior track record delivering 32%IRR to investors provides direct evidence that it is indeed possible to consistently invest for both financial returns and social value creation. If you are an accredited investor and would like to learn more about investments that can advance social, racial, and gender equity by supporting high-value companies led by women and/or people of color, please contact us to start that conversation.
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