Start-Up : Who to listen to ?

At a board meeting a new startup CEO delivered the bad news. “Our current plan isn’t working. We can’t scale the company. The user numbers is not growing and sales is all time low. But I think I know how to fix it.” He looked around the boardroom table and then proceeded to outline a radical reconfiguration of the product line (practically reengineering the entire game software they had invested the last 18 months on) and a change in sales strategy, focusing on a different customer segment.

Some of the junior investors and directors blew a gasket. “We invested in the plan you sold us on.” A few investors suggested he add new product features, others suggested firing the CTO of the company or the lead game designer. Through all of this, the lead and senior VC just sat back and listened.

Finally, when everyone else had their turn, the white-haired VC turned to the founder and said, “If you do what we tell you to do and fail, we’ll fire you. And if you do what you think is right and you fail, we may also fire you. But at least you’d be executing your plan not ours. Go with your gut and do what you think the market is telling you. That’s why we invested in you.”

He turned to the other VC’s and added, “That’s why we write the checks and entrepreneurs run the company.”

*The VC always invest into the people running the business and not the business. Is this always the truth ? Sadly it's not always so !