Entrepreneurship, Failure, and the 20-year Game

I often tell our portfolio company founders the following: at Kepha, we’re playing a 20-year game.

I think having a long time horizon affects what we do, why we do it, and how we behave. It sets a very high bar to which we aspire. It’s not always easy, and we don’t often hit those ideals. But, we certainly try to.

Here’s how a long time horizon affects how we work: we’re OK if entrepreneurs fail, as long as they don’t lie to us. We know that most VC-backed companies do poorly. With its 33% success rate, VC is a lot like baseball, as I’ve written in the past. It’s all about home runs. So, we’re OK if entrepreneurs “strike out.” But, what we want to do is have earned the right to work with them again. Over a founder’s career with multiple start-ups, one should be a home run. So, we want to earn the trust to be there for each company in a founder’s career.

In one example, we worked with an entrepreneur on two seed ideas, neither of which got anywhere. But, we introduced him to a third opportunity because we really believed in him. That one is now doing well. Eric and I identified this person as someone with whom we want to work for 20 years. The first two seeds failed because of the market and not because of any shortcomings in the entrepreneur.

Having a long-time horizon also encourages us to say the hard things, rather than keeping quiet and writing off an entrepreneur in our minds.

For example, I yesterday had a tough conversation with one of our founders. I told him that we thought his company’s progress seemed slow, but that we wanted to help. That tough topic led to a very honest and very valuable exchange. I said that since we wanted to work with him for another 20 years, we needed to tell him what we really thought. It ended up being a very awesome conversation, and I feel more aligned than ever with this start-up.

Having a long time horizon can make for tough situations, but it’s how I want to live my life.


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