Great Product – Wrong Deal.

In my dealflow I are often see great features, great products, and great companies. But I can only invest in great deals. Passing on your deal is not a judgement on your product, nor on your company, nor on your character. This isn’t personal.

Great Features.

10x Speed at 1/10th of current cost. Because when you launch the product, it’s going to be a 3x speed and 1/3rd of current cost.

Great Product.

A packaged set of features that is easy to discover; does what it promises; and you can buy it. Easier said than done. Lookup Philippe Bouissou’s “A4 Precision Alignment”. You have to align Perception vs. Message, Pain vs. Claim, Purchase vs. Sale, Delight vs. Offering.

Great Company.

A sustainable operating model of constant re-invention and re-imagination: A launch pad (or re-launch pad) for better and better products, all the while keeping customers happy, and off-board ing customers gracefully. Note how I did not say sustainable business model. Many companies seem to have a great business model, it all makes sense, but then they just get ground to a painful halt by the wrong culture. Culture starts with leadership. You set examples. “A fish stinks from the head,” as we say in Germany. “If you see something that’s sub-standard and don’t say anything, you just set a new standard.” (Jocko)

Great Deal.

The deal parameters need to match my individual risk-reward profile and portfolio construction. If I have investors (aka perhaps as your Limited Partners of a venture fund), then the portfolio needs to match the risk-reward profile these investors were underwriting to: I am running a product, too (a two-sided platform, connecting startups with LP money), and I have to run my own A4 Precision Alignment (no, I’m not sponsored by Audi).

Note how I did not mention valuation, growth rate, EBITDA, FCF, or any other metric. I said deal parameters, which includes more than just my price per share, total shares issued, and overall company capitalization … What’s great for you might not be great for me. With some LPs, I know for a fact that financial returns were secondary, while glamour and bling of a brand were more important.

Thoughts? Opinions? Comments? Corrections?