There is often a lot of “heat” around a company that is growing very fast. There is most likely a lot of growing pain that comes with hyper-growth but generally that is a high class problem (assuming the growth is authentic).
Founders, employees, investors and press will look at the metrics and combine it with a growth forecast and a reasonable scaleable business model and the mind makes the heart race.
But often times there is an opportunity to invest in a company (as a new investment or inside round) where the data isn’t obvious. The numbers look confusing. The metrics don’t present a compelling story. The chart can look boring or even scary.
In todays world where there are no shortage of startups being formed, the question is why would you fund a company that has been operating or a year or more and doesn’t have compelling metrics.
And in some cases the answer is you won’t. In that scenario the mind takes over and the logical conclusion says to move on. Find a new investment.
But there are times when the heart overrules the mind. That happens to me and some of my favorite venture capitalists out there.
For me, it’s when I see the founder(s) completely obsessed about the thing they are building. You can just tell that they are working on the product they have been dreaming of their entire lives. These founders obsess about the details of the product. They obsess about the quality of the team working on their ideas. They strive for perfection. They use their products intensely and actively. They are working on the one thing they want to see in this world.
One thing I always look out for in any new or existing investment is how often does the founder actually use his/her product. The answer can be extremely revealing. (actually the opposite is a red flag for me: compelling data but a founder that doesn’t use his/her own product is a big concern).
So in the absense of data, we get inspired by the founder who not only believes they can make it happen but they are designing, building and shipping products that get them closer and closer.
It doesn’t always work.
But that passion and obsession is one way to make the heart overrule the mind. And it makes it easier to give the company more time to win.