What about the other half?

What about the other half?

by | Oct 22, 2018 | Hustle and Fire

Last week, I read a quote from an investor, sharing how he makes investment decisions.

“50% of what I’m looking for in an investment is me being able to answer, ‘Do I like this person?'”

Yikes. I find this incredibly problematic.

Of course investors should put money into companies with founders they like. The founder/investor relationship is for the long-term. I certainly wouldn’t invest in someone I didn’t want a long-term relationship with.

Here’s the problem though: We humans tend to “like” people like us. We tend to not like people who are very different. This is called Affinity Bias.

It’s not a bad thing, in general. But it sets off alarm bells in my head when I hear an investor say it. Because if they are making half their decision based on affinity, what are they basing the other half on?

Because let’s be real. Once we’ve made an irrational but emotionally comfortable decision, we tend to use our considerable intelligence to rationalize that decision. (Again, humans are weird like this, but predictably weird.)

My guess is that the other 50% of this investor’s decision-making process looks a lot like confirmation bias thinking – looking for reasons he or she is right.

Investors that make decisions like this are going to miss A LOT of great business opportunities.

 

My response?

You must have needed it.

And I’ve said this enough, to her and about myself, at various times over the years, it’s almost a life motto.

We often feel like we have to be super productive all of the time. Work 12-14 hour days every day. Hustle. That may be the story of entrepreneurship. And there are definitely times when that kind of focus and energy is needed.

But sometimes, we need to slow things down as well. And if we hit a point where we just can’t motivate ourselves to do the work we love, there’s probably a good reason. Maybe the thing we’re trying to push forward isn’t quite ready yet. Maybe it’s not the right thing. Or maybe, like my friend, we just need a little break.

 

Each day, I publish an idea I'm working on, highlights from a founder coaching session, or other tidbits from my work with founders, investors, corporate partners, and accelerators. Check out the Hustle+Fire blog for more.