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This is the last post about the trip I did last year to the Silicon Valley with IE students.

During the last day of the visit we moved to San Francisco and had some different workshops with local professors, organizations that support “wanna-be” entrepreneurs and “wanna-be” entrepreneurs themselves. Just to make it clear, I call “wanna-be” entrepreneurs those people who want to get to the stage to be considered entrepreneurs. Those of you who follow my posts know that I just consider “entrepreneurs” people who exercise their theoretical (or Schumpeterian) function in society of finding new – and innovative – ways of trading something. People who are still trying to get there I call them just as “business people”.

San Francisco

In San Francisco we had the opportunity to meet the businessman Brandan Wallace, co-founder of Identified.com, a tool developed to compete with LinkedIn in a more junior – and facebook-like – job market (among other things, they found out that LinkedIn’s demographics achieves much more the senior profiles). Together with Prof. Blake Winchell of IE Business School, partner of Partner Ventures, and investor in the venture, they developed together some thoughts I not only share with them but would like also to debate with you:

1) In the market, usually, most of the people think that the entrepreneur (or the “wanna-be” entrepreneur, under my perspective) is the passionate guardian of the venture while the investor is “barely” the financial-minded part of the formula. In fact, quite often, the situation is the opposite. Think about it: there are a lot of investors out there with pretty much limited resources (let’s say, few millions). If they will put their money in something, they do have to believe in it, be passionate about it.

I met an investor in Brazil once that built his initial “venture capital” by selling part of the company he helped to build throughout some 15+ years of hard work. Me (and the local market – friends, press, etc) estimated he raised some 10 to 20 million dollars in that operation. He was explaining to me that he had only about 10 “shots” in his gun. So, he wanted ideas from IE students to consider investing on them. Imagine the emotional cost for this guy in believing in those 10 ideas. What if none of them worked? His whole fortune would be gone…

2) The myth of the great idea: Most of the “wanna-be” entrepreneurs think that their key contribution to the project is the “wonderful” great idea they had. I tell you something: the idea is not as important as people think. There are A LOT of hard work, appropriate networking connections and accumulation of positive outcomes from business decisions involved before the original idea become something really hot.

With years of accumulated experience, Prof. Blake estimates that nowadays the idea is responsible for about 5% of the success of a venture while proper execution about 95%. I not only strongly agree with him but also think that the tendency is that this proportion will considerably change in favor of execution as ideas become more and more available worldwide. Ideas will only keep relevance when deeply connected to “hard” intellectual property (patents) such as those for new materials.

3) In fact, “pivot” became the magical word of the moment in California. According to the Wiktionary, the word “pivot” comes from the French and Italian word for a very specific tool, usually made of metal, that allow us “to turn something using the same point of support”, like the base that allow the arm of a LP Player to move around (and reach different ideas):

A way of seeing the "famous" pivot

According to this way of thinking, ventures can turn mediocre ideas into billion-dollar companies. To get more information about this interest trend read Eridc Ries book “The Lean Startup”. I have not read yet it sounds interesting.

I had so may other hints from this last day but I do not want to make this post too long. Let’s get back to these issues soon…