I’ve actually been a father longer than I’ve been an investor. My son Jason was born in 2002, and I didn’t make my first angel investment until 2005. Yet as I’ve watched both my children and my companies grow up, I couldn’t help but notice the many similarities between being a good parent and being a good investor. Here, just in time for Father’s Day, are a few of these observations.
1. You can’t tell them what to do.
You haven’t been a parent or an investor if you haven’t thought to yourself, “Why the heck would they do that?” It’s enough to make you wish you could make all their decisions for them. But that’s not your role. If you try to tell them what to do, (a) they won’t listen, and (b) they’ll never learn to make their own decisions. The best you can do is encourage good values.
As a parent or investor, your role is not to make all of the decisions—the best you can do is encourage good values. Tweet This Quote
Whether I’m talking with one of my children, or one of my entrepreneurs (and sometimes it can be hard to tell the difference), I try to focus on understanding things from their point of view, and helping them think through the situation. Rather than giving an answer, I’m trying to get them to think about the broader principles at play.
Just recently, one of my entrepreneurs called me to get my advice. He wanted to grant one of his valuable employees more stock, but wasn’t sure if his generosity would cause problems later on. We talked through the different implications of his actions, but my basic message was, “Don’t worry about whether Advisor A or B agrees with the decision; focus on the principles behind the decision, and whether they reflect your true values.”
2. What they need from you changes as they grow.
When my daughter was little, she wanted me to walk her to her classroom and give her a big hug goodbye. Today, if I’m driving her to school, she wants me to drop her off farther away from the front so that people don’t see her with me—and that’s okay. The point of growing up is for a child (or a startup) to separate from you so that they can live an independent life.
The point of growing up for a child (or a startup) is to separate from you so they can live an independent life. Tweet This Quote
Your job is to give them what they need to grow, and that changes over time. Just in the past few weeks, I’ve spoken with entrepreneurs who were at very different stages of life. One set of entrepreneurs is still in the kindergarten days; they haven’t raised any real money, and as they get ready for their first pitches, I can’t help but be reminded of sending a child to the first day of school. “What should I say? Will they like me? Are my revenue projections high enough?”
Another entrepreneur has raised a Series A round and is working on scaling up the business. He’s in his teenage years, trying to figure out if he’s bitten off more than he can chew, or if he’ll grow into the millions of dollars he’s been entrusted with. He doesn’t need reassurance (though it always helps); he needs guidance on how to focus on what’s important, even when there are a million things clamoring for his attention.
Focus on the principles behind any decision and whether they reflect your true values. Tweet This Quote
Finally, there are those entrepreneurs who are all grown up, and who do the equivalent of calling home on special occasions and sending cards (i.e. quarterly and annual reports). They just need to know that you’re still there for them if they really need it.
3. You can’t give them success; they have to earn it.
You want the best for your kids—and your startups. But, you can’t give them success. When I help my kids with their homework, they get frustrated because I won’t just tell them what to do. Instead, I keep asking questions and giving them hints, slowing edging them towards their own answers. I feel sorry for parents that end up doing their kids’ homework and projects, in a misguided attempt to help them do well in school. Someday, when it really counts, you won’t be able to do that, and if your kids haven’t learned how to lead their own projects, they will fail.
The same holds true for startups where you’re an investor. You can tee up potential clients, introduce investors, and recommend job candidates, but you can’t close the deals, make the pitches, or hire those candidates. The entrepreneur has to earn the success; you’re there as a supporting actor, not the lead.
You want the best for your kids—and your startups. But, you can’t give them success. Tweet This Quote
4. You’re not in control of the outcomes.
When you become a parent or investor, you always have visions of what they’re going to be like when they grow up. Maybe you picture your child as a star athlete, an accomplished musician, or the lead in the school play. Then, inevitably, reality takes an unexpected turn. Maybe your son hates school, but loves working with tools. Maybe your daughter quits orchestra to focus on her own YouTube channel. You could be disappointed, which will just make you both miserable. Or, you could realize that you’re not in control of the outcomes for your kids.
It’s unlikely that any startup will follow a straight-line path to success, just like it was laid out in the initial pitch. Tweet This Quote
The same is true for startups. You don’t control the outcomes. In fact, because you’re not involved on a day-to-day basis, you probably don’t even realize what the appropriate outcomes are. It’s unlikely that any startup will follow a straight-line path to success, just like it was laid out in the initial pitch. The entrepreneur will have to improvise along the way, and sometimes, even if you have great people working very hard, things don’t work out. You can’t let that uncertainty drive you crazy or ruin your enjoyment of the good things along the way.
5. No matter what, you’ll care too much.
You would think that it’s easier to regulate your emotions when it comes to startups. After all, you’re likely to have a portfolio of more than a dozen investments, and you don’t expect all of them to make it. (This is very different from how you should feel about your children; if you have more than a dozen kids, and you’re counting on the majority not making it to adulthood, you’ve got bigger problems!)
Yet despite what your brain says, you’ll care too much. You’ll spend too much time and too much money trying to save the ones that aren’t working. You’ll feel sad when things don’t work out, no matter how many times you tell yourself that it’s part of the natural cycle of things.
As a parent or investor, give your kids or startups what they need to grow, but know that it changes over time. Tweet This Quote
Becoming a parent and becoming an investor have a lot of things in common. It only takes a moment to get the process rolling, but it will affect your life for years or even decades to come. It will challenge you in ways you never imagined. But even though both involve heartbreak and sleepless nights, when things work out, you wouldn’t trade it for anything in the world. Happy Father’s Day!