What Founders can learn from Investors

I’d normally say NOT VERY MUCH but that’s not completely true. For Founders who are running large scaling businesses there actually is a lot to learn from an investor. The top investors are very good at allocating money and building a portfolio of investments that hopefully return excess capital. This is actually no different than what a business owner does. They allocate money, time and resources (people) to the most promising opportunities of the business whether it is international expansion, new customer segments, new products or even acquisition or investment. 

A good business owner should be using investor frameworks to evaluate where they put these precious resources and when to double down and when to cut them off. Start with small teams (the Amazon way of not having a team that can eat more than 2 pizzas) and some little bets of time & money. Continue to invest as they prove themselves out. 

Then the question is: What is the time horizon of the investment?

Invest in stuff that will drive returns in one year or one quarter, or invest in initiatives that will drive results and returns 5 year or 10 years out? Also when should you do this. Or perhaps it is some balance of both. Publicly traded companies tend to have more constraints here due to a wider number of shareholders versus private companies. 

But as the Founder led FAANG tech giants have shown, it is possible to do this and still thrive. I think it’s very clear that companies like Amazon, Oracle, Cisco, Salesforce, or Netflix are masters at this.  

Great tech companies really understand this portfolio management of initiatives. Adopting investor frameworks are a good way for managers and founders to discuss and prioritize these initiatives.