In the Broadway show The Rothschilds, there is a scene when
Prince William of Hess (remember the Hessian mercenaries?) asks Mayer
Rothschild (a coin peddler who rose to become one of the richest and most
powerful men in the world) about the Yiddish word Chutzpah. He asks Mayer something like: “This
thing that you call Chutzpah, how do you teach it to your sons?” Mayer responds something like, “No, Prince.
This thing Chutzphah is something that your people teach to my sons”.
There is no doubt that it takes a lot of chutzpah to start
any business, especially a VC-backed startup. My partners and I joke that if
our venture development group had a tag-line, it would be “We revolutionize
industries that we know nothing about”. Recruiting great people, raising money, building products to compete
globally against entrenched corporations, forging business partnerships,
selling anything new – all takes a lot of chutzpah.
So, the other day I had lunch with an aspiring entrepreneur
-- even though my partners and I aren’t taking on any new projects (which I
made very clear when I was introduced to this person by a good friend). Let’s
call this entrepreneur “Jennifer” (not her real name – wow, I’ve always wanted
to do that). Anyway, Jennifer has a lot of chutzpah. Since she drove down all
the way from LA to San Diego to have lunch with me, I wanted Jennifer to get her gas-money’s worth.
Jennifer actually has a promising idea for a business (large
market, real value potential to consumers, poorly served by competitors,
promising enabling technologies, etc). I even said so – but then I started
asking her about the key hurdles and execution paths, and our lunch virtually
fell apart. I think that she came close to doing what my mother did to me
decades ago, when she poured a glass of wine over my head at a restaurant. I
was a Republican then so my Mom had cause. “Jennifer” didn’t have any reason to
get upset with me – I thought that she drove down because she said on the phone
that she didn’t know what she was doing, and needed help. Turns out she really
only wanted $200k in capital from me (boy, she came to the wrong place).
I just (mildly, at least by VC standards) started asking
Jennifer about how she would get distribution and create her core content. And
she blasted me for getting into the specifics, telling me that she would hire
someone to run the business and do that. Now, my partners will tell you that
I’m definitely not a “detail person” – I’m certainly more in the “big picture”
camp. However, Jennifer had me feeling like I was the Compliance Director for
Goldman Sachs (who I am sure does a great job, and is very-well compensated). I
was just trying to be helpful, letting her know what I thought were her
challenges. At one point, I told her flatly that I would never invest in her
project, even though I think that her idea has merit (I’d probably make a
horrible real VC since I told her the truth).
Jennifer told me that she “can’t deal with reality because
it interferes with the dream.”
Since she has created a prototype and a business plan (and she’s had a successful career in Hollywood) – maybe her Chutzpah and the dream will carry her. Maybe it’s just old-age (I feel like the world’s oldest child prodigy) – but these days, I want to cherish the dream, but know as much as possible about reality. You can’t delegate execution until you have delegated execution. Since Jennifer isn’t self-funding and needs capital – (despite telling me over and over how successful she has been in Hollywood) – she should be listening and learning, and at least trying to understand the key path of her idea. She took my questions about execution as an insult to her inner fire and ability to succeed. I once had the pleasure of accompanying a consulting client (another startup CEO) to a meeting with Jeff Bezos. I was struck by something that Jeff said, something to the effect that “you need to keep the dream and big picture, but relentlessly execute day-to-day”. Bezos definitely has a lot of Chutzpah.
While my partners and I still have a lot to accomplish as
entrepreneurs, I think that the highest compliment ever paid to us is that we
actually listen to VCs. It’s not that we will do it their way – but we always try
to listen carefully. I’m convinced more than ever that entrepreneurial success
requires chutzpah and great doses of reality. I hope that Jennifer learns that
the more she digs into “reality”, the more likely she will be to make her dream
come to fruition.
After our lunch, Jennifer got back to LA and sent me her
business plan, asking me to make edits. Now, that’s Chutzpah!