Over the weekend I had the chance to listen to Jim Armstrong, of Clearstone Venture Partners, talk with Frank Peters on his angel / venture capital show. Jim, one of the good guys in the Southern California VC community, touches on the challenges for venture firms in raising capital and his interest in companies that focus on pushing content out, and not driving eyeballs in.
Most interesting was his comment that "you can afford to have a false positive; you can afford to invest in things and fail, but because the big ones are so rare, you cannot afford a false negative. You cannot afford to be looking the wrong way."
While running a venture firm is primarily a strategic game (placing the bets) and running a company is more of an operating game (executing against the plan), this concept of avoiding the false negatives applies in our day to day lives. Misfiring on an employee is manageable. Yet, not hiring a superstar is far more painful. Closing a partnership that ultimately fails is acceptable. Not closing the deal with the next Tier A network is not. This is especially true when money and time are tight.
The challenge of course is having the initiative, intuition and experience to make these decisions. As is eliminating waste with too many false positives.
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