Everything I know about investments, I learned from my children

You are happy so much, how happy your child is in a predicament.

Once I had ambivalent feelings. One of our companies was ready for sale for an amount that was several times greater than the investment, while at that time our other company lost two potential buyers and was in a deplorable state. Since our attention is usually attracted by problems, I plunged headlong into a crisis occurring in company B, and most of the euphoria about company A’s success evaporated. Ironically, on the same day I talked with my friend about the children, and he mentioned this very quote. You will often be happy enough as a parent when one of your children eventually learns a difficult task and is depressed because the other suffers from health, friends, study, or something like that.

I began to think about drawing analogies between children and the portfolio, and realized that there are many other similarities. Most of them relate to how you join the process. So what should be avoided as a venture capitalist (hereinafter referred to as VC) is not to join the daily business routine. The VC should draw a clear line between helping the project manager and being an annoying fly for him. Many of these lessons are also suitable for the CEO to improve the management process.

They should own their idea and responsibility.
VK have a huge number of brilliant ideas on how to conduct business. Something came with experience based on similar situations in life, something came down on them with insight. VK have a lever for pressure, because they own money and play an important role in the business, which encourages them (not always) to try to promote their ideas even if the team or CEO disagrees or does not understand them. This usually does not end well.
')
Just like with my children, if they do not like the idea, they will not accept it, will not see the need for it, and will make it through the stump-deck, if only you are behind them. Moreover, they (children or managers) understand better what daily compulsions may or may not lead to and what all this will result in. As a result, I found a good way to express my thoughts: “Express your thoughts, set the framework (read the next paragraph) and let the company do what they think will be better.”

Mark the scope, rules and consequences.
Children can become responsible and independent only when they themselves want it. While the CEO must have free rein to run his business, he also has to abide by the "laws of gravity." VCs have a lot of experience in order to protect themselves from what can “explode”, at the same time, they should try to avoid the team management process. VC should establish management, set boundaries (income goals, flow of money, number of customers, etc.), establish rules (improve quality, communicate openly and honestly with management, etc.), and allow the company to exist in the way it believes will be better . The consequences of winning and losing are usually clear. This approach determines the direction and expected results, but also allows the CEO to manage himself and be responsible.

Let them fall
Parents do not like to look at how their children suffer. There is also an opinion that victories and defeats of children are also victories and defeats of their parents. This also applies to the VC. If the VC correctly set the boundaries, then there should be a place for the company for infrequent errors and failures that will not lead to the destruction of the business. Failure for the CEO is the key to understanding the high value of various aspects of the "laws of gravity." As the Irish say: "That which does not kill you makes you stronger." On the other hand, I often found that they were right and eventually coped with the task.

Offer help and funds
Suggest, not insist. Only they know that they really need to finish it all. In addition, it can be said that if they do not appreciate or do not understand that the tool is useful, then they will not be able to use it fully. VC often says: "You need to meet with someone who is the vice president of such and such a company." VC seems that such information is quite enough, but the CEO sees this from a different angle and will go to the meeting only to please the VC, as a result - lost time. It's like making a child go to extra classes or something like that. Sometimes you have to do it, but the result will be much better if he understands how this will be reflected in the future and how useful it is.

Let them find the solution themselves.
VC should help to find a problem or difficulty, but after that ask the company to find a solution or express an idea about it. VC faced problems expressed in tough resistance, expressing their opinions and recommendations on actions. This derails the whole process and usually ends with a decision with which the CEO only half agrees. In the case of my children, I was pleasantly surprised at how creatively they approached the solution of the problem for themselves. Very often, the solution turns out much better than I ever got myself.

3 cakes to 1 whip
I can’t remember exactly 5 to 1 or 3 to 1, but I remember exactly what the children involved in raising children say about the importance of multiple “gingerbread feeding” for each “stick”. People feel criticism much better than praise (many tests have proven this theory). VK is a nervous get-together, and they can easily determine if everything goes wrong or can go wrong. It is very important to restrain and support the company. Everything should happen on the battlefield, and the last thing the CEO needs is to conceal malice on the VC while sitting at home. This, of course, does not mean that you have to play Love at First Sight, but the VC must inject positive energy into their company. Pay attention to little luck, not just misses and risks.

Reduce the use of the "red button"
Every parent has ever come across a moment in life when the disappointment is so strong that the approach of a heart attack is clearly felt. Often this is expressed in the fact that the parent begins to raise his voice and articulate the standard phrase - “Because I said so (a),” because the child categorically refuses to do something. When a parent starts shouting or threatening a child, it attracts his attention, but also, the effect weakens each time and reduces sociability, and the child begins to lose the essence of the discussion. With the CEO of VK, sometimes you have to take the whip, but as soon as this happens, the trust will begin to fade away, and the flow of information will go through a strict filtration. If this happens often, then either the CEO will leave, or the company will be sold.

Do not take to heart
Stay calm and try to control your emotions. When my daughter banged her head against the table as a child, everything was fine until a big purple bump began to form, and I panicked. After that, she went into hysterics. If dad can't stand it, then why should she? At that moment, when the VC begins to fear that the ship is going to the bottom, he should sit down and sort everything out, determine the consequences and draw up a plan of action, instead of falling into despondency. The management's response to the situation can seriously affect how the CEO approaches the problem and how he will behave.

And although this is all very simple, these lessons are also very complex due to human nature.