Many fund prospectuses, after disclosing strong past returns, contain the statement “past performance is not indicative of future performance.” Of course, the fund manager wants you to believe the opposite, and in venture there is a demonstrated persistence in returns: better fund managers produce consistently better results.
When it comes to entrepreneurs, the warning should read “past performance is often determinative of future performance.” However, I’m not talking about success or failure: there are many entrepreneurs who have both success and failure on their resumes. Rather, I’m talking about human nature: how people behave, work, interrelate, etc. in the workplace is indicative of how they will so behave in the future.
In my experience, many personality types can be successful in the workplace. Success comes from a combination of hard work, good ideas, careful planning, market timing and a little luck, and that success is not concentrated in entrepreneurs with only certain skill sets, certain personality traits, certain management styles, certain interpersonal relationship methods, etc. Some of the greatest entrepreneurs of our time (e.g. Steve Jobs) are not people I’d hold up as the quintessential managers to bet on for a start-up.
So, when reviewing past performance of an entrepreneur or executive, what can we learn?
I find that if someone micromanaged at his last company, he’ll micromanage in his next one. If someone built a great culture once, she’ll want to build a great culture again. If someone thought job 1 for the CEO was marketing, that person will probably find job 1 remains marketing in the next gig. The key then is determining not whether the entrepreneur succeeded or failed with those traits at the last company; instead, the focus should be whether those traits will properly serve the next organization at that moment in time. Sometimes a micromanager hinders progress; other times, a micromanager is necessary to complete the job.
Determining a company’s needs, and then making sure the fundamental characteristics and traits of the team meets those needs, can further a company down the path of success.