Why Venture Leaders are Investors and Time is Their Most Precious Asset

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I know what you’re thinking! What the heck does Jit mean by that? In a previous article, I covered how to choose the market in which to launch your venture. This has led to a number of people coming back to me and lots of conversations. One of the interesting concepts that has come out of this discussion is a different, yet complimentary, way for a venture leader to think about which market they should tap into. When you think about your venture and how you go about choosing and running it, consider yourself an investor.

Time Money Signpost Shows Hours Are More Important Than Wealth

Your Time is YOUR Investment

This approach centers around the idea that the venture leader is in actuality an investor. However, the venture leader, themselves,  are also the “currency” or “asset” that is being invested into a market. Whereas most people use dollars as their currency, the venture leader is using their time and energy. Their blood, sweat and tears is their “equity” investment.

An average investor might deposit thousands of dollars into the market, but in the case of the venture leader, it is a singular transaction, it is their time that is invested and there is no ability to “earn” back that time, energy and efforts if the venture fails, nor do they get more than one “investment” as successful venture leaders will tell you, you’re “all in” or nothing. That can be a scary concept to any of us and especially the venture leader in question.  Given this background, there are three concepts below that I would encourage you to think about as a venture leader as you decide which venture to pursue.

Conceptual montage themed around money with a clock and an eye in the center of the dial.

1. What Exactly is YOUR Value of Your Time?

When answering this question view it as a personal  version of an investor’s typical tool of looking at the “time value of money” coupled with “opportunity cost” for an investment. As an “investor”, the “asset” that you are investing is your time. Unlike other assets, your time is a very limited and dear asset; after all you only have one you and once your time is gone, it’s gone and you can’t get it back. Sorry! No Back to Future’s here!

When considering your personal version of time value of money, you need to think about what economic needs you have short, medium and long term and how those goals can be achieved. How can you make sure that the venture opportunity you’re examining will satisfy those needs? The good news is that in this day and age there is an ample amount of capital chasing good ideas – so venture funding is available for good, sound principals. Check out these my previous blogs on this topic:  Blog #1 and Blog #2.

Now that you know the importance of your time, think hard about what else you could be doing with it. In other words, what is the opportunity cost associated with this venture and your role in it. How else could you be building your career? Where else could you be building yourself in your chosen profession? Perhaps, most importantly, how would those other opportunities satisfy your short, medium and long term economic goals and objectives?

You may come to the conclusion that while the venture looks interesting it is far too risky for you to undertake, especially if the alternatives are sufficient to keep you challenged in the foreseeable future. Conversely, the opportunity could be far better than what you’re doing today and you may end up wondering why you haven’t already begun.

Advice: As a venture leader, be particularly careful, conservative and hard-nosed as you evaluate the opportunity at hand. Maintain a high bar for what will and won’t be a successful venture for yourself personally on every level. If you are cautious and judicious in this assessment, then you’ll find yourself even more willing to go “all in” thereby further contributing to the likelihood of success for the venture.

Risks Rewards Buttons Showing Roi Or Payoff

2. What is YOUR Risk Profile?

In the investment world, the “Beta” of an investment represents the volatility and risk profile of a stock, bond or other investment. As a venture leader, you will need to assess both your personal Beta and that of the venture in question and ensure the two are in alignment. In the previous section, you came to an understanding of what your time is worth and how you value it – which essentially now tells you how much risk or “Beta” you can tolerate. The venture’s Beta can be determined by questioning some of the key principals upon which the venture is based as I discussed in Blog #1 and Blog #2.

Start evaluating the venture by validating that the principals used to select it as the “venture of choice”, are indeed accurate in today’s market and revisit this Beta analysis regularly because markets change often and quickly. If things in the future appear to be turning your Beta or risk to a level you find intolerable, don’t be afraid to ask yourself the hard questions.

Consider your venture’s risk profile and your own. At certain times in our lives our own personal Beta may be higher or lower. As you progress in time generally speaking our personal Beta, or affinity for risk, is highest as we graduate from college, and goes downward from there, taking larger dips and drops after major life events like, buying a home, getting married and having children. Assess the Beta of your venture based on its market prospects and overlay that with your personal Beta.

Earlier in your career, when your Beta was higher, you might have tolerated a venture that wouldn’t appeal to you after you bought a house and had kids. It may be that you need to make a wise decision and bring your current venture to a close, thereby freeing yourself up to move on to your next one. Or things may be tough, but in time it will work out fine. When there is a Beta imbalance, make an adjustment to ensure that you are comfortable as the venture leader and can drive the venture to success. It’s the moment of “fish or cut bait,” as they say.

Advice: Clearly understand the implications of Risk profiles/Betas for both you personally and your venture and use this knowledge to guide you in your decision to charge forward, hold steady or call it quits.

Happy businesswoman showing blank laptop screen and holding copyspace on the palm isolated on a white background. Looking at camera

3. Evaluate YOUR Return on Investment

In general when investors are considering the ROI on their investment they look at things like the following:

  • How an investment has performed over time?
  • How the market for the investment looks? What the broader market looks like?
  • What does the market look like in which the business is operating in?
  • What are the macro and micro economic factors in the world today? How do these factors affect the investment?

As a venture leader/investor you too should consider all of these factors for your venture. In addition, examine the history of the venture capitalists backing the venture, or those leading and involved in it or those partnering with the venture. This is a good proxy for how likely the venture is to be successful. Just like an investment, the past doesn’t indicate the future, but if you’ve got a group of successful people involved in the venture, it increases your chances of success.

Next consider what’s happening in the broader market and marketplace. What challenges are businesses facing in the market today? Will this industry or players in it be “Uber’d” because of massive disruptions or could you be the disruptor? What are the specific market dynamics for the industry your venture will operate in and how is it affected by these specific industry trends? Examining all of these factors will contribute towards your ROI analysis for the venture.

Finally consider the much larger macro and micro economic factors that might affect the venture. Is the economy headed for a recession? Is the global economy headed in the right direction? Is the “unicorn” venture trend headed down and will it take other ventures with it? Examine all of these factors to clearly understand your probability of realizing the gains from the venture. If you’re unlikely to see upside gains based on your analysis, then Good For You! You saved yourself a lot of time, effort and money. Alternatively, if after you look at these factors, you may come to the realization that the ROI is attractive and that you’d be silly to continue in your current role, then you need to move over to this new venture ASAP.

By examining the value of your time, analyzing your risk profile and calculating your ROI, you will know whether or not you should pursue the venture at hand.

Like what you’ve read, or not? Have a question or a topic to suggest? Want to get another perspective on an issue or challenge you’re facing? I welcome your comments, feedback and insights below or feel free to email me here.

 

About this blog – The goal of this blog is to share my experiences, to capture and reveal valuable insights, and to draw from my serial entrepreneur-ship through 7 ventures over the past 20 years. I have encountered many impressive entrepreneurs along the way and I hope to share our collective experience with you to help teach and perhaps motivate you to launch your own B2B or B2C enterprise.

© Jitin Agarwal – All rights reserved. This blog is property of Jitin Agarwal and leadingventures.com. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Jitin Agarwal and leadingventures.com with appropriate and specific direction to the original content. For this blog, in instances where other previously copyrighted content, trademarks or brand references are used and noted as such, the author disavows any ownership claim, trademark, copyright or intellectual property ownership of these items and they remain the property of their respective and original owners, their inclusion in this blog is merely for illustrative example purposes only.

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