Hedge fund managers and startup CEOs may appear to come from opposite worlds – the former numbers-obsessed nutjobs hiding behind dozens of screens, the latter product-obsessed nutjobs hiding behind dozen of bowls of ramen – but having masqueraded as both nutjobs I’ve noticed one unique quality ever present in the best of both: they know how to go all in.
What I mean by knowing how to go all in is that not only do they have the balls to do it, but they are experts about knowing where and when to go all in.
When you own a bunch of stocks in your portfolio and one starts working, it may feel intuitive to take a little off and book some profits. “Nobody ever lost money taking a profit.” And often it’s the right move. But the best folks I’ve seen are keenly aware of that moment when it’s time to back up the truck. They nail the breakout and ride it out.
Every startup advisor I’ve ever worked with has told me to find that one simple thing the company does really well and focus all energy and resources on only that. It sounds amazingly obvious, but when you’re in the trenches it’s not that simple. You’re a young, nimble company struggling to find the right product / market fit and the thought of cutting off potential areas of development, sacrificing features existing customers use, or not appealing to all of your users is terrifying. Diversification may feel like a better strategy – you never know what will hit and you certainly don’t want to piss off or lose existing users. But it’s the wrong strategy. (You can do it later when you’re Google.) When that one thing works (product, feature, market, demo, etc.) the rest doesn’t matter. That’s when it’s time to go all in.