Does “Passion” Always Make for Good Entrepreneurship?
by Om L. Lala
In a recent HBS class, a firm called “KNP,” specializing in “speaker training and executive communication,” shared their advice on presentation skills. After seeing thousands of VC pitches and interviewing hundreds of VC principals, KNP noted that despite the quantitative nature of the evaluation process, the characteristic that often ends up making the difference between getting funded and not is “passion.” Similarly, entrepreneurs often describe how their “passion” for an idea is what motivates them. But in the journey of most startups, passion can be both an asset and a liability.
Hypothesis-driven entrepreneurship is the best approach a startup can employ to make sure their business model is viable. But this process is an inherently unbiased analysis that should not be influenced by an entrepreneur’s personal attachment to his idea. As such, there can be an inherent conflict between the dispassion required for hypothesis-testing and the entrepreneur’s passion for his idea. As a startup evolves, hypothesis-testing may reveal that a) a business model is simply not viable or b) it requires a dramatic pivot that would fundamentally change the product being offered. Rationally, the entrepreneur should have an interest in determining if either of these scenarios is true for his startup. However, if an entrepreneur is so attached to his business continuing or to his original product vision, he can be blinded by his own passion. He might either not initiate necessary hypothesis testing or ignore its conclusions.
This phenomenon seems to have been at work in the case of Steve Carpenter and Cake. Steve started his business because he was passionate about “applications of social networking for adult consumers” and wanted to relate it to things he cared about. Very late in the evolution of his startup, well after A-2 financing, Steve was forced to realize that social networking did not have a place in a viable Cake business model. In his words, “It turned out that active investors wanted ideas, but they didn’t necessarily want to share them because they viewed the stock market as a zero-sum game.” Why was such a fundamental and important realization made so late? Clearly, Steve was extremely intelligent. But perhaps his original passion for and attachment to the idea of creating a social-networking-based business prevented him from rationally investigating and testing his business model earlier. While some products need to be launched before they can truly be tested, a basic factor like willingness to share investment strategies could have easily been examined through a variety of survey methods.
Reflecting on my own experience, whenever I dismiss an idea I have or decide against a startup position, my most frequent reasoning is “I’m not passionate enough about this product.” But it may be much more sensible to first ask myself whether I am passionate enough about hypothesis-driven entrepreneurship itself, because it is the insistence on conducting rigorous tests and fully accepting their results that is the biggest determinant of success. It is far too easy to let attachment to an original vision inadvertently undermine one’s prospects for success.
In a recent HBS class, a firm called “KNP,” specializing in “speaker training and executive communication,” shared their advice on presentation skills. After seeing thousands of VC pitches and interviewing hundreds of VC principals, KNP noted that despite the quantitative nature of the evaluation process, the characteristic that often ends up making the difference between getting funded and not is “passion.” Similarly, entrepreneurs often describe how their “passion” for an idea is what motivates them. But in the journey of most startups, passion can be both an asset and a liability.
Hypothesis-driven entrepreneurship is the best approach a startup can employ to make sure their business model is viable. But this process is an inherently unbiased analysis that should not be influenced by an entrepreneur’s personal attachment to his idea. As such, there can be an inherent conflict between the dispassion required for hypothesis-testing and the entrepreneur’s passion for his idea. As a startup evolves, hypothesis-testing may reveal that a) a business model is simply not viable or b) it requires a dramatic pivot that would fundamentally change the product being offered. Rationally, the entrepreneur should have an interest in determining if either of these scenarios is true for his startup. However, if an entrepreneur is so attached to his business continuing or to his original product vision, he can be blinded by his own passion. He might either not initiate necessary hypothesis testing or ignore its conclusions.
This phenomenon seems to have been at work in the case of Steve Carpenter and Cake. Steve started his business because he was passionate about “applications of social networking for adult consumers” and wanted to relate it to things he cared about. Very late in the evolution of his startup, well after A-2 financing, Steve was forced to realize that social networking did not have a place in a viable Cake business model. In his words, “It turned out that active investors wanted ideas, but they didn’t necessarily want to share them because they viewed the stock market as a zero-sum game.” Why was such a fundamental and important realization made so late? Clearly, Steve was extremely intelligent. But perhaps his original passion for and attachment to the idea of creating a social-networking-based business prevented him from rationally investigating and testing his business model earlier. While some products need to be launched before they can truly be tested, a basic factor like willingness to share investment strategies could have easily been examined through a variety of survey methods.
Reflecting on my own experience, whenever I dismiss an idea I have or decide against a startup position, my most frequent reasoning is “I’m not passionate enough about this product.” But it may be much more sensible to first ask myself whether I am passionate enough about hypothesis-driven entrepreneurship itself, because it is the insistence on conducting rigorous tests and fully accepting their results that is the biggest determinant of success. It is far too easy to let attachment to an original vision inadvertently undermine one’s prospects for success.
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