As we’re going through our investment process at OATV we do a a bunch of polling in our networks to get people’s opinions on the companies we’re looking at backing. We talk to current and potential customers, we check references, we ask for input from our friends, spouses, parents, kids, you name it. What we’re looking to gain from these interactions is information that will clarify and enforce or muddle and negate our original investment thesis.

But, universally, a funny thing happens- >50% of the feedback we hear is negative. Why people wouldn’t work with an entrepreneur again, why no one will ever pay for the product, why something will never go mainstream or why its just a bad idea. So I had to smile just a little bit when I read a post the other day titled, “Foursquare: despite 5 million users, its still dumb”. From the article:

Oh, did you really just eat lunch at Subway? Why the hell do you think anybody cares to know that? Foursquare is one startup that’s fueled by the idea that sharing the mundane details of our lives makes us feel more connected. Here’s a shocker for those who continue taking photos of their burger: nobody cares.

I remember doing the work on Foursquare prior to our investment. At the time they had about 30,000 users and plenty of people told us it was a dumb idea. No one would use it, not everyone has an iPhone, no utility, small market, immature founders, big guys will crush it, you name it. There were a million reasons people gave us not to pull the trigger. But that’s true of of most companies, successful or not. See for yourself. Run a search, on the search engine of your choice, for “why x (where x = a company name, facebook, twitter, salesforce) will fail”. Some results will be recent, some will be old, but all will lay out cogent arguments for why these companies will fail. 

As early stage investors we have very little hard data to input. We’re making decisions based, primarily, on qualitative and macro data- where is the market headed, do we believe in the team, do we see potential in the product, does this company just need to exist. And at some point in the decision making process, we suspend disbelief. We start to hear opportunity in the naysayers. We see paths to take that they don’t. We envision our Davids beating their Goliaths.

I’ve been at the table more times than I’d like to admit where I didn’t suspend disbelief when others did. I really admire they’re ability to consistently do so. At some point, every great company was a dumb idea. But, at some point in every great investment, someone had to suspend disbelief. I hope I can do be better job at processing when to suspend my own disbelief in the future.