I was doing some pro bono work for an entrepreneur a couple of months ago, the company is a University spin out and has some great technology, I was helping him figure out how to apply the technology. He was really interested in going one way, a way in which he saw himself and people like him using the technology, I told him while that was an interesting direction the big market was in another use case of the technology. He’s gone with his gut and I’ve wished him luck.
But this brought to my mind an interesting dilemma that I’m sure entrepreneurs’ face all the time, when the numbers say one thing and your gut says something else how do you make the decision of which way to go?
Examples could be development platforms, target markets, suppliers, distribution channels, and many other decisions that entrepreneurs have to make. Decisions aren’t a zero-sum game, but there are definitely times when choosing smaller/less effective paths can have a negative effect on a company’s growth.
This is why you need strong investors with strong technical and business savvy. It’s almost like a gut check of strategy. Unfortunately, the company doesn’t have strong investors, yet, and so they’re relying solely on the entrepreneurs gut. Sure there are entrepreneurs whose guts out perform the market, especially when the relationship between numbers versus gut is pretty close, but this is too few and far between.
If you’re going guts over numbers make sure you know why and be prepared to pay for the consequences.
