One of my favorite people to have discussions with is John Ramsey. From the conventional to the unconventional, the orthodox to the heterodox, Ramsey is one of those rare guys who can take a discussion to any level at any time. Michael Jordan versus Lebron James? John Ramsey is there. Technological disruption and the future of education? You won’t lose Ramsey with your talk of pedagogy. Political philosophy and Economics? Ramsey can do more than just hang. He can come back with some views and arguments of his own that will provoke you to think about things in entirely new ways.
When I heard that John would be stopping by the Praxis Opening Seminar to share his insights and experiences with the participants for the Fall 2014 class, I was excited to know that I’d be having another one of our classic conversations. Our conversation at Seabrook Island revolved around lessons from John’s experiences as an investor.
John, widely known for his success with Never Hungover and My Tennis Lessons, is the Founder and CEO of SeedCess. As I wrote in the summary of my last conversation with John, the name “Seedcess” was derived from John’s philosophical approach to investing, which is consistent with Robert Louis Stevenson’s famous quote: “Don’t judge each day by the harvest you reap but by the seeds that you plant.” Along with his investment activity, John is involved in various charitable and non-profit organizations, all of which are designed to promote liberty, freedom, peace and prosperity.
Here are some of the highlights, along with my personal notes, from my conversation with John.
Founder/CEO of Seedcess Investment Group
1) “Not every investor is rosy and wonderful and ready to work on your terms.”
It’s easy to feel desperate when you’re starting a new venture. When your capital needs are high and your momentum is low, it often seems logical to take money from anyone who’s willing to invest. Acting on that impulse, however, is a big mistake. The mere fact that someone is willing to give you money doesn’t mean they’re a good fit for your mission. All investor capital comes with a price tag. Once you accept resources from someone, you’re accountable to them. Think critically before saying “yes” to an offer. Ask yourself questions like, “does this investor get my vision?” or “will I enjoy communicating regularly with this person or group? or “can I trust their integrity?” Never make assumptions. All investors aren’t bad, but neither are all investors good.
2) “Investors want to see a persistent personality. You’re going to run into difficulties, be told “no”, run out of money, etc.”
Good investors care as much about the character of the entrepreneur as they do about their creative ideas. Nearly everyone thinks they have creative ideas. Nearly everyone believes success would be easy if they only had tons of money. Investors don’t buy into such myths. They want to see evidence that you’re willing to sacrifice for your goals even when the world isn’t making it easy for you. One of the best ways to attract money is to find creative ways of moving your dreams forward before you have money. Anyone can sit around and wait for a million dollar check. Investors are interested in the rare group of hustlers who know how to make things happen regardless of their conditions. The people who refuse to use a lack of money as an excuse for getting things done are usually the very people who will use money responsibly and constructively when they finally get it.
3) “When you go in to an investor be yourself. It’s OK to say you have vulnerabilities in your plan or that you haven’t figured it all out.”
If you present your business ideas as if they don’t have any weaknesses, investors will either assume that you’re simply naive or just flat out dishonest. Everybody wants to make a strong impression, but the best way to do that is by showing people that you have a realistic understanding of the obstacles you’ll be faced with on your entrepreneurial path. Know who your potential competition is. Know who your potential enemies and critics are. Know the shortcomings of your management team. Know the resistance you may encounter from your market. You don’t need to spill your guts about every possible thing that could go wrong, but you do need to demonstrate an awareness of the sorts of challenges that make strategic thinking necessary.
4) “Raising money isn’t inherently good. Not every company needs to raise capital.”
Before you try to raise capital, be very specific about what you would (and wouldn’t) use the capital for. Never assume that you’ll automatically be better off with an investor’s money. Each time you raise money, you’re giving up equity. If you give away too much equity early on, you’ll lack the leverage necessary to attract investors when you really need them.
5) “The most important thing is creating value for others. You can’t focus on making money.”
Making money is a lot like making friends. If you focus on being popular, you’ll just drive people away. If you stop counting the number of friends you have and just focus on being interested in others, you’ll have more friends than you can count. Dale Carnegie wrote, “You’ll make more friends by becoming interested in other people than by trying to get other people to be interested in you.” The same is true of money. If you’re just consumed with the idea of getting people to give you money, not only will you come across as obnoxious, but you’ll also be out of touch with the very kinds of creative ideas that will help you. Always focus on how you can help improve other people’s experiences. Money is just a metric that measures your contribution to the well-being of others. “If you create value, profits will come.”
6) “I surround myself with people a lot smarter than me.”
This is one of the most simple, yet overlooked pieces of advice I hear over and over again from great achievers. Why do successful people insist on reminding us of this? Maybe because the ego has a need to feel good about itself. And while there’s nothing wrong with feeling good about ourselves, it’s very easy to take shortcuts by only socializing with people who never challenge us to get better. If you want to feel good about yourself, dedicate your life to personal development. Read books that are slightly above your level. Reach out to people who have more influence and wealth than you. Allow yourself to be influenced by great thinkers who can really take you for a good brain spin. The sense of self-esteem you can build from elevating your mind is so much better than the pseudo-confidence that comes from avoiding people who are better than you at important things. Smart people will take your mind to interesting places. And when you start going to interesting places in your mind, it’s only a matter of time before you start going to interesting places in your business and in your life.