I’m not much of an investor, but if I was, there are certain criteria I would look for before putting my money into the hands of a new company.
I would study the founder and the management team, and what his strengths and weaknesses are. I would look for a high level of past experience in a similar field, and study the company financials. I would look for a very strong product/market fit, and ensure high levels of intelligence and ambition. I would look for a well-structured plan of action with streamlined processes and procedures.
All of that being said, here are 5 companies I would never invest in:
• Founder dropped out of school in 6th grade. His work experience includes being a farmhand, a railroad worker, an insurance salesman, a tire salesman, a gas station operator, and a failed restaurant owner.
• The founder is 65 years old, and claims to have a good chicken recipe. He wants to try franchising.
• Founder graduated from the Tokyo College of Commerce. His work experience includes being a professor of economics at Kyoto Sericulture Technical High School.
• The founder is 55 years old, and wants to start a real estate business.
• Founder dropped out of school at 16. His work experience includes working as an ambulance driver and a newspaper artist.
• The founder is 20 years old, and wants to start an animation studio.
• Founder’s work experience includes working on a whaling ship, and failing at 4 attempts with owning a retail store.
• The founder is 36 years old, and wants to open a new retail store.
• Founder studied furniture and interior design at the Royal College of Art. His work experience includes a small invention while in college.
• The founder is 36 years old, and wants to start a vacuum cleaner business.
Sounds like a bunch of duds to me.
I would never invest in them, and nobody else initially did either.
These companies/founders I just described are:
Company #1: Harland Sanders (Kentucky Fried Chicken)
9 years after starting the company, he sold his interest for $2 Million.
Company #2: Taikichiro Mori, two-time richest man in the world (Mori Building Company)
Despite starting his real estate career at 55 with no prior experience, he built his worth well into the $10 Billions.
Company #3: Walt Disney (The Walt Disney Company)
One of Walt Disney’s employers told him he lacked imagination. He was laughed at when he announced he was creating the first full-length animated musical feature (during a depression, too), Snow White. Disney is now worth over $100 Billion.
Company #4: Rowland Hussey Macy, Sr. (Macy’s)
Sometimes you have to fail to learn what not to do. After a few failed retail attempts, Macy’s was born. It is now worth over $20 Billion.
Company #5: James Dyson (Dyson)
Dyson was determined to design the first ever vacuum cleaner that would not lose suction as it picked up dirt. He failed with the first 5,127 prototypes. James Dyson is now worth over $4 Billion.
It’s easy to get caught up in the startup game and give authority to other people to tell us if our ideas are good or bad, if our education was enough, if our connections and work history are enough, if our age is optimal, if we have what it takes or not to be successful. What separates these 5 people from 99% of the population who have dreams of following a passion or starting a business, is that instead of focusing on what other people or social norms may have told them, they believed in themselves. That’s not always enough to be successful, but without it you don’t have a chance.
I would never have invested in those companies or people, but they invested in themselves. Always bet on yourself to win.