Almost by definition entrepreneurs make their mark on the world. Building a company that grows and prospers is all about taking the intangible thread of an idea and spinning it into something real and enduring. John Hamm, 40, managing director of operations at Internet Capital Group (ICG), is an expert at scouting for and developing the personal traits that can mean the difference between a breakthrough business that succeeds and an interesting idea that goes nowhere. ICG, the high-profile B2B holding company based in Wayne, Pennsylvania, has invested more than $2 billion in 80 e-commerce startups, including Breakaway Solutions Inc., eCredit.com Inc., and VerticalNet Inc.
ICG's stock-market fortunes have been as volatile as those of the whole Internet sector. The company went public in 1999 at $6 per share, soared to more than $200 per share, and then crashed back to $24. But it's not Hamm's job to understand the shifting moods on Wall Street. His job is to test the mettle of the entrepreneurs whose companies ICG may invest in. A former CEO himself (of Whistle Communications, which was acquired by IBM in June 1999), Hamm has interviewed scores of aspiring CEOs in order to assess their ability to make their mark. Here, he shares his criteria for determining whether a would-be entrepreneur has what it takes to succeed. Do you?
What Are You Committed To?
People don't try any of the stuff that they read about in Fast Company unless they are committed to their work. But there's a skill to getting deeper into what people are committed to. Everybody is committed to something. And track records can tell you a lot more about what people are really committed to, as opposed to what they think they're committed to. What are the nuances of your commitment? What exactly are you willing to risk for that commitment? Are you more committed to the friends you made in business school than you are to your business plan? If it came right down to it, would you sell those guys out if you thought that they might be going in a different direction than you are?
At the end of the day, you have to do a forced ranking of your commitments. For example, I'm often asked to go back to being a CEO. One thing that keeps me from doing that is that I'm not more committed to business than I am to my children. Working 24 hours a day for the next two years could be right for someone else, but that's just not where I am.
What Mark Are You Trying to Make?
Even more important is the question "On behalf of what are you trying to make your mark?" I ask that a lot, and it startles people. People don't want to say, "On behalf of my ego. I want to be a big shot. I want some publicity. I want to be a big deal." Actually, those are all okay answers. But I want to know the real answer. So when people talk about making their mark, I say, "Great, what mark do you want to make? What would it look like? What would it be on behalf of?" And I want really thoughtful answers to those questions. I don't care as much about the content of the answer as I do about the authenticity of it. I'll decide later if it's the right content for the deal at hand. But if it's not thoughtful, if it's not deep, then the content almost doesn't matter.
Are You Tough Enough?
An entrepreneur needs to have an emotional maturity and toughness. Any hard project is guaranteed to stir up a wide range of emotions. Take, for example, running out of money just when your team needs you to keep the faith. On the one hand, you're scared to death. On the other hand, you have to keep a stiff upper lip. I also look for a balance of optimism and grounded reality. Optimism without grounded reality is a dream. Grounded reality without optimism is boring. People who are emotionally tough are always saying, "There's got to be a way." Business is not life-threatening; it's ego-threatening. And the people who are willing to risk their ego are emotionally tough.
A key point: Leaders mostly get tested on emotional toughness. You can farm out intellectual problems to your team, your advisory board, or your board of directors. But you can't subcontract emotional toughness. I don't mean the emotional toughness of Patton being a hard-ass. Toughness also means taking care of people. It means being skilled enough to deal with people and their emotions and realizing that the business is creating as big of an emotional roller coaster for everyone else as it is creating for you. Real leaders aren't afraid to say, "Hey, you guys are scared. I'm scared too."
Are You a Learning Machine?
To succeed as a leader, you have to be a learning machine. You have to let the environment and your team inform you. At the same time, you also need to have a balance between being open to ideas and pushing forward in the face of skepticism. There's one extreme, where lots of people offer lots of different opinions, and the leader winds up utterly confused about what to do next. Then there's the other extreme, where entrepreneurs think that they know it all, and don't allow themselves to be informed and do a course correction. The best entrepreneurs have a strong vision but allow that vision to be affected by other great points of view. I'm interested in people who are committed to an outcome -- and not attached to the ways and means.
Are You Courageous?
Do you have the courage to change course, to stay committed to the outcome, and to do things differently than you anticipated doing them? Are you courageous enough to change the whole plan if you find a better way? When I look at people's commitment, I really want to know what endgame they're committed to. I've seen people who are committed to doing it their way. That doesn't particularly impress me. What are they courageous about? Are they courageous about making the right call? Are they courageous about being wrong? It actually takes a lot of courage to stand up and say, "Hey, the first plan was a bust, guys." If you can't do that, then your ego is in the way of your courage.
Are You Unwilling to Fail?
There's a lot of lore around the words "failure is not an option." That's just a cute phrase. The meaningful way to think about it is, "We said that we were going to make this work, damn it, so how?" If you let yourself think "if'' too much, then you'll create a lot of energy around "if we make it." And when leaders acknowledge failure, they drag a lot of attention away from the "how." A colleague of mine once said that he didn't want any of his employees to worry about "failing elegantly." When I hear an "elegant failure" conversation, I know that people are already trying to make their failure look better -- trying not to get too much mud on their face, to fall gracefully onstage.
Most true entrepreneurs believe, "We're going to win, and if we don't, I don't care." It could be ugly. They could fail miserably. But failure is so uninteresting to them that they don't really care if it's pretty or ugly. Their idea is, "We're going to make it. And we're going to focus on the how. That road's blocked? Let's find another one."
When you absolutely have to land that plane, there will be a runway -- even if you can't see it sometimes. And based on my experience, if you have a highly committed team with a great idea, 99 out of 100 times they will find a runway. It might not be perfect asphalt, but that plane is going to land.
Cheryl Dahle (email@example.com), a Fast Company senior writer, is based in Silicon Valley. Contact John Hamm by email (firstname.lastname@example.org), or learn more about Internet Capital Group on the Web (www.icge.com).