Life is essentially a large prioritization exercise – how much time you allocate to work, your significant other, your friends, your family, etc. Even within companies as there is only so much a team can do, a manager’s single most important task may be setting the right priorities for the people reporting to him.
This is even more true when selecting business ideas. I am a big believer that we can only do a few things well. It’s hard to be fully committed to a project if you are working on five projects simultaneously. In other words, I would rather put my eggs in a few baskets and watch the baskets carefully than invest in many different projects.
That is why I am only an investor in 4 companies. Even then, 2 of the companies are complements and the other 2 companies are partial substitutes trying to solve a single problem. In other words, I only have two underlying markets to think about.
Within those 4, my capital and time is allocated in direct proportion to my perceived market opportunity and my personal opportunity (e.g.; at what valuation can I invest, how much of the company can I own). My time commitment is then directly correlated with the size of the potential outcome.
In other words, of the 4 companies I have 2 small investments where I help out a little on strategic thinking and business development, but spend no more than 5 hours a week total for both companies. I have one investment where I am large investor and chairman of the board. I defined the product specifications, managed the fund raising, hired the key team members and set the direction, but again, at this stage that requires less than 10 hours per week. Finally, I am co-founder and co-CEO of a new startup where I am spending the bulk of my time trying to get the company off the ground.
I already spoke of my small investment in Phanfare (www.phanfare.com), I will speak of the other three companies soon especially as I need the community’s creative juices to crack two of the very difficult problems two of the companies are facing.
On another note, all of the above does not mean I would not invest in 1 or 2 more projects or be on the board of 1 or 2 more companies so keep sending me business plans and ideas! At the very least I will give you honest feedback. Besides I love the intellectual stimulation of meeting new entrepreneurs and talking through new ideas! However, it does mean that the bar is set very high. Good luck 🙂