After all is said and done, more is said than done

"After all is said and done, more is said than done."
Aesop 620 BC-560 BC

"A vision without the ability to execute is a hallucination."
Steve Case, former AOL CEO

When I first meet with an entrepreneur I have to make some pretty quick judgments about the individual. Does he or she have credibility? Do they seem smart? Do they have experience starting a company? Do they have integrity? Are they a good leader? It's very hard to make these judgments in a short period of time. If the dialog continues over the course of a few meetings, the added interaction provides additional data points. If we proceed even further, reference checks add significant value.

However, one of the most important criteria I need to asses is the entrepreneur's ability to execute. Can they do what they say they are going to do? If I am truly investing in chefs (not ingredients), then I need to be comfortable that they can really cook.

So - how does a VC get comfortable with an entrepreneur's ability to execute? When I look at my current investments -- and try to separate those companies that are thriving versus those that are struggling -- a few things stand out.

There is greater risk (and variability) in first-time CEOs than in serial entrepreneurs.
While there are some first-time CEOs in my portfolio that are doing unbelievably well, there are also some first-time CEOs that are struggling.   The serial entrepreneurs in my portfolio, on the other-hand, tend to have less variability in their performance. So while past performance (or experience) is not always a determinant of future success, it sure helps!

Just say no.
One of the most challenging jobs a CEO faces is to determine what opportunities/projects to say "NO" to. Given the limited resources that a startup has, it is critical for an entrepreneurial CEO to have real discipline in prioritizing projects. If a CEO can't make tough trade-offs, it has a direct impact on the company's ability to execute.

It's all about the team.
The first 25 hires at a startup are CRITICAL! They will set your culture. They will be the reason you reach (or fail to reach) your milestones. They will be responsible for hiring everyone else. One of the most dangerous mistakes a CEO can make is to accept "compromise" candidates because of time pressure. A strong team is critical to strong performance.

A culture of accountability.
Is there a culture of accountability?  Is there clear operating plan with  monthly/quarterly/annual goals/milestones?  Does the CEO hold him/herself and their team accountable for commitments?  Is there a dashboard to track key metrics? Are they disciplined about forecasting (using a waterfall revenue forecast)?  There is a clear correlation between CEOs who hold themselves accountable to goals and their ability to execute.