&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-173376074&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/173376074/960×0.jpg?fit=scale&q; data-height=&q;704&q; data-width=&q;960&q;&g; SUN VALLEY, ID – JULY 12: Jeff Bezos, founder and CEO Amazon.com, and his wife Mackenzie Bezos arrives for the Allen &a;amp; Co., arrives to the Allen &a;amp; Co. annual conference July 12, 2013 in Sun Valley, Idaho. Photo by Kevork Djansezian/Getty Images
Professors are generally smart –&a;nbsp;yet not as rich as successful entrepreneurs. But if you have enough money and can invest early in the next Jeff Bezos or Mark Zuckerberg, you could get much richer.
I wondered whether the smartest professors could shed some light on what it takes for a CEO to turn an idea into a huge public company. And in so doing, possibly provide some useful insights on how startup investors might identify a potentially great entrepreneur before they achieve greatness.
in my recent book, &l;em&g;Startup Cities&l;/em&g;, I argued that the most vibrant startup hubs have a higher proportion of &l;strong&g;marathoners&l;/strong&g; (entrepreneurs who can turn an idea into a company that goes public and keeps growing rapidly thereafter) and &l;strong&g;sprinters&l;/strong&g; (entrepreneurs who can turn an idea into a company that is acquired after three to five years) than other regions do.
People like Bezos and Zuckerberg are the best or a rare breed of marathoners. If you&s;re toiling away at a regular job and have the good fortune to meet one of these people before they achieve greatness, you should invest.
Based on my interviews with scaling experts at Wharton, Stanford and Harvard business schools, here are&a;nbsp;six useful questions you can ask entrepreneurs seeking investment that might help to identify such marathoners&a;nbsp;while they&s;re in the bud:
&l;/p&g;&l;ul&g;&l;li&g;Do you have a clear and compelling vision of why your startup exists?&l;/li&g;
&l;li&g;Can you switch tactics flexibly to surmount obstacles to achieving that vision?&l;/li&g;
&l;li&g;Can you quickly build a product&a;nbsp;that satisfies unmet customer needs by getting fast-feedback on prototypes?&l;/li&g;
&l;li&g;Can you build and motivate a&a;nbsp;team of leaders who excel at skills your company needs to succeed?&l;/li&g;
&l;li&g;Can you&a;nbsp;develop a business model that yields lower costs and more value for customers as your company scales?&l;/li&g;
&l;li&g;Can you build an organization with the right blend of specialists and generalists, coordinate their efforts, maintain an effective culture, and&a;nbsp;hold everyone accountable for your growth goals?&l;/li&g;
Here&s;s what the professors had to say about how to find such&a;nbsp;potential sprinters and marathoners&a;nbsp;and more broadly how they think about the scaling a company — which after all, is the key thing that separates a good idea from a business that enrich an early investor.
&l;strong&g;Wharton&s;s Gad Allon&l;/strong&g;
&l;a href=&q;https://oid.wharton.upenn.edu/profile/gadallon/&q; target=&q;_blank&q;&g;Gad Allon&l;/a&g; is the Jeffrey A. Keswin Professor and Professor of Operations, Information and Decisions, and the director of the Management and Technology Program at the University of Pennsylvania. (Read the complete interview &l;a href=&q;https://www.forbes.com/sites/petercohan/2018/06/06/wharton-scaling-expert-on-why-snap-blue-apron-are-in-danger/#2ab9d83ac6e5&q;&g;here&l;/a&g;).
He humbly admitted that he could not help predict who would be the next Mark Zuckerberg or Jeff Bezos — but he did offer some helpful insights. For example, he said that In a June 4 interview, Allon explained, &q;The most successful founders are good at product, organization, or in rare cases both. Zuckerberg, Evan Spiegel (Snap), and Reid Hoffman (LinkedIn) were focused on product. Organization was not always top of mind or their greatest skill. So they brought in others to help with organization — Zuckerberg hired Sheryl Sandberg and Hoffman hired Jeff Weiner.&q;
Bezos is the rare individual who can do both. &q;Bezos was always thinking both about how to develop products and how to build an organization. For example, with Amazon Fresh, Bezos wanted to start small – trying to&a;nbsp;optimize the logistics of grocery delivery work in Seattle before expanding to San Francisco where he realized that he needed to organize by zip code.&q;
Amazon&s;s decision to acquire Whole Foods may have been based on the realization that his approach to grocery delivery would not scale. As Allon said, &q;There is a difference between scaling and growing sales. Scaling is about selling more while achieving economies of scale in supply and demand. This is important because when startups are able to raise so much money, it creates the illusion of exponential growth. In reality, that is never the case, if you scale your organization as fast as your sales, costs will be too high if there is a downturn.&q;
&l;strong&g;Stanford Business School&s;s Bob Sutton&l;/strong&g;
&l;a href=&q;https://www.gsb.stanford.edu/faculty-research/faculty/robert-i-sutton&q; target=&q;_blank&q;&g;Bob Sutton&l;/a&g; is a Professor of Organizational Behavior&a;nbsp;at Stanford Business School. In a May 31 interview, Sutton explained that the ability for a successful founder like Zuckerberg or Steve Jobs to keep their company growing depends on their ability to create and lead a great management team. (Read the complete interview &l;a href=&q;https://www.forbes.com/sites/petercohan/2018/06/06/stanford-expert-highlights-reasons-to-like-amazon-and-netflix/#24d7eeda6ad9&q;&g;here&l;/a&g;).
Sutton did not provide a simple formula for pinpointing the next Bezos before he becomes successful. As he said, &q;Michael Dearing who helped run the Stanford Launchpad program and&a;nbsp;through Harrison&a;nbsp;Metal has&a;nbsp;invested in 100 startups has a theory of cognitive distortion of successful founders — noting that it leads to zero/one thinking . The reality is that most startups die and it&s;s largely due to randomness.&q;
Yet Sutton suggests that the makeup and stability of a founding team can boost the odds of success. As he said, &q;Prior joint experience and stability of the team is helpful. If two or three people are working together, that can help — unless they are all engineers. Not being a first mover seems to work. Teams that are good at focusing on the negative rather than the positive tend to be more successful because they are obsessed with what&s;s wrong and how to fix it.&q;
The key to the most successful marathoners is their ability to look beyond themselves. &q;The most successful leaders like Zuckerberg and Jobs identify the skills that their companies need to grow. They figure out which of those key skills they lack and attract and keep the best people with the skills that they lack. These leaders are able to build and lead a management team of no more than six or seven people.&q;
Sutton also believes that a company&s;s culture — which he calls its mindset — is crucial in determining whether it can scale. As he explained, &q;Mindset is the agreements about what is good and bad behavior. When I meet with companies, I ask two questions: &s;What&s;s sacred?&s; and &s;What&s;s taboo?&s; When I asked those questions at Amazon everyone instantly agreed: the customer is sacred and wasting money is taboo (Amazon is really really cheap).&q;
&l;strong&g;Harvard Business School&s;s Tom Eisenmann&l;/strong&g;
HBS&s;s Tom Eisenmann is the &l;a href=&q;https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6452&q; target=&q;_blank&q;&g;Howard H. Stevenson Professor of Business Administration&l;/a&g;. While he does not have an easy way to predict who might be the next Zuckerberg or Bezos, he did offer an interesting way of thinking about the problem.
As he explained in a May 31 interview, &q;I am reading Yale history professor John Lewis Gaddis&s;s book, &l;a href=&q;http://Lewis%20Gaddes&s;s%20book,%20On%20Grand%20Strategy.&q; target=&q;_blank&q;&g;&l;em&g;On Grand Strategy&l;/em&g;&l;/a&g;. He talks about the distinction between the hedgehog — who knows one big thing (for example, HBS professor Clayton Christensen who sees disruption everywhere) — and the fox who knows many things (HBS professor Michael Porter comes to mind). The best leaders have the vision of the hedgehog and the flexibility of the fox. You need to have a true north — — and be flexible enough to know when you need to take a detour .&q; (Read the complete interview &l;a href=&q;https://www.forbes.com/sites/petercohan/2018/06/06/hbs-scaling-expert-on-finding-the-next-bezos-zuckerberg/#e366a1e38f1f&q;&g;here&l;/a&g;).
After thinking about all these ideas, the three professors are onto something that could have practical value for those aspiring to make good startup investments. Try asking those six questions the next time a founder pitches you for money.