Laura Huang, a preeminent Harvard Business School professor and Advisor to Women 2.0, shows that success is about gaining an edge: that elusive quality that gives you an upper hand and attracts attention and support. Some people seem to naturally have it.
In her new book Edge: Turning Adversity into Advantage, from which this essay is excerpted, Huang teaches the rest of us how to create our own from the challenges and biases we think hold us back, and turning them to work in our favor.
I often ask entrepreneurs to describe what they believe is the single most important quality that investors are looking for. Their answer: passion.
Similarly, with investors, I ask them to describe what they believe is the single most important attribute that they look for in making their investment decisions. Again, overwhelmingly, it’s passion.
After having met and interviewed over 500 entrepreneurs and 350 investors through the course of my academic career so far, the answer remains consistent.
Some, like Mark Suster, state it immediately: “The goal is to invest in passionate entrepreneurs. That’s it, end of story. Passion,” he often says, unwaveringly.
Another investor shared, “This gal, she would light up when she talked about her business…the intensity of her passion was just obvious.”
In my research, I’ve tested the perceived passion of an entrepreneur and it turns out, investors are right—passion does matter. It’s one of the most significant factors in determining who receives start-up funding. Entrepreneurs presenting in pitch competitions who are rated high on passion by investors are 7.4 times more likely to receive funding than those who are rated low on passion. In fact, perceptions of passion compensated for poor performance and weak objective data on the venture’s profitability, product performance, and market size—just to name a few.
And it even feels contagious sometimes. I’ve heard this echoed by investors, who say things like, “He was so passionate about it that it made me passionate about it. I could feel myself getting excited in the same way he was.”
So to gain an edge, at least in the start-up world, the trick is to be self-aware and demonstrate your passion in a focused, self-enhancing manner, right? Passion is inarguably a benefit, to be used to our advantage, right? Well, not exactly.
What I’ve discovered is that investors don’t actually know what they’re referring to when they say they want a passionate entrepreneur. That is, investors don’t agree on what passion is to the point that different investors have different definitions. Some think it’s about an entrepreneur demonstrating passion for the vision of the company—that you believe in what you’re working on. Others think it’s about demonstrating commitment—having passion that can sustain you through the rough cycles. Some investors see these as being linked, while others argue that it’s two entirely different things. So as an entrepreneur, you might be trying to enhance in the very ways that would turn one investor on and turn another very much off. You’re aiming at an unreliable, moving target.
To further complicate things, it’s not just differences between investors. Often, when I pushed individual investors, even gently, to define passion, they couldn’t. For example, an investor once told me that he doesn’t invest in anyone who lacked passion. No more than five minutes later, when I asked him to tell me about an entrepreneur whom he decided not to invest in (despite all the objective business data was telling him that it was a good investment), he told me, “Well, there was this one guy who looked like he had had waaaay too much coffee. He was so passionate, and I couldn’t invest in him.” Investors might think they want one thing, but that can change at any time. And it’s not just investors.
That unreliable moving target exists everywhere, beyond just the start-up environment. People, in general, are tricky. And it’s not just other people—we ourselves are tricky folks, falling prey to our cognitive biases. One bias that is particularly common among entrepreneurs, and widespread across the general population, is the “spotlight effect.” As humans, we all tend to forget that although we are at the center of our own world, we are not the center of everyone else’s. We believe that our ability to convey passion (or charisma, kindness, what have you) is always received perfectly unfiltered by our audience. Turns out, we are wrong. We drastically overestimate the effect we have on others.
And so, the double-edged sword of passion can be used to our benefit, but it can also result in our downfall. As long as we are aiming at a moving target, we are likely going to fail more often than not. Instead, we need to train ourselves to redirect that passion and get people emotionally invested. Guiding entails being purposeful in helping others frame the attributions that they make about us. Once we can do this, we are able to create a truly unstoppable force—our own, unique edge.
Laura Huang is the MBA Class of 1954 Associate Professor of Business Administration at Harvard Business School and the author of “Edge: Turning Adversity into Advantage” from which this essay is excerpted.