Cameron Chell here.

In my last piece, I discussed the true mark of a successful startup: the ability to pivot.

However, it takes more than just a great business idea to be able to pivot successfully.

It has to do with one of the best and most surprising lessons I’ve ever learned as a founder.

And it’s one that all investors should learn before investing in a startup themselves…

Don’t just bet on the jockey… Bet on the best jockey for your horse.

We’ve all heard the phrase, “bet on the jockey…” and it’s one I believe in.

However, it’s really important to understand that you need to bet on whichever jockey is most likely to win… and that person may not be the founder.

But very often, what we need to realize is that the deal is not always about the founder.

It’s great and a lot of fun to invest in dynamic founders who have the ability to create incredible value, but that’s not how things usually play out.

Great founders can be absolute pros at turning their best ideas into reality. But scaling that idea into something sustainable and profitable is a horse of a different color – which is exactly why, more often than not, the CEO role will eventually change hands.

It’s all for the best – but it was a tough lesson I had to learn the hard way.

Kill the king

I learned the importance of betting on the jockey firsthand in building a company called FutureLink.

FutureLink was the original cloud computing company. Back then, we called it an ASP – an Application Service Provider.

This was a concept that my brother-in-law, a couple of others, and I came up with.

The company was scaling fast, bringing in huge amounts of investment dollars, and signing on massive clients. In other words, we were killing it.

We went public and started making large scale acquisitions, and we had opened a new head office and world-class data center in Orange County, California. The company had incredible momentum.

We were fortunate enough to attract a highly regarded executive leader who, at the time, was the CFO of a large telecom company. He came on as Chairman and was an amazing and disciplined addition to the leadership of the company.

As it turns out, though, it wasn’t too long after he started that he fired me.

I was shocked that I could be fired… and of course, I was bitter and predicted the demise of the company.

The company, however, thrived and went to greater heights than I could have taken it to at the time.

That was a tough pill to swallow… But it was also an incredibly valuable lesson.

It was deadly good for my ego to understand that everybody is replaceable, and in fact

Everybody should be replaceable.

This typically goes against the traditional impulse of finding the special founder that is irreplaceable.

The bigger lesson for me as a company builder and investor was that if the founder is not replaceable, then you should take a look at whether or not the company is a good investment at all.

That’s because the single point of risk is very high if the founder is not replaceable. If the whole thing hinges on one person, you’re looking at a fragile ecosystem that could collapse at any moment.

In other words…

Different jockeys can win different races.

Basically, CEO struggling to thrive in one role might be perfect in another.

That’s why adaptability in leadership throughout the company is key to a successful pivot, and ultimately, a successful company.

Without this skill, a company will be unable to pivot, be flexible, or ensure that it is not driven by ego.

You have to have the ability to change or move in other jockeys.

Because at some point, the founder and the jockey are not necessarily the same person…

And as an investor, it’s up to you to bet on the right jockey.

That’s all from me for now, but I’ll be back soon with another update.

Talk soon,

Cameron Chell