{"id":195,"date":"2014-04-30T15:57:36","date_gmt":"2014-04-30T14:57:36","guid":{"rendered":"https:\/\/blog.iese.edu\/entrepreneurship\/?p=195"},"modified":"2015-03-17T12:03:49","modified_gmt":"2015-03-17T11:03:49","slug":"which-is-more-important-the-car-or-the-driver-ask-fernando-alonso","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/entrepreneurship\/2014\/04\/30\/which-is-more-important-the-car-or-the-driver-ask-fernando-alonso\/","title":{"rendered":"Which is more important \u2013 the car or the driver? Ask Fernando Alonso\u2026"},"content":{"rendered":"
\"FA-1\"<\/a>
Fernando Alonso (25 March 2012, Sepang International Circuit, Selangor, Malaysia). Author: Morio<\/figcaption><\/figure>\n

The \u201cfather of Venture Capital\u201d and founder of INSEAD George Doriot once said: \u201cAn A-team with a B-plan is always better than an A-plan with a B-team<\/strong>.\u201d I have heard this said again and again, and it seems to have passed into business lore.<\/p>\n

For early-stage investor, however, I think it can be somewhat misleading<\/strong>; it really depends on your perspective. If we take Formula One<\/strong> as an analogy, for example, it is quite clear that the car (i.e., the \u2018plan\u2019) is more important than the driver (i.e., the \u2018team\u2019) \u2013 just ask Fernando Alonso<\/strong>; he is considered to be the leading Formula One driver, but he hasn\u2019t won the title since signing for Ferrari (which was supposed to be the A-plan).<\/p>\n

Naturally companies are built and led by teams with the ability and freedom to maneuver the business model and pursue any given opportunity if the original plan doesn\u2019t work out, but there are some reasons why I disagree with Doriot\u2019s assertion<\/strong>, and I think most early-stage investors would agree with me.<\/p>\n

    \n
  1. There are industries (by nature, level of maturity, and so on\u2026) that are more attractive than others<\/strong>: compare the automotive industry margins vs. mobile gaming margins. The structure of the competitive landscape is given. That affects the plan, but not the team.<\/li>\n
  2. There is room for a limited number of players who can monetize<\/strong> any given business model (particularly in the internet\/mobile area). Again, it is a plan issue; the team cannot change that.<\/li>\n
  3. Time to market<\/strong>\u00a0\u2013 Changing plan A to plan B takes time. This will affect the ROI of early-stage investors.<\/li>\n
  4. Money to market<\/strong> – Changing plan A to plan B costs money, and this too will affect the ROI of early-stage investors.<\/li>\n<\/ol>\n

    My point is that an A-team will probably have the capacity to turn a bad plan into a better plan<\/strong>, but it won\u2019t be enough for most early-stage investors seeking a high return on investment<\/strong>. If changes that need to be done are marginal and can be solved though A\/B testing and minor changes to the business model, then the returns anticipated in the business plan might be achieved. If the changes to be made are related to the core of the business, the probability is that this will use up a considerable amount of the initial investment<\/strong>.<\/p>\n

    Netflix<\/a><\/strong>\u2019s successful move from \u201cDVD home delivery\u201d to \u201cstreaming\u201d, compared to the death of Blockbuster<\/strong> is quite illustrative in this sense: it doesn\u2019t just show how competent the team is, it shows that it is also the magnitude of the required change that matters<\/strong>.<\/p>\n

    Don\u2019t forget what another well-known guru, Warren Buffet<\/strong>, said, a few years ago: \u201cWhen a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.\u201d<\/p>\n

    So \u2013 are you more Buffet or Doriot?<\/strong><\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    The \u201cfather of Venture Capital\u201d George Doriot once said: \u201cAn A-team with a B-plan …<\/p>\n","protected":false},"author":1682,"featured_media":202,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[353,157],"tags":[49452,78214],"coauthors":[],"class_list":["post-195","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-angels","category-entrepreneurship","tag-plan","tag-team","megacategoria-mc-entrepreneurship"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/users\/1682"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/comments?post=195"}],"version-history":[{"count":6,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/195\/revisions"}],"predecessor-version":[{"id":204,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/posts\/195\/revisions\/204"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/media\/202"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/media?parent=195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/categories?post=195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/tags?post=195"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blog.iese.edu\/entrepreneurship\/wp-json\/wp\/v2\/coauthors?post=195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}