When I joined the venture business, I was told that the job is a lot harder than it looks.  You need to find great companies to invest in, work hard to make them successful, and work even harder to try to make the most of the ones that aren’t going so great.

But what I found to be much harder than I expected was the process of choosing companies, and having deep conviction about those choices in the midst of vast uncertainty.  It’s also difficult to exhibit clear judgement when you learn more about a company and uncover things you didn’t expect to find.  It’s an intangible quality that I’m going to call investor mojo.  As one of my colleagues Santo wrote in an old blog post:

“If I did not foolishly think I knew everything and would be right most of the time, I could not be in this business. It is hard to be often wrong – historically only 1 or 2 in 10 companies provide meaningful returns – and live with it.”

I didn’t have an appreciation for this because I used to hear about new companies all the time, and always had an opinion.  In fact, I never had a hard time saying “that company sounds really interesting” or “that investment sound really dumb”.  If you look at the comments section after any new investment announcement on Techcrunch, you see a lot of similar comments from folks from all walks to life.

But there is a world of difference between making a passing judgement and really committing your time and money to a company.  Maybe it’s just me, but it’s a completely different exercise when you decide that you are going to love a deal and pound on the table to make the investment happen.

By “pounding the table” I don’t mean that every investment decision is contentious.  But the truth in early stage investing is that almost all companies have a few fatal flaws.  Maybe it’s an inexperienced founder, a product with no traction, or something else entirely.  For almost any new investment announcement, there is bound to be a sizeable population of folks who say “wow, that was one dumb deal.” I’m as guilty as anyone.

But being a great VC is about proving all the doubters wrong.  Actually, that’s true about being an investor in every asset class.  Outsized returns comes from doing things differently from the herd.  As Warren buffet famously said:

“We simply attempt to be fearful when others are greedy and greedy when others are fearful”.

What he didn’t say is that doing this also exposes you to the risk of looking stupid.  Unless of course, you are Warren Buffet and you just bought a railroad.