Q: “What is the difference between a good CEO and a great CEO?”

A: “A good CEO will pivot. A great CEO will pivot in a capital-efficient way.”

That gives me a jumping off point to talk about temperament and EQ and point out that any CEO will pivot when they are out of money and their back is to the wall and the only alternative is failure.

But a great CEO has the EQ and the humility to listen to what the market is telling him/her and make the pivot before the company is in a deep cap table hole. In other words, make the pivot when requiring them to do so requires them to admit they were wrong before they absolutely have to. It is far easier to “keep experimenting” until the money is gone. But being a great CEO is having the courage to admit it is not working, cut your losses relatively quickly and fund a different experiment before the runway is gone and the company is underwater relative to their post money valuation.

This insight has served me very well and informed a lot of the due diligence we do into CEO temperaments and coachability.