11–20 of 119 posts
Been waiting for someone to articulate this for a while now. Pitch people an idea a few thousand times and you get pretty good at reading if people buy it. Getting close to the "convince" threshold for investors and when we do reach it, watch out!
I <3 this essay. "Fake it 'til you make it" seems to be the m.o. in a lot of entrepreneurial circles. I've honestly never known if this is actually a good strategy or not. It seems the answer is no.
That closing line is the equivalent of a gymnast sticking a landing.
- Trying to reconcile this with the earlier citation that truth telling is critical. This flies in the face of it and rationalizes this behavior by claiming it's dickish to ask? I don't think that's true and when did two dicks make a right? By the way the much better tactic to solve this problem is pick one or two investors and work with them to get them to commit and then have an honest answer for the others who'll fill out your round.
I enjoy these essays overall but don't enjoy this common thread I see that confuses hustle and sleight of hand as being interchangeable.
It seems insane, but investors are blinded by traction.
If you are a startup that has low scalability, but you have traction, you will get funding
If you are insanely scalable, a great idea, but you don't have traction, you just won't get funding. It doesn't matter how awesome your team is. Investors just can't see good ideas through the traction curtains anymore.
Why is this? Because investors have no clue, but you can't blame them, they are mostly 40-50 year olds whose minds are just not built anymore to foresee the future and most of them haven't even build a startup from ground to IPO. How are they supposed to even remotely know what will be the next startup that turns the whole silicon valley upside down.
This applies to 99% of investors, but there is a tiny folk of 1% who are so in the mindset, almost all of them previous founders. They can foresee the future and they are only waiting for the startups to have built the product they have been thinking of for years, but haven't built it due to simply not having the time.
Source: Pitched my no-traction/very scalable startup to hundreds of investors over 4 months until I stopped 2 months ago to get traction, never got a second meeting except for one time. Always thought, do the investors not see how super scalable this all is? Said no-traction startup now has strong traction.
The people who are really good at acting formidable often solve this problem by giving investors the impression that while no investors have committed yet, several are about to. This is arguably a permissible tactic.
By engaging in this tactic, you are working to make foolish behavior on the part of the investor successful, which then leads to the very climate that makes the dishonesty so tempting in the first place. It's a vicious cycle.
Why not stick to the "always be 100% honest" approach? This will reform the investor climate over the long-term if the best startups consistently use it, and after all, these best startups are the target of your essay.
I recognize you didn't recommend this approach. But I think you should go one step further and not claim it is arguably acceptable.
Do you know for whom you do not need a pitch? Investors. I am not talking about potential investors, who may one day remember you and consider the investment as the entrepreneurs I said earlier. I am speaking of that meeting with the investor, face to face, where you're to present your startup and they will decide whether to invest in you or not. A meeting is a conversation, not a pitch. It is the time that you will present what you know, not what you memorized. We must listen to the investor, to understand his doubts, it takes a lot of empathy. When going to a meeting for such a conversation you should prepare your knowledge, not your speech. You must have a deep understanding of the strengths and weaknesses of your startup, you have to create a presentation only to show some specific numbers that you have no reason to decorate. Those data that are calculated in a serious, rigorous method and not "estimated" or "expected".
In summary, I think two things are essential: i) to have a carefully prepared pitch, ready to go out without thinking, the standard answer about your startup - something that is clear and visionary at the same time, to show the idea and attract person's interest and ii) not to have anything memorized if this short answer turn into a conversation, but you have to be completely updated to all relevante knowledge about your business - and this will tell not only the investors, but yourself, if you are prepared to run this business.
So a question... how do you balance confidence from a well-understood solution to a well-understood problem in a well-understood market, with the kind of blue-sky dreaming that seems to excite investors? Crossing into that blue-sky world starts smelling like BS to me, but when I say "We could realistically get a $100M chunk of an existing multi-billion market", it doesn't seem ambitious enough?
That's not necessarily bad, but the whole point of the essay is that you should first come up with a strategy for a market that you really think has a shot of being that big.