I try to talk to as many early stage founders as I can.
I do that because I learn so much by hearing other people’s ideas around building a business from scratch, and I appreciate how difficult it is to start a company so I want to help whenever the opportunity strikes.
I also spent two years working on a startup that never really got the kind of traction we were looking for. I went broke in the process of learning quite a bit (as anyone will if they crack at it for two years). We made plenty of mistakes, some of which are listed below.
There are a few signals I get when talking to new founders that suggest they’re thinking about the wrong things when they pitch their idea to new stakeholders.
They’ve got their eye on the wrong carrot.
NOTE: I’m not really talking about marketing your product to customers here. I’m talking about building a group of stakeholders that includes investors, advisors, and team members.
The following are a few insights I think early founders, especially first-timers, should take to heart when talking about their project.
- You can only do one thing. Your big vision usually clouds a conversation about how you’ll survive your first six months. Get crystal clear on the most simple way you can explain what you’re doing NOW. What’s the problem you’re solving and what’s the unique value you’re bringing to that problem? The biggest signal for missing this insight is the words “and then”. Never say “and then”.
- Sexy doesn’t survive a seed round. You can raise “dumb” money from people who don’t know anything about technology by telling a good story. It’s actually not that hard. What is hard is identifying a valuable problem and surmising a plausible strategy for solving it that will convince real stakeholders (who’ll act as multipliers) to buy in. Stop selling and start learning more than anyone else about your market by gathering real data.
- Flashy, showboating decks are like websites that play music. I know you want to stand out, and there are stories of pitch decks that broke convention and got a lot of buzz. Ignore those stories. Build 10 slides and crush what’s important. Think about it this way: the best decks get forwarded to people’s networks…nobody’s forwarding a video deck or overblown sales pitch to their network.
- Your story matters a lot. People get behind people they like. It’s true in sales and it’s true in startups. Don’t be afraid to share your story and a bit of your ethos in your deck (or in your accompanying email). Your background doesn’t have to demonstrate you’re an ideal customer, but you do need to highlight why you’re the team who’s got what it takes to persevere when things get really ugly. Hint: Things will get really ugly.
- You don’t have all the answers. Too many early founders present themselves as if they’re right about all of their assumptions. Startups are mostly about being wrong. The winning founders have a plan to figure out how they’re wrong quickly, via product design and iterations. What if you presented your idea as a series of hypotheses you needed time to prove? Would it change your pitch?
- Never fudge material signals. An almost Fortune 500 customer isn’t a Fortune 500 customer. A non-material acquisition conversation isn’t an acquisition offer. It’s far more helpful to discuss the reasons you didn’t land a customer or acquisition deal. Focus on what you’ve learned so far, and use “almost signals” as data points that you’re seeking knowledgeable advice on.
- Outline your revenue model. An amazing amount of pitch decks don’t outline a revenue model. Businesses are made to earn profits, so assuming you don’t have incredible retention or growth metrics yet, you should have a really strong grip on the ways you might make money. Have a favorite revenue model, but be open to exploring other ideas.
- Humble intelligence wins. You’re pretty smart. Anyone who gets a company off the ground has a bit of smarts in them. Mute the ego and become a great listener, absorbing the feedback you’re getting without taking it personally. Defend your hypotheses but listen to outside perspectives and treat startups like professional sports…very few rookies make an impact in their first season. Be a rookie in your Rookie Year.
A lot of these insights are based on the idea that the benefits of being open, humble, and honest when you’re just getting started outweigh the natural inclination you have to present yourself as as a big deal.
The biggest companies in technology are almost exclusively the ones that nobody thought were going to be huge.
Live in that space while you can, and learn as much as possible quickly, leveraging the smart people you have the opportunity to meet with.
Now I’ll ask you readers…
Founders, what mistakes have you made while pitching your idea?
Stakeholders, what kinds of things do you see repeatedly that you wish everyone knew before you sat down to meet founders?