I’ve written elsewhere about things that startups do that annoy me and I’ve got a post in my drafts about startups that I’ve heard so many times that I throw up a bit in my mouth whenever I hear an entrepreneur launch into his pitch (wait for it) so I thought it would be nice to change things up a bit and write about cute sh*t startups say that make me smile.
In that spirit, here is a list of things that startups say that make investors think “that’s cute”.
“Our projections are extremely conservative.”
Really? That’s a relief. And here I thought that reaching $1B in revenue in 3 years was a bit of a stretch. But now that I know that there are conservative assumptions, we’re good.
Rather that tell me you are being conservative, why don’t you take 30 seconds to tell me the top 3 assumptions that move your model and how you justify the values you plug into your model for those assumptions? You don’t have to prove the model to me on the first meeting but why not give me some reasons to believe in it rather than simply saying, “trust me”?
“We have no competition”
Is that so? And before Uber came along, people just sat outside their caves moaning, “Gee, I wish their were some way I could get to the mammoth hunt.”
Whatever unmet need you are addressing, people are somehow dealing with it right now. Depending on what you are doing, your potential customers might be using telephones, excel, post it notes, walking down to the corner store – somehow, life goes on. As an investor, I want to know how they currently cope so I can assess whether your solution is a quantum leap forward or an incremental improvement. It also should help you decide how best to market to your potential customers.
You know what kind of startup trust has no competition? Startups addressing problems that are so trivial that no one cares.
“I need X before…..”
I wrote a whole rant about this not too long ago so I won’t go into all that again (you’re welcome) except to point this out: investors like problem solvers.
If you are saying this, you are effectively saying, “I can’t solve this problem.” Not a great first impression.
The reason I include this in the “Cute” column is that any investor with a fair amount of experience has met some stellar entrepreneurs who have left them mouths agape at how far they were able to get with virtually no resources. They didn’t moan about what they needed but didn’t have; their attitude was, “Let’s see how far I can possibly get with what I have.”
You want to be one of those guys. So instead of leading with what you need, concisely talk me through what you needed to know or do and what you were able to figure out or accomplish already and how. Then I can judge if you have really pushed this as far as possible before looking to throw resources at the remaining issues.
“Competitor X’s recent investment round proves the market”
Yes, it proves that they are ahead of you in the market. Remind me why that’s a good thing for you?
No VC wants to put money into an also-ran. So many startups are in fields with network effects or economies of scale or similar characteristics where an early lead can quickly add up to near insurmountable competitive advantage. So I don’t care about the market being “proved”. I want you to prove to me that you can win.
Are your metrics better than the company that just got funded? That’s interesting to me. Do you have a better go to market plan than they do, ideally one that they cannot copy? Proving that to me would go a long way. Is your tech massively better? I’m skeptical – it’s shocking how often that didn’t matter at all – but I’m listening.
Bottom line: I’ll make my own decisions about the market. You just show me how you are going to smoke the competition.