“I have a startup…”
That is quite possibly the worst way to introduce yourself to anyone. And, yet, it’s the most common phrase I’ve heard over the past few years.
Now that we’re in the second year of our tour, we’re meeting many of the same entrepreneurs again. And I love that. Until they introduce themselves the same way they did last year.
- If you’re an entrepreneur, listen to the way other people introduce you. If you don’t like it, start introducing yourself differently. Humblebragging is ok.
- You’re not building a startup, you’re building a business. When someone asks what you do, talk about your customers — not about your startup.
- If you don’t control your own narrative, someone else will create one for you. And it probably won’t help you or your business.
I meet an awful lot of people that seem to think entrepreneurship is risky. It’s not.
I meet an awful lot of people that want to “do” a startup. That’s a terrible idea.
In fact, having a job is riskier than you think and most startups die. The truth is that every good business is built in steps.
To keep things simple, I’m going to suggest that there are three stages to any business and you can’t skip one to get to the next:
- During the side hustle (or $1,000 / month), you’re probably holding down your full-time gig — maybe you’re consulting for others or sitting in a cubicle — but you’re focused on getting to $1,000/month first.
- Next, you build that side hustle to $10,000/month and you’re working for yourself — you’re a solopreneur. You’ve made the leap from your previous gig and you’re working on your own business full time.
- Then you’re on your way to building a business and you’re growing to $100,000 / month. You’re probably hiring people to help you — maybe they’re part-time or virtual assistants, but you’re growing.
Earning your first $1M in revenue is an act of brute force. Don’t waste time looking for growth hacks or strategy. Instead, focus on speed, tactics and iteration.
Dumb ideas don’t get funded. Dumb ideas aren’t getting funded. Dumb ideas aren’t even getting second meetings.
The only people complaining about “dumb investors” and “dumb ideas” are the lazy ones.
The lazy entrepreneurs that would rather complain than try to understand exactly how investment decisions are made.
The lazy community leaders that would rather complain than learn about investor’s fiduciary duty.
The lazy local investors that would rather complain than research the portfolios of the “dumb investors.”
Let me share a little secret I’ve learned about investing over the past few years: in a world where you can’t predict which businesses will be ultimately successful, the business of investing is about listening to the most pitches and investing in the least-worst in any given time period. And then you wait.
Ambition and talent seems to be equally distributed around North America — and the world. That becomes more and more clear in each new town or city we visit each week.
What’s not equally distributed around the country is access to cash. Some of that is because most investors don’t travel. Maybe some of that will be fixed with the new AngelList Funds (though, I’m not holding my breath, the AngelList Syndicates should have helped with some of this but they’ve proven to be anything but predictable from a lead’s perspective — especially if you’re investing outside of Silicon Valley).
If you’re an entrepreneur, you’ve got to match your ambition to the amount of cash that’s readily available to you.
Bootstrap, if you can. Raise money if you must but skip the local investors (first).
Now that we’re just about to hit 40,000 miles of driving in just over a year, I can count the number of investors I’ve seen more than twice on one hand. It’s not surprising, however, to bump into entrepreneurs we’ve met in one city in other cities hours away (and weeks or months later).
Midwestern entrepreneurs, it seems, are hustling to grow their companies more than Midwestern investors are trying to find returns. The thing is that it’s the investors that should probably be a bit more nervous than the entrepreneurs.
Entrepreneurs don’t always need outside capital to build a successful business. Investors, however, need to generate returns if they want to raise their next fund.
Seed. Pre-seed. Pre-A. Series A. Bridge. Just stop.
There are so many names given to people’s fundraising these day. And they mean nothing.
If you name your round, you’re unintentionally allowing investors to make some judgements about the status of your company.
Bridge round? Oh, so you’re running out of money?
Pre-seed? WTF is that?
Series A? Ah, so you’re about a $1M run rate?
Seed? I’m going to bet this is going to be a $500K ask.
If you’re raising money, just say that you’re raising money. Don’t put a title on it.
- Don’t make basic mistakes. You can’t raise money on ideas. You can’t raise money on outsourced teams. You can’t raise money on complicated business models. Keep things simple. I wrote about this in 2014 and it’s still true today.
- Build a business, not a startup. The world is full of people that talk about ideas. You should be focused on your customers. Once you sell one thing to one person you don’t know, you’ve got a business.
- There’s no excuse for a bad pitch anymore. Not when hundreds — if not thousands — of other pitch decks from funded startups are posted all over the web. Find some here.
- Stop chasing investor money. The best time to raise money is when you know how to use it to continue growing the business. Investors want to put money into sales companies, not product companies. You should view investor money as a tool to grow your business.
I can’t promise you the perfect pitch deck or fundraising formula but I can tell you that the bar continues to rise for entrepreneurs everywhere. My hope is that you’ll consider some of these ideas and raise the bar for yourself.
In the worst case, you’ll build a better business for yourself. In the best case, you’ll build a better business for yourself and raise some money to help speed things up along the way.
If you’re interested in picking up a few more tactical tips for your next fundraise, I created a free email course on fundraising for startups.
America is one of the only places on the planet where entrepreneurship is a binary choice. You’re either an entrepreneur. Or you’re not. As if entrepreneurship is a career path or something you put on your LinkedIn profile.
Everywhere else, entrepreneurship is considered a way of thinking and it’s applied to everything they do.
Being an entrepreneur doesn’t necessarily mean you have to learn to code. It doesn’t mean you have to be a founder. It doesn’t even mean you can’t work inside a cubicle inside a larger company.
If you’re thinking about ways to be more productive, you’re an entrepreneur. If you’re offering a service or product that will make you an extra $1,000/month on top of your full-time job, you’re an entrepreneur. If you’re doing both of those things, you’re an entrepreneur.
“I wish we would celebrate the side hustle as much as we celebrate those swinging for the fences.”
That was the main point I made during my opening keynote at EntreFEST in Iowa City, IA earlier this morning. (If you’re here too, let’s hang! The trailer’s out front…)
Everywhere we go, we find the same thing: community leaders that want more job creation, local investors wanting more deals and entrepreneurs looking for more money.
Regardless of which side of the table you’re on, there’s exactly one thing you can (and should) do: encourage your entrepreneurs to get to $1,000/month first.
Imagine you had a full-time job and you screwed up nine out of ten assignments. You wouldn’t keep that job for long.
But being an investor is kind of weird. We’re wrong more than we’re right but, for some reason, people still want our opinions on their ideas.
The truth is that investors (and most everyone else) is notoriously bad at judging ideas. (Remember what most investors said about the iPhone, Uber and AirBnB?)
If you insist on talking to an investor about your ideas, focus the discussion on your growth / distribution tactics. Talk about what else they’re seeing. Ask them why they’ve chosen to invest (or pass) on other opportunities. Talk about everything but the idea.
Stop asking for advice and opinions. Learn to extract information.