A Misread Lead
“How were they able to sell without having anything?”
Let’s start off the day with another encounter that I had but this time it was with an investor. This investor had more technical knowledge in the business than I do when I was pitching to him. Interestingly, instead of shunning me when I couldn’t answer some very technical questions, it was an experience where he was accommodating and trying to figure out rather than berating. Then the question came, “How were they able to sell without having anything?”. In the moment, we were both dumbfounded as this question was foreign to me because of my own experiences with businesses that started selling despite not having an MVP and start building after. On the other hand, the idea seem foreign to him as the investor who is also running a business sells a finished product or at the very least an MVP.
“How were they able to sell without having anything?”
Why was it foreign to me?
Having read and been exposed to startups that raised funds with only an idea, my attitude towards fund raising is a can-do attitude. An MVP is an outsource or a build away while a key developer or member of management to perfecting your idea is a hire away. I have seen and been part of pitches where founders had nothing but an idea to do X in Y market and the Venture Capital at that time practically leaped to giving them the cheque. Of course there are different requirements by different funders in different stages and having different sector preferences. The response gave me a reality check, my message wasn’t getting across and there was a mismatch of information expected and given. At the same time, it also reaffirms one other thing about entrepreneurs, there are astonishing founders who are able to sell their services/products even when they couldn’t really show the “physical” or “finished” product. I do not deny that having the finished product is a lot easier to sell but you have got to respect their ability to secure clients.
What does this mean?
To me, it meant there is a right product/services fit to the market. Imagine this, the product/service technically does not exist because there was no finished product to show, in this case there were no product to show at all, and YET there are orders. (In the hundreds of thousands mind you). My takeaway from this is, don’t be shy about your startup, your idea if you know that there is a demand for it. Even if there isn’t, you could create the demand (this is a little trickier).
Why was it foreign to him?
My read of the situation is this, I was once someone who only believed in selling a finished product, that’s why my first job was a real estate negotiator. I sold secondary markets (finished product) there was something to show and tell, when I was asked to sell a to-be-constructed project, I didn’t know how to while my colleague became top sales in the agency. The investor later revealed his preference to investing in post revenue stage companies that can offer a dividend. He doesn’t like the fact that it is an idea despite the impressive pipeline this company had and the market it is tapping into. He is not wrong, just a different preference and perspective. He further explains that his preferred investments are the ones that generate cashflow. (I misread him the last time).
My mistake was the lack of understanding what he preferred and I rushed in to show him my latest project. (Old habits die hard). However, this is a win for me as I will never know I had fallen back to my old ways. What we hope to do is improve on a daily basis and be a better version than we were yesterday. What you can takeaway from my waste of a lead, don’t be too eager to close the deal and really understand what the party on the other side of the table wants. Know where he/she stands so that you know how much persuasion has to go in to bring this to a happier end result.