Don’t charge the hill until you are “ready.” This probably seems obvious to military types, but I see entrepreneurs violating this rule all the time. They approach key potential investors way too early, trying to talk their way up the hill, with no supporting business plan, and before they have a support team around them. Needless to say, they usually get shot down, and get no second chance.
The first rule is to separate your advisors from your investors. Perhaps a close personal friend can be both (the earliest stage and first tier investors should be “friends and family”). But for angel investors and venture capital investors, just remember that investors are not on your team (yet). You only get one chance to make a great first impression.
Continuing with my military analogy, here are some logistics, suggested ammunition, and an assault strategy (the bold points apply to every aspect of building the business):
- Do your reconnaissance first. Before you meet a potential investor, check them out on the Internet and through your advisors. You need to know exactly what the investor has done before, what he is doing now, and what will interest him If you walk into his office cold, and can’t convince him you meet his interests, you will walk out cold.
- Coordinate and brief your support team. Make sure all your advisors and team members know exactly what your mission is, and if possible, have at least one of them make prior contact to set the stage. If the investor thinks you are coming to ask for domain advice, and you ask for money, your success probabilities are shot.
- Fully prepare for the assault. Don’t try to talk and demo your way up the hill. Talk bounces off and won’t stop any bullets. Lead with your two-page executive summary, be prepared to give a ten-slide investor presentation. Keep your big guns, the business plan and financial model, in your holster but visible for backup.
- Put your ear to the ground before charging ahead. Offer to give your executive presentation, but he may want just the elevator pitch. Listen, and follow his lead with confidence and enthusiasm. Don’t insist on a product demo – he is buying the business, not the product. If you have an hour, use no more than 20 minutes for presentation.
- Follow up to assess progress or casualties. Have someone else, if possible, follow up with the investor the next day, to find out what really happened. If you didn’t learn anything from the meeting, you weren’t listening. Most VCs won’t volunteer to the Founder what they think, because that limits their options later.
By now, you are probably saying that this is “old school;” when going to Sand Hill Road offices was like going to the principal’s office. There you were ushered into a gorgeously appointed conference room for a precise amount of time with a serious-looking partner. Now some VCs and angels actually hold court in a nearby Starbucks or Paradise Bakery.
But believe me, investors are, if anything, tougher now than then. Don’t be fooled by the informality. Preparation, professional image, confidence, and strategy are just as important as they ever were. The strategy of “I’ll talk to him informally and early, find out what he doesn’t like, and then I’ll fix it,” is pure folly. Napkins don’t really work as your business plan.
Some of the most prepared “teams” I have seen are essentially one person, with a few part-time advisors, who seem to overcome all obstacles. One person can look like an army charging the hill, if they use all the networking facilities of the Internet, all the tools available to build business plans, financial models, and product prototype.
Don’t be afraid to use some mercenaries to back you up (outsourcing, consultants). All the shortcuts up the hill are rigged with minefields. Better safe than sorry. This is serious business.et that they too have to change rapidly and often as the market evolves. Too many find that out too late, and are left chasing a rabbit that is long gone.
- Improve change awareness. How good are you and everyone on your team at proactively scanning the environment for opportunities, emerging trends, and customer feedback? This contextual focus is critical to innovation and survival – the right product at the right time.
- Increase change agility. Change agility represents a startup’s ability to immediately and effectively engage everyone in pending changes and innovations. It starts at the top with the founder and CEO, but has to extend quickly to the bottom of the organization. This requires leadership, teamwork, and trust at all levels.
- Expedite change reaction. This is the ability to appropriately analyze problems, assess risks, and take responsibility for problem-dictated and market-dictated changes, while still sustaining the day-to-day business activities. It’s called the management of unplanned changes, or how well your startup reacts to crises.
- Implement change mechanisms. Every organization needs to have specific mechanisms in place to facilitate change, including regular effective communication, reward systems that reinforce desired change behavior, and accountability for results. These won’t work in an autocratic or dysfunctional management environment.
- Build a change readiness culture. Change readiness is hard work, and requires creativity sometimes in conflict with task orientation. People have to have the right attitude, and make the choice from the beginning to be ready to change at any time. They need a sense of urgency to handle change, and confidence in their leaders.
- Imbue customer change focus. The more everyone in the startup is obsessed with satisfying customer needs and providing better customer service, the more effective the startup will be in adapting to change. Provide direct customer contact to everyone, as well as training.
Experts say that we live in a world where the pace of change is accelerating at the fastest rate in recorded history. On the other hand, change management practices seem to be changing very slowly, resulting in a 70% failure rate of change initiatives. Failure rates this high demand a new mindset and startups are the logical place for this to happen.
For starters, the whole team needs to be constantly trained and encouraged to develop their skills. Relevant skills include continuous improvement of existing methods, processes and devices against a set of quality metrics. The ultimate skills, which lead to innovation and totally new processes, usually come from experimentation and special studies.
In summary, change will happen. If your people and your startup do not change, statistics say you won’t survive. It’s up to you to get out of your comfort zone and make things happen in your startup, rather than let things happen to your business.