Rocky Top MBA

CMM July 9th, 2008

Five little words all entrepreneurs have wanted to yell… You. Just. Don’t. Get. It.

I intended this type of post to be the final in this series, but Mark Cuban has a small blog post about those five little words. In this post, he talks about how insulting and ridiculous it is to use those five words on a potential investor. He also implies that any entrepreneur that uses that expression is lazy. You know what? I kind of agree… but for kind of a different reason.

Let me clarify. I agree that any business plan should be concentrated into a focused pitch. Investors train their ears to listen for those pitches, and they have a list of performance indicators they hunt for in early conversations. Likewise, too many entrepreneurs are caught up in the wonders of their technology instead of the wonders of the value proposition. Use the pitch to focus on the customer’s need and your proposed solution. Let the prototype demonstrate the technical wonder of your product.

Also, I think too many entrepreneurs see successful fundraising as a roadshow. Just yesterday I heard someone talking about “running the gauntlet” to raise money. Personally, I think this is a very poor strategy for fundraising. Venture capital should be smart money… so focus your fundraising efforts. Identify the venture funds that have records of success in your area or an expertise you need. The VC sits on the board to do much more than just monitor the investment, they want to add value through their experience and network.

In conclusion, no matter how frustrating it may get… don’t ever use those five little words on an investor. You may think it is the best idea in the world, but if investors aren’t biting, it’s a good sign that you need to rethink your strategy. Ask yourself:

• Is your pitch communicating the right points?
• Is the idea justified by a market need?
• Have you honed in on a scalable value proposition?
• And are you talking to the right audience?

Hearing “no” shouldn’t be a death kiss for seed, growth or expansion money. It should cause you to revisit your assumptions and proposition. Entrepreneurship isn’t about being a sniper. Its about being a machine gunner. Keep aiming, but keep firing!

Update: Per a thought-provoking comment, I’d like to elaborate a little on my comparison to being a machine gunner vs. a sniper. In contrast to my machine gunner analogy, the comment suggests that a good entrepreneur would be a persistent sniper– aiming carefully, pulling the trigger, and moving on to the next target. I agree with this methodology as it applies to the day-to-day responsibilities of being an entrepreneur… but I’d caution using it as a product development strategy. With a sniper mentality, too many entrepreneurs develop tunnel vision and miss ancillary opportunities. They look for the perfect perch to fire the perfect shot with the perfect weapon at the perfect target. That’s like a web-based entrepreneur saying they’ re going to run in stealth mode until they perfect the product and land a contract with the largest potential customer in the space.

By being a machine gunner you keep your focus on the objective. Contrary to the Hollywood portrayal of the machine gun as a “spray and pray” tool, there is actually a degree of skill required for effective use. The machine gunner focuses on a target and lets out a burst. Then they refine their aim and let out another burst. They use this “aim, fire… aim, fire” technique over and over, until they’ve achieved the objective. That is the point. Entrepreneurs need to aim, fire… aim, fire… aim, fire… until they’ve achieved their objective.

• Entrepreneurship , Fundraising , Pitching