#SOTD 85: Things (not) to say to your investors!

1. Make me Understand / 2. Make me Engaged / 5. General

#SOTD 85: Things (not) to say to your investors!

Often founders share certain statements about their startups with investors which seem to indicate their startup’s strength.

For instance:

1. “We Haven’t Spent Any Money on Marketing”: Meaning our product is already selling without any marketing effort – imagine what would happen if we started to market it!

2. “Our Price is Low Enough to Avoid Procurement”: Meaning we have faster sales cycles.

3. “We Haven’t Started Monetizing Yet”: Just you wait when we do!

4. “We Have No Competition”: We’re unique, no one’s doing what we are doing.

5. “We’re Co-CEOs”: Why settle for one leader, when you can get the best of two?

In an insightful tweet thread, Canada based VC, Chris Neumann clearly lays out why these statements do more harm than good.

What I really liked about the thread was the structure he uses to make his case. For each of the five statements above, he writes

  • What the Founders think is the meaning of these statements?
  • How the investors actually interpret it?
  • How should the Founders reword it?

For instance, consider the statement:

“We Haven’t Spent Any Money on Marketing”

Here’s how Chris explains the interpretation/s and alternative:

What Founders Think: “Our product is so great that users/customers are flocking to us. We haven’t had to spend any money on marketing…just imagine how awesome it will be when we do!”

What Investors Hear: “We haven’t given a single thought to how we’re going to acquire users/customers outside of our personal networks. (If you build it, they will come…)”

How to Do it Better: “We haven’t done paid marketing as we were focused on our MVP and had enough beta users to get feedback. In testing, the product has really resonated with X persona. We think we can acquire them using Y strategy.”

The rest of the four statements also have some thoughtful interpretations and alternatives.

Chris shows great use of the principle of contrast. Instead of just showing what is wrong (or what is right), he shows both of them side-by-side.

Also the use of dialogue in the content is always engaging – it makes us feel part of the conversation and makes the abstract concrete.

#SOTD 85

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