A SWING and A MISS (AGAIN and AGAIN and AGAIN)
The day my LLC paperwork was sent to the Sec. of State was amazing. It was also the day I incurred a annual state tax/fee. Of course, I had no idea. I skipped over all the reading about taxes and fees because I was too busy reading about how to attract VC’s and other foolishness. That’s what I get for watching “Social Network” too much.
Little did I know, that some long, discouraging days were ahead of me.
One of my greatest assets has been my ability to articulate ideas, therefore I confidently entered the start-up phase of entrepreneurship believing that “the pitch” would be the least of my problems. Additionally, I’ve always been a pretty strong debater as well, so I did not fear having my idea challenged either. What I had yet to learn, was the importance and value of something called “Traction”…
In my mind, the process would look something like this:
Get an idea, develop an idea, confidently articulate an idea, gather feedback and constructive criticism on the idea, re-develop the idea, pitch the idea until someone bites, and finally watch the idea blossom into tangible existence. Fairly realistic, right?
No, No, No, ladies and gentlemen. I’ve come to understand, that investors (whether they be investors of talent, capital, time, advice, etc) do not usually commit their limited resources to unproven ideas, no matter how good it sounds. Proof of concept has to come in the form of either “traction” (results you accomplished on your own) like sales, beta sign-ups, users, etc or in the form of solid data (statistics that clearly prove the market you think exists, actually exists).
Now as entrepreneurs, we can sometimes get offended by this. We believe an awesome idea is worth something. Nope… Thus far, I’ve been constantly asked to provide statistics and data that support my idea has a market, has growth potential, and will generate money. Unwisely, I ignored these requests for quite a while. I was convinced that when I found “the right” investor or partner, they wouldn’t need such trivial information. So I’ve pitched and explained and illustrated and given examples of and crafted proposals for and pitched some more for a very long time. Finally, this great idea hit me. HHHHmmmm, apparently people want to see some proof that this idea works.
WOW, we entrepreneurs are just so intelligent sometimes.
Lesson in Retrospect: When your asking someone (friends, family, angel investors, VCs, advisors, etc) to contribute something to your venture, be open to contributing the data or traction they want to see from you first.