Your Business Plan Stinks and Your Momma Wears Combat Boots
A Guide For Handling Rejection, Defeat, and Victory
(orginally written August 16, 2000)
I managed to travel in time yesterday. It all started with a bizarre email that said:
"Bill, Great job on the NPR piece."
What NPR (National Public Radio) piece? I don't remember being interviewed by NPR? First thought: Oh my god, someone out there has the same company name or something. Get to the NPR site and check out what's happening. Turns out that the show 'Marketplace' ran a show yesterday on the June 8th iBreakfast in Los Angeles.
June 8th, iBreakfast (2000), wow it seems like a year ago that I did that. I entered this business competition where you submit a brief one-paragraph summary of your business concept. The iBreakast folks pick 4 or 5 folks (out of almost 50 applications) to do a five minute presentation to a panel of VC's and industry folks (and a audience of about 100 people). The winner gets a T-shirt and a chance to pitch their concept (in private) to angel investment groups.
So I managed to find some streaming audio of the radio show ( AUDIO ). What a weird feeling to hear myself, the audience, and the VC's. and remember the ABSOLUTE CERTANTY that if I was to win this, my company would be on its way. Well, I did win that. No, we didn't get our 'instant funding' but we are on our way.
I listen to that fellow with the upbeat tone and the sound of victory in his voice and I wonder "who is that guy>?" what would he have thought if he knew then what the next two months were going to be like? Would I have been as confident?
What happened? Well, we did enter serious negotiations with one investor from that event. After almost a month I decided that the terms were getting a bit too bizarre (property liens, debt loans with free equity, etc) and I decided to tough it out till I could sell some stock (locked up) in August. I believe that was quite possibly the smartest thing I could have done. Time will tell if I was right or wrong.
Since then we've had presentations with two major investment groups. In both cases the answer has been 'no.' Each time I try very hard to listen for the 'why.' This is not an easy thing to do. Particularly when you've had several "really positive" meetings with these folks. It's important to listen and listen hard. In some cases the objections are legit. In others it's a case of them wanting you to build toward a IPO as opposed to building a profitable business from the get-go.
What's worse is that you look at VentureWire and you can't imagine the silly stuff that gets funded. I mean high priced content plays and B2C's that have no hope of profitability. All I can imagine is this sort of conversation between two guys in funny clothes somewhere around the 16th green.
"Say Thad, I was thinking of starting up a dot-com to sell Bonsai Trees on the net, I'm calling it Smalltree.com [note: the name is taken]. Want to kick in a million or so to get this started?"
"Sure Bob, would two million be enough?"
Well, the "silly stuff" may be happening, but that doesn't change the fact that you (and I) haven't been funded yet.
I've decided that the smartest thing to do is to look at each rejection as an educational experience. Get what you can out of it and move on.
The key to moving on is to run the business. Focusing on sales and building the company (technology and people) is a great way to get your mind off of the funding merry-go-round. Selling VC's on your company is no harder than selling a customer on what you're doing. Only with customers you get something called revenue, in case you forgot. I've said it before and it bears repeating:
"Run the company like you'll never ever get any funding"
You've got to do whatever it takes to get things off the ground. If that means selling off the stock you were going to retire on, then so be it. If you don't believe in yourself and your idea ' why should some stranger fork over a few million bucks? Build stuff, make sales ' whatever.
So, if I really could travel in time and talk to Mr. Optimism what would I say? I'd say 'enjoy this ' you'll need to remember just how good it was when things aren't so great.' I also think Mr. Pessimism needs to remember that the good stuff is possible. I think that little trip in time was just what he needed.
I'll leave you with this quote:
"A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort."
- Albright, Herm
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