Here's what you say to an unsophisticated investor who demands exclusivity when investing in your startup...
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Hi Miss Investor,
Thanks for getting back to us.
Completely understand and respect your perspective regarding the issue of exclusivity.
Let me walk you through a chain of reasoning and see if it resonates with you
✅ 1. Any Silicon Valley-style venture scale company's (think Canva, Uber, Atlassian, Xero etc) number ONE mission must be equity growth for its investors. It wants to deliver 10, 100, or even 1000x returns by increasing the value of its equity through a series of funding rounds and eventually an 'exit' to a large acquirer (or some, of course, IPO).
✅ 2. The moment you invest, you will be a major equity holder of the business and will therefore hopefully want the same thing we want (maximum equity growth).
✅ 3. The #1 way to maximize equity growth is to do the following (amongst other things)...
➡️ a) In a rapidly changing and highly competitive landscape (think of all the AI companies, Silicon Valley disruption, etc), the key is to preserve optionality for the business (especially in the early days) so that it can make quick decisions, adapt to circumstances, and WIN no matter what the world throws at it. So any pre-commitments can tie it down and choke it in the crib before it gets a chance to thrive.
➡️ b) Go global as quickly as possible. So we will need multiple vendors and partners across multiple countries.
➡️ c) Successfully convert all qualified opportunities. So we need a mix of vendors to ensure broad coverage for the most challenging use-cases and circumstances.
➡️ d) Be obsessively user-centric (think Netflix, Amazon, etc), including by finding and offering the best solution for any given situation. Better outcomes lead to more trust, more utility, and faster (exponential) growth. So, a marketplace of independent vendors will likely be required to drive competitive pressure and price discovery for users.
I hope this line of logic not only highlights why it would be an amazing opportunity to keep the company free of any exclusivity deals, but also shows just how ambitious and effective we are at executing towards a huge exit for you and all our investors.
Cheers
Mr FounderProduct & Startup Builder
The SECRET to validating your startup idea in the age of AI
Here are some things that are NOT validation for your startup in the AI era
❌ VC funding - They have no idea what's going on right now either
❌ Academic endorsement - They don't know what users really need
❌ Media coverage - They just need to fill column inches and air time
❌ Government Grant Beuracrats - They REALLY don't know what's going on
❌ Nice words from your former colleagues - Your MVP should be embarrassing!
❌ Nice words from potential customers - People just like to be nice
❌ 1 or 2 big enterprise clients paying you to do something custom for them - You can't scale this
The only thing that really matters for validation is...
✅ Real users REALLY using your product (Do this first)
✅ Real users paying for your product (Do this second)
Don't screw up these seed stage fundraising tricks
Some thoughts about raising money for a seed-stage company from angels...
I advise founders to have a roadshow period BEFORE they officially start fundraising.
Use this time to introduce yourself and the startup and see if they might be a fit for your round.
There are a few KEY things to do during the roadshow.
➡️ Ask Key Questions
You want to ask them 2 key questions before you finish the meeting.
1. What do you need to see us do/achieve to get conviction on investing during our fundraise?
2. Who else should we talk to in your network who might be interested? We'd love 2 or 3 intros.
Remember, for Question 1, this is less about gathering homework assignments and more about...
1. Uncovering the hidden objections in people's heads.
2. Giving you a chance to commit to something so that when you return, they have evidence that you know how to execute and keep you word.
3. Minimizing or eliminating any room for them to say NO when you come back asking for money.
Pro Tip: Try to guide the requests from Question 1 toward a small set of things you're already planning to achieve! If they give you a random metric or goal, try to get them to agree that the north star metric you've ALREADY decided is the right one to hit.
➡️ Create a methodical pipeline of investors
Make sure you end up talking to 100-150 angels at least. Question 2 above (intros to other possible investors) should help turn your initial list into more and more people.
Make sure you have a methodical spreadsheet with all your notes and what you committed to as part of Question 1 so that you can follow up properly.
➡️ Timing
1. Try to talk to everyone within a 4-8 week timeframe. Don't let this diffuse out into an endless process. You need to keep things tight and build momentum toward the fundraising process itself.
2. Tell everyone that the fundraise will start at the end of the Roadshow (no more than 2 months out) so they know when to expect you back.
Let's talk if you need help with this.
I've been doing a LOT of pitch deck and fundraising advisory work lately.
The path to failure
If you have...
The Right idea
+ Wrong time = Fail
+ Wrong team = Fail
+ Wrong investors = Fail
+ Wrong implementation = Fail
+ Wrong go-to-market = Fail
+ Poor alignment = Fail
+ Weak perseverance = Fail
+ Slow adaptation = Fail
In startups, like in life, the stars need to align for outsized value creation and success to occur.
In Startups:
Choose your market timing well. Choose your founders and operational team well. Choose your investors well. Choose your implementation details and roadmap well. Choose your go-to-market strategy and tactics well. Manage your team's alignment well. Maintain your team culture and perseverance well. Adapt quickly without thrashing.
In Life:
Choose your life stages well. Choose your spouse and friends well. Choose your career well. Apply your superpowers well. Craft your attitude and personal brand well. Maintain alignment amongst your family and friends well. Continue to invest in each other well. Know when to pivot, adjust, and/or move on.
It’s like threading the eye of a needle.
Very difficult. Nearly impossible.
However, the effort and the outcome can be very rewarding if you put your heart and soul into it with the right people by your side.
If any of these elements are fundamentally broken, though, the pain, suffering, and failure will be heartbreaking and maybe even maddening.
You can push and push, but you will ultimately get nowhere.
It’s like a supercar on a track with a flat tire. The horsepower will never overcome the friction. And you’ll mess up the rims trying.
Are you OBSESSED with solving problems?
Talking to a former employee at a startup I used to advise about his new startup, "I was just a fly on the wall, but I so admired how you help companies build products that people genuinely love. Every conversation I've had with you, you're so focused on the problem, and I LOVE it."
I love this.
Also, I love bumping into founders who have a BRILLIANT B2C app that they THINK is a B2B play. So much latent potential at risk of being totally wasted. When I tell them the REAL potential of their app to disrupt (rather than support) their "customers", their eyes light up and they get a glimmer in their eye.
Remember: Go forth and disrupt the slow, the lazy, and the unimaginative. Eliminate (rather than optimize) inefficiency, waste, and pain.
Feature Prioritization vs. Effort
When it comes to product roadmap prioritization for your early stage product: If it's worth doing, it's worth doing.
Factoring in "level of engineering effort" and other random data is typically just noise.
Focus on one question: "What is the #1 reason why more people are not getting more value from my app more often?"
Once you've identified the top problem and the key feature ideas for addressing the problem - DO it.
Don't overcomplicate it.
The only reason you need to concern yourself the level of effort is to a) estimate when key features will ship (and therefore when GTM activities and business metrics might change) and b) understand if you might want to slice the iteration into even thinner slices so you can deliver value more quickly (WITHOUT compromising on the final requirements). c) hold your engineering team accountable.
What's left when AI can do everything for you?
What's left when AI can do everything for you?
Taste, judgment, intuition, and taste.
In short, wisdom.
With a core group of truly wise people on your team, you can leverage AI to execute faster, make a bigger impact, improve people's lives, and make big money more quickly and easily than ever before.
Hiring well and firing fast has never been more important.
Having great advisors and mentors has never been more essential.