Flattery Will Get You Nowhere
I haven’t posted something new in quite a while. There are lots of reasons, not the least of which is that I try to comment on patterns I see which have not entered the general discourse about startups. This one is about the seduction of the startup CEO – a pattern of distraction I see all too often.
Startups are the stem cells of our economy. They represent the hope and possibility of something new, invigorating, and transformational. Startups are new ideas, often self-selected with leaders who see a few moves ahead from the rest of us. At least that is the hope.
It often feels like the scarcest resource in a startup is money. It is not. Time is scarcer. You can raise more money, but you cannot raise more time.
New companies are interesting precisely because they are new. If you’ve been doing this early stage stuff for while, you begin to recognize that there are certain life forms that get their nourishment from the new. The most obvious are venture capitalists themselves. We VCs all harbor the secret fantasy of finding the next big thing before anyone else recognizes it, even the new company itself.
Nearly as obvious are Established Companies – the putative ‘partners’ of the new company. This comes in several forms – the line of business meeting, the business development meeting, and the corporate venturing meeting. They, too, are driven by a discovery fantasy. They are looking to discover growth DNA to graft.
All this attention is seductive for the new CEO. The new CEO has the fantasy closing the single transaction that instantly transforms the new Company from obscurity to dominance. You can hear this hope in the treatment of institutions as individuals. “We had a good meeting with Bank of America.” “We just got an inquiry from Toyota.” “Far West Ventures wants to meet with us.”
One of the most common mistakes small companies make is mistaking “opportunities” for opportunities. Most of the time these “opportunities” are distractions that drain energy, resources, and most of all, time. People don’t talk to institutions. They talk to people. When you have a “good meeting” with a potential partner, you really had a meeting with people in an organization.
These people have their own agenda, only a portion of which is institutional. A large part of it is personal. I can’t tell you how many times I have seen a new company take two or three meetings with someone from a big company, only to culminate in a conversation in which the big company person uses the new relationship to disclose that s/he is leaving and looking to join a company like yours.
Another frequent outcome is the set of “good meetings” that lead to the “no, thank you” result. Usually these are result of a process of discovery and education engaged in by the inquirer and the new company respectively. The inquiry begins with a sense of genuine but diffuse excitement about “your space.” Eventually as you spend time with them, the inquirers are bit more educated about they do want and a lot now more educated about what they don’t want. They don’t want companies like you. This is equally true of companies and investors. You are worse off than you started. You have spent precious time and you have educated one more resourceful and intentioned group about your market and the strategic contours of the opportunities within. No good can come of this.
But not all “opportunities” are illusory. Some are real and truly transformational. What I try to get my companies to do is apply basic sales skills to this question of partnering and inbound opportunity management. The undisciplined salesperson will chase every inbound inquiry in the hope of finding the “bluebird.” The disciplined one will ask qualifying questions of the inquirer.
- Why are you interested in this sector?
- How does this fit into the core business or business strategy?
- Is there a line of business directly impacted by this sector?
- Does the line of business have an objective in this sector for the coming year?
- Is there a specific budget or program associated with this sector?
- Who is responsible for this sector?
- What kinds of companies/products are you looking to evaluate or partner with?
- What other companies/products have you considered?
- What were your conclusions about those other alternatives (likes/dislikes)?
- Is there a timeline or desired time goal for building a relationship with someone in the sector?
These questions may seem too direct to pose to an inquirer. After all, you are small and they are big. They have the power in the conversation, or so it seems. But if they have a well-formed interest, they will be all too happy to share these data with you to move the conversation along rapidly. If they don’t, they are looking for an education.
Save your time. This is not the Academy Awards. It is not an honor just to be nominated. It may be flattering to be called; but many are called, and few are chosen. And this flattery will get you nowhere, fast.
