Entrepreneur-turned-VC Mark Suster has a great blog post explaining that he invests in “lines, not dots”. Especially outside of “frothy” markets, tech startups are unlikely to find big ticket investors or customers who will throw money at them after a 30 minute meeting. Customers and investors need momentum to motivate them to write you a check NOW instead of waiting until later when the price may be higher. The discount gambit applies to both.
The first time you meet someone, you get to tell someone what you’re working on, and they get to decide whether the idea is cool. The second time you meet them, they expect to hear progress, and you had better be prepared to give it to them. If you see someone a few times over the course of a few months, and you cannot give them specific updates on progress your startup is making, you’re working on a hobby, not a company. They probably also expect to hear updates on some of the things you were working on last time you talked.
I do recommend that startups get out of their cave more often. Every week, as I consider the events I’m going to that week, I also think about who I’m going to see, and what the few interesting things are that I can share about the progress Badgy is making. A few years ago, I learned how awkward and pointless it feels to tell people that your company update is that your “product is coming along nicely”. That means nothing, and unless you’re VERY early-stage, nobody cares. If you’re in “stealth mode”, your secrecy means people don’t even have an opportunity to share expertise or contacts that could help you figure out your product. (I hope you’re good at guessing what people want.)
Here are some examples of company momentum I’ve heard lately:
- We have new customer X, they are a great use of feature Y
- Potential partner X wants to put us in front of all of their customers
- We’re finishing up Feature Y, which many potential customers have asked for
- We just got coverage from News Outlet Blah, and that generated X total new leads
- [talking to investors] This smart investor who knows our space is funding our current round