Tag: Investment

What’s in your control

Posted on

There are two types of businesses — the one that you control or the one that controls you.

Let me explain.

I met with another co-founder who had recently raised a Series A investment of $10M. His hardware company was founded in 2016 (8 years ago as of this post), raised a seed round in late 2019 and, despite his business being severely impacted by the pandemic, survived and is now thriving.

How?

Cashflow.

He was always in a position to be able to survive. He ran the business very conservatively, knowing that a small wobble in the economy or in manufacturing could kill his business. He built for contingency and that paid off. It always does. He controlled his business.

The founder explained that he always grew from a place of profit — never too quickly as to expose the company to excess risk. When he went to raise his next funding round he didn’t need the money.

Contrast that with many of the businesses that don’t survive despite large investment rounds. Often the founders feel that there is always more investment coming so they build on losses and when the money runs out, the investors do as well.

To build a real business you need to build a real business. There needs to be proof that it can survive on its own and this simple fact often gets lost along the way.

Controlling the growth, the spend, the scope and the scale of the business until it is proven, earning, profitable and can stand alone is how to build a real business that you control.

The Fast No

Posted on

There is nothing that beats a fast “no”. Doesn’t matter what language, what circumstance, what context — a fast “no” is the greatest gift to receive.

Don’t mistake a fast no with every other type of “no” that is used. There is the “no, but” <– NOT a fast no. What about “not now”? Nope. Not a fast no. Anything without a concrete, 2-letter, hard end or anything remotely sounding optimistic is absolutely, 100% NOT a fast no.

So why is a fast no such a gift? How can that little word, usually the first one out of toddlers mouth or the thing you yell at your dog to stop bitting strangers, be a good thing?

Two reasons.

The first is obvious. It’s the end of a line of conversation. If you’ve ever tried to raise any kind of venture financing you know that VCs are notoriously vague with their answers. Only the good VCs that know and follow their investment thesis say no quickly. The rest string you along for fear of missing something — anything — that pops. They want to keep their options open. Often you’ll hear “let us know when you find a lead” <– that’s a “no”. Or, you’ll hear “circle back with me in a month” <– NO! The fear of that little word is real and sometimes you need it to move on.

The second reason is not so obvious. A fast no is sometimes the real start of the conversation. If someone can say “no” it means they have a line and you are on the other side of that line. A fast no means they can define why “no” makes sense for them. This is glorious. It means you can ask why they said no. It there truly isn’t a fit you are liberated. You are free to move on. There is no more baggage, no follow ups, no awkward emails or calls. But sometimes there IS a fit and the “no” helps clear up any confusion or misconception. Yup, “no” can be a conversation starter. I’ve seen it happen. Often.

Getting to a fast no takes courage from you. YOU need to be able to give the other side the permission to say it. At the end of every optimistic investment pitch or sales call I like to ask a variation of the “asshole” question (nicely, of course): Do you see a fit here? Can we work together? Does this fit your business/investment requirements? We often don’t want to hear no so we avoid asking for it.

Getting to a “no” is a gift — often AS valuable as a “yes” — but anything in between is pure anguish.