Check Yourself Before You Wreck Yourself
Product-market match is real magic. Funding is just math.
Once Upon a Pitch Problem #6
You are ready to call it quits, finito, toss it in the bin, torch it, send it to Davy Jones’ locker. Q.U.I.T. You researched, drafted, revised, pitched, rebranded, been accepted and rejected, talked to and at, met with just about everyone and then someone after that, been ghosted, ran late and arrived early, followed up and through, been validated and unfunded. It is a new year so you contemplate whether your resolution should be to shut it down and leave the business in last year’s memories.
First principles. First principles is a style of thinking attributed to Aristotle and his quest to identify “the first basis from which a thing is known.” Before you throw in the towel, check your business idea down to its first principles. What is the very first thing you know about the problem you are trying to solve? What is the indisputable truth of the business solution you came up with to solve that problem? These fundamentals need to interlock, building an unbreakable foundation for the business. If your problem-solution puzzle pieces do not fit, then you have your answer: the problem is the problem is the problem so look at the solution you created. Can you change the solution to better solve the customer problem and will the customer pay more for that solution than it costs you to make it? Scrap it if you have a solution in search of a problem or customer. Think long and hard too if your solution ‘sorta’ solves the problem and you cannot fix it to ‘actually’ solve the problem. Let first principles guide your next move; simplicity reveals answers.
“And because of this . . ..” In 2020, 375,000 new businesses were formed on average per month in the US, totaling almost 4,500,000 annual new enterprises, with only 1.4% (64,480) receiving traditional angel investment and only a minuscule 0.1% (4,859) receiving angel/seed VC investments. You and the other 4,430,661 enterprises would be foolish to believe that validation lies solely in the hands of this 1.5% of funding, especially considering the math of 4x, 10x, or even 20x returns that venture funds are striving to achieve. Even if you have perfect product-market match with delighted customers, your company may never align with the VC math requiring monstrous addressable markets. Before you hammer the last nail in the coffin, check your funding options in the real world. Did you meet with your customers to discuss contract terms that decrease your capital outlay and increase their upside? Did you investigate corporate partner and vendor startup development initiatives? Did you engage with trade associations supporting early-stage ecosystems? Did you soul-search bootstrapping through savings, credit, home equity and business loans? Did you review grants and programs through your local Small Business Administration or relevant research institutes? Did you visit your local Chamber of Commerce? Did you think about crowdfunding like GoFundMe and Kickstarter? Look in the right places to fund your product, not just the celebrated places.
Resting your eyes. In the middle of a loud family party with music playing, laughter roaring, and babies crying, you could find the party hostess, my aunt, sitting alone quietly in an easy chair, hands folded in her lap, slight smile on her lips, and eyes closed. Inevitably, someone would notice and frantically signal the party-goers to shush with dramatic arm waving and finger-to-lip “shhhhhh” gestures until my aunt would chirp, “I am not sleeping, I am simply resting my eyes, carry on.” Winding down a startup for the right reasons is evidence you are a successful entrepreneur. If there is no product-market match at a price that eventually yields profit, call it a wrap. To some it will look like sleeping in the middle of a party, but to the rest of us in entrepreneurship and innovation, we know when a founder is simply resting their eyes and getting ready for what’s next. The story you now need to tell is to yourself. Are you a quitter or are you a disciplined entrepreneur who carefully checked the business fundamentals and determined the value creation was negligible? It is your story to tell.
What They Said
Elysium is a myth. One does not overcome an obstacle to enter the land of no obstacles.
On the contrary, the more you accomplish, the more things will stand in your way. There are always more obstacles, bigger challenges. You’re always fighting uphill. Get used to it and train accordingly.
Knowing that life is a marathon and not a sprint is important. Conserve your energy. Understand that each battle is only one of many and that you can use it to make the next one easier. More important, you must keep them all in real perspective.
Passing one obstacle simply says you’re worthy of more. The world seems to keep throwing them at you once it knows you can take it. Which is good, because we get better with every attempt. - Ryan Holiday, The Obstacle is the Way: The Timeless Art of Turning Trials into Triumphs, pages 172-173.
See You on the Track
Author The First Principles Pitch, startup storyteller, board member, advisor and investor. Once Upon a Pitch is a weekly newsletter looking at one business pitch problem and offering storytelling solutions to help solve that problem.
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