Let me share with you a short story about brilliant ideas, growing ventures, value–and why those three things so often die an early death. And let me begin with growth and this simple truth: No matter what business you’re in, you grow or you die. While obvious for a start-up, the reality of growth applies to any company. So do the lessons of what growth truly is, and the truth about why you want it in the first place.
A short story of why ventures die
Whatever its stage of evolution, no venture can ever really stand still if it hopes to be around tomorrow. Reflexively, we translate not standing still to mean growth. But growth isn’t always what the innovation myths and the short-term stock pickers tell us it’s supposed to be: up. Sometimes growth is up, as in higher revenues, market share, or brand awareness. And there are times when growth means making a move sideways, or even stepping back. Successful ventures wisely focus first on figuring out what will improve the odds of generating greater value–and then they move.
When we speak of growth, what we are really talking about is value and how to increase it. That isn’t the whole story. There’s a layer of understanding deeper still that smart entrepreneurs and their teams quickly come to appreciate, and it centers on this question: Of value to whom?
In the common tale of a doomed venture, the first strike is failing to understand that growth is secondary to–and indeed results from–a keen understanding of value. Strike two occurs when the fundamental truth that any value a venture creates has to be appreciated by and accrue to ‘others’ is missed. Others means people beyond the founder, beyond the startup team, even beyond the obvious audiences with whom a new venture seeks to connect.
These first two strikes are what typically lead to a third and final strike. It comes in the form of ten little words uttered to anyone you hope to convince that what you are doing is valuable: “But you don’t know how hard this was to do!”
The story behind the story
Reading that phrase, you might have felt an immediate pang. If you didn’t, let me give you a rare view into the scene where that comment most often spills forth–and where this story meets its end.
For over 30 years I’ve sat in rooms where an entrepreneur is pitching an investor. Time and time again, the entrepreneur enters that room fully prepared to do the most important thing. For them, that is–to ask for money to fund growth.
Most entrepreneurs truly believe in the value of whatever it is they’ve come to sell. They believe it because they’ve spent years conceiving and developing their idea. In that span, many hours resulted in dead ends. Countless days leading up to this day and this meeting were spent toiling to refine the idea, to convince others to join the team, even to find an audience willing to listen.
No doubt as they prepared themselves the startup team thought of others –customers, partners, future employees, and of course investors. But the odds are better than not that they thought of them only in the most surface ways and as the lucky recipients of their entrepreneurial brilliance. Rarely if ever did they make the simple move of trying to see their idea through someone else’s eyes.
And so, following a familiar outline, the meeting begins. The entrepreneur starts methodically walking through the Power Point, handouts, or whatever performance they’ve prepared. And that’s just how they see it, not as a mutual learning about what’s important to each side, or how each side values whatever it is they value, but as a dog and pony show. Rather than see warning signs, they perceive the investor’s early and constant interruptions as annoyances. Rather than listen, really listen to the questions directed their way, the founder and his or her team too quickly answer as they’ve rehearsed, all the while missing the most important question behind all the others: What’s in it for me?
Time seems to speed up and run out. Barely into their pitch, the founder sees the investor gradually gathering up their files, looking at their phone, even heading for the door, causing the entrepreneur to exclaim some desperate version of that killer phrase. “But you don’t know how hard this was to do!” And it’s over.
It doesn’t even matter what “this” is to the entrepreneur – their incredible idea, the still tiny but hard-won customer base they’ve somehow been able to grab, the meteoric growth they know they can achieve if only…
Indeed, if only. Ask any professional investor or successful entrepreneur what these meetings are too often like and they’ll tell you a version of what you’ve just read. Trouble is, most entrepreneurs never ask. They’re too busy working unbelievably hard on what they do to pause and consider value as seen through the eyes of those they ought to be doing it for. And so one more great idea bites the dust. End of story.