One of the hardest things to do as an entrepreneur is to have a reasonable expectation. Often you end up thinking one of three things: 1) this is going to be amazing (ie I’ll get 100,000 downloads, execute multiple biz dev agreements, will close a round of funding); 2) this will never work and is doomed for failure; or 3) I have no idea what will happen. The problem with limiting yourself to these three outlooks is that you are missing the range of likely outcomes that actually inform strategy and tactics. For every action will have an outcome no matter what. Something WILL happen. Prediction is simple in hindsight, but true learning comes from making a concrete prediction BEFORE you know the outcome.
Taking Meetings
Remember that moment when you were hit by the brilliance of your novel idea to change the world? You wanted to share it with everyone? So you started to set up meetings with all of the smart, wealthy, well-connected people you knew? And how did those meetings go? My guess is, it went something like this: “Very interesting. What about these [insert risks and potential pitfalls]? But I do agree that [insert potential benefits]. Well, good luck and keep me posted. And definitely let me know once you’ve [built the product/made a sale/inked a deal/raised a round] and gotten traction.” The reason these meetings were generic and vague and never seemed to produce anything tangible is that you likely had no realistic expectation about their outcome. In your enthusiasm to discuss your idea, you may not have asked these critical questions: what do I want from this person? what can they give me? what constraints prevent them from giving it to me? if they can’t give it to me, do they know someone who can? will they introduce me?
Similarly, when speaking to someone with specific expertise in what you’re doing, you should always have a hypothesis going into it. For instance, a close friend of mine is a medical resident interested in entrepreneurship. He got an introduction to a guy who went from residency to startup world, to founding his own companies to investing his own capital. The perfect contact! But what I told him was, if he doesn’t have a specific viewpoint before going into this meeting, then everything this guy tells him will be “right” and my friend can’t start the learning process of fixing his incorrect assumptions. This meeting is an opportunity to make mistakes and learn from him. To articulate a viewpoint that may well turn out to be dead wrong. But though he’ll feel sheepish when he completely inaccurately describes his perception of, say, the investment process, he’ll never make the same mistake again in future conversations. Because by forcing himself to articulate a set of views PRIOR to the meeting, he is guaranteed to better refine them for future meetings, of which there will be many. As my brilliant economics teacher told us, “I can tell you the right answer, but it’s only by diligently convincing yourself of all of the wrong answers that you will truly understand it.”
Predicting your launch
Here’s a nice piece about the day after you receive coverage in TechCrunch. It outlines that young entrepreneur’s disconnect between expectations and reality. We, as a team, had this problem early on. We’d say, “How many users are we going to get from PR.” And our answer was, “Well, there’s really no way to know until we do it.” That’s certainly true. There is no way to know. But certainly we have to have an EXPECTATION. Let’s say we expect only 15 people to show up. If we need 15,000 to have a successful launch and a viable business, then we better get back to the drawing board on what tactics might get us there. But if we expect it to be 15,000 and it turns out only to drive 15, then knowing that we were wildly off in our prediction will help us reevaluate our current plan (ie, get coverage in TechCrunch and Mashable and then put feet on desk and pop champagne may not be the right answer). So of course you will never be able to accurately predict the outcome - but you have to believe SOMETHING! Otherwise, why are you doing it in the first place?
Raising Capital
We all know it’s hard to raise capital and it takes a long time. But we also believe that, because we may be lucky enough to know a few millionaires or billionaires, that we don’t have to worry about the “traditional” fundraising process. We simply need to refine our idea and plan to near perfection and then, along with our inherent character, present it to this rich guy who has “known me all my life” and wait for the check to clear. The problem is, this is an unrealistic expectation. I often hear from friends that they have meetings with the one or two “whales” in their networks. It’s an exploratory meeting where they get lots of great advice, challenges on their core idea, and promises of future help and introductions. I ask them, “So, did you ask them if they would invest in you?” Invariably the answer is, “Oh no. Not yet. I’m not ready to do that. I have to work on my plan/product/thesis before I bring up that part of the discussion.” The problem with that thinking is that it ASSUMES that future investment hinges on having the idea ironed out and in a position where capital is the only barrier to execution; and that, furthermore, your relationship with this person, and how well they know you, will cement the investment. However, remember that this person is more than a pile of money. The reason you ask them, that day, if the would invest in YOU (not the half-baked idea, which they will evaluate at some point in the future on its investment merits) is that they may surprise you with their answer. They may say, “Oh, my money is locked in a trust that I have to get the judge to approve allocations from because otherwise my ex-wife will bring me to court. So, no, I don’t invest in early stage ideas.” Or “I love you, but I only invest in real estate since that’s all I understand.” Or “Perhaps, but I invest bi-annually, so ask me again in June because I’m done with allocations for the year.” The point is, who knows what their specific constraints are unless you ask? By determining that as early as possible, you can modify your story, timing and asks with plenty of time to spare.
Conclusion
Start-up life can be exhausting because of its inherent unpredictability. There are so many variables and so many unknowns that the futility of the process is enough to stop anyone from pulling numbers out of thin air. But the more disciplined you are at taking a specific view and then being comfortable being proven dead wrong - even if it’s by someone you want nothing more to impress - the more learning you’ll get early in the game. Because I promise that if you are talking to a well-respected VC, whom your uncle went out of his way to connect you with, and you brashly tell him that you’ll make 1.5x his money within two years, you’ll never, ever make that mistake again.
Avi Levine is co-founder and CEO of PhilterIt, a Google Chrome extension for Gmail. You can find him on Twitter @alevine0.
