[WISE GUY]
^ ^ g BY GUV KAWA5AKI
LIES, LIES, LIES!
IN THE QUEST FOR CAPITAL, MANY ENTREPRENEURS STRETCH THE TRUTH. ONE VENTURE CAPITALIST CALLS THEM OUT.
AS A VENTURE Capitalist, I get pitched
dozens of times every year, and
every pitch contains at least three
or four of the ties below. Are you
guilty?
l.''OUR PROJECTIONS ARE CONSERVA-
TIVE." An entrepreneur's projec-
tions are never conservative. If
they were, they would he $o. I
have never seen an entreprenexir
achieve even their most conser-
vative projections. As a rule of
thumb, when I see a projection,
I add one year to delivery time
and multiply by 0.1.
$$$
Forecast!
= Projections
c/a
WOW!!
34 ENTREPRENEUR MARCH 200?
^ ^ r
2."[BIG-NAME RESEARCH FIRM) SAYS 6 . " N O ONE ELSE CAN DO WHAT WE'RE
OUR MARKET WILL BE $ 5 0 BILLION IN DOING." The only thing worse
2010." Even if the product is bar than cluelessness and the lack
mitzvah planning software, every of a market is arrogance.
entrepreneur claims the market ?."HURRY, BECAUSE
potential is tens of billions. Do SEVERAL OTHER VC
yourself a favor: Remove any ref- FIRMSARE INTERESTED.'* The only thing
erence to market size estimates. There are maybe
3. "(BIG-NAME COMPANY) IS GOING TO 100 entrepreneurs worse than
SIGN OUR PURCHASE ORDER NEXT WEEK " in the world who
Only play this card after the pur- can make this claim. cluelessness
chase order is signed, because The fact that you're
no investor will fall for this one. reading this article and the lOCk Of
4 . "KEY EMPLOYEES ARE SET TO JOIN US means you're not
AS SOON AS WE GET f UNOEO." W h e n a one of them. a market is
venture capitalist 6.''0RACLEISTD0BIG/
calls these key em- DUMB/SLOW TO BE A arrogance.
ployees, he usu- THREATTO US." T h e r e ' s
ally gets the fol-
lowing response:
"I recall meeting
him, but I cer-
tainly didn't say I
a reason Larry Ellison is where
he is, and it's not that he's big,
dumb and slow. Entrepreneurs
who utter this lie look naive at
best, stupid at worst.
would leave my g.''WE HAVE A PROVEN MANAGEMENT
$25O,ooo-a-year job TEAM." If you were that proven, you
to join his com- wouldn't be asking for money. A
pany." If key em- better strategy: State that you have
ployees are ready relevant experience, you'll do wliat-
to rock 'n' roll, have ever it takes to succeed, you'll
them call the ven- surround yourself with proven
ture capitalist and advisors and you'll step aside
confirm it. whenever it becomes necessary.
5."NO ONE ELSE IS 1 0 . "ALL WE HAVE TO 0 0 IS GET 1 PER-
DOING WHAT WE'RE CENT OFTHE MARKET." First, n o venture
DOING." Weil, either capitalist is interested in a com-
there's no market pany that wants just l percent of
for it, or you're so a market. Second, it's not easy to
clueless that you get even 1 percent, so you look
can't use Google silly pretending it is. Instead, show
to figure out you an appreciation ofthe difficulty
have competition. of building a successful company.
Neither a lack of
a market nor clue- tiri"/s GUY KAWASAKI'S
mantra. He isjbtmer chief evangelist far Apple
lessness is con- Inc.. co-founder of VC prm Garage Technology
ducive to secur- Ventures and author of eight books—rnost
ing an investment.
recent/n The Art of the Start Wsjf te btoj of htfp//
q uykawasaki. corn.