Entrepreneur Office Hours - Issue #111
Lawsuits aren't always about right and wrong
I’ll never forget talking with one of my earliest business mentors as he was returning to his office after spending the day in court. His company we being sued for an amount of money that, at the time, seemed unfathomable to me, and I asked how he was holding up. His response surprised me. He said:
“Aaron, one thing you’ll learn as you get further into your business career is that, at some point, you’re going to get sued. Just remember, the only companies that get sued are the companies that have built something valuable.”
At the time, I remember thinking it was profound wisdom. In retrospect, I’m not so sure. It actually seems like a problematic thing to tell a young entrepreneur for a number of reasons, but I think the point he was trying to make — or at least the one I want to believe he was making — is that sometimes lawsuits aren’t about right and wrong. Sometimes, lawsuits are a business strategy companies deploy against each other as they jokey for position in a market.
That was certainly the case for the story I’ve featured on this week’s episode of Web Masters. It’s the story of MP3.com, which, for a moment, was the most popular music website in the world. But that popularity was also its downfall as the music industry decided to protect themselves by suing MP3.com into oblivion.
Were they right? Were they wrong? Listen to the story and decide for yourself!
Even when startups get big, it doesn’t mean they’re safe from their competition… especially if that competition has lots of power and money.
Hard as it may be to remember now, there was a time when every song we wanted to listen to wasn’t available to stream instantly. An entrepreneur named Michael Robertson tried to change that when he built MP3.com. It almost worked until the ruthless recording industry decided to shut him down.
Get the full story on this week's episode of Web Masters. Listen now on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
FROM THE ARCHIVES…
Sure, all entrepreneurs are told to practice their elevator pitches, but the one time I had to give a pitch to a VC inside an actual elevator, the experience was wildly different than what I’d expected.
Office Hours Q&A
I’m ready to start fundraising for my startup, but I’ve never had to fundraise before and I really have no idea where to begin. I especially don’t know any investors or how to meet them, and I don’t live in an area with lots of investors.
If you were just getting started fundraising, what would be your first steps? I understand it’s a long process, and I’m prepared to do the work. But I would really appreciate some guidance on how to begin.
The first question you should start with is: “Do you actually need to raise capital?”
I mention this because lots of entrepreneurs think fundraising is a necessary part of building a startup, but it really isn’t. If bootstrapping is possible, it’s usually a better option. At the very least, you’ll want to bootstrap as long as you can in order to give yourself as much leverage as possible when you do start fundraising.
If you’re absolutely certain you need to fundraise, the first step is – believe it or not – meeting people.
Wherever you live, I guarantee there are people who can either invest or introduce you to people who can invest. Either way, finding those people requires networking.
Figure out where and when your local startup and/or business community gathers and make sure you join those meetings. It’s probably going to be uncomfortable, but that’s OK. Each person you meet will teach you something valuable (even if the valuable thing is “don’t waste your time talking to people like that”) and get you one step closer to the people you’re looking for. Plus, talking with people and networking will give you opportunities to practice describing your startup in ways that’ll make sense to people hearing about it for the first time.
In addition to local networking, depending on the stage of your startup, you may want to begin the process of reaching out to investors in other places. Luckily, we live in a world where contacting people around the world is as easy as sending an email.
I wouldn’t start emailing investors outside of your area until after you’ve spent a few months networking locally. That’s mostly because you’ll want the practice of talking with people about your startup and learning to pitch. However, once you feel comfortable explaining the value proposition of what you’re building, you can start researching investors online, finding ones that are a good fit for the type, stage, and location of your company, and then sending emails.
I’ve written extensively on how to email investors (scroll through my archives on Medium). Reach out, arrange virtual meetings, and start pitching. The first few pitches probably won’t go well, but that’s OK. Each conversation you have will be an opportunity to learn, and the more you practice the better you’ll get.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!