Entrepreneur Office Hours - Issue #91
Is it "lying" or is it "controlling the narrative"?
If you’ve been reading this newsletter for a while, you know I tend to believe entrepreneurship has lots more “gray area” than “black and white.” By that I mean the startup world doesn’t have many incontrovertible truths. Instead, most things are either a matter of perspective and/or situational.
This issue cropped up again in response to one of my articles from last week where I suggested entrepreneurs learn to leave out certain information in their fundraising pitches in order to encourage investors to ask questions they’d be well-prepared to answer.
Some people loved the strategy and thought it was the best fundraising advice they’d ever read. Other people wondered if it was too manipulative and a form of lying. I got more than a few questions about it in my email, and, as you’ll see, I’ve tried to address them in this issue’s Q&A.
But before you get to that, be sure to spend a few minutes with my guest on this week’s episode of Web Masters. It’s the incredible Rand Fishkin, founder of MOZ and perhaps the most important voice in the history of search engine optimization (SEO). If SEO isn’t your thing, don’t worry. We cover lots more than that. Rand discusses some of the mental health challenges he faced running his company, and I’m betting his thoughts will provide some helpful perspective on your entrepreneurial journey.
Most founders treat their startups’ competitors like their enemies, but is that really the best strategy? Not according the founder of Drupal.
How do you get your website listed at the top of Google? It's a simple question with an answer so difficult and complex that Rand Fishkin built an enormous company around it. Hear the story of MOZ, the world's premier SEO company, on Web Masters.
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…or search “Web Masters” wherever you listen to your favorite podcasts.
FROM THE ARCHIVES…
I’ve never been a huge fan of asking for investor intros. I tend to find that introducing myself is more efficient and, ultimately, more successful. But, if you have to ask for an investor intro, at least be sure you’re asking the right way.
Office Hours Q&A
Loved your article about not being too detailed in your pitches or trying to explain everything so investors wind up asking questions you’re well prepared for and have great answers to. I thought it was one of the most clever and creative fundraising strategies I’d ever seen.
I shared it with a friend of mine who is also an entrepreneur, and he had a different take. He said it felt too much like lying.
What are your thoughts on that? Is intentionally leaving information out of your pitch to force investors to ask certain questions actually a form of lying?
Well… that’s a loaded question.
Personally, I feel like the word “lying” is too harsh. It’s not lying. The strategy simply identifies the fundamental structure of a pitch and leans into it. By that I mean no pitch can ever be entirely comprehensive. You’re always going to leave out some information. And investors are always going to ask questions at the ends of pitches. So why fight that structure? Make life easier for everyone by enabling the Q&A to be as productive as possible.
At least, that’s the argument I’m making in the article. By trying to include every last detail in my pitches, the Q&A sessions at the ends of my pitches had become terrible time wasters filled with irrelevant questions. That wasn’t good for anyone. At the very least, how was wasting investors’ time better than setting us up to engage in a fruitful conversation where they could continue learning more about my company in a constructive and familiar way?
Rather than using the word “lying,” I might be willing to use an alternative and somewhat pejorative word: “manipulative.” The strategy I described is, indeed, manipulative. But, negative connotations aside, fundraising is an inherently manipulative process. After all, fundraising consists of entrepreneurs trying to convince investors to give lots of money to highly risky ventures. Theoretically, nobody should invest money in startups. Statistically, they’re bad bets. I’d argue the only way to convince anyone to invest in a startup is by manipulating them to some extent.
To be fair, you could read everything I’ve written so far and argue I’m inventing justifications for my obviously deceitful actions. Maybe you’re right. Maybe I am. Maybe I’ve invented a way to make myself feel better about lying.
But that doesn’t matter. My morals and ethics don’t have to be your morals and ethics or your friend’s morals and ethics.
The important question is whether or not you believe the strategy I’ve shared is a form of lying and whether or not you want to use it? If you believe it’s lying, then you definitely shouldn’t take my advice. But if, like me, you believe the Q&A session at the end of a fundraising pitch is a core part of a pitch itself, then you also believe your job, as the fundraising entrepreneur, is to be sure the Q&A session continues making your venture look like a compelling investment. In that case, the advice I shared is a strategy that might help.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!