The only way to truly prove that a business idea is good is to launch it and make it successful. What is much, much easier is proving that a business idea is a bad one.
“Do you think investors are stupid?”
You would not believe how many times I have posed this question to my clients. And every time they talk about approaching investors with “quick wins” and meaningless metrics, I am forced to ask them again.
“Those times when you get up early and you work hard, those times when you stay up late and you work hard, those times when you don’t feel like working, you’re too tired, you don’t want to push yourself, but you do it anyway. That is actually the dream.” – Kobe Bryant
This week I’m handing off the blog to a good friend and client of mine, Pascal Wagner, to provide a case study for one of my coaching aphorisms, The 1-10-100 Process. Pascal’s experience provides additional insight into what happens when my clients put my advice to work.
Investors are looking for a solid framework of how your company will grow and succeed, and they want to understand all of the assumptions underpinning that framework. It’s called The 1-10-100 Process, and it meets all the same criteria as a five-year projection, without the arbitrary time variable.
You’ve maybe heard the terms “dumb money” and “smart money.” If this is your first rodeo, “dumb money” refers to capital from investors who provide nothing but the cash, ie. they have no experience or connections in your industry, while “smart money” comes from investors who can offer you their rolodex and years of experience in addition to their funds.
Unfortunately, smart money is by and large a myth.