VCs' Nastiest Interview Trick
Almost every day, I meet and speak with young entrepreneurs trying to get their businesses off the ground. I’m willing to give almost anyone a quick chance to explain what he or she is trying to do. Anything that you can’t explain about your business in 10 minutes really isn’t worth saying.
That means you need to focus. One of the nastiest things venture guys like to do to “newbies” is to ask them how big their businesses can be and how many opportunities and directions there are to build the businesses. And when they charge off into the future and start building their castles in the sky, the VCs look at one another, roll their eyes, and say to themselves, “Boy, this guy’s not focused at all.”
After 50 years of doing this, I can make these initial decisions with a high degree of accuracy in a matter of minutes. My guess is that VCs do the same. Yes, I will miss out on a few real opportunities and turn down some very talented people, but, by and large, especially because we’re all dealing with limited time and scarce resources, the system works pretty well.
Here’s why. It’s not that I’m so perceptive and smart; it’s that way too many people make it too easy to turn them down because they’re so unprepared. They can’t take their best shot, even when the opportunity is there, because they don’t understand how to make the most of that short window of time. As we used to say in the music industry, it’s easy to tell when a song is bad, but only the public and the market decide what sells.
It’s the same story when an entrepreneur is describing a new business. If you’re all over the place; if you’re trying to be all things to too many people; if your story is so complicated that it’s hard to follow; or if you’ve got a solution in search of a problem, it’s going to be pretty easy to say, “Thanks, but no thanks.” You’ve got one shot, one moment, and one opportunity to get right to the heart of the matter. The most crucial part of the entire process is to tell a simple story.
How simple? Your story should answer three questions. These are the same questions that will inform and guide your company for its entire existence. The answers are every bit as significant for each and every employee as they are for investors. So you need to get them right at the outset. The answers might change over time, but the fundamental questions never do. Here they are:
Who Are We?
Management and team members’ relevant experience and credentials
Where Are We Going?
Short- and long-term objectives and goals. Tell me about your milestones (in brief) and when you plan to meet them.
What problem is being addressed and solved-–time, money, productivity, status?
You’ve got to be a ruthless editor. The hardest choices are about what to leave out, not what to include. Detail and elaboration are forms of pollution. Cut to the quick. And stick to your story.
It’s an old but important trick from debate class: Tell the story you need to tell, be relentless, stay on point, keep it short, and make the limited time that you have count. Everything else can come later. Bottom line: Tell a simple story.
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HOWARD TULLMAN | Columnist
Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman