As entrepreneurs, it’s natural to focus on cash and cash flow, but we need to treat our precious time with the same respect. Your bank can’t give you a line-of-credit on time, but haven’t we all wished it were possible?
A conversation with a potential investor really brought this point home to me. I was raising angel money, and this investor wanted to know who was already in the deal. His response to each name was either, “I have time for him” or “I don’t have time for him.” I realized he truly understood the value of time, and that he wouldn’t squander mine. I liked him instantly.
The truth is, there are time robbers out there everywhere, especially when you are trying to raise money. You can have meeting after meeting with these people, and they will chew up your precious time and drain your energy as well. This is doubly true if you are working on something exciting and new, because everyone wants to get close to the action.
The best way to safeguard your time is simply to start asking direct questions. This is hard. It can seem rude. And it helps to know what you’re looking for. Here are three common ways that investors and even customers can eat up your time – if you’re not careful.
1. Using you for market research. Maybe you have something interesting in its own right, but maybe your product or company is even more interesting because it competes with a technology or business in an investor’s portfolio. How do you know if you are educating the competition? The only way is to find out about the investor’s other investments. In some cases, you can look online, and in others you need to ask. This is where having a solid network comes in handy.
2. Holding pitch meetings even when there's no money to be had. The old adage is that venture capitalists never say “no” directly. They also don’t announce when they can no longer invest, for fear that their deal flow will dry up. They need to always seem like they’re in the game. So they’ll listen to pitches even when they have nothing to offer, except feedback on your pitch (Admittedly, this can sometimes be useful). One of my early mentors was a venture capitalist who told me to always ask the following questions, then do the math and ask myself why I was pitching:
3. Trying to bring on suppliers without a budget to pay them. Perhaps even more prickly than asking an investor about the health of their fund is asking a company about their budget, particularly if it is a start-up. Being in high-tech, in Silicon Valley, puts us squarely in these conversations all the time. Entrepreneurs are optimists. I’ve met plenty who will tell me, month after month, that they have a term sheet and they’re about to close a round of investment. Then they will propose that you start working for equity, not for cash. It’s a slippery slope. Wear rubber-soled shoes.
For the next four weeks, try keeping track of your hours, just as if you were working at a law firm and tracking billable time. The results can be illuminating and frightening at the same time – and can motivate you to focus on spending your time where it will be most productive.