The difficulty in giving honest feedback to entrepreneurs

I met a cofounder-team last week at the Microsoft BizSpark event. They were fairly young, and were working on their first startup, after 5+ years of working in a large corporate environment. They were both a year into their startup and were looking to raise funds (seed round). They were focused on the consumer Internet space (are now considering pivoting to B2B instead) and have been building a version of their webservice.

They definitely caught me at a “not so opportune time”. Actually, a friend pulled me in adhoc after a bad call (bugs in our software, customers complaining, etc. you get the point) to introduce me to them and ask me for feedback.

The next 30 min was painful for us all is the best way to say it. After the 5th time of me asking what problem they were trying to solve and if that was a real problem, I think I had a breakdown.

I tore into them for the next 15 min with both my friend and another individual sitting next to them. I claimed they had no idea what problem they were trying to solve, who their target audience was, what their product actually did that any of 20 other startups did not do already and why I would not use the product even though it was meant for folks like me.

They were patient, gave me a hearing, but I you could cut the tension with a knife. I felt awful 2 hours later. I had forgotten the cardinal sin I kept repeating to others they should avoid doing.

If you cant give constructive feedback, you are a moron, not an investor. If an “investor” does not help you with a next step, he is a moron. Period.

I had become a moron. The very thing I had detested in many other investors (not all, there are several exceptions).

You know the type. They kill every idea and suck your soul dry. They dont think your idea is good, they dont think you can pull it of, they dont believe you have what it takes.

I used to believe this was necessary tough love. It is absolute B.S.

What I did was inexcusable. It bordered on killing the spirit of another individual, which no person has the right to do. Even if they are an investor.

So, what should you as an entrepreneur do when you meet this type of investor?

First off, try some mind-relaxation techniques.

Second, give them the benefit of doubt. You probably got them on a bad day/week/month.

Third, ask the question:

“How would you go about trying to solve this”?

Put the ball on their court to give you a SINGLE next step that they (the smarter ones) would take to get you further along on your path.

One last point. Being an investor, you meet many smart, talented individuals daily and its difficult to not do some form of “pattern matching”. So, if anyone tears into your idea, remember at that back of your mind, you are likely doing something (either right or wrong) and its worth doing some more digging.

The worst feedback to get when you are pitching your idea/product/startup is no feedback.

P.S. I did meet the team this week and offered some (my version of the story) constructive ideas they could possibly work on, and was trying to help as much as I could. That does not make me feel better about what I did last week, but its good karma to erase the bad.

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18 thoughts on “The difficulty in giving honest feedback to entrepreneurs”

  1. Hi: Thats brutally honest – and very admirable. Clearly you are comfortable with introspection and taking a good hard look within when required. Thats a pretty awesome quality to have.

    You are right – no one has all the answers, and no one can predict which idea may work and which will not. To assume one has the answers is the worst form of pomposity that usually plagues those that succeed in the generally accepted view of things.

    Sure, as a seasoned investor – one may come across inexperienced folks that do have gaping holes in their theories, assumptions, strategies – it still does not mean that one cannot be inclusive, generous and nurturing in highlighting the same. It takes refinement and an indomitable strength to have the tolerance to take people along, to sometimes indulge those that are setting out on their journey, and take a big-hearted approach that’s warm and inclusive – thats how those that succeed can pay it back or pay it forward. Karma balancing in its subtlest form.

    Have a good day 🙂

    1. Sangeetha
      Thank you very much for the always consistent, thoughtful and interesting comments. You have helped me think about many of my posts differently than I would have after your comment.

  2. Mukund : It must have been a really bad day to get you off your stride. That apart, I wonder if it was your tone , rather than the substance of what you said. Being in the marketing side of the game, I have seen that this lack of clarity can be the kiss of death.

    1. Rashmi you are probably right. I dont think I would have changed the feedback but if I had presented it in a better tone and been more thoughtful, it would not have appeared condescending.

  3. Mukund, you had me with your P.S. else I would have simply treated you the same way as I feel for the investor fraternity. My disbelief in investor would have become even stronger as far as their attitude towards the wanna be entrepreneurs is concerned, had you not mentioned things in your P.S.

    Like every entrepreneur, even I have a story/ experience to tell. I did have few conversations with investors. The biggest problem that I have found so far (after talking to 3 investors), was that they feel that they are doing a favour in investing their money on people like us, which is not right. Rather I feel they are the one who are always on the look out for opportunities from people like us. If the investors were too good (Here i am talking specifically about invention and integration), too creative and too innovative, they would have been busy inventing instead of putting their bet on someone’s invention. Please do not feel bad or take it personally, this is nothing against the fraternity of investors, this is a people specific comment, not directed towards you (for sure).

    Moving on, I was rather approached by four investors (never approached anyone so far), had a dialogue over the phone, three out of four were more inclined towards telling me that what you are trying to achieve is not feasible (one was very kind, I am sure like you, but he fell ill and of-course never heard anything from him after his surgery), my question to them was, before you approached me, did you go through the profile that I shared on LinkedIn/ an informative flyer kind that I had put onto my profile which gives a bit of brief of my concept? They said yes. My next question was, what made you come to me when you read the flyer and went through my profile? They said we found your idea to be really amazing, workable, sell-able, profitable and unique. To take the credit away from me, they said we have been thinking in the same line from last 3 years but never could implement it. My third question was, the same concept which attracted you towards talking to me, how come you now find it “Not Feasible” and “Not so brilliant idea anymore”, they as usual did not have answer. I then told them, just because you couldn’t implemented it in all these four years, you think the whole world is full of incompetent people? They simply got the drift at that very moment and decided to call off the conference call with a comment, first you get 100 customers, serve them, become the reason of their smiles, make profit, retain and sustain all the 100 customers for a year, show us the picture after one year, walk into our office and we will invest any number that you expect from us. Before they could hang up on me, my answer to them was, after I am able to do what you asked me, which I would ultimately, do you really think I would come to you? The call ended….

    Sorry for making you read so much, the whole point that I wanted to bring onto the table was, when a person who wish to become an entrepreneur, who sacrificed all of the lavishing life that he had while being on the job and decide to move on from a secure to an insecure life, you get the idea about that individual’s intention immediately. You immediately realises that, if he can sacrifice whatever he has today and is so very focused and hopelessly and crazily in love with what he wish to achieve, and is so very passionate about the whole thing, he surely can be an asset if not a great entrepreneur. We human have seen many movies and watched many interviews, and we have developed a tendency that all you need a light bulb on your head (an idea), when you go onto the real world and try to get that idea turning into reality, you realise it that, oh, it wasn’t enough. When a guy decide to become an entrepreneur, no matter how much experience he carries with himself, he still has to start from the scratch. He still has to learn. But Investors feel that the moment they are approached, they expect people to be ready with what you want to see in them, instead what you can adopt from them. The guy has invented something and had courage to reach to this level, his efforts should be appreciated. I do not wish to see this terminology called “investor” according to me they should be called “mentor”, and if you are not good at mentoring, you are not a good investor.

    All you (as a mentor) have to do is to utilise those skills, may be their idea is not as good as you would have expected it to be, nurture them, guide them in such a way that the relationship goes to the next level from investor to mentor. And even if you feel that there is no room for improvement in their idea and it sucks big time, but you see the quality in that individual, you use their skills for the start-up that you are already running and I am sure, struggling too (because no matter how good a project manager you are, you are bound to have teething problem), offer them to provide their services.

    Let me sum this up by saying it again, you had me on your P.S. and with that P.S., you have earned yourself all the respect at least from me and from and I am sure wanna be entrepreneur fraternity too.

    Extremely sorry, I do not blog or never ever put my comments anywhere, but after reading your post, I just couldn’t stop myself. Please pardon my long comment.

    Warm Regards
    Akhilesh

    1. Akhilesh
      Thank you for the personal story. Your comments were spot on with the indifference that many entrepreneurs feel towards investors. I dont think anyone is doing anyone a favor in the entrepreneur community. Many investors want a great return on their money, or fame, or want to give back in some way. Even if they are just giving back, its important for them to realize the story from the entrepreneurs point of view. Thanks again for your deliberate commentary.

  4. As an entrepreneur who has faced this situation several times, this post made me smile. It makes me feel really good to know that there are investors out there like you who realise that negative feedback can be terrible thing for a person who is building something by putting their life and soul into it.

    A side thought though, as an entrepreneur we should get used to the nay saying, especially in India. Its not just investors, but almost every third person tries to say something borderline negative – but that’s just part of the game I think.

    Nice post.

  5. And I would like to add another point: It is ok that as an investor you are no inclined to invest in a product. (For example, being an IT guy, you do not want to invest in food business or even an IT guy to an IT product). That’s absolutely fine. But there is no need to say negative about the product / business to other investors.

    And, don’t waste anyone’s time (Applicable to both – investors + startup).

  6. Great stuff Mukund!
    “If you cant give constructive feedback, you are a moron, not an investor. If an “investor” does not help you with a next step, he is a moron. Period…….You know the type. They kill every idea and suck your soul dry. They dont think your idea is good, they dont think you can pull it of, they dont believe you have what it takes.

    I used to believe this was necessary tough love. It is absolute B.S.

    What I did was inexcusable. It bordered on killing the spirit of another individual, which no person has the right to do. Even if they are an investor.”

    Advice, Not just for an investor but for every manager, mentor, advisor!

  7. Hi mukund so ultimately you are a moronic investor or interesting moron?..
    Very insightful. Pause ,think, rewind and review we ought to do everyday.
    We unlearn every day if we are prepared to do so……

  8. Mukund,
    First of all – hard to actually accept one’s fault. You have the courage.
    But then, some times acting like a moron is the best way to provoke wannabe entrepreneur to transition him/her to a serious entrepreneur.

    Few weeks back – we spoke- however your nice words actually did not help much :). May be you needed to be brutally honest with me. Some times – if EQ is high – one could tend to be rude in words and not actions and I dont think any one need to take it personally.

    thanks
    sudhi

  9. Not siding with either here – but as an entrepreneur turned investor I thought some of you may value a few tips.

    Unfortunately investors see sooooo many presentations that they are unable to grasp the vast majority and attention spans are extremely short. Entrepreneurs should focus on the following points while they still have the investor’s attention.

    Fundamentally the four questions investors need to see addressed are:

    – What is the problem you are addressing?
    – What is the proposed solution?
    – How will it make money and from whom?
    – Why YOU can succeed over others?

    Additionally:
    – How will you know you have succeeded or not? i.e Metrics?
    – How much money will it take to achieve these metrics?
    – Who else is trying to do this – basically tells them you aren’t blind to competition.

    Whenever I see a well constructed presentation of a business plan (and all of this can be in 3-4 slides honestly) it immediately not just communicates the plan, but it also communicates clarity of thought & thoroughness in the entrepreneur(s).

    Investors make decisions on the basis of multiple meetings – persistence and perseverance are very important – relationships are built over multiple meetings, not one.

    Using a cricket analogy I would say this – “the key in the first meeting isn’t to score – its to NOT get out”. Investors will bowl a number of out-swingers at you – but once you see off the new ball, it gets a lot easier to score.

    Last but not least, an entrepreneur/investor relationship is a partnership – you should use the opportunity to ask as many questions, and interview the investors as they ask you. Investing in your company is a privilege you are offering the investor – and you should be evaluating them too. If they get pissed off – that tells you something important, IGNORE THEM!

    Good luck!

    Sanjay Swamy
    Managing Partner
    AngelPrime

    1. Sanjay my point was not to dump on investors. The only point I was making is there’s a nice way to help an entrepreneur and a bad way to make her feel miserable. Don’t make them ever feel bad. It’s not respectful.

  10. @Sanjay – Thanks for the tip. I am sure each entrepreneur understands these questions and trust me they try their level best to answer without being asked. Because these are the questions which motivates them to build a concept else why someone would try to reinvent the wheel or invent something which wont add value at all. If these questions never existed, they wouldn’t have thought about inventing or putting a concept all together. All of the information that investors seek, would be somewhere in those 40 pages long business plan that entrepreneurs would submit. But unfortunately the debut match is always the most difficult one, no matter how good you might have played in Ranji Trophy or Daleep Trophy, playing an International match that too in front of huge crowed who wouldn’t feel shy in screaming boooo and top it all opening the innings especially when the bowling side has names like Holding, Marshall, Peterson. I know investors look at thousands of such applications and we need to give them a bit of discount. But if investors can make it absolutely clear before even having a first dialogue/ meeting, that answer these 7 questions for me in not more than 3 pages first then we would see whether your application would even deserve further dialogue or not. This would help both parties and a lot of time can be saved.

    Mukund’s post was not about how entrepreneur should prepare themselves, it was a very honest and humble attempt of Mukund to make the world aware how one should not loose temper like doctor for patient, same relation is between entrepreneur and investors, I prefer calling them mentor.

    I am sorry Mukund for polluting your blog with so much of text from my side.

  11. Somewhat tangential musing:

    Do you think the likelihood of any meeting-type-interaction going well (where ‘well’ is defined by the context), is determined even before the meeting begins?

    I have a sense that the actual content of the meeting or even the setting, have (proportionately) little bearing on the outcome. If I had the perfect morning coffee or a colossal bowel movement or both, it’s pretty much a given that any meetings till lunch will go well. (Assuming that the people I was meeting with, also had similar movements… er.. mornings).

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