I really like The Ultimate Cheat Sheet For Starting And Running Your Business, which was first published on TechCrunch last weekend. It’s a numbered list of James Altucher’s answers to 100 frequently asked questions about startups. I posted about this yesterday on gust.com in a post called Good Advice, Bad Advice, Land Mines on the Path to Heaven, selecting some good, bad and hilarious answers.
To be clear: I don’t recommend taking all of his answers as all true, best practices, or even all good advice. He notes up front that some of them might not apply to you, and he’s right. Some of them are (in my opinion) such bad advice that they apply to nobody I’ve ever known. But they are all worth reading. And the ones I’m including in this post seem very true to me.
Two of his 100 answers deal directly with how and how not to approach potential investors.
1. “What is the sign of an amateur?”
- Asking for an NDA.
- Trying to raise VC money before product or customers.
- Having fights with partners in the first year. Fire them or split before anything gets out of control.
- Worrying about dilution.
- Trying to get Mark Cuban to invest because ‘this would be great for the Dallas Mavericks.’
- Asking people you barely know to introduce you to Mark Cuban.
- Asking people for five minutes of their time. It’s never five minutes, so you are establishing yourself as a liar.
- Having a PowerPoint that doesn’t show me arbitrage. I need to know that there is a small chance there is a 100x return on money.
- Catch 22: showing people there’s a small chance there’s 100x return on their money. The secret of salesmanship is getting through the Catch 22.
- Rejecting a cash offer for your company when you have almost no revenues. Hello Friendster and Foursquare.
2. “What is the sign of a professional?”
- Going from bullshit product to services to product to SaaS product. (Corollary: the reverse is amateur hour).
- Cutting costs every day.
- Selling every day, every minute.
- When you have a billion in revenues, staying focused. When you have zero revenues, staying unfocused and coming up with new ideas every day.
- Saying “no” to people who are obvious losers.
- Saying “yes” to any meeting at all with someone who is an obvious winner.
- Knowing how to distinguish between winners and losers (subject of an entire other post but in your gut you know — trust me).
These are very good answers to two very real questions. And to conclude, because I did mention “hilarious” answers above, a couple answers that are probably true and certainly funny:
- Why didn’t the VC or customer call back after we met yesterday and it was great? They hate you.
- How long does it take to raise money? In a GREAT business, six months. In a mediocre business, infinity.