Working with founders and CEOs, like I do, I have the opportunity to hear a lot of complaints, a ton of blame, and a buttload of excuses.
Let me give you an example, there’s a founder working on a passion product. It’s a worthwhile project. It would benefit the world. It would improve the lives of a small percentage of humanity for a few short periods of their life. It’s an important problem. Yet, in the list of important problems, it falls behind a passel of priorities that would have an equally impactful effect on an order of magnitude larger population.
He didn’t factor in Market Priorities
Now this person can’t figure out why he can’t get anyone to fund his passion project. He has said it’s because he’s not an insider because he needs money to study the problem before he can prove there is a need for a solution. He believes there is only one path to market, and his chosen decision-makers “don’t get it.” “Don’t get it” is the standard excuse for founders with a flawed business plan.
When I dug into his plan, I found multiple issues with his business model. Let me count them.
- Go-to market plan – He identified the type of company to which he would sell his product but not a method to reach them.
- Go to market research – He couldn’t get anyone to tell him they needed the product or would pay for it.
- Unit Economics – He believed he could charge $19 for his product, meaning his lifetime value (LTV) for a client was $19. He had no clue what his Customer Acquistion Cost (CAC), or his Cost of Goods (GOG). My guess is he would lose $80 on each sale.
- Total Addressable Market (TAM) – His total addressable market in the US was $1.4 million.
- Investor Returns – His revenue plan showed he would be generating a total of $1.9 million in his 6th year after receiving an investment. I guess in six years, he’d have 100% of the market, and inflation would grow the TAM from $1.4 to $1.9, although demographics have the possible consumers in the market dropping.
I addressed all these and other issues with the founder. He listened, and then later, I heard him tell a panel that he hasn’t been able to raise money because:
- He’s not an insider
- Corporations don’t want to talk to him about his product
- Investors don’t get it
It was everyone’s fault! He was playing the victim.
Here’s the best coaching question I know for cases like this,
“If it wasn’t everyone elses fault, who’s fault would it be?”
This founder had a passion. What he didn’t have was an understanding of how startups work, the best path for his product to go to market, and the ability to pivot. Pivot to a different funding path, possibly a government program that saw the value of solving this problem. Pivot will try to interest NGOs that serve the market, which is the market that his product benefits.
There were three lessons from this tale of woe.
- Maybe people don’t “Get It” because it ain’t gettable.
- When the universe is telling you something, don’t simply listen, HEAR what it’s telling you! PIVOT!
- When you’re a founder… you can’t afford it to be everyone’s fault but yours.
Have you ever worked with an executive coach? Do you know what it feels like to work with someone who asks tough questions and works with you to tackle challenging issues? Try a complimentary coaching session. Schedule yours today.
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