So my last post was on calling VC’s on their bullshit, now i need to turn the table on myself and call entrepreneurs on our own bullshit.
FIRST OFF: VCs get screwed by entrepreneurs more than the VC’s screw entrepreneurs and thus resulting in my last post. My last post was meant to spark discussion not be an end all be all in itself.
The biggest problem with entrepreneurs is a lot of us are arrogant and delusional and think we can manage when we can’t. Additionally, a lot of entrepreneurs let the money/power get to their heads and they go crazy and start screwing everyone.
There are more failures then successes in a venture portfolio. Entrepreneurs primarily get screwed on the successes so who gets screwed on the failures? Everyone.
The main point of my last few posts is to stir up discussion and hopefully get people to be a little more transparent and honest. If we can be honest with each other about our good/bad/strengths/weaknesses then its far more likely to be able to work well today. I’m just asking everyone to call themselves on their own BS 
I try to call myself on mine all the time and ask everyone to call me on it too.
1) Your valuation doesn’t matter - it’s better to be honest, say the amount of cash you need, what you will use it for - and then just ask the investor to justify his valuation. The investor is not going to believe your projections anyway.
2) Your business plan is NOT a sales document - it is an internal plan and support document. If it’s full of flowery bullshit ergo you are full of flowery bullshit. Your business plan should break down your business in very simple terms and inside you should play devil’s advocate with yourself. I want to see the RISKS section to see if you are grounded in reality. Also, my countering criticisms in the plan - you can be several chess moves ahead of investors as you will have taken out a lot of steam from their punches and can negotiate more evenly.
3) You are selling yourself first, your team second, your idea third and your execution fourth. Most people forget about the first 2. The odds are there are 50 people out there with the same ideas as you - therefore the reason the investor is investing is you and your team.
4) Have either a finished product or at least one member of your team with real related top level (funded startup or public company) experience. If you have a napkin idea and you’re a plumber you’re not getting any investors - unless they are fools.
5) If your presentation is boring - you suck. You are selling yourself - if you can’t sell yourself well, odds are the investors are asleep.
6) If you say “I just need cash” then you better be willing to step aside as CEO. If you have to ask for cash there’s a greater than 50% chance you shouldn’t be CEO. Unless of course you’ve bootstrapped it to a product and need cash for a very specific reason. I’m not saying you are definitely terrible but if you have to ask for investors - then you are clearly not a big swinging dick - or you wouldn’t need investors ergo have some humility. Personally, I will not work with arrogant delusional assholes. (unless of course that delusional asshole is myself, in which case i am truly screwed)
7) Most founders are terrible managers. Horrible managers. Have some humility and know when to replace yourself. I don’t understand why Jerry Yang is CEO of Yahoo, if i remember correctly, didn’t he step down originally because he was running the company into the ground? He’s brilliant, he built a huge company but he should probably not be CEO (unless he’s learned his lesson but my theory is that entrepreneurs rarely though sometimes learn to manage). As Mark Davis says: “There are 3 stages in companies, startup, growth and maturity - the same person is rarely right to run it at each stage” (he said something like that). It’s true. People have skills, harness them, don’t be a prick and think you are superman. If you can do all 3 stages = you are Bill Gates.
Talk Don’t Sell. I hate when people go into pitch mode. Talk to me like i’m your partner not an investor. NO investor wants to hear a salespitch.
9) If you don’t solve a problem, you are not a company. You may be a great feature but if you don’t solve a problem you are not sustainable. Twitter is likely going to die because it is a feature not a problem solver. If you cannot articulate the problem you are solving then you ain’t solving shit and find a new idea. Your pitch should be the following: Ask the person you are pitching a question. Then show how you solve it. Follow it up with 10 seconds on your team and close it with a brief history of you (especially your failures).
10) I don’t care who your board of advisers are if you are an asshole or an idiot.
11) 14 board of advisers = window dressing. If i see a lot of advisers i’m going to ask you point blank “What are you hiding?” and follow it up with “So i see you’ve spent a lot of time bringing on 14 advisers, how much profit do you have?” The exception is in situations where you need political capital and you just need to jam your board. It also helps to have a lot of super connected people on your board if your trying to sell the company, can help inflate the valuation.
12) Failures are not a bad thing. As Larry likes to say: “so you’ve never failed before = therefore your asking me to invest in your first failure?” If you’re never failed before - why should anyone invest in you? … because if you haven’t failed failure (bankruptcy) in the face then how will an investor know you have the balls to run a company when the shit hits the fan? but you better be able to show why you will be successful now.
13) Everyone knows you don’t have any cash - so just admit it and move on. Don’t justify it or bullshit it. If you had cash, you wouldn’t be trying to raise money. Most great serialist entrepreneurs are not liquid. It’s not something to be ashamed of - begging for money however is something to be ashamed of!
14) If you are running a million miles a minute, you have probably dropped your wallet 600,00 miles ago. Relax. Going fast and setting artificial and expedited deadlines is a recipe for failure. A month doesn’t make a difference, if you think it does, no one should invest in you because you are probably delusional.
15) Have a confidante - have at least one if not many friends that are wiser and more experienced then you and listen to their sage advice. Entrepreneurs as a tribe are self destructive. We need people to keep us out of trouble.
16) If you don’t know how to market your product, you don’t deserve to be CEO and probably don’t deserve any money - unless you are humble enough to admit it.
17) If you cannot monetize your product, you don’t deserve to be CEO and probably don’t deserve any money - unless you are humble enough to admit it.
18) Viral Marketing is a myth. Word of mouth marketing does not exist because you say it does. All things must be seeded if you don’t understand this, you will fail. Seeding usually costs money or requires my Hijack Marketing. Did you know Myspace was seeded? ResponseBase had 300 employees, each of which referred on average 30 friends thats 9000 friends, they also emailed out to millions upon millions of records in their database - especially to daters as they owned a dating site. They seeded the site with close to 50,000 members and there wasn’t many social networking sites around at the time. So why do you think you will be successful with just word of mouth marketing today when the market is flooded with noise? You will fail unless you understand marketing. I want to know how you will market - not just what method you hope to bullshit me into believing you understand.
19) if you can’t convince me why the world needs your product in 30 seconds, give up and find something new to do. (The exception to this is very specialized and some b2b products that actually require detailed explanation)
20) If you can’t give me one example of how someone must have your product - then i don’t want to hear it - find something new to do.
