11 million people watched the US World Cup Soccer Game against Ghana. 18 million watched the game against Portugal. 25 million watched the game against Belgium.
People jumped on the bandwagon of US World Cup Soccer. It was amazing to see.
People like jumping on bandwagons, but hate creating or enabling bandwagons. Not consciously realizing this leads to one of the biggest mistakes I see founders make when they pitch their startups.
Often, founders try to convince investors that together, they can create momentum. This is a dumb idea.
Bad Way to Pitch a Startup Idea:
“If you fund us, we’ll be able to do these things.”
Almost no investor will fund this pitch. Why? It sounds like the only way the company will be successful or grow is if the investor commits.
(1) Why fund the company now if you can just watch the startup for longer, and see if more progress is made? No FOMO (Fear of Missing Out) exists. The investor doesn’t have to worry that another investor will swoop in and steal the deal if she doesn’t.
(2) It sounds like the founder will only be successful if the angel investor or VC invests—investors aren’t meant to build companies, they’re supposed to catalyze them.
Correct Way to Pitch:
“Our company is moving really fast, we’ve achieved ‘x’ things in the last few months, and we’re raising ‘y’ amount of dollars to do ‘z.’ Do you want to join our round? It’s likely going to close pretty soon.”
(1) The investor now knows she needs to act, because if she doesn’t, the round will be closed and she won’t be able to buy equity. FOMO is in play. Scarcity in the round has been created.
(2) The company will be successful with, or without the investor. This creates confidence that the founder knows what she’s doing. I’d much prefer finding a founder who I think will be successful with, or without me—but whom I can still help anyways. I love seeing confidence.
The Same Goes for Hiring Key, Early Employees
Every single employee is investing his or her opportunity cost into your company. Imagine the decision tree:
Join Google // Join Awesome Company you just founded
==>joining your company automatically means giving up the opportunity cost of Google, making it a difficult decision.
==>if the potential employee doesn’t think you’ll be successful without her, she’ll feel as if there is no opportunity cost by joining Google. The opportunity cost invested will be joining your startup that is going to zero. She’ll never have to fear being the tech veteran remembering the story of that time she was almost the 5th employee at Facebook.
==>If that prospective employee thinks you’re the bandwagon, and joining Google will mean missing that bandwagon, she’s going to join.
Be the bandwagon.