Believe It Or Not, I Love It When You Prove Me Wrong
About 9 months ago I had a conversation with an entrepreneur about a company he was starting. I remember walking away impressed with the entrepreneur but not the company. He was really sharp, communicated effectively, and showed a level of hustle even in that first encounter. However, I just didn’t see the vision. I didn’t think there would be demand for what he was building and it wasn’t a “sexy” product in a “hot” sector.
When we first met, they had literally just launched so the company was too early for us to invest in anyway. I did bring the company up in our weekly partner meetings, shared what I had learned, and suggested we pass. The next day I followed up with the entrepreneur with candid feedback as I always try to do which includes what we liked about the business (him) as well as what concerns we had (too early, questions around demand and defensibility). I wished him good luck and told him feel free to keep me updated on the progress of the business.
Now I know at this point many entrepreneurs out there rolls their eyes and say this sounds dis-ingenuine and par for the course when dealing with VCs. I know because I’ve been there myself and I try not to be a “typical” VC. The truth is I do want to stay updated on your business. The problem is when you look at nearly 1,000 deals a year that’s a lot of nos we have to issue. I feel like Im the Pope of Nope at times. Have a doctorate in Nopeology. My nickname should be Nopestradomous. It’s the part of the job I dislike the most. However, that’s a post for another time.
The purpose of this post is that the entrepreneur, to his credit and going back to that hustle gene, did in fact follow up with me. He shared he had made some great progress and enticed me enough to take another call. Admittedly I came into the call skeptical and expecting to be issuing another pass email in a few days.
And then something amazing happened. He started talking about the business and had the data and traction to back it up. Im not talking just a few customers and a little revenue, I mean REAL traction. The part of the business that I was most skeptical about, the demand, is actually the part of the business that is exploding. Customers cant get enough. I was shocked. So I started probing more and the more I did the more the economics of the business began to shine. I was really impressed.
I don’t know if we will invest or not but I will admit that every assumption I had about the company initially proved to be wrong. I didn’t think there would be a market for this product. Wrong. I didn’t think it could really be a big business. Wrong. The only thing I got right initially was my impression of the entrepreneur and even that I think I might have underestimated.
After the call I began to have this tug of war in my own mind. This entrepreneur is really on to something yet if you had asked me 9 months ago I would have told you it would have failed by now. I know a few other investors that passed on the deal for the very same reason I did. It reminded me of the stories of all the investors that passed on AirBnB because of the “no one will want strangers living in their apartment” rationale. Im not saying this company is the next AirBnB, but I don’t want to be that investor that isn’t open to new ideas because I don’t think it will work. I don’t want to be a herd mentality investor.
So listen up entrepreneurs, we VCs don’t know everything and we are wrong. A lot. I love entrepreneurs that hustle and can prove that their business is working even if every investor doesn’t believe it should. Some of the greatest companies of this generation started this way. So this is my commitment to continue working on keeping an open mind. Believe it or not, I love it when you prove me wrong.
