Are you a storyteller? You better be if you want to build a successful startup
I have raised over $10 million from individuals in my career. Just people, not entities like angel groups, VC’s or others. If I included angel groups. VC’s and entities my company’s had partnered with, the number is north of $100 million. Let’s focus on people for the moment, not firms.
Raising money from people is by far the hardest thing to do. It takes a balance of experience, personality, and basic honesty. It also takes storytelling.
Here is a basic way to look at it; If YOU have $10,000 that you HAD to invest, what would make you want to do it with a particular company?
- An industry you understood or have an interest in.
- Meeting someone who you just “feel” is someone you can trust or like.
- Like or Love his/her Story.
I am reading a great book called “Billion Dollar Whale”, which is about Jho Low and how he swindled many firms and people out of a lot of money. It is a fascinating read that reminded me of just how much reality often becomes perception. Perception is very important when you raise money. Don’t get me wrong, I am not advocating lying to any potential investor, but you need to be able to communicate a story to them and a story that is both compelling and one based on the perception that person has of you.
Let’s for a moment assume that you have access to someone who has the money to invest. How you get access to potential investors is an entirely different story. What you do when you get access is the better question. I feel this way mainly because in this day and age, getting an introduction to someone with money to invest should not be too difficult. It’s made easier by the people you are around. If you are hanging out with the same people all the time, you will likely find gaining access the hard part, but more on that later.
Storytelling is the biggest thing as an entrepreneur. Almost every successful entrepreneur can tell a story. Telling a story in a manner where the person or people you are speaking with can easily visualize what you are saying is the key.
Let me give you an example. I will tell you a story about Billaway, a company I started. Here is how I do it.
“Mr. Investor, imagine if you were a person living in poverty (if you find a self-made person like me, this is really easy. Trust fund babies may not get this, and I likely would change my “story” based on who I am talking to) in a country where you had to work for 2–3 days just to pay your mobile phone bill. Now imagine, you and your seven siblings lived with your mother and father in a one-bedroom house with one bathroom. Imagine the one bedroom was mom and dads and you and your siblings had to bunk in the rest of the house. Imagine what that must look like. Now imagine, at the end of each week when you got paid, you had to go to a store a half mile away on your bike and pay for your mobile bill in person so you could use your phone to access the internet and text people during the coming week. Now imagine Billaway coming in and giving you a way to pay for your mobile bill simply by asking questions, and you never have to go to the store to do it. Imagine getting those 2–3 work days back and being able to use that money for something else. Imagine how you would feel”.
You see what I did there? I made that person VISUALIZE the problem and the solution. That is what an individual will need to do; visualize it. A person who is wealthy cannot just listen and understand what poor means, most of the time. You need to ask them to “imagine” it. Storytelling is an art you can learn. Anyone can learn. Us Irish people seem to have the ability to tell stories from birth; however, most people who can tell stories seem to create them to the detriment of others instead of for the benefit of themselves. Most storytellers create a story for gain as opposed to describing what they do in story form.
Storytelling is by far the most important thing to be able to do to get an individual interested in hearing more. Once they “get” the issue at hand and how you solve it, then you can tell them about the opportunity. Once they hear your story and understand it, they have the perception that you identified a problem and maybe solve it. Without that, you have nothing to interest the person. You have no emotion.
Here are the things you need in order to create interest. Understand you have less than 10 seconds to do so because, after 10 seconds, that person has already decided if they want to hear more.
- Be a great storyteller.
- Make sure the story contains emotion links (being poor, living in close quarters, etc.).
- The perception that you know how to start to solve it.
Once you have the interest of a person, you are 90% there. As long as the benefit is there after the story, you just need to make sure the deal terms are good, and they will invest. If your story does not serve to get them interested, you will never be able to close them. Emotion drives the brain faster than facts, so use that to get the person to a place that will enable you to relay the facts. Anyone who has fallen in love knows that emotion drives decisions harder and faster than facts.
So, above we spoke about gaining access to individuals who can invest. If this is hard for you, you are doing someone wrong. Here is what I mean. I will use my own experience as an investor as a guide.
I had brunch today with someone I have been getting to know really well. This person has a great job at a large global retailer in the fashion industry. She, Erica, is also leaving said great job to start her own fashion line. Today’s brunch was all about going through all the different things concerning starting a business. We talked about the product, the sale, the investment side, the corporate structure, the dynamic with the people you bring on, etc.
I explained to Erica that what is most important is getting someone to buy what you are selling. Once you have one buyer, get 10 then get 20 then 100, etc., but get someone to buy it. To my surprise, she already had that lined up. You see, Erica is part of a large group of people in her friend group that are successful. Her friends are working with celebrities, have agents, are traveling the world and really kicking ass. I have met several of them but I never really knew what most did. I had no idea that her entire friend group is composed of successful people that can help her in all aspects of creating a business and making it successful. People from high net worth individuals to people who are willing to help push her new line once it is ready.
What I realized is that this smart, hungry twenty-something person has her shit wired tight in this area. I have come to know she is wicked smart and a dedicated person before the brunch, but what I realized today was that she is that way because she is driven. She has also created a friend group and support group around her of like-minded people that are continually meeting people like them. Successful people having fun with other successful people and organically driving each other.
I recall when I was her age that I was just getting married, having a kid and buying a house I could not remotely afford. I also remember not merely partying but trying to meet new people to help me grow my second startup. I never really understood that I was doing it, but it worked.
I am not really sure where I got that drive from, but on some level, given today is my dad’s birthday, perhaps he gave it to me. He lied about his age to join the army for WW2, then when he came back after the war, got into the Military Police because he wanted to be a NYC cop. Unfortunately, he then found himself in the middle of the Korean War before returning to finally accomplish his goal. He died many years ago, but he certainly had an impact on motivating me. No matter who or what motivates you, pushing outside your friend group is really important.
I have met wannabe entrepreneurs before that are looking for help. These are people that always seem to have a “problem,” usually with money or find themselves going out every weekend with the same people they have known for ten plus years and doing the same stupid shit. They are not meeting people that are either driving them to do more or driving them to be a better them. More times than not, when they do meet someone trying to drive them to do more in a positive manner, they rebel against that person.
I remember trying to help this one person who actually went to a party with the same people they knew for years instead of meeting my CTO who was in town and could have helped this person understand some of the technical challenges this person was asking me about the day before. Those are the people that will never actually grow. Those are the types of people who always seem to have trouble or just give up trying to become self-sufficient.
Erica does not need any help at all to get her new fashion line going, but she is asking questions because she thinks she must not understand something. She knows that to be able to do something she never did before; she has to learn things she did not know before. She is doing just that, and it’s impressive to see.
If you are a person who is thinking of starting a company, you will need to get things in order in your personal life before you even embark on it. What does your friend group look like? Are you the smartest? If you are, you have a huge problem because that means you are not learning anything. No one can help you, which is terrible when you are starting a new company. You need help. You will likely have to pay to get it.
Your friend group is where the storytelling starts. If you are surrounded by smart people like Erica is, start telling your story. Start listening to the questions. Once you hear minimal questions, then get introductions to potential investors and start telling them the story. I guarantee that if you get good at storytelling, you will raise capital from individuals. If your friend group is a bunch of very nice, but average success based people, you will likely fail. It shocks me how so many first time entrepreneurs do not understand how your personal relationships impact your future business ones.