Feb 3, 2021
How to Show You’re “Worth Investing In”
Whenever an investor friend tells me, with every excitement, that they’ve just met someone worth investing in, I’m always happy for them.
But also puzzled.
Because… well, how do you know that someone is worth investing in?
After some looking, I found an answer I really liked from Y Combinator’s Paul Graham, in one of his essays:
The foundation of convincing investors is to seem formidable, and since this isn’t a word most people use in conversation much, I should explain what it means. A formidable person is one who seems like they’ll get what they want, regardless of whatever obstacles are in the way.
So that’s awesome, and fits with my experience working with both founders and investors.
But it actually leaves a further question: How would you know that someone is formidable? And turning the question around for founders: How would you SHOW that you’re formidable?
Paul Graham sort of gives an answer later on in that essay, which I’d summarize as: “If you’re formidable, you’re formidable. Don’t try to seem like one or copy the swagger of someone formidable. Just stick to the truth.”
This seems pretty sensible, except for one problem: I know quite a few founders who would beat down all obstacles to get what they want, but whose demeanor don’t fit the stereotype of a “go-getter”.
And for many of these founders, the advice to “just stick to the truth” would simply trigger a stream of boring concepts and flat events that make investors drift off.
So again, how should actually formidable (but sadly ineloquent) founders show that they’re formidable — that they’ll get what they want regardless of obstacles?
The answer, I suspect, lies with a usual suspect: Storytelling.
Bad Pitches Tell, Great Pitches Show
The reason is that being “formidable” and “worth investing in” are character traits. And when you’re trying to convince someone of your character, no amount of “I’m formidable” or “I’m a go-getter” will convince them. In fact, it’ll probably have the opposite effect.
(Case in point: Richard Nixon said “I’m not a crook”, and instantly became a crook in America’s eyes)
The key is not to tell them what you are, but to show them. Instead of telling them who you are, a story helps you show them what you’ve done.
Paul Graham is right: you should stick to the truth. And you do so with story (that means no fabrications and alterations!).
Example: SpotOn
A great example of this comes from an episode of The Pitch, where founder Aparna Srinivasan pitched a “Uber for Pets” idea.
When one of the investors asked her: “Tell me a little bit more about yourself,” this gave her an opening to show her “formidable” qualities — with a story.
Aparna first had to check whether people needed this service, which was challenging, because nothing like it existed.
So what does she do? She created a pilot by printing out fliers and handing them out at dog parks. And when people called for rides, she became the driver, and personally gave over 500 rides.
But she didn’t stop there.
She also went to LAX (the main airport in Los Angeles), stood outside, and whenever people arrived with their pets, she ran up to ask them how they arranged their transport, whether it was a hassle, etc.
All of this confirmed to her that there was indeed a need for such a service, so she confidently launched her company.
With a brief story that took no more than a minute, she showed the investors how far she was willing to go to get what she wanted.
She ended up getting commitments to invest, and the investors made several mentions of this story — and her “moxie” — as a reason they said yes.
These days, whenever an investor tells me that they’ve met someone “worth investing in”, I always pepper them with questions like: “Can you recall the exact moment when you felt that?”, and “Right before you felt that, what did the founder tell you?”
You’d be shocked how many of them come back with stories.
But here’s the next problem: everyone thinks they know stories and storytelling, maybe because their parents read stories to them when they were little, and they’ve watched and read stories all their lives.
The truth is, however, that most people are not very good at telling stories.
So in the next post, we’ll break down the structures and elements of a good character story, and explore how you could put one together to show ’em who you are.
