I Wanted to Give You My Money and You Wouldn’t Take It
This is a different sort of post — it’s on starting and running a business or firm. More specifically, it’s also on the 200 or so times someone with a business idea has asked me to invest in their idea and why I have said “no” every single time even though I’ve loved some of the ideas. In fact, I’d love for someone else to take some of my money and make more of it. Sounds like an ideal situation, no?
A small amount of backstory for context: I live near Denver and Boulder, Colorado, both annually ranked as some of the best start-up locations. I also run a company, Spivey Consulting, which is in our seventh year. Seven years ago we made about $35,000 total for the year — not including expenses. We had zero brand. In my first 3 months, I had a total of two clients. Today, in a relatively short time, we have grown by 5,614% in demand, and have grown from one employee to a team of 30. Our blog now ranks as one of the more popular worldwide per Alexa Website Traffic. We have done so without ever having spent a penny on advertising or taking on any debt. It’s been a combination of good luck, great hires of incredibly talented and diverse-minded people, and one more thing. I want to talk about that “one more thing” for those considering starting their own businesses or firms.
Back to Boulder. I have attended a variety of start-up gatherings and spoken at a few. Invariably, especially of late as our own brand has grown, the following will happen. Someone will approach me about their business idea — most often technology-related because of the tech corridor nature of the area. I would say at least 60% of the time the idea will either sound strong to me or it will amaze me. An example would be a drone that flies over the forests with heat sensors that detect forest fires right when they start. They are also most often energetic. Ebullient. I am drawn in by their energy. In a few cases when the capital “ask” comes up I’m actually doing the math in my head.
And then the following happens. Always. “In year 2 we will be making ‘x’ amount of money!” and x is always, always wildly optimistic.
So I have one simple follow-up question. “Okay, I see the idea — it’s a great one. I see the goal. It’s robust. What is the plan to get there?”
At this stage let me insert a short video clip of these little gnomes from South Park that have been stuck in my head for many years.
Here is my point. In the 200-ish “asks,” either no one has been able to articulate their actual plan, or their plan is wildly optimistic. It isn’t really a plan; it is a checklist of things that are going to go right. “The US National Center for Atmospheric Research (NCAR) will design and build the drones for us I bet!” (Okay, so you actually just have an idea; you have no way of making the idea happen other than asking people to do it for you). Or so on.
The surprising thing, perhaps, is that we don’t have a great strategic plan at Spivey Consulting. It’s good, I think, but we could do better. Our redundancy would make the airline industry cringe. We could do a lot better, But, and this is the punchline for the article: we worst case scenario every single thing we ever do. Our starting point is, “Why would this go wrong?” I believe I read once that the CIA employs professionals who do this for a living; they are called a “red team.” Want to abduct a war criminal by getting his armed vehicle caravan to slow down by having a Special Forces soldier dress in a gorilla outfit walking down the side of the road (true story, see “The Men, The Mission and Me” by Peter Blaber)? Let’s talk about all the things that could go wrong first. I suspect in that case it was a long talk.
If you are willing to take this 2 cents I suspect you’ve gotten the point, so I won’t belabor it much more. I will, however, reference Bill Gates in the recent Netflix documentary on him. He visited a whole slough of start-ups looking for an idea to help reduce carbon emissions, or to capture carbon emissions in the atmosphere. He visited, quite literally, some of the most brilliant minds out there. They weren’t picking him — he had done an incredible amount of due diligence and had hand selected them. Point being, these were the best of the best.
The documentor asked Bill after the clips on his visits what the odds were that just one of them would be a success. “Oh, pretty good,” Gates responded immediately with detectable optimism in his voice. “You know, 40%.”
If you want someone to invest in your idea — or more importantly, if you want your idea to work — don’t just think of the best ways to get there. Think of the worst things that could happen to the best ways that would get you there (and if you read any other blog on this website you will see that I am an eternally positive person by nature). That’s when I will gladly give you my money.
Best of luck on your new business!
– Mike