My first job out of college was working at a consulting firm called Markowitz & McNaughton Inc. (MMI) in the DC area. We did primary market research for our clients, mostly Fortune 500 and similar international firms. Essentially, this meant calling customers, competitors, suppliers, and other market participants to develop a better picture of market forces. We then translated these insights into strategic recommendations for our clients. I was living in Arlington, VA with my brother and two other college friends.
After three or four months, my brother asked me an interesting question: “Sounds like you are doing great—but are you really working for MMI, or did you take the CIA analyst job?” I had interviewed for the CIA role as part of my job search. I did not pursue that position. But apparently I had done a bad enough job articulating what I was actually doing that he did not really understand my job. He believed in me and what I was doing, but did not really understand what that entailed. So his mind leapt to a plausible alternative explanation.
What can founders learn from my trip back along memory lane? Startups often struggle with getting support in the early stages. This is the core of our research on Venture Advocate Behaviors. Communication with early supporters/potential advocates, customers, and investors plays a critical role in whether a venture launches and gets traction. The struggle sometimes occurs because founders confuse belief in them versus an understanding of what the startup is doing. So let’s disentangle the two concepts.
Belief is confidence that the startup team will move forward. It is often based on the founder or founding team’s passion, experience, and prior relationship with the potential advocate. Parents, friends, and colleagues are great sources of confidence and support in early stages of a venture because they believe in you. But they might not actually understand what problem you are trying to solve, and how, and for whom. Similarly, passionate and visionary founders are often able to garner support due to a belief in them, even if stakeholders do not understand the hazy vision they describe. Belief is based more on the emotional component.
Understanding is actually “getting” the premise behind the startup. This often includes the product or service features and benefits, as well as the target market for the product. In The Titanic Effect, we talk about this as product/market fit. But understanding also includes how the problem is solved and paid for—what the business model is - and whether it will support a sustainable and scalable venture. It is more of a rational and analytical component.
When garnering support, it is important that a startup moves from “I believe in you” to “I understand what you are doing and think it will be successful.” To be sure your potential supporter understands what you do, ask them to deliver the startup’s “elevator pitch” back to you. Even better, try to listen to them explain it to someone else. If that is a major fail, it is likely you have belief but not understanding. Sadly, you may be at risk of the “false hope” debtberg. On the other hand, if they understand the model but still don’t express support, it could signal the “misguided motivation and experience” debtberg. Maybe you have not demonstrated enough passion for the problem you are solving. Or, they may think you need to bolster your team.
What is the ultimate test of understanding and belief as you move to launch? A check. If customers and potential investors are not willing to write a check, they may not believe in you, even if they understand what the startup does. Getting customers to sign a letter of intent (or a promise of a check) that they will buy your product provides strong showing that they believe. And customer “checks” will improve your chances of getting investor checks.
To learn more about false hope, product/market fit, and keeping your startup afloat, check out The Titanic Effect on Bookshop – it supports independent bookstores – or Amazon.