Bob Lieberman's Blog

Commentary and Tools For Empowering Change

Money Talks, But Should You Listen?

I worked on a project once that my employer believed was essential to our company's survival. At a critical point, I recommended rejecting a multi-million dollar vendor proposal because it seemed wildly optimistic to me. The delay implied by my recommendation frightened my colleagues, and they offered this glib reply: "It won't matter if we don't have a company!" So I was overruled and the proposal was accepted. The project came in a year late and several million dollars over budget.

This kind of thing has happened to me more than once. It demonstrates the survival mindset in a pure form – thriving on hyperbole and stifling the creativity that turns good ideas into great products.

Companies at all stages of maturity struggle with fear about survival. But the struggle is especially acute for startup entrepreneurs. Often babes-in-the-woods, they seek advice out of near-total ignorance. They are told to focus on the critical path to funding, and they get (and pay for) help with that. So they write a business plan, establish market receptivity, and polish their pitch. But rarely does anyone offer to help them refine and re-imagine their product.

What new entrepreneurs need most is not more polish, but a better shoe (if you'll pardon the metaphor). And this is not a cause for disgrace. In fact, in the world of product development it's more like a law of nature. Successful products rarely resemble the original ideas from which they spring (see Bob Rosenfeld's book Making The Invisible Visible).

I have some direct experience with startups myself. I was the 63rd employee at Sybase way back in 1986, and saw the company grow and go public. I've been with a few more since, and lately I've been advising a social-networking startup. From all the failures and successes, I've come to the conclusion that once the money talks, eventually everybody walks. The startups that succeeded did so, in part, by keeping the survival (i.e. funding) quest in perspective.

I'm interested in this subject because I see too many business incubators inadvertently wringing much of the creativity (and therefore, the value) out of entrepreneurship. The drama surrounding that fistful of dollars on the horizon is a serious distraction to a starving entrepreneur. As money talks, so does the promise of money. And the promise of $1M in angel or venture funding talks so very loudly that it drowns out other sounds the entrepreneur should be hearing.

At the end of the day, new companies succeed because they're meeting a real market need, and meeting it well. So if your venture is not attracting investment, there's a pretty good chance your product, in its current form, just isn't good enough. That's not a cause for despair, but it is a trail marker worthy of your attention.

Real scrutiny of their idea, itself, is a tough pill for any entrepreneur to swallow. In the development of my own consulting business, it was a tough pill for me. We all love our children, whether they're sweet-smelling babies or sweet-smelling ideas. But where children are concerned, love is no excuse for blindness.

Loving a child requires appreciating its deficiencies as well as its beauty, a balanced perspective that leads to healthier development and growth. Who is providing it to startup entrepreneurs?