I Don't Know

An entrepreneur asked me a great question last week:

When is it OK to say I don’t know in a pitch meeting?

I told her the following things:

1/ This varies from investor to investor. Some investors are looking for founders to have all the answers.

2/ I am not one of those investors but I do want the founders to have some of the answers.

3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer.

4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer.

In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc.

And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly.

Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite.

I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product.

The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?”

The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question.

So he answers in his broken English “I don’t have a fucking clue.”

Our meeting ended several minutes later and we were shown the door.

We did not secure an investment from that VC but the company was successful and went public five or six years later.

So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to.

#entrepreneurship

Comments (Archived):

  1. LIAD

    you learn very quickly in pitch meetings whether the questions come from a sincere desire to understand (even if to you the question seems ridiculous) or because the investor wants to trip you up, catch you out and establish some kind of supplicant-master power dynamic.the former you should always deal with politely. the latter, screw them, see you later bozo.

    1. Amar

      I would say this is not just a “pitch meeting” thing. This happens routinely in large companies — there inevitably is someone on the other side of the table who is a financial gatekeeper – who likes to show the she/he is in chargeIn those cases you walk the gray area between polite and screw you bozo 🙂

    2. LE

      or because the investor wants to trip you up, catch you out and establish some kind of supplicant-master power dynamic.Wanting to trip you up doesn’t imply also wanting some kind of ‘supplicant-master power dynamic’ though.Could simply be wanting to see how you react off script. Curveball, no?Also ‘sincere’ is overrated maybe. It’s business. The bedside manner only goes so far. I want the girl or guy with the best skill and benefit. Not the surgeon (story that i have told) that my ex wife loves because he is friendly to her at synagogue. In fact the asshole (academic that I found who did the operation on my daughter) worked to his advantage. (Phil would call this bluster). I knew any guy like that was probably the real deal and had overcome that drawback with good work.screw them, see you later bozoI don’t think an attitude like that is helpful in a business where people talk to others. You have to bite your tongue and say maybe ‘thank you sir may I have another please’.

    3. Lawrence Brass

      Alphas are very easy to please if you can play the supplicant without moral compromise.Some even have programmable brains you can code. 🙂

      1. cavepainting

        How do you play the supplicant without moral compromise?

        1. PhilipSugar

          This is what’s known as Minnesota nice. The not polite term is Grin Fucking. You sit there and be “nice” knowing you are going to screw/stab in the back the dummy on the other side.

          1. Lawrence Brass

            It has an uglier name in Spanish, something like “smiling f…..”But those people will always cause harm and win themselves. I was thinking about dealing with alphas in a constructive way.

        2. Lawrence Brass

          I mean, the only way to negotiate with an alpha is to concede him/her the first win to be accepted in the pack. The other way you are the enemy and a threat. I know good people that really can’t avoid being AHs all the time, as if it is in their genes or they are addicted to it.Give people what they want if you can do it without feeling stripped or hurt. Be generous.

          1. PhilipSugar

            Here is the thing……True alpa’s do not need that. Those that are not do. Now a true alpha will let you make as many decisions as you want, give you enough rope to hang yourself. But will intercede strongly and when they do you better understand your place. Because their hand is on the hangman’s door.

          2. cavepainting

            Yes, being graceful, generous, and kind is really the better approach both for inner peace and actually getting stuff done in the outer world.Easier said than done for most people.

    4. JamesHRH

      I am one of the all time ‘fill the clip and let that Bozo have it’ types.But you should NEVER do it.People that are a great fit for your situation can be influenced by bozos, even – or perhaps more likely – by third hand chatter.Go home – office or house – and tell the story of what a giant Bozo the person was….its better for you all around.

      1. JLM

        .Always fill to two less than full capacity to keep the spring live. Pro tip.JLMwww.themusingsofthebigredca…

  2. jason wright

    “Sometimes investors ask ridiculous questions and then you have to bite your tongue…” No, no you don’t have to at all. that’s ridiculous.

    1. Pointsandfigures

      No, you do. It’s called poise.

      1. jason wright

        No, you don’t. it is perfectly possible to point out the ridiculous with poise.

        1. Lawrence Brass

          Only the English can do that properly, Jason. 😉

          1. sigmaalgebra

            Supposedly part of the English “poise” is theirAnyone who always calls a spade a spade if fit only to use one.Ah, dripping with English upper class arrogance by denigrating the same manual labor that keeps their palaces and formal gardens looking good!Or, for a US version,I’ll have to investigate and get back with you on that.where, of course, have given no due date!

        2. awaldstein

          why bother.i do little in business or in communications strategy without purpose.time is too precious. emotional communications and objectiveless actions really do little for my life or my business.

          1. jason wright

            once upon a time i was a teacher. that requires patience. the reward is seeing people learn something new, ‘getting it’. try it one day. you might learn something new from it yourself. you’re still young enough. the skill is sensing who genuinely wants to learn. we shouldn’t dismiss people simply because they don’t know or understand what we do. we all start out in life knowing next to nothing.

          2. awaldstein

            I come from a family of teachers. I understand that.Has no relationship to be the collective memory of an industry and policing bad behavior.

  3. awaldstein

    I try my best to not be an ass nor surround myself with them as almost every connection I get is a referral and it flows back.But need to say that I have never closed a deal that worked out with someone who I disliked nor with someone who had such a steep course up the education cliff to understand what I was selling. Spent too much time on the later in the last few years.

  4. William Mougayar

    The proverbial ‘knowing what you don’t know’ is an interesting part of this. I have seen some pitches that openly list what they don’t know, but backed by scenarios for some answers or possible paths.

    1. Lawrence Brass

      It wouldn’t be any risk if all questions had answers on day one.Plan A, B and C.. scenarios.. I like that.

      1. JaredMermey

        Being able to explain what might cause you to go down path A, B, or C is a good answer.

  5. Mac

    I once had a potential investor stop me, about ten minutes into the pitch, and ask if I was wanting to sell the product. He was mistakenly referring to a part of the finished product. When I explained that this particular item was just one of several outsourced pieces needed for the finished product, he through me out. Even a slight misunderstanding can derail the best of plans.

  6. Pointsandfigures

    Flip it. Sometimes people ask me questions and my answer is “I don’t know but will try to find out”. No one has all the answers.

  7. DJL

    To me the “future revenues” question is always ridiculous. Everyone knows that you are making guesses, but you need to demonstrate you have some plan to get the VC 10-100x or they are not interested. I wonder how many successful companies met the sales projections they made in their first deck?

    1. sigmaalgebra

      To me the “future revenues” question is always ridiculous. For an answer with no assumptions or an unqualified answer, likely yes. But gotta have some idea or instead of the tooth grinding meeting would be doing something else more pleasant, e.g., watching that hawk or falcon or whatever that used to be in NYC!One way, e.g., commonly used in estimating selling prices in real estate, is to look for “comparable value” — what roughly similar properties have been selling for, but that’s not very good for this context, a growing company, especially a young one!Well, there is a way!!! Below is a scenario (made up numbers) that illustrates the way!We need three numbers and a simple argument.First NumberAs athttps://www.statista.com/st…the number of Internet users in the world is 3.58 B (billion). But for our start we are focusing on only the Internet users in the US which, from that source, is 287 M (million), and that is our first number.Second Number Six months ago we had 2 M users.Third NumberCurrently we have 3 M users.ArgumentFor time t (days), with t = 0 six months ago, let y(t) be the number of users at time t. Let b = 287 M, our first number.By a user we mean anyone who has visited our site at least once, and we assume that eventually in the US that will be our first number b = 287 M.So, for our projections, we need to interpolate between the second number y(0) = 2 M and the first number b = 287 M.For this interpolation, we assume that the growth is viral, that is, from users talking to people not yet users. So, the rate of growth should be proportional to both the number of users talking and the number of non-users listening.Well, at time t, the rate of growth is y'(t) = d/dt y(t) from freshman calculus. So, for some constant of proportionality k, we havey'(t) = k y(t) (b – y(t))where y(0) = 2 M.So, this is a first order, linear, ordinary differential equation initial value problem with an easy solution in closed form!The solution is a lazy S curve that rises asymptotically to b from below. Larger k makes the curve rise more quickly.For the value of k to use, we select that so that y(183) = 3 M, our third number.We now have the full growth curve in terms of users.To get the growth curve in terms of revenue, we just use the current figures on revenue per user.Done.Sure, at one time I did that little calculation, pleased the BoD, got major investor General Dynamics to stay, and saved FedEx.So, my answer was good enough to please the serious investors from General Dynamics.I never learned how accurate my prediction was!

      1. Mark Essel

        Dig it sigma, curious what revenue per visitor did you have back then? Is that a difficult factor to estimate accurately?

        1. sigmaalgebra

          That’s math, a scenario, with made up numbers. But, if my computer doesn’t quit again, global warming doesn’t destroy the planet, etc., hopefully soon such numbers will be real.

      2. DJL

        I thought it was blackjack in Vegas?

        1. sigmaalgebra

          That was another time FedEx was saved — FedEx founder Fred Smith was waiting to see Howard Hughes to get him to invest and, while waiting, made, IIRC, $27,000 at blackjack.Another time FedEx was saved was when the BoD didn’t believe that the needed plane schedules could be developed. We had some meetings with consultants, etc., at the Georgetown University library (I was working in applied math and computing and teaching computer science courses at Georgetown at the time), and no one had any ideas. So I accepted the challenge, joined FedEx, continued the teaching, designed some software, typed furiously, then drove my Camaro hot rod at 90+ MPH on the Interstates to Memphis.Soon the BoD was about to pull the plug on the company due to the fleet scheduling question. SVP Roger Frock and I sat one evening, used my software, and developed a full schedule for the whole planned business. The next day, our two representatives of General Dynamics went over the schedule and announced “It’s a little tight in a few places, but it’s flyable.”. Smith’s remark at the next senior staff meeting was “Solved the most important problem facing FedEx.”. The BoD was pleased, and crucial funding was enabled. FedEx was saved.Later I called a meeting, and about 20 people, including all the C-level people and Smith, showed. I proposed three projects for progress. One of these was much better scheduling via 0-1 integer linear programming set covering. And there were two more.My jealous immediate manager fired me, and Smith wrote a memo to have me report to SVP Planning Mike Basch with my office across the hall from Basch’s and next to Smith’s. Since Basch was a SVP, I was suddenly Director of Operations Research.Promised stock was 18 months late. My wife was still in her Ph.D. program near DC. Smith’s remark was “You know if you stay you are in line for $500,000 of FedEx stock?” No, I didn’t know that, and he wasn’t putting it in writing. I went for my Ph.D. in applied math.Maybe my startup will do better than FedEx!

          1. DJL

            Wow. Great story.Interested to hear about your startup if you want to share.BTW – I took applied math from Gilbert Strang and it was the best class at MIT back then.

          2. sigmaalgebra

            Of the three projects I proposed, one was using deterministic optimal control for least cost vertical flight plans — climb, cruise, descent — for the planes. I’d gotten the lift and drag equations. So, I stopped at MIT to meet with Mike Athans as inAthans and Peter L. Falb, Optimal Controltook a pass by Lynn, MA to talk to GE about the engine details, took a pass by Providence and the Division of Applied Math at Brown to talk with Falb, took a pass by Ithaca to talk with George Nemhauser about 0-1 integer linear programming set covering, etc.Nemhauser gave me three words of advice (not about integer programming!), and as I flew back to Memphis I understood intuitively, and that was the start of my Ph.D. dissertation. In my first year of grad school, I took the best course I ever had, from books by Rudin, Royden, Neveu, Breiman, Chung, Oxtoby, and from a star student of E. Cinlar at Princeton, and in the next summer independently used that material to do the research for my Ph.D. — walked out of the library with an 80 page manuscript. Right, Nemhauser directed my dissertation with three words before I entered grad school!Strang has a good reputation, especially for his text on linear algebra. In my work around DC before FedEx, linear algebra had been a big subject — applied math, once it is applied and the software written, often boils down heavily to linear algebra. I ended up working carefully through books by Murdoch, Nering (an E. Artin student at Princeton), and P. Halmos (written as an introduction to Hilbert space theory while he was an assistant to von Neumann at the Institute for Advanced Study at Princeton). Then there was much more from parts of the Nickerson, Spencer, and Steenrod honors advanced calculus book from Princeton, my undergraduate honors paper in group representations (heavily linear algebra),George E. Forsythe and Cleve B. Moler, Computer Solution of Linear Algebraic Systems.some more numerical methods from notes of H. Lieberstein, some work via interval arithmetic, some work on numerically exact arithmetic (number theory techniques), and lots of connections with stacks of texts on digital filtering, the fast Fourier transform, multivariate statistics, etc. Later I worked from a text by R. Bellman and some notes by R. Horn (student of Loewner at Stanford). But, so far I’ve never looked at Strang’s text!The startup is a new Web site intended to have most of the people on the Internet, with the word of Paul Graham of YCombinator, “love” it for an average of about 60 minutes a week. It’s to be ad supported. My first focus is just the US. Then, sure, Great Britain and the EU. Then, sure, maybe Japan. I’m unsure about how much ad revenue there would be in the rest of the world to bother with it.The site is to be a new engine for search, discovery, recommendation, curation, notification of Internet content where content is something with a URL that starts “HTTP…”.So, it’s in the old field of information retrieval where way back there they understood clearly that keywords/phrases solved only a small part of the problem due to:Assumptions: The user nearly needs to know what they are looking for, know that it exists, and have keywords/phrases that accurately characterize the content.As we see at Google, Bing, etc., can do well when these assumptions hold and usually poorly otherwise.Keyword/phrases are just a tool, borrowed, say, from an old library card catalog subject index, and not very directly what the user really wants.From 10,000 feet up, essentially what the user wants is content with some meaning they have, usually only roughly, in mind. This meaning can have to do with artistic taste, political inclinations, level of expertise in some topic, etc., and the content types can be Web pages, PDF documents, images, audio recordings, video clips, old movies or TV shows, Web cams, etc. Well, for meaning of most of that content, keywords/phrases work at best poorly. Moreover, the need is not just search but also discovery, recommendation, curation, etc.So, one afternoon I leaned back, put my feet up, popped open a cold can of Diet Pepsi, reviewed some of my prior studies, and had some ideas for how to do that. The ideas are the crucial core of the business, are some original applied math based on some advanced prerequisites, and look nicely sufficiently powerful and valuable and difficult to duplicate or equal. I typed the math into a paper using TeX.Then I started the software. I selected Windows instead of Linux. On Windows, got into the .NET Framework and studied 5000+ associated MSDN Web pages. I selected Visual Basic .NET as the main language (essentially equivalent to C# but with what I regard as nicer syntax — not the deliberately idiosyncratic syntax of C). I designed the Web pages and used the ASP.NET classes. I designed the relational database and used the ADO.NET classes.The server farm architecture is several server types that communicate via simple TCP/IP sockets — using byte arrays and class instance de/serialization. So far I’m using TCP/IP’s FIFO for queuing. So, there are: (A) Web servers — with no user affinity needed, (B) Web session state servers (each using two instances of a .NET collection class and much of why there need be no Web server user affinity), (C) two servers for the core applied math, (D) Microsoft’s SQL Server for the relational database (lightly used for the on-line work), and (E) soon, a log server (slight tweak of the session state server). My timings indicate that the code is surprisingly fast.The code is 24,000 programming statements in 100,000 lines of typing profusely documented both in the code and externally all the way to the TeX document.The crucial core code was coded twice independently and checked with data — check passed. I do intend a third check. There is some computer science style algorthmic work in the code, one piece likely not new and another maybe new.All the code appears to run as intended and to be ready for production. I have a few tweaks in mind for the user interface.So, right, the user never enters any keywords or phrases!And, yes, I’ve made progress, enough for my startup, handling meaning of content.The work itself has been fast, fun, and easy. But I’ve had some outside interruptions.My first server is based on an AMD FX-8350 processor, 64 bit addressing, 8 cores, 4.0 GHz standard clock speed and, so far, Windows 7. I plugged the server together from parts; it’s running and seems astoundingly fast.Currently I’m working to get really good backup and recovery for both my data and also disk partitions with installed instances of Windows. I’m working first with the Western Digital version of Acronis True Image — it’s quite nicely documented, seems quite capable, and is likely based on Microsoft’s VSS (Volume Shadow Copy). I intend also to use the backup in Windows 7. Likely for SQL Server backup and recovery I will have to work with what SQL Server provides.I have some nice data but need to gather more.I need to do an alpha test and then a beta test, then do some routine things, e.g., for publicity, and go live.In time my site should be able to do some of its own quite effective ad targeting — I have the math ideas worked out.It appears from my software timings, the FX-8350, and the Mary Meeker report data that if users like the site and keep the server on average half busy 24 x 7, the monthly ad revenue, before my ad targeting, should be over $100,000. Some of the rough estimate arithmetic says $250,000 a month.Maybe if that revenue is achieved and is growing rapidly, some VC firms would be interested in a seed round of maybe $1 million complete with a term sheet, vesting schedule for my stock, 1/3rd ownership, BoD control, a suggestion to hire people they know as my COO, CTO, CFO, etc. Likely I’ll say, trying to be nice, “Thanks but not now.” and continue as 100% owner. To me they will be trying to get a seat on my plane after it is 5000 feet in the air and climbing rapidly to FL 400 and 0.90 Mach!!!!With such revenue, if the site is growing, then I’ll get more servers and put them in two upstairs spare bedrooms, with window A/C, UPS boxes, and a backup generator on a pad out back. Filling those rooms and my Internet connection and keeping that equipment busy should give me a nice company. Then I should go shopping for a location for a more significant server farm.Thanks for your interest.

    2. LE

      Essentially shows that you are prepared in some way to be able to say something in response to any typical question.

  8. BillMcNeely

    The best training I got for fielding questions during a pitch were briefing to Colonels and Generals. You get cursed out enough you learn to stop and think through 2nd and 3rd order of magnitude questions. If you don’t know find out and report the answer.

    1. LE

      I will throw a foul flag on that one. While there is no question that the Jenners (or Kardashians) are great opportunists and definitely skilled in no way can you discount the fact that as celebrities they have a host of advantages that normal entrepreneurs do not. Most people are not in the same league as someone with that kind of celebrity. This does not mean they are not smart or that they don’t deserve the success they have. LIke the kid with rich parents (who has an edge) there are plenty of rich kids who do nothing with an advantage. So of course they deserve credit. But don’t ever think the same things apply to people who are nobodies. And I am even discounting the people that she has around her (who could be doing actual thinking) and/or are able to get her meetings to pitch her ideas.Lastly any article appearing like that (I did not read it but I know of it and may have scanned a similar article) are always filled with fluff that is invented and/or exaggerated.

    2. JamesHRH

      LE is right and this a weak effort from you TT.This business is an extension of her already successful modelling business. A stone cold startup is not at all comparable.

    3. JLM

      .Sorry, I have to jump to TT’s defense here in this beef. Kylie Jenner has no known talent other than a moody look and a suspect blood line and she has outdone all the wise guys and smarties.Results count.Bravo, KJ. Tip of the hat to T x 2.JLMwww.themusingsofthebigredca…

      1. Lawrence Brass

        The celebrity status in not a guarantee for a successful company, and she has both.https://www.kyliecosmetics….Are you rebranding Twain? 🙂

        1. Twain Twain

          Hey I could sell accessories and lipstick like Kylie Jenner and become a $ billionairess!Of course, the fact that I NEVER wear make-up and everything about me is au natural as my parents made me is beside the point … LOL! https://uploads.disquscdn.c

          1. Lawrence Brass

            Of course you can! TX2, it would be intelligent makeup.Looking good, Twain.. and natural :)Enjoy your summer.

      2. Twain Twain

        Thanks, JLM! I’ve learnt BIG lessons such as it doesn’t matter that I have more vision+execution than a bunch of people in AI. https://uploads.disquscdn.c…Investors assume I don’t know how to solve tech problems because I’m a woman. Less than 3% of VC money goes to female founders.So I may as well stop fighting against the system and simply copy Kylie Jenner and sell cosmetics and my looks instead.I’d have a higher chance of success than the startup-VC [email protected]_on_avc:disqus @jameshrh:disqus — There’s been 2000+ years of thinking by lots of men, starting with Aristotle:* https://aeon.co/essays/on-t…* https://www.theatlantic.com…The end result of those 2000+ years of thinking is that we basically have garbage data and garbage AI:* https://qz.com/1316050/tech…I’ve done my share of thinking+doing that overwrites those 2000+ years.From now on, I’m going the Kylie Jenner route. It’d be a lot more fun than being bored solid by the cluelessness of Professors and PhDs in AI.

    4. jason wright

      born to rule.

  9. Guy Lepage

    >3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer.>4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer.The inverse of 3 & 4 compared to the above is the difference between a VC who does not understand that the business side can be taught to an entrepreneur vs. a VC who cares if the team is capable of building and executing.

  10. PhilipSugar

    I will add a corollary. Sometimes it is worth pausing and thinking out the question.I learned this from the Japanese when I worked at Mitsubishi Corp. The COO would tell me Phil-Kun that person is an idiot, they didn’t even think about the answer before they spit it out.It is fine to say let me think. Take a couple of seconds and get a good response.

    1. LE

      Sometimes it is worth pausing and thinking out the question.Agree. Also to take the skill to parry the question is a good trait in itself. Do you fall apart at a bit of adversity and push back even if meanly intended? Or do you power through it and show that you can handle it and deal with it in some way. And come out ahead. To me that is the game and challenge and it often pays off. See my Dr. story as an example.This is all idealistic but my point is that there are several ways to look at this story and interpret it. We don’t know enough details to see the nuance of the exact situation. My guess is that if it happened now with Fred things would be different in many ways. I can think of things that I wouldn’t have on the spot (which Fred was in) that I would use if that happened to me.Remember our Dr. conversation last week about wait times? Yesterday I waited in the Dr’s office for 1 hour 20 minutes. (Payback?) The doctor was running behind. I waited patiently in the room. I could hear him calmly discussing Alzheimer’s with a patient (so much for Hipaa) in the adjacent exam room. He finally came in. I related our conversation to him. I said ‘my attitude is that I like the fact that you do that it means you will be the same way with me’. He immediately shot back excited and was all happy and began to tell me stories along those lines. He also said they wanted to only give him 15 minutes per patient and he had to beg for 20. But yes it’s hard to predict the time for a visit etc. Anyway my point is really that it would have been counter productive for me to be upset with him. I don’t want him upset I want him thinking clearly and liking me (because I want something from him basically which is his full attention and care). [1][1] This is also somewhat similar to how you deal with Police that you have told me.

    2. JamesHRH

      Yes, sometimes people will see a quick answer as an answer without thought, even though it is the exact opposite.

      1. PhilipSugar

        It is what is taught, say the answer immediately. Everybody knows sometimes I contemplate the question. One of my most uncomfortable meetings was when I had a board member asking me questions and I would say let me think for a second and somebody would blurt out stupidity. He roared get the fuck out of here I didn’t ask you the question I asked Phil, you are stupid, your responses make me dumber.

        1. JamesHRH

          Great story.

          1. PhilipSugar

            You should have all of the obvious one’s thought out and be able to respond instantly. That’s a given. That’s called being prepared. And I would say not knowing the market cap of your publicly traded competitor is not being prepared.But if you are talking to somebody good they are going to ask a question you are not prepared for.For instance what are your revenues going to look like in a year is an obvious question, and I don’t have a fucking clue is not a prepared answer.But let’s say the person says: I know this person that is an expert in the field, I want them to join the team. Well now you have to think things out, and what questions to ask.

        2. LE

          and I would say let me think for a secondI don’t do this but I have noticed a pattern that people will often start to just talk about something else (as a pre-amble) to give themselves time to come up with an answer. Requires the ability to think in parallel. Another thing obviously is asking a clarification so someone restates the question which gives you more time.I am sure this is taught in media training as a technique. I’ve seen it to many times for that not to be the case.get the fuck out of hereImagine what would happen if someone roared to either a protected group, a woman, or both. People would infer that it was behavior and respect specific to those groups and not a general way of behaving.

          1. PhilipSugar

            The problem with talking about something else is that you can say stupid stuff, and you are not fully concentrating on the question.Silence is a very powerful tool. It for some reason is uncomfortable here, but not in many other parts of the world. Sometimes I don’t say anything and the other person will start negotiating with themselves.I need to think about if that offer works for me. Sometimes at Mitsubishi we would sit for minutes and not say anything.Talk about grin fucking, he would mutter it in Japanese under his breath with a smile on his face and his head cocked like he was talking to himself.And yes you are right about the protected groups. One thing that has gotten out of hand inferring any behavior to your protected status. If I say only a woman would say something so stupid. I need to get called out. That is plain wrong. If I say I can’t believe you said something so stupid, It has nothing to do with anything other than the stupid thing you said.

  11. Kriss Kirchhoff

    The Q&A dialog in a pitch meeting is very important to both parties.For the entrepreneur, it allows her to demonstrate that she has leadership skills by having members of her team present to help field questions even if she could answer them. The dynamic between the CEO and team is illuminating and allows the investor to gauge the strength of the overall team.The entrepreneur’s approach to taking in a question, probing for more information, and explaining the answer or how she will get the answer also shows how she thinks and reacts when challenged.And too, this dialog is important for the entrepreneur as they qualify the investor as an advisor and ally in what will be a dynamic business journey. The entrepreneur should be interviewing the investor as much as the reverse.

  12. Frank Traylor

    The most important advice “if you don’t know the answer to the question, you should be honest about it”. Absolutely. Whether the audience expects all the answers or none, an evasive, uninformed, or just plain wrong answer projects an image of someone without the courage to communicate in difficult situations; a bad characteristic in a business relationship.I’m surprised at your founder story as I assume he was experienced in these situations. I coach inexperienced founders to not be upset if the presentation is derailed. In fact, that is the goal. If your pitch gets straight to the end you haven’t generated enough interest in the pitch, nor the company.Best case, interest is generated, questions revealing the concerns of the investors are asked, and then the founder, armed with better knowledge, realigns the pitch to the investor’s interests. I recall a presentation by one of my favorite founders that only got 2 or 3 slides in when the (relevant) questions came. He took the pitch down a new course, with extra slides he’d prepared. He came off as very sharp and prepared and secured an investment.

  13. Mark Essel

    Yeah you do.

  14. Richard

    Founder seems like an ahole. Why not just placate the VC, state a few assumptions and provide a range?

    1. Salt Shaker

      Actually, I too think the Founder was more of a jerk than the VC. The VC’s Q was relevant, although prob not delivered in the most appropriate, timely or thoughtful way. Perhaps would raise a red flag whether he’s the personality type I’d like to do biz with, but again a reasonable Q. With respect to rev projections, all highly speculative, but likely the VC was most interested in the Founder’s thought-process in arriving at h/her numbers. Lastly, if the Founder didn’t know the financials of his public competitors and “needed to get back to you”,” then meeting over in my mind. That’s about as fundamental as it gets.

      1. JamesHRH

        VC’s question was idiotic.’None’ or ‘we are too early in the cycle to know’ would be appropriate.Its also a sign that 27 years ago, no one was very good at the process and Fred had not set this founder up with the mantra “we are looking for someone who gets it, who is a good fit…. most of the people we talk to will not get it and will not be a good fit.’I had investors asking a pre-market product near complete founder for 5 year pro forms. Shit man, if we knew that, we’d be at the bank.

        1. Salt Shaker

          Well, of course a 5-yr Pro Forma is ridiculous, as is holding anyone to even a Year 1 rev projection. What isn’t ridiculous is having some fundamental understanding how the company is potentially gonna make money. What’s the thought process? Without even a speculative plan, it’s more hobby than a biz.

    2. JamesHRH

      You missed the phrase ‘brilliant software developer’.Try reading Dealers of Lightning as a primer on the highly opposable, binary analyst personality type….. (jk).

      1. JLM

        .Great book.JLMwww.themusingsofthebigredca…

  15. Paulo Trezentos

    Another question to be sure you know the answer is: ‘How will you become a $1B company? ‘ (Replace $1B by $100m depending on the VC)Initially, I thought as a dumb cliché but over time learned to appreciate the exercise of practicing the answer. Combines your differentiation, market size,.. I don’t remember my original answer but was closer to I don’t know than I don’t have a fucking clue.

  16. aminTorres

    This is a great post, no arguing the wisdom here but this confirms my friend’s ( https://twitter.com/k1ix ) stance of why even bother with talking to VCs to begin with?Clearly, the entrepreneur’s ability to answer the question at that time had no impact at all on the outcome of the company. In a way, he burned a bridge in this meeting. My friend would argue that if you spend 40 hours chasing VC meetings and twice as much agonizing in building “the perfect pitch deck” those are a solid 3 weeks you could just spend building your product instead. Once you’ve build something VCs will find a way to find you. Not all products are built equal but I am increasingly favoring this line of thinking.

  17. JLM

    .I have raised well more than a billion dollars in my career; and, bought/sold a lot more in assets, probably 2X. To this day, I have learned one important thing about pitching. [Only one.]The purpose of initial contact is to provide sufficient information as quickly as possible to answer this question, “Why do I care about this?”Make them care.The call to action is to get them to ask enough questions to support sufficient interest to have a second meeting, to ask for more info, to turn that caring into follow on action.That is all you need to do to have a successful meeting.Don’t ever let your own ego get in the way of doing business even if the other party is a certified, first rate jackoff. Part of raising money is to take a little abuse. The money is stupid.Never get mad at the money. It will change its mind. I promise you.I once got turned down for 18 months in several different languages before I raised the money I needed. Thereafter, a great number of the people who turned me down re-approached me and asked to get into the deal. By then, there was no room.If you want to feel good all the time, don’t become an entrepreneur. If you want to harvest, ferment, and use disappointment to create rocket fuel, sign the book.It only takes a single YES to undo the 18 months of frustration. I know cause I’ve lived that.On a professional note, you should spend some time anticipating every single question you can imagine. Good God, the questions are almost obvious, aren’t they? Whip up an answer and practice giving it.Do take a breath before answering and don’t be afraid to take your time answering ones you know cold.To this day, whenever I raise money, I feel like a beggar with a tin cup. That feeling never goes away. Sorry.The world is divided between users of money and providers of money. Pick sides.JLMwww.themusingsofthebigredca…

    1. sigmaalgebra

      A keeper, kept, thanks!

  18. creative group

    CONTRIBUTORS:There is another moral to this story. If you have a great product or service you don’t need to bend over to the VC no matter the reputation. That founder was rude but he knew he had the confidence and ability to locate other VC’s that could see his vision to success.Pitch to VC’s who want to be pitched to. Sometimes people smell themselves on past success and performance not realizing what counts in right now.Entrepreneurs be your own person. You are not required to follow the herd in dress and talk. There are good VC’s and bad ones who gained success. You make the choice which fits your company. Don’t be the me too crowd. If a noteworthy person says they do a certain habit the me too crowd will follow without reservation or independent thought.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

    1. sigmaalgebra

      Yes, the ambitious entrepreneur, should there be another kind?, and a good VC share one interest — something exceptional. Kinda tough to do that following the crowd, doing what the VC did when he was an entrepreneur, using patterns can see in the rear view mirror. Instead, have to be good at working with things that are new — there really are ways to do that!