——————- Scene rolling ———————–
(Mr. A: An entrepreneur and Mr. B: A top-notch investor)
Mr. A: I’m seeking a $50,000 investment with 10% equity in my business
Mr. B (smiling): You are valuing your company $500,000. Tell me about your little adventure.
Mr. A: It’s a digital marketing start-up. We provide customize T-shirts to our customers.
Mr. B: You mentioned “we”, any other partner(s) involved?
Mr. A (confidently): Myself and a friend.
Mr. B: Seems interesting. How much business he owns?
Mr. A : Sorry, but he is “she” here and we both are 50-50 partners.
Mr. B (wickedly): Okay. Walk me through the economics of your business.
Mr. A: Well! It’s been only a month and we’ve made $1,000 net profits on sales till this day. T-shirts cost $15.99-20.99. We have sold 350 T-shi..
Mr. B (interrupting): Are you kidding? $1,000 and 350 sales are nothing and you are evaluating your company at $500,000. Its pathetic. Tell me, what’s your differentiation; there are so many similar startups in market nowadays?
Mr. A: I agree but it will be huge soon. We are also planning to include referral system. For say: you referred us to your friend. And if your friend buy our product(s), worth of $35, then you cash-in $2, as a mark of appreciation.
Mr. B: Kind of royalty and that too, so early is a very stupid step. You guys simply are bozos. Okay now, tell me how are you planning to cut off other players?
Mr. A: We haven’t thought that through.
Mr. B: Sorry, strategy doesn’t seems to click at this moment. I’m not interested. Good luck.
Boom!! That’s it. It was over. He couldn’t convince Mr. B to gamble money on his startup.
————–Time for some Q&A—————–
Q. Why did it happen? What are the loop-holes in his proposal?
1) Company evaluation (too BIG, too SOON).
2) No “Extreme Differentiation” (space is crowded and chaotic, so one needs to have a “SPIKE” somewhere to stand out).
3) Profits and sales, both are acute (pilot run in an experimental phase; not fully tested and developed).
4) No strategy to curb competition (providing live reviews, ratings, etc. would help)
That’s life. You started off well, but due to uncertainties in your plan you go downhill. Career is similar. You could start with flying colors but if you lose hindsight, then you are probable to go downhill, just like Mr. A.
Career ladder is similar to doing a business. You start from the very basic (entrepreneur level). Slowly and strongly, with baby steps, you develop your capabilities, and your muscles to eventually rise up to the top. It all about growth. Doesn’t matter how quick or slow it is. Though, it must be significant enough to get you to the next level, every now and then.
Q. How investment and investor could be related to career?
Investments are our opportunities. Both grant us a path to grow, to take calculated risks and to put our focus to different avenues. Thus, helping building our capabilities, as pointed out earlier.
On the other hand, Investors are the people, who believe in your abilities. They invest in you. Take personal interest to give you a fighting chance to showcase your talent. That’s why it’s very important to have right investors in life. World is too big and challenging to do everything yourself. So start building good personal relationships with the right people, if you haven’t.
A quick summary
1) Think and analyse plan of action, thoroughly.
2) Invest on passion first and skills second. Passion always supersedes skills.
3) Restrict yourself from doing too many things, too soon. If you are a person who wants to do many things, then divide them into timeframes on priorities, like till age 30 this, till 40 that…and so on.
4) Don’t let disappointments hamper your thinking. Everything has a time. Your time would certainly come. Keep working towards your goal to become a success.
5) Always smile and get your hands dirty.
Like to end with an quote from the movie: Robinhood (2010)
Rise and Rise again until Lambs become Lions