David Cummings on Startups

Ways to Tell an Entrepreneur You Don’t Like Their Idea

Written by

David Cummings

in

Wyoming Entrepreneur
Image by ▓▒░ TORLEY ░▒▓ via Flickr

On a monthly basis I hear two to three new startup ideas from entrepreneurs that want help with something (investor intros, thoughts on an issue, transitioning from consulting to products, etc). Unfortunately, a small percentage of the time I don’t like their idea and want to strike a balance between offering candid feedback and still being a nice guy. Nice guy tendencies usually win out.

Here are some different ways to tell an entrepreneur you don’t like their idea:

  • Direct – give it to them straight and frank that their idea isn’t good and you don’t see how it could succeed
  • Too many competitors – point out a number of other companies that are doing it and how you don’t see how they can be successful without a small fortune (look on LinkedIn to get a proxy for size based on how many employees a competitor has)
  • You don’t get it – don’t focus on whether it is good or bad but be self-deprecating that you don’t get it and aren’t the best person to provide feedback because you can’t relate to it
  • Poke extensive holes in it – articulate everything that is tough regardless of idea, and hit on all the warts of the specific idea
  • Market focus while downplaying the idea – focus on the fact that the market they’re thinking about is good (small, fast growing, etc) but that you’re not sure if that’s the best idea for that market and that if you start with that idea there’s a good chance you’ll find a better idea

Telling an entrepreneur that’s excited and passionate that their idea stinks is hard. Very hard. Sometimes it’s the best medicine for them and sometimes it’s best to hold your nose and move on. Regardless, it’s always a judgement call.

What else? What are some other ways to tell an entrepreneur that you don’t like their idea?

Comments

3 responses to “Ways to Tell an Entrepreneur You Don’t Like Their Idea”

  1. Jason Caplain, General Partner, Southern Capitol Ventures Avatar
    Jason Caplain, General Partner, Southern Capitol Ventures

    Great topic David. I always enjoy your blog and glad you spend the time on it.

    This is something we have thought a lot about over the years. We try to provide as much honest feedback as possible. Let me share some stories that may help.

    Over the last 11 years, we have passed on companies several times before finally investing. In fact, our most successful exit, we passed on twice before finally investing the third time! I think the honest feedback (and treating them with respect) is a reason we both stayed engaged in conversation over and over again. But entrepreneurs need to know why we’re passing. Then they know if they’ve addressed our concerns (or not) and when they become a good match for us.

    At the same time those same entrepreneurs get to better understand our criteria. They are a close group. If they understand what we’re looking for, they may be able to refer in others that may be a better fit for us.

    The other comment I will add to this is that the truth might actually be impactful in helping them build their business (beyond funding). For instance, we were digging in on a company recently and bounced the concept off of a bunch of potential sales prospects that we know. Although the feedback was negative, it helped them the entrepreneur with their sales and marketing messaging.

    So, I guess my thought is for investors to be armed with less “excuses” on how to back out, Instead, I encourage investors to be truthful in the feedback they give. The entrepreneur is already giving up their time to pitch an investor. In return, they should at least get some valuable advice that they might want to use to help them shape their business.

    Reply
  2. Dave Avatar
    Dave

    Give it to them straight up. Sugar coating it doesn’t help anyone. Of course prefaced with, I could be completely wrong and these are just my opinions from an investor perspective!

    Reply
  3. Paul Freet Avatar
    Paul Freet

    Focus less on the idea and more about the problem. Is it a real problem that is important enough that people are motivated to solve it with your product? Then it is discussion about market needs and solutions, not the idea itself.

    Reply

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