Listen to customers, not investors

If you’re going to start or sustain a business, you’ll need customers. You won’t need investor feedback. In fact, listening to too many investors has the potential to kill the energy that surrounds a promising new venture.

So don’t listen to investors.

Listen to customers.

It’s the marketplace that will determine whether you have something. If customers are interested, if they’re giving good feedback, if they’re willing to pay for your product or service, the investors will follow.

The startup community places too much emphasis on the investor, on the demands created by the image of his or her fund, and the returns he or she expects.

Don’t let the rules imposed by the self image of another business cast a dark cloud over yours. Your business exists to serve customers.

Lots of startups wait around for an investor to bless their idea, thinking that’s the path to success. But here’s the problem.

Investors are almost always wrong.

The vast majority of their ventures fail. Most don’t have anything approaching a crystal ball. No matter what they may say, it’s not just about great entrepreneurs and great ideas, it’s about hitting the next grand slam, and all the accolades that go along with that. It’s about ego, and investor ego has nothing to do with creating an amazing experience for your customers.

Funds don’t want great business ideas, they want startups that can double the size of the fund with GIANT returns. But here’s the problem. The potential return on investment way, way down the line is unknowable (again, see most investors fail). All the emphasis at the outset on “MAKE SOMETHING REALLY BIG THAT WILL EAT THE WORLD,  AHHHHHH!!! DISRUPT, BLAHHHHH” actually gets in the way of entrepreneurs making useful things for customers.

The “10X” sales pitch VC uses to raise money for their funds, doesnt have much to do with what will make a solid, profitable, business. Unfortunately, there is a whole class of startups out there whose goal is more VC, not profit, not self sufficiency.

Famous VC Fred Wilson said it well:

Investors have their own agenda. They want to invest in “bigger ideas” and “larger outcomes”. When they tell you that your idea is too small, they may be talking to themselves, not you. Do not make their problems your problems. This is your business, not theirs.”

If you’re raising capital for a startup, customer feedback, especially feedback that comes up again and again, is gospel.

Casual investor “advice” is not.

Back to Fred:

You have spent way more time and energy thinking about your business than someone who takes a 30 minute meeting with you, having never thought about it for one iota, and then gives you a ton of advice that you are doing everything wrong. You have to learn to hear that feedback but not react to it.

If you have a business idea you’re proud of,  one you believe in, talk to lots and lots of customers. Learn what their issues are, and how you can help them. Get the customer to bless the idea.

Then go talk to some investors.

If you must.

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