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Things founders say to investors that are complete BS

I’m not an investor. I’ve never invested as much as a penny in any company other than my own. I have raised money from investors though, which I’ve spoken about in “What I’d Really Like to Say to Investors.”

It only seemed fair that I balance out the negativity by sharing my thoughts on the stupid things founders say. Plus, someone on Twitter asked how I would respond if I was given $100,000 to invest in a company.

Not sure how I would respond, but at the very least, I could sniff out the bullshit.

Here are the things that founders say to investors that are complete BS:

  • “I’m not looking for money, just your feedback.” Translation: I heard this tactic works for getting meetings.
  • “My cofounder turned down a job at Google to focus on our company.” Translation: He applied for an internship a while back and it fell through.
  • “I had a successful exit with my first business.” Translation: I sold my lawn mowing clients to a friend on a commission.
  • “We’re being selective on the investors we let into this round.” Translation: We’re taking every intro we can get, which isn’t many.
  • “We’re taking our time to make sure we find the right partners for this round.” Translation: Finding people to invest has been a bitch.
  • “We’re seeing 20 percent month-over-month growth.” Translation: Last month we had 10 email sign-ups, this month we have 12.
  • “Our growth has been all organic.” Translation: Our friends are using it.
  • “We felt we were too far along to join an accelerator.” Translation: YC rejected us — twice.
  • “We’re raising money to scale quickly.” Translation: We want to finally pay ourselves.
  • “Our competition is too big and slow to come after us.” Translation: The market size isn’t significant enough for them to care.
  • “Customer service is what sets us apart.” Translation: We just installed a free version of Olark.
  • “We’re launching public beta next week.” Translation: Should be two or three more months.
  • “We plan to stay in beta for the next 12 months” – Translation: We’re not sure how long our shoddy codebase will hold up, beta is a good excuse.
  • “We want to create a very minimalist design.” – Translation: We’re not designers and can’t afford to hire a decent one.
  • “We’ve gotten outstanding feedback from our users.” Translation: Our friends think it’s awesome.
  • “We’re about to blow up.” Translation: We hope one of our blog posts hits big on Hacker News.

And, finally…

  • “This is a $50 billion per year untapped market.” Translation: I heard this tactic works for getting investors.

For the record, I’m guilty of all of the above.

  • The title of this post should actually be “Things bullshit founders say to investors that are complete BS”

    Reply

  • Sometimes those answers are true and sometimes they are not. Experienced investors can properly DD any of those answers.

    Reply

      • I don’t know, say you hit your market – that doesn’t seem to leave a lot of room for growth? We like markets that you can expand both vertically and horizontally, not a market you can dominate 100% of on day one, without ever expanding it. Plus, growth has been stagnant for a lot of the $71.83 trillion that you mention:

        http://www.indexmundi.com/g/g.aspx?c=xx&v=66

        2% to 4% growth for over a decade sounds like a hobby more than a startup. Frankly, we are looking for opportunities where we can grow 1000x, and all of the businesses we’ve had success with have grown 2%-5% monthly, not annually. So while we can admire the $71.83 trillion business you’ve built, it does not seem like a match for the hypergrowth opportunities we’re looking for.

        Reply

  • I have the opposite problem — I tell people what’s what, and then they call me a liar. Even when there’s timestamped video.

    Reply

  • Hilarious. But this one isn’t fair:

    “Our competition is too big and slow to come after us.” Translation: The market size isn’t significant enough for them to care.

    It’s simply Innovator’s Dilemma all the way. Disruptive technologies (what startups try to build) are constantly working in unattractive, niche spaces. Then they move upmarket and capture would-be competitors’ clients.

    Reply
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