Once every 2 ½ hours, a startup, somewhere in the world, is being asked on stage to give confidential information about their startup – that’s not a real statistic, but it certainly feels true today.
Startup Competitions are bad. Judges in non-related sectors determine whether an early-stage gaming studio is ‘better’ than a boot-strapped big data startup. They give false senses of satisfaction that ultimately leave the founders trying to measure the impact of the investment they just made (“5 tweets about us winning!”), and they are flawed in their very assumption that there are enough startups to fill every startup competition. You’ll notice that Rude Baguette doesn’t do pitch competitions – we may eventually, but I really hope we don’t, unless we do them right, like we do with Code in the Dark.
Today, I want to talk about one part of the pitch competition: the Q&A section. “What’s your exit strategy?” “How many Daily Active Users do you have?” and “What’s your conversion rate from freemium to paid ?” are all questions an investor should ask you – unless, of course, they are holding a microphone at a conference in front of an audience of 500.
Smart founders find politician-style ways of circumventing these questions: “Our exit strategy is to build a great product that people use every day,” “we’ve been pleased with the growth rate in our DAUs – it’s been very encouraging” or the less-stealthy “I’m happy to talk with you after the competition about that, if you’re interested.”
Judges need to stop asking probing questions
No one is teaching founders which information they should give out to strangers and which information they have a right to keep to themselves, and frankly, the judges are more at fault than the founders. There is some truth to that fact that being on stage at the LeWeb Startup Competition is akin to a first meeting with 100 VCs, and so founders want to offer information that will get them a follow-up meeting; however, don’t be fooled into thinking that this is your only chance to meet that judge. If they are interested, they’ll answer your emails or talk to you backstage – after all, you were just on stage with them.
More often than not you see journalists as judges (journalists do not care what you should keep to yourself – anything you say is a scoop), or late-stage VCs as judges asking how you’re going to deal with their portfolio company, who works in an adjacent sector but may eventually come into your vertical.
Founders: you need to be ready for every question, but you don’t need to be ready to answer them.
If a journalist asks you what you’re going to do if Google copies you, just tell them “Google’s DNA doesn’t really fit with this vertical, and we don’t believe it’s priority for them” – I don’t even know your startup, and there’s a good chance that answer will fly, because Google is actively reducing the number of activities it does and is too preoccupied with Google+ and Google Drive to worry about your sector.
As for judges (myself included): if you want to ask about what they’ve been working on for the past 6 months, and where they’d like to be in 6 months, go nuts. But don’t ask them questions that should be asked behind closed doors. Putting a founder in an uncomfortable situation is a good way to see how he reacts under pressure, but a competition is enough false pressure on its own that you can just stick to asking them questions about their strategy, positioning, and thoughts on recent sector news and competitors.
The image above is of TechCrunch Disrupt NY 2013’s Startup Battlefield, courtesy of CoolThings.com – the article is not based off of this event, nor did I even attend or watch videos of this particular event. I don’t even know who the judges or startups are above.
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