Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at firstname.lastname@example.org.
Q. I have a new product in the market and there’s some interest, but we haven’t yet proven product market fit. Truth be told, there are some things that have been criticized and that we have to defend. What’s the best way to handle this?
—Founder struggling post launch
This is pretty straightforward. Acknowledge the concerns upfront. Don’t be defensive or flip about it.
Share what makes you excited, and talk about what’s going well but acknowledge that other things are not perfect. Tell the truth. Things go awry when you give a B.S. explanation when there’s trouble on the horizon.
This is an important time to connect with the customers you have. You need to delight them and earn their loyalty. Then, you can work on your go-to market plan and customer acquisition.
If some of the criticism you are receiving is from investors or VCs, not customers, keep in mind that these people have to say no so many more times than they can say yes. Sometimes there may not be a real problem with your business; it might just not be a fit for them. However, you can always use this as an opportunity to get better. You must accept the fact that they are passing, but you can ask them for more insight. Consider inquiring, “Is there anything other than what you’ve already told me that other VCs may be concerned about?” You might be surprised at how much you can learn and how much one “no” can help you secure the next “yes.”
Q. What’s your best fundraising advice?
—Founder of an early stage company looking for seed money
I understand that this is going to sound counterintuitive, but it can often be better to raise money when you have nothing than when you have something.
It depends on the industry of course—if you were launching new detergent or diet drink, you’d actually need a product—but if you are in enterprise software, you can raise money with a good reputation and a great concept, even if it’s not built yet.
The fact is, if you have a product and are beginning to get it moving, but it doesn’t yet have real traction, it can be hard to raise money. On the flip side, if you raise money before you build something, you can create excitement about the possibilities and an investor can have more authorship of the product, which, for many, is an attractive opportunity.