If you know Seattle, then you know Green Lake — a fabulous park with a 2.8-mile running/walking/riding path around a lake with swimming/paddling/fishing… and much more. Truly a lovely place to hang out. Ironically, also the birthplace of the GroundWork Framework. But that’s a story for another time.
I took a walk around Greenlake this weekend with one of my daughters. Halfway around, she wanted to pause to take a closer look at the water lilies and lily pads. We pondered the coolness of the lily pads that seemed almost like you could walk across them. She told me about giant lily pads in Thailand that a person can stand on and not sink. I later fact-checked that; sure enough.
For my part, I told her that startups are like lily pads. My daughter knows a thing or two about startups — partly because she’s had me as a dad her whole life and partly because she co-founded a company when she was 12. The company was Wise Walker. Her cofounders were her sister and her dad. 🙂
“Startups,” I said, “have to be built one lily pad at a time. You don’t get to just jump to the other side of the lake all at once.” To her dad’s great satisfaction, she understood it immediately.
I often meet founders who have a grand vision of where their company could go. On the one hand, bravo! We investors frequently tell founders that we want them to “swing for a far fence.” But, founders, far-fence vision stories alone won’t get you funded. You also have to tell the “how we get there” story, and that story is best when served with a heaping helping of cogency.
Of course, you don’t have to map out the complete journey. Even if you do, we won’t believe you — at the earliest stages, your headlights don’t go out that far. To bring it back to Greenlake, you can’t jump across the lake in a single bound — but you should be able to tell a cogent story about the first couple of lily pads.
Lily pads are milestones. If you pick the right lily pad and you can describe to investors why it should be that lily pad and you can convince the investor that you can jump that far… then you will have their attention. If the investor doesn’t think that is the right lily pad to jump toward or doesn’t believe you can jump that far, then the investor will see visions of you (and their money) drowning in the lake.
The right milestone (i.e., lily pad) is one that unlocks something strategic for your company so that your NEXT investors will recognize your company as fundable. But that’s not all. The right milestone also must be reachable with the resources you’ll have to get there — i.e., the time, money, and skill you’ll have after the investor writes you a check.
You might have in mind a fabulous milestone that would if you were to reach it, ensure you raise your next round. But if reaching that milestone is not possible (or highly improbable) then it’s not the right milestone. Investors see that. And they probably won’t invest. Instead, you’ll hear, “Love what you’re building, keep me on your update list, would love to see you get to [insert metric].”
What the founder hears is, “the investor loves us and will write a check when we reach [metric].” What the investor really means is, “I do love you, but you’re unfundable and even if you reach [metric] I’m still unlikely to invest… but I will take another look.”
Founders: Figure out the right next lily pad and build a cogent story about how you could jump that far.
