TFF #008: How to answer the harder, unanswerable questionsDec 01, 2022
When I was investing I tried to keep away from asking the unanswerable questions to founders.
But sometimes as an investor it’s basically impossible.
So, what do you do when someone asks a fundamental, unavoidable risk?
E.g. “What if Google or Apple makes what you are building?”
Or, “Isn’t this market too competitive?”
The initial instinct from you is to turn these into a discussion, to see how the investor would tackle this.
Or create a conversation together to solve this.
And for the rest of a fundraise I would say this is correct.
This is where the problem aligns.
They don’t know as much as you. They may genuinely believe you can never compete with Apple.
That when you pose it back to them as a question on their knowledge: it deloves into a long, negative conversation that doesn’t resolve the issue. Which makes it seem like an even bigger deal than it is.
They are horrible questions asked to you. I get that.
But you will be asked something like this during your fundraise.
So… how do you get past this?
I have found that you can have the most success on this question when you stand your ground. You have to show you are the expert. You have to answer with a strong counter argument that doesn’t leave too much room for discussion.
E.g. let’s say an investor asks you, “What if Amazon enters your market?”
You could answer back something like,“Amazon has shown they don’t care about this market, the last 5 products they launched were a flop and it’s a huge market. All backed up by data, data, data.”
The key is to have real counter arguments that you believe in. And an informed confidence that this big, hairy risk is actually not a worry to you.
This takes experience to get this right in meetings. This isn’t an easy skill.
You have to understand:
- When an investor is asking this question
- When to move from discussion to explaining
- When to push back (covertly) when asked a bad question
But when you do this correct, you can move into that “it” factor as a founder.
This is why recording your meetings is so important.
So you can look back and see how you react to these types of harder questions.
And practice how you answer them to future investors.
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