I receive lots of pitches from entrepreneurs and it seems that all of them are out to disrupt the status quo with their creative innovation.
I can’t understand why they all want to be so disruptive.
I know the term sounds great, and it’s become very fashionable to want to become the next Uber for healthcare, for example. It seems that every startup wants to disrupt the way healthcare is delivered. However, not only is disrupting something extremely hard, it can be painful and destructive as well.
It makes much more sense for founders to aim for more incremental innovation.
Not only does this have a much higher chance of success, it also means that you’re much more grounded. It’s also easier to raise money because investors understand that you first need to show that you can get from point A to point B, even if your long-term goal may be to reach Z.
Dream Big, Do Not Talk Big!
It’s not just the founders who are to blame either! Investors also want to know what the TAM (total addressable market) is – and this is why founders inflate their figures. After all, isn’t it true that bigger is better? It’s great to want to change the world, but there’s no need to exaggerate. You end up losing credibility.
The Uber founders didn’t start off by trying to destroy the entrenched taxi systems. When they started, their goal was much more modest – to make it easier for people to get transportation.
It’s all very well to talk about what your dreams and plans are, especially when you are talking to the media; or competing at pitch events, but a lot of this is hot air. Serious investors start discounting everything you say because they’ve heard a variation of a similar spiel so often from so many different entrepreneurs, that they get jaded and take everything you say with a very large pinch of salt.
It makes much more sense to show that you’re focussed on one particular area.
Prove that you are able to solve the pain point of customers in that well-defined segment and that they are willing to pay for your solution. If you can do this profitably, investors are smart enough to be able to extrapolate as to what additional uses your product could be used for to earn more money.
It’s great to dream big, but you don’t need to talk big!
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
