Favorite Three Questions for Early-Stage Companies

At the risk of making life too easy for early-stage companies I’m talking to, here are three of my favorite questions to ask the team — which is usually only 2-3 people at this stage — in one of the first meetings. I usually select a different person for each distinct question

  1. I’m a star prospective employee (I usually alternate between salesperson and engineer) you’d like to hire. Recruit me.
  2. I’m a nervous prospective customer. Gently size the opportunity, and then sell me.
  3. I’m an angel investor you’ve just met. You have one minute, so get me interested in taking you seriously.

These questions may or may not sound trite, but you would be amazed at how effective they can be at figuring out how clearly the team understands what it’s trying to do, what it’s not trying to do, where the value is, why the timing’s right (or wrong), and whether they can communicate with passion in a crowded market why they’re great.

Related posts:

  1. The Early Stage Venture Investment Trap
  2. Universities and the Further Perils of Early-Stage IP Investing
  3. The End of the Early-Stage IPO
  4. Big Companies, Small Companies, and Media Markets
  5. Five Questions that Will Let You Spot a VC Bluffer

Comments

  1. Greg Linden says:

    All three of these questions appear to be tests of the entrepreneur’s sales skills, are they not? Do you really want a selection criteria which rewards the slick?
    Let’s look at this another way, Paul. How do you think Sergey and Larry would have done on these questions when they were starting Google?

  2. I think they’d have done great. They would have told me how awful search was, how they had a much better way, and they would have beat me silly if I deigned to see things differently.
    It’s not about sales, it’s about clarity, conviction, and passion. It’s about knowing what you’re trying to do (and not doing), and having just enough ego to get the point across without pissing people off overly.

  3. Andy C says:

    I can understand you here. If you can’t answer any of those relatively quickly and with earnhest you’re giving a pretty strong tell that you’re not interested–or at the very least it’s not connecting 100%.
    As a startup, doing pitches, and believing deeply in what we’re up to it’s my job to beam that across the table–and I love it.
    When I meet new people and I bring up what I’m into it’s a fantastic exercise to find new ways of hooking people onto what I love.
    An idea strikes me–I’ve been skydiving for a while now and selling the skydiving sport is almost like pitching for my company.
    People already have this unnerved risk that they think is inherent which has to be unlearned, then re-explained quickly and with great passion and imagery that you can win back over one out of two people.
    Thanks for causing an own ah-ha moment, and further thoughts on correct responses during interviews.
    -a

  4. Matt M says:

    Sounds familiar! ;-) Thanks Paul, awesome stuff.

  5. Nivi says:

    These are great questions that measure the team’s ability to execute in three key areas: recruiting, sales, and raising capital.

  6. Andi says:

    Sales, done well, is precisely about about “clarity, conviction, and passion.” Without these things the salesman is a con man. And until the deal is closed all communication is a sales pitch.

  7. Great questions that everyone at a startup should be able to articulate, not just the founders.

  8. Tony Wright says:

    “Clarity, conviction, and passion” can can help a startup team pass this test, but there’s no denying that an effective spin-doctor can make a mediocre idea sound more compelling and that an engineer with weak communication skills can make a great idea sound kinda “blah”. I can refer to something as a “muscle tissue sample of a castrated bull” or a “nice juicy steak”. Both are true, but which would you rather have for dinner? (credit to Robert Heinlein)
    A lot of founders need to fight against their instincts and learn how to craft their messages effectively.

  9. Star prospective employees and angels are pretty sharp people. Customers can be fooled but don’t count on it. All 3 can see through a spin doctor.
    A star entrepreneur, on the other hand, will have all 3 jumping out of their skin to work with them. Why? Energy. People pick up positive energy because it can only come from someone who truly believes in their path. People want to be a part of that. That’s the company you bet on.
    Best,
    George