Only The Top 5% Listen Their Way to Funding: The Master Funding Equation (Part 3)
Want to have a breakthrough in funding? Then you undoubtedly need to have a breakthrough is listening. In fact, you need to become the superhero of listening.
A year ago in this blog, I wrote twice about the importance of being a master listener as a means to gain investor trust. In the first post, we looked at four research studies demonstrating the impact of poor versus excellent listening. The results of those studies showed that:
- Most of us think we are good listeners, yet most of our peers don't rate us highly as listeners
- Listening skills impact 40% of our job performance as leaders of organizations
- Multitasking is a primary distraction that keeps us from being masterful listeners
- We all want to be good listeners, but most of us go about mastering listening the wrong way
That last point was derived from a Harvard Business Review Study that compared the ways most people practice good listening, versus the listening skills of people whose peers rated them in the top 5% as masterful listeners. This is important, so I'll summarize it here. Most of us practice listening by:
- Not speaking when others are speaking
- Using facial expressions or verbal indicators
- Being able to repeat what others have said back to them
But those rated in the top 5% of listeners by their own peers practice listening this way:
- Asking questions to the speaker that provoke insight and discovery
- Creating a safe space for dialogue about the issue at hand
- Fostering relatedness rather than trying to win the point
Why are these listening skills vitally important in developing good relationships with investors?
Because the research showed that people who practice those three listening approaches were far more likely to be listened to in response when they offered insights, suggestions or solutions.
I've been preaching for some time that one reason trust with investors is so vital is that without trust they have too many barriers up so that they're simply not able to listen to the facts and figures about your idea, your team, your product or your market. This notion is not an opinion of mine. It's backed by a lot of research, published as well as anecdotal.
So that's why mastering the art of listening is so important: it is a key component in trust-building. Trust-building is a key component to the Master Funding Equation. Fulfilling on the Master Funding Equation is your best way to gain the funding you need.
In the second piece, I wrote about listening some time ago we explored listening specifically in the context of the entrepreneur-investor relationship. The key concept I shared is that from the investor's perspective he or she is considering giving you not just money, but also time. They're also putting their reputation at stake. They want to see that you value all three. If you're only interested in their money, investors will sense that from the way you listen within the conversations you have together.
So let's look at the three core listening skills identified by the Harvard Study to apply them in the entrepreneur-investor context.
- Asking questions to the speaker that provoke insight and discovery
At the beginning of most conversations, people engage in what we often think of as "idle chit-chat." With someone, you already know it's apt to be some form of "how are you doing?" "how's the family?" or "what are you working on these days?" When meeting someone for the first time, it's apt to be some way to create relatedness based on what you already know about them -- such as who they know that you know, where they're from or what they do for a living.
When you meet an investor for the first time, you'll both be engaged in that "feeling out" process. You need to really listen to what they share with you about themselves. Then, build rapport by asking them a question or two about what they've told you, something that provokes them to talk about themselves further. Remember that you're out to demonstrate that you value their time, you value their reputation, you're not just fishing for their money. I suggest continuing on that track until THEY decide to shift the conversation over to the business purpose of the meeting.
2. Creating a safe space for dialogue
I want you to be very clear about the notion of "creating a safe space" within a conversation. This is a highly contextual thing. We're talking about early stage conversations with investors, not coffee with your best friend or spouse. Your objective as a listener is to build the self-esteem of the speaker. Let them speak about themselves, their interests, their motivations, whatever it is they choose to speak about. It is a curious thing about the human psyche that even if we are highly-accomplished our self-esteem is often fragile. We tend to remember our mistakes far more than the times we succeeded. We're more aware of our shortcomings than we are of our brilliance. Our fears are more present to us than our possibilities.
So we often find a place to weave into our conversations something about ourselves as a test. We're looking for some indication from the listener that what we've mentioned is interesting or important to them as well. Rapport is either fostered or not based on how another responds to what we value about ourselves. Let me reprint what I shared with you in that past post on this subject:
"Be genuinely curious about the investor and his or her life, interests, goals, fears, dreams and ideas, in the same way, that you are genuinely curious when working on product design or business modeling or research. Masterful listening happens within this space of humility, curiosity and genuine interest in another person."
If you focus on building their self-esteem a safe space is created within which they'll be able to listen to you generously. Now the ball will be in your court . . .
3. Fostering relatedness rather than trying to win the point
As you begin to discuss yourself, your business, your team, they'll usually intercede at some point. They have a point to make or a question about what you've said. At this stage in the conversation, I want you to remember the metaphor I gave you in my original post about this subject: the tennis volley. Obviously, the goal of tennis is to win points. The points add up to games. The games add up to sets. The sets add up to matches. But some of the greatest joy in tennis is a well-placed volley. It's the back and forth. You learn so much about another player in a long volley. And that is precisely what you are trying to do -- learn about them (they're using the volley for the same purpose of course). DO NOT focus on winning the point.
Quickly winning or losing the point provides no opportunity for the kind of volley that builds relatedness. By the way, consider your investor as someone that has been in hundreds or even thousands of similar conversations. They'll know in five seconds whether you are interested in the volley (learning about them, how they think, what they value) or simply trying to win the point (get their money). Since you can't fool them, learn to enjoy the back and forth of meaningful dialogue. By the way, the more they volley with you, the more they're actually interested in you. If they weren't very interested, they'd either let you win the point or serve an ace and move on in the conversation.
Key Take Away: So practice being a master listener. Listen from the context that the investor is risking not just money, but time and priceless reputation. Listen to demonstrate that you really understand that -- that you care about that. Nothing builds trust faster.