Make Investors Sit Up and Notice - #5 - Prove You're Coachable
Today, I want to share something else that can set you apart from the crowd and make investors take a serious look at you, even if they still feel there is a lot of risk involved. But first, let me ask this question. Do you consider yourself coachable?
Let me give you an image to help introduce this next subject. It is a cold and rainy night. The roads are slick. The wind is howling. You and a friend have gone out to a party. While you're enjoying the party the weather outside is getting worse. Temperatures have dropped and the rain is now freezing on impact. Black ice is forming on roads and bridges. You and your friend are leaving the party and have a 20 mile drive home. You walk out to the car. Assume that neither of you has had any alcohol.
Would you rather be the driver or the passenger?
If you've ever experienced a long drive on a night like that with danger around every curve then probably you'll agree that even though driving is difficult, being the passenger is truly the white-knuckle experience.
Am I right?
When you're driving you at least feel some sense of control and you can apply your skill and experience to conquer the risks. When you're merely a passenger you are completely at the mercy of the driver and you have to just hope that he or she can manage.
Now, if you can't drive, maybe the next best thing is that you can stay very alert, watch the road, use your own skill and experience to help navigate, look for ice, notice where other cars are, point out upcoming turns and twists in the road.
OK so just hold this imagery as we discuss coachability.
You see, if you're coachable -- I mean really, honestly, consistently coachable -- you elevate your potential investor from a passive rider in the car to someone one who can help navigate, point out the perils along the way, maybe even co-pilot at times. They'll feel safer.
Put yourself in the investor's shoes -- are you more likely to invest in something where you're a helpless passenger or something where your opinion, skill, experience and past success can be used to navigate through the difficult times?
Now on that icy road the most difficult thing is the sharp turn. You could spin out. You could skid. Your brakes could fail. You could fall victim to another driver's navigation failure. The pivot is where the risk is greatest and it's the same in the business world. And, just like virtually any drive home involves at least one sharp curve or turn, the life of any business inevitably involves at least one pivot.
Other investors agree -- the pivot is inevitable. Verne Harnish, author of Scaling Up: How a Few Businesses Make It . . . And Why the Rest Don't says, "There are no straight lines in nature or in business." In other words, life and business are both full of twists and turns that require your organization to be nimble. Coachability is one way a prospective investor can determine, prior to investing, whether you or your team are nimble, malleable and open to input. Research bears this out as well. Debi Kleiman, Executive Director of the Arthur M. Blank Center for Entrepreneurship at Babson College, summarizes that research as follows:
"Several academic studies have demonstrated the impact coachability can have on an entrepreneur’s chances of securing funding. A 2010 study led by Cheryl R. Mitteness, an assistant teaching professor of entrepreneurship and innovation at Northeastern University, showed that coachability influences whether angel investors recommend moving forward with a company after a pitch. Recent research at Babson College by Lakshmi Balachandra, an assistant professor of entrepreneurship, also found that the more willing an entrepreneur is to accept feedback and engage with suggestions that are offered during a pitch, the more interested investors are in pursuing the company. Her study concluded that coachability has an impact regardless of how strongly investors rank a business’s economic fundamentals or the competence of the team."
But you need to demonstrate being coachable before you hit the icy turn in the road. Otherwise, when you most need him or her, that experienced, skilled investor probably won't be there with you. And this presents you with a great opportunity, because investors love to be coaches, even when they don't have a ton of time. It is an honor to be asked to assist, to be a part of problem-solving and they'll feel a bit less risk if they feel genuinely "wanted" by you and your team -- because they'll have some input, some sense of control over their investment, some opportunity to help mitigate downside risk.
There are abundant articles, resources and opinions out there about what coachability means. I think the essence is what is most important. The essence is listening. Listening breeds trust. Trust is the key to getting a 'yes' from an investor and that is why I wrote about being a true listener in an earlier post on this blog. Let me briefly summarize what I wrote in that post, which came from a major research study conducted at Harvard University:
- Good listeners ask questions that provoke insight and discovery -- so focus on asking good questions when you meet with an investor. Get their view of things. Listen to what they have to say. Really pursue the line of inquiry with them. Show them that you care about their opinions, concerns, fears, etc. by probing into those things.
- Good listeners build the self-esteem of the speaker. The point here is to engage by asking questions, then keep engaging by showing real interest in what the investor has to say, regardless of the particular subject being discussed.
- Good listeners engage in a back and forth conversation on the subject matter, rather than simply setting forth their own viewpoint and sticking to it. This means be willing to actually hear another viewpoint and treat it with genuine regard.
- Good listeners make valuable suggestions. If you're not really listening to someone else, when it comes time to provide your own insight, your suggestions will generally lack depth and insight. That's a key indicator about whether you really give a damn or not. And that relates to coachability down the road.
Are you seeing a connection here between some of the things we've been discussing over the past several weeks on this blog?
Get off to a good start with investors by spending most of your time with them asking questions and listening. When you do this you begin to prove that you are coachable because listening is the core of coachability. And, you really do have to prove this, because everyone says they're coachable, but in practice investors know that few really are.
Remember, getting funded requires investor trust and at the outset they perceive you as a very big risk. Period. Developing trust has to do with being genuine, being vulnerable (appropriately), being humble and listening. If you demonstrate those qualities, guess what?
By definition you'll be considered coachable and much more fund-worthy than the average know-it-all, super-confident, poor-listening and uncoachable entrepreneurs out there.
Key Takeaway: Investors want a nimble, coachable team run by people they can trust to handle pivots. Being genuinely coachable reduces your risk profile and increases your trust quotient. Being coachable has a lot to do with listening. Demonstrate coachability and you'll stand out from the crowd by perceived as a lower risk than many others. Lower your risk profile and increase your trust quotient in investors' eyes and you raise your funding chances substantially.