Leading a startup is harder than any other career path on many levels. You must build everything from scratch, fight for every dollar in and out of the company, and go to sleep each night with the knowledge that you should have done even more that day. You suck up an incredible amount of rejection from prospective customers, partners and investors. The rejection is always “personal” because the business is your baby.

While rejection is part of the game, a handful of jerks make life even harder for the hopeful souls trying to get a startup off the ground. Last week I felt the sting of a jerk–and while the experience ruined my day, I discovered a better way to diffuse this stress going forward. You might find the story helpful whether you are in the startup trenches, or just got cut off on the exit ramp of the interstate.

I was recently reading the blog of a fairly well-known investor and noticed that he had added an open calendar app on his website inviting people to meet with him. This is an example of a new trend of “office hours” that progressive investors have recently embraced. I was planning to be in his city the following month and figured it would be a great opportunity to connect both as a startup (MVC Test) and fellow investor (CincyTech). The scheduling process requested that I pick a few times and add a one-sentence description of the reason to meet.

A few hours later I got a response from the investor: A snarky one-line assessment of my business and no word of whether or not he would meet with me. My blood boiled for several hours. I wrote and rejected several responses to his missive, deciding to try and put the incident behind me. But something still nagged at me–Rejection is fine and expected, but why add malice? In other words,

Why be a jerk?

Believe it or not, some people actually choose to be jerks in the business world. A recent Wired article on the management lessons of Steve Jobs shares the stories of executives who openly denigrate people’s work and call customers “idiots” over email. I personally stay away from anyone who frequently speaks negatively about other people behind their backs. This lack of self-esteem can be toxic in many ways–especially in the personal crucible that is a startup. And if they tell you about others behind their backs, chances are they will do the same to you.

Startup investors often have to defend themselves against charges of jerk-ness. Many who are criticized say that they are simply being direct, and that this directness is meant to help the companies that come to their doors. And as gateways to money and success, investors can be seen in a harsher light to entrepreneurs. There is always one fundamental difference in perspective: The company pitching in the conference room is taking their jobs personally, while investors must look at a business with absolute lack of passion and emotion.

For some investors, though, absolute power corrupts absolutely. Investors simply don’t have the same kinds of checks and balances that business owners have. If you are a jerk in most other business roles, people will choose not to work with you or for you. Your business results will sour and soon you’ll be looking for a new job. But investors get 10 years to show results, and their limited partners are only looking for a strong return on investment. Niceties don’t count.

I have a unique perspective as both a startup founder and investor. Over the past year as an Entrepreneur in Residence at CincyTech, a seed-stage VC firm, I have listed to over 100 founders pitch their ideas. For me, the role of listening to a pitch produces empathy. I feel for the founders pitching their hearts out, because I know that the odds are long, and the reality is that we can only invest in a fraction of those who walk in the door.

To reduce any negative feelings along the way, I try to go out of my way to explain our process, offer helpful perspective and tips, and always keep the door open for future conversations. No one taught me to behave this way, it just seems natural to try and be a good person.

In the midst of my anger over the jerky reply from the “open” investor I went online to learn more about him. From the first page of Google results I discovered that he recently tried and failed to launch his own startup, and was now struggling to find investors and startups to join his new fund. Then I read some negative industry buzz about his mixing of business and pleasure. On one hand I felt better reading this. It validated my experience of his jerkiness, and suggested that karma is, indeed, a bitch.

But then my anger melted away and I began to feel sorry for him, because he is likely suffering because of his personality issues. What could be worse than having a flaw that you don’t know exists, or that you don’t know how to correct. It is hard to be angry at a person that is self-destructive.

So as you struggle on toward startup success, feel sorry for the jerks that you will inevitably encounter. By forgiving and pitying them you might be able to better wade through the unproductive anger that ensues…and it just might make you a better person in the end.

You should learn more about the MVC Test here, and follow me on Twitter here.

+Bob Gilbreath

You are an entrepreneur, a builder, and an artist. If you wanted to spend all day “writing up plans” or “researching” you’d be back in the corporate world, right?  After all, real artists ship. But one of the biggest mistakes startup founders commit is rushing to make, rather than taking the time to listen and learn.

In the past six months I have run across scores of eager entrepreneurs who put their heads down to build a solution without thinking through the basics of their businesses. I recall the crowdfunding startup that raised funds and raced to a beta version but failed to think through which customers they should build for.  Then there was the advertising services company that didn’t stop and learn about how the marketing world actually works. And I’ll never forget the group texting startup that had no clue who might use its service and why. Each company was full of energy, brains and passion, successfully got something into the marketplace…and struggled to move past the early stages. No amount of A/B testing could get them past the basic misses that we already baked into their businesses.

There are many reasons that founders seem to be rushing faster-than-ever to build. First, the people who start companies tend to be those with the skills and confidence to put something in the marketplace. After all, software developers like to, well, develop software. Second, by now nearly everyone has read The Lean Startup and taken as gospel that companies should get a “Minimum Viable Product” into market as soon as possible. Lots of investors have fanned the flames by encouraging pitching companies to, “Go ahead and build it…and come back to us when you have some traction.” Too often this is an easy way to show companies the door without having to actually reject them and their ideas.

There are some deeper human tendencies at play here, too. It might sound counter-intuitive, but making something is often “easier” than planning your approach and getting feedback before you build. Human beings tend to avoid two things, which can kill startups:

1. Work you don’t like to do – We all naturally gravitate toward the kinds of work that we like and think we’re good at, but we need to put our feet in the mud once in a while and do the things we hate in order to get to the greener grass. Most software developers I know would rather bite off their right arm than go to a public park with a clipboard and ask strangers what they think of the new app they are working on. It’s also a lot more fun to launch a web page than spend hours Googling for industry facts and figures. An no one likes to sit in front of a blank word doc and write out the 25 reasons why your company might fail. Unfortunately, these un-fun tasks are often the ones that help you learn to build better and dodge bullets.
2. Rejection – We don’t want people to judge our baby’s name before birth, and we don’t want people judging our startup idea before it’s on the app store. That’s why we tend to keep both out of the limelight until the product is delivered and people are much more likely to congratulate you than question your decisions. While it might be a smart idea for baby names, keeping your idea quiet is the absolute worst course of action. You should get as much feedback as possible as early as possible–as it is the best way to learn, adjust and check your assumptions. Ask everyone you know who is even slightly relevant for your business–and ask them to connect you with five other people they know. Don’t spend too much time trying to sell or convince them that it’s the next Instagram; rather, spend 5 minutes sharing the idea and 25 minutes (or much more) listening to what they like, what they hate, and whether and how they might use it. The earlier you are in the process, the more honest people will be–and after several dozen interviews like this you will vividly understand their needs, along with how you totally missed the mark on your version 1.0.

By failing to do the yucky work and embracing rejection, you’re really just postponing the inevitable: A big, hairy, public failure–potentially with lost income, strained family relations, pissed investors, and a scar that might scare you away from the entrepreneurial path altogether.

No amount of advice can guarantee success, but I have repeatedly seen startups increase the odds of success (and significantly instill great confidence from investors) by learning before they leap. Here are three buckets of work you can do today:

Dig Up Graves

Many of the great ideas founders come up with tread on ground that others have cleared years before. Blogger networks, insurance quote sites, and family calendar tools have been around for well over a decade at this point, and we keep seeing ideas like this return from the grave. So one of my first questions when hearing a pitch is: “Who has tried this before–and what can you learn from them?” But too often the founders have not done their homework, despite hundreds of Googleable articles and even founders fail posts. Smart founders dig deep into failures in order to avoid their mistakes, but also to uncover a new approach that might work. One of my favorite business school professors, Peter Golder, wrote a book showing how most successful innovation comes not from the first mover, but from the follower who broke open the one or two barriers that prevented an idea from going big. You can do the same.

Believe it or not, you can even contact someone who worked at a company that didn’t work out, and ask them an hour’s worth of questions about what went wrong and why. Most people can be tracked down thanks to tools like LinkedIn, and people tend to want to help others who are following in their footsteps. A startup client of mine recently interviewed a founder who failed with a similar idea; he not only got priceless perspective, but discussed licensing his technology solution at a vary favorable price.

Fake it Before You Make It

Instead of making a full-blown solution, you can often learn faster and cheaper by creating your business in a way that feels very basic but works well enough to gauge interest. This is the idea behind Eric Ries’s Minimum Viable Product. But too many startups don’t think basic enough; they tend to want something like a completed house when all they really need is a false door and mailing address. If people knock on the door and put checks in the mail, you win; if not, you’ve learned a lot without taking out a mortgage and hiring contractors.

Eric Ries did this when he was thinking of turning his blogging and speaking topics into the book version of The Lean Startup. Instead of spending a year selling into publishers (yes, it takes a year in my experience), he took book pre-orders on his website. If the book didn’t get many pre-orders he could have given people their money back and saved himself a ton of time. Zappos didn’t start with a warehouse full of products–rather, the founders tested the idea of online shoe ordering by taking photos of shoes from a local store, and when orders came in, they bought them from that store and re-shipped them.  Or you can take my “false door” analogy literally, as one of the newest trends for deciding on which features to add to an app or website is to build a graphic link or banner ad, and count how many people click on it.

While I don’t like investors who send companies away with an order to “just launch it,” as an investor I do like to help startups think about how they might learn with a very basic MVP. For example, one company recently told me about their idea for a web matchmaking service to link brand marketers with social media mavens. The founders spoke with big brands and their PR agencies, who were eager to buy, and they intimately knew the maven audience, which was willing to get involved with big brand campaigns. The company asked me for $X dollars to build an online portal to make the matches. But I said, “Hey, why not go ahead and tell the brands you are in business and begin making matches?” They could run the whole business at an early stage with just email and phone calls, giving them a chance to work some of the bugs out and test brands’ willingness to really fork over their dollars.

Test your Minimum Viable Concept

Speaking of which…Why create a Minimum Viable Product, when you can get a great feel for receptiveness to your idea by just sharing the idea with a large number of the target audience? That was my inspiration to create the Minimum Viable Concept Test. I was tired of seeing companies struggle after spending months and money getting a product into market, so I developed a simple, affordable research tool to get unbiased feedback from a few hundred general market consumers across the U.S. Today, I’m able to get startups real, invaluable data on consumer interest, likes, and dislikes, within a couple of days. And the results are compared to my database of dozens of other startups’ tests, so you get a better feel for your odds of success against the noisy din of new ideas.

Unfortunately, Steve Jobs gave market research a bad name, and not a week goes by without hearing his famous line: “People don’t know what they want until you show it to them.” Entrepreneurs often take this legend’s words as yet another excuse to just launch it, baby. Well, the fact is that you can “show” people your idea and get a response at a tiny fraction of the cost and effort with a basic write-up or video animation and asking a big group of people what they think about it.

Ironically, as I was half-way through writing this post I took a call from an aspiring entrepreneur who pitched me an idea that had more than half-a-dozen holes in it. I listened for a bit, then started prying, prodding and pushing at the idea–as investors are wont to do. It was clear that he needed to stop pitching, cease building, and start over. I wanted to help and seriously feared that he would be risking a great deal personally by continuing down his current path. So I amped up my voice and proceeded to vigorously walk him through the suggestions laid out in the post here. He sounded rejected at the end of the call and my partner in the other room remarked that I sounded “a bit tough.” If you, dear reader, are the person I was speaking with–or anyone that has been or ever will be on the receiving end of my passionate reactions–I apologize if it felt a bit too “vigorous.”

Please know that my passion comes from my belief that entrepreneurs hold our future, and my commitment to helping you avoid the mistakes and pain that those of us before you have felt deeply. If you stop building for a moment, you might discover a better way.

You should learn more about the MVC Test here, and follow me on Twitter here.

+Bob Gilbreath

Can an entrepreneur look worse to an investor by presenting consumer research in a pitch? Would an investor look down on a startup that developed Year 1 usage and revenue scenarios? Believe it or not, it is possible–and it is happening in VC offices that you might work at today or present in tomorrow. It’s just another example of how some investors are so tied to old ways of thinking that they can turn positives into negatives. Not to fear, though, as founders have more choice than ever in seeking funding, and new-school investors have a growing opportunity to turn an innovator’s dilemma into enormous potential.

Like any good startup, I have spent hundreds of hours sharing my Minimum Viable Concept Test with potential customers–mainly Venture Capital investors who assess a large number of consumer digital services each year.  I’ve gotten a lot of positive feedback and leads in the pipeline to date, but the MVC Test has gotten a number of interesting negative responses, too.

Some wonder whether or not consumer research can uncover “The Next Twitter”–something so new that people don’t know they need it yet. My response is that Twitter is a rare breed that proves an exception; in reality, most startups address a clear, existing problem or unmet need (e.g. Dropbox, Airbnb, GroupMe, Shazam, Instapaper, etc., etc.). Others wonder whether or not we can prove that companies with high MVC scores actually succeeded in the marketplace (and vice versa). I hope to have that data some day, but it’s still too early to start showing such results. Overall, the purpose of the MVC Test–like any research–is not to provide all of the answers, but rather to bring in additional perspective to improve decision-making. It’s an unfair advantage in the race to learn and improve the odds of success.

But a few weeks ago I shared the MVC Test with a Venture Capitalist who reacted with a quote that left me gobsmacked. I shared an example of how our test helped a startup estimate its Year 1 sales based on actual consumer reaction to its concept. According to this investor:

To be honest, I might have reservations about backing a founder who spent his time and money modeling a forecast like this.”

This particular investor worried that founders who took the time to research the market might be too cautious to succeed, and would be better off just getting a Minimum Viable Product into the marketplace. There are a few issues with this reaction. First, it shows an incredibly narrow view of what it takes to be a successful entrepreneur. Many investors claim that the “quality of the founders” is the number one criteria in their investment decision-making, but too many typecast what “quality” looks like. Unfortunately, the use of stereotypes often leaves many high-potential people and ideas on the sidelines. Y-Combinator, for example, doesn’t have the most diverse classes, and there is an entire “genome” for what a successful founder team is frequently comprised of. Like in any job interview, investors tend to pick people who look and act like them (but wear hoodies, of course).

The second issue is the failure of many investors to adopt a more rigorous, data-based approach. One would think that smart financial minds with millions of dollars on the line would embrace a data-based forecast. Sure, it’s a different type of founder coming through the door, but kick them out for bringing a better business mind? Alas, habit change is hard, and some investors are too hard-headed to change.

Another investor I spoke with shared a deeper insight in his reaction to the new data that comes out of the MVC Test. I took him through the Year 1 business forecast MVC Test output and he remarked that it was “smaller” than he was used to seeing. With a little prodding, I discovered that he was so used to looking only at broad market size numbers, which typically are in the billions of dollars–and it was an adjustment to dig down to a new business’s specific business opportunity, and projections of first year users and revenue.

I took this particular investor through the results of a startup in the travel booking business. He said that before the MVC Test, he would only see that travel booking is a $X billion market. From there, he would usually make some generalized evaluation of whether this was a big enough number or not. But with the MVC Test, I could show the percentage of people who say they would use the new business, and at what rate they would book travel. The numbers were outstanding (enough for my firm to invest!), but it was something new and different for him to get his arms around.

Now, there are times when you can be too obsessed with short-term numbers and projections. In fact, just this morning I advised one of our startups to stop thinking about how to make a profitable small business in the short-term and instead make bigger, bolder experiments with our investment dollars to see how they could create a giant business for the long-term. The point is that every startup and founding team is different, and each deserves better data and personalized coaching to succeed.

Remember, founders, that you have more options than ever in launching your new business, and you are interviewing the investor as a long-term partner, too. Don’t give into the hype machine and sacrifice a desire to learn and improve just because a handful of investors want you to kowtow to their worn-out models. Investors that abide by old, inflexible rules are bound to provide poor coaching at best, and force you through destructive paths at worst. Take the push-back as a sign that you wouldn’t want to work with them anyway.

There’s nothing more exciting than entering a large, but stagnant marketplace with a fresh perspective.  Like Amazon beating brick-and-mortars or the iPod remaking the music industry, disruptive innovations often come when new players bring improvements that the established leaders are too slow and arrogant to react to in time.  Startup successes such as Google (over Yahoo!), Facebook (over MySpace) and Instagram (over Flickr) prove how investors and entrepreneurs can reap great rewards by betting on new approaches.

Ironically, I believe the latest example of disruption is happening to the Venture Capital industry itself–as new players enter the scene and current players are blind to their own bad habits. While poor VC returns take a turn for the worse, we are witnessing a Renaissance of investment innovation, from Super Angels to Accelerators to Seed+ funding rounds (coined by our own Mike Venerable). Better data and new thinking will be the key to turning the investment market back into market-beating territory. To quote one of the more forward-thinking investors I shared the MVC Test early on, “The world needs this”–and that’s what gets me up in the morning.

You should learn more about the MVC Test here, and follow me on Twitter here.

+Bob Gilbreath