What’s the kind of “No” that entrepreneurs should be looking look for?
As a founder, expect rejection. But above all, learn from every single “no” you get. All entrepreneurs experience it and building up resilience is the only way forward. Hearing “no” is a daily routine for entrepreneurs. They hear it over lunch, dinner, over the phone, from someone leaving a meeting early or even from their friends over drinks at the end of a tenuous week. And it’s not only when you are getting started.
In the beginning it comes from prospective customers, then from venture capitalists, then from private equity people, then investment bankers, and so on. You really have to learn how to deal with it.
Entrepreneurship is about big non-consensual or unexpected ideas and opportunities. If not, big companies or tons of other entrepreneurs would have had a go at it already. It is the lack of agreement around a specific opportunity that gives space for creation and, potentially, the opportunity to build something big and unique. Very smart and experienced people will say no to huge opportunities (by the way, it has happened to all the unicorns and successful startups of today).
From this perspective, rejection is a good thing. Everyone saying yes to you and your ideas, besides being meaningless, would not necessarily be good. You must learn to distil the “no” you are hearing. History shows that great, groundbreaking, ideas seem laughable at first sight.
What is the kind of “no” you should be wishing for?
Pay attention to the quality of the “no” you get. This is what really distinguishes bad ideas from potentially great ideas. Look for, at least, a tiny bit of friction, either between people (if pitching to a group) or as a person explains the reasoning behind a “no”.
It is also important to truly understand what is leading people to saying “no”. Sometimes, it comes from externalities which are completely unrelated to your idea or project. For example, when pitching to venture capitalists you might encounter profiles that are simply not willing to acquire the context necessary to understand what you’re working on, or maybe it is something they consider extremely boring and, as such, just don’t want to get involved in.
Focus on understanding the “no” and learning when there are learning opportunities or brushing it off, when it is simply an externality. In the latter, simply brush it off and move on.
What happens after an entrepreneur pitches to VCs?
Recently, I heard an interview of a partner of a big multinational venture capital firm. He shared a bit about the backstage of pitching to venture capitalists; what happens immediately after an entrepreneur leaves the room. I consider it to be great food for thought for entrepreneurs getting used to hearing “no”.
“If I’m presenting an idea to my partners and they all go, “That’s great! We should do that.” I’m like, “Careful. Here’s a bunch of hyper-smart people and no one’s saying, ‘Oh, watch out for this, or watch out for that.’” It’s too easy. The idea is so obviously good, I can already hear the stampede of competitors trampling over our hopeful little startup.”
(Adapted from Reid Hoffman’s podcast series ‘Masters of Scale’)
It goes to show that even venture capitalists (people whose professional purpose is to identify successful startups) are looking for a polarised reaction among their peers. What they want is some people fully aligned with the startup. And others questioning if any of it makes sense.
In a nutshell, if you are feeling the friction in the “no’s” you’re getting, you are most likely on to something.
Dealing with rejection
Despite everything I just said, rejection is extremely hard to deal with. And even when we understand the rationale behind it, it still generates emotional stress.
Some entrepreneurs develop a thick skin, others face it as just part of the routine. I believe that the best approach, at least for me, is to change mindset. Look at the “no” as a gift. A gift of feedback that you can build upon. Don’t take it personally. And remember, if you are doing things right, you know more about your customers and your business than any investor out there.
Listen, learn from the “no”, but also learn how to hold on to what you know and stand your ground if needed. You will, most likely, be respected for it.