The best advice I got on my first business plan was also the hardest to swallow. A CEO whom I respected took a look at it and told me, flat out: “Tear it up and start over.” In the end, this feedback helped me get my first software start-up funded. But years later, when I tried to pass on my experience to someone else, it wasn’t very productive. These episodes have become linked in my mind as a lesson on the value of knowing not just how to receive criticism, but also how to give it. So I offer my success with the former and failure with the latter, not as two lessons, but as one.
*The truth is that my first business plan was pretty lame.* It was 1996, and I didn’t know anyone who had written a business plan well enough to ask if I could see it. So I bought books, followed templates, and wrote what I thought was a pretty good plan. The husband of a close friend of mine had, over the prior decade, raised $20 million dollars for his biotech start-up in Boston. I called her, and she volunteered that Charles would be happy to help me out.
*Charles didn’t like my plan.* With my best game face, I said: “OK, what do you suggest?” He was nothing if not confident and direct. He said: “Really, and I mean no offense, I think the best thing you can do is throw it away and start over.” Then he proceeded, in that same style, to give some reasons for his advice, along with other less-than-encouraging salvos, like: “If you’re not prepared to be turned down at least 100 times, you don’t have what it takes to get funding.”
During the weeks it took me to absorb the impact of all this, I ceased to be a great fan of Charles’s. But then I did start over, and wrote what became the early draft to my first real business plan. Along the way, I received a lot more input: much of it came indirectly, from potential investors who ultimately declined to invest; some came from members of my team, some from board members and advisors. At that point, I was steely enough to take input from anyone who would offer it. I considered every comment, and incorporated most of them. *The business plan evolved and matured, and eventually, after about eleven months, it produced my first $2 million in venture capital funding.*
*Next it was my turn to give advice.*
Nearly 10 years later, while changing planes in Dallas, I met Marvin. He was full of enthusiasm – to do an animated film. He was coming from Hollywood, and had gotten enough interest in his concept to convince him to write a business plan. I told him a little about my own background, and before long he had cornered me into agreeing to provide some consulting, including a review of his business plan. In the weeks that followed, he was brimming over with enthusiasm. I read his script — and he surprised me by having an engaging story. I saw sketches of his characters – they were adorable. Finally, after months of salesmanship about how great his business plan was going to be, I received it. What can I say? It wasn’t terrible, exactly. It was something more familiar. In fact, I recognized it like an old friend: his first business plan was much like mine had been … lame.
My personality is not like Charles’s. I think of myself as a positive person who sees the strengths in others. I offered what was intended as an initial commentary, from which we would work forward. I based my advice on the experience from my own three business plans, each honed and hammered until they resulted in three successive rounds of funding. Some of what I suggested to Marvin is similar to what I have suggested to others. Some is unique to his situation. But instead of summarizing it here, I’m including a redacted and abbreviated version of the email that I sent to Marvin, so you can see some of it yourself:
I’ve taken some time to review the package you sent me. I realize that it is not a final version, so my comments may very well prove to be in line with what you currently have underway in the form of revisions. You probably know that it is not yet what it needs to be in order for you to sell it. Here are some initial thoughts. If you feel they are valuable, more will follow:
*1. The image on the business plan cover is captivating,* and the intense look from [your animated character] holds one’s gaze to the point where one is reluctant to look away. I would go all the way with it, filling the entire page. This cover will get the reader to open your plan.
*2. The plan does not make sufficiently clear how you will get from cashing the investor’s checks to a finished or raw product.* As part of their due diligence, investors will want to know that you have a firm grasp of such things as: What are the tasks? Who will complete them? What are the challenges? How will they be surmounted? What are the key roles? Who will fill them? What is the rough schedule, in months after funding? All of this should be developed and laid out, as it will be much more difficult to sell on the “trust us, we will figure it out” model.
*3. I don’t feel that your description of the team is consistent with all of the resumes.* For example, you say, “Attached are the resumes of the people who have worked on blockbuster projects and who have the knowledge and expertise required to make this film a sure success.” This is a bold statement, and if we are going to make it, we need to be able to defend it.
Let me comment on [the first guy]. I see that he has been a “Video Asst” in most of his assignments, and that he has worked on a lot of well-known animated pictures. Ok. Good. [But] how does this qualify him as a producer? Or [the second guy], who has previously “assisted in the production of commercials”? Is he qualified for the Digital Studio Director role? Maybe they are hugely talented, as demonstrated in past innovations and results (we need to say what these are) that parallel the unique needs of your film.
The alternative is to modify the claim about the team, and to have a more realistic, defendable paragraph that describes the actual team and how the individuals you believe in synergize to benefit your project.
and on it went…
…So these are some initial thoughts about modifications we need in order to have a good chance of funding your project. In any event, you are off to a start, and you should be pleased with the progress you have made. Congratulations.
*That same day Marvin responded.* And it turns out he was far less pleased with my feedback than I had been with that from Charles.
You excel at what you do but I don’t think movies are quite your cup of tea and I frankly do not see the point of burdening you with the vagaries of an entertainment start up operation.
Again thank you for your interest and input,
He fired me on the spot, and I never heard from him again. I never heard more about his film, and I never saw his characters on billboards or gracing DVD casings on a video store shelf. As far as I know, his film has not been made. Oddly, every year or so I look for it, hoping that Marvin found someone else from whom he could contemplate input, perhaps someone who had been down his particular industry’s “startup road.” I say this because he had a really good idea — and it would be a shame if it had not gone anywhere only because he was uncomfortable with feedback.
*So this is what I’ve learned: When it comes to advice, criticism is as important as encouragement.* Like all diametrically opposed forces, they should exist in balance. So take in all the feedback you can. And then pass it on to someone else.