Making success out of other’s failure : How 5 days of travel, a magic question, and impromptu living yielded to a potential big league investor.

 

Sitting in bus on my journey back from a week of travel from Dublin to Berlin to Amsterdam and back to Dublin for conferences and meetings alike, I am reflecting. There has been a recurring story I’ve received from investors, interested press, and people on the street alike: “I’ve made a tremendous amount of mistakes on my journey, here’s what I did wrong.” While this is a theme that most people have come across in their lives and the rhetoric seldom changes, I’ve recently employed a mentor’s lesson in listening to understand this story more deeply. Bill Liao, the mentor leads RebelBio, the accelerator program my company is participating in. He has been very keen on the selling technique that is listening. I paraphrase when I quote him:

“The key to selling, the key to getting someone to put a term sheet on the table, and the key to success in both business and in your personal life is your ability to make people feel heard.”

There’s nothing new here. Making people feel heard is the basis of forming a genuine connection with someone. It is a means of generating that key characteristic of a valuable conversation. What Bill suggests, and I mention next, is nothing new either. Listening is a powerful tool in the game of social engineering because it gives you deep insights into the people around you — all real conversations require listening, but the way you listen can be a key value-add to a conversation. Before I share with you the secret script that makes the magic, I’d like to mention that this technique isn’t a form of manipulation. In reality it is a tool that allows you to understand who the people are around you: to understand who they are, what they’re doing, and, most importantly, what their current needs and struggles are. By understanding this, we can easily begin to understand our business or personal relationship with them from the perspective of helping them. By listening, and only listening, you learn the true nature of their problem. The secret sauce to listening is a simple question, the script everyone should memorize:

“Can you tell me more about that?”

Simple, almost stupidly so, though I’d like to think that stupidity and eloquence are interchangeable bits of speech. Over the course of this last business trip, I focused on the task of learning more about peoples experiences and asked this question, ad nauseam, sitting in the perspective of the retroactive ‘how do I help satisfy your needs.’ With investors, old friends, and potential customers alike, I would start with a thought provoking question, then listen to their answer, and let them run mad with their experiences and stories. For the sake of focusing on the developing my start up, I’ll tell you how listening landed me a big league investor.

Berlin: Where lunch conversations are pivoting.

Like many conferences, it featured pre-planned meetings, showcases, a pitch battle, and interesting talks such as the history of biotech and a special presentation by the CEO of Oxitech about his GMO mosquitos. Naturally, the meetings were interesting, discussions fruitful, the talks fascinating, but impromptu meetings with people, as always, were the best. And this was was no exception when it came to lunch, much needed after three hours of scheduled meetings and talks. I sat down, randomly, with two gentlemen at a table with my catered fish and chips. We made polite introductions. As it just so happened, the gentlemen were representatives from a VC firm that had visited our accelerator just one week before, but I had missed meeting because I had been in Vienna at another conference. The two gentlemen were from Merck Ventures, the investment arm of the massive pharma company, and were out and about doing their thing scouting for companies and being engaged with the space. One of the gentlemen knew all about my company, as he has heard a video version of a pitch during his visit. The other fellow, he knew nothing; so, I took the opportunity to give him a conversational pitch, with all of the added details of who we are, what we do, regulatory hurdles, road to market, etc. He gave a wonderfully Austrian smile, a bit of a laugh, then told me how he had been working on a project years ago that was tremendously similar. I wasn’t too surprised, making rapid STI tests has been a need for quite some time now and the idea to go direct to consumers isn’t a genius notion either. What was surprising, was a summation of his experience in a sentence. Again, I paraphrase:

“‘We spent 25 million dollars and 5 years trying to do the exact same thing and failed.’

My heart sank a bit like a gag reflex, teetering between the thought of ‘WTF have I been doing for the last few months’ and ‘where can I get a cigarette.’ I held my ground and proceeded with the grand question. “Can you tell me more about that?” We talked tech and scope. Then gave me a key piece of advice:

“‘Your focus is a bit myopic in the actual application of your product.’

‘Tell me more,’ I now instinctively have droning in my head like a harmonium.

‘What you’re trying to sell to investors shouldn’t be a test for the detection of STIs. Sure, you’re first target market is the at home and point of care settings for chlamydia and gonorrhea detection. But to limit what you’re building to that is just plain stupid.’ He continued to elaborate….

“What you’re actually building is a device that can detect any pathogen. That could be in urine, water, potentially blood: You’re replacing a technique that’s the standard in molecular biology, and making it remotely available for a qualitative end that can be obtained anywhere without a lab. You need to sell THAT vision. No offense to STIs, but F*** them. You’re making something that could be MUCH bigger than that.”

We exchanged contact info, I thanked him, and walked away with a keen satisfaction and a preoccupied glaze of fear. With that, I ran off to another meeting with my head buzzing knowing how much work I would need to do; edit business plans, pitch decks, and the lot of materials that I would send out to press and investors. Note to self and the reader: “TMI does not exist” was a motto of mine. I just don’t have a threshold for what I can tolerate hearing. I just know what questions not to ask to avoid hearing things that give me the feeling I felt after that conversation. I never thought an open question like “can you tell me more about that?” would leave me murmuring to myself: “Keep your sh*t together, man.”

Amsterdam: Where capitalizing on learned knowledge brought captital.

For some fantastic reason, some of the best experiences happen over food. This time is no different. Two days after Berlin, I’d planned to visit some with some cousins in Alkmaar just outside of the city, for a day while on a layover. Instead of a simple “let me show you around the city” my cousin offered to introduce me to his childhood best friend, an investor. I couldn’t refuse. We drove into Amsterdam, spend some time walking the canals and talking life, then finally walk into a beautiful restaurant and sit with a normally dressed man. Embarrassingly, my Dutch only could get me through 5 minutes of conversation before we started to get technical and I asked to switch to English. I explained my company, and gave him a 10 minute rundown of our products with the Merck considerations. As we took a moment to pause and enjoy our food, I broke the silence, with my favorite delineation of the mystical question. ‘Can you tell me a bit of your story.’ There, he broke into childhood stories, his education experience, his break up with academia, and the story of how with a little bit of capital he was able to start one of the most successful businesses in the Netherlands. I continued to prod at early stage decision making strategies and he gave me some invaluable experience and perspective. As it so happens he emphasized a disdain for Venture Capital and the tendency for founders and inventors equity to be diluted round after round. Again, I paraphrase:

“When you’ve finally made something of your company, are rolling out and have revenue, so many founders are left with what? maybe 5%? That’s ridiculous. While providing capital and exchanging for percentage stake of a company is determined by risk and investment, how does that provide opportunity for the founder’s to generate anything new thereafter? After all, it’s the inventors and entrepreneurs that are creating the innovation, not the investors. The investors are taking a bit of a risk, but they can easily afford to.”

At that moment I swear my eyes were twinkling like an enthralled anime character. Someone who speaks like an entrepreneur, but is a hot and heavy investor. I’m listening.

“With my first company, I made that mistake. I ended up with a tiny percentage of the whole thing. I’ve seen it happen too many times. You go through seed, someone asks for 25% for $500k, then you need your A Series, they put in maybe $1.5 million and take 15% diluting the pool further, Series B comes along with another million, Series C maybe 5 million. You’d be lucky to have 10% once you hit revenue. Don’t fall for this, find a mentor who is outside of your business, listen to their advice, and never part with equity. Align yourself with people who believe in what you’re doing, and be extremely cautious.

“What do you want?” he asks me.

“What do you mean, out of life or for my company?” I responded, bewildered.

I told him how I started as a garage ‘biohacker’ and my dreams of using synthetic biology to designing materials, but how I kept running out of money, when only starting a project. In the end, all I want is to have the financial freedom to be creative and experiment while generating the capital from I need from a system that is inherently altruistic. Make the world a better place blah blah, have money, blah blah, be creative and enjoy, blah blah, not be held back by monetary inconvenience. He questions why my interests are so spread out, so non-linear and seemingly chaotic. I give him impromptu answers and he smiles, “sounds like you’re just like him,” pointing to his colleague. Then he said something that left me as stunned as my first lunch:

“Are you available at 4? I’d like you to meet my mentor and investment partner.”

They leave their business cards on the table like summoned by a magical question, shake my hand, and say they look forward to hearing from me. When it comes to growing a business, listening, exploring failure, and applying what you hear directly to your work, this is now my operating strategy. And while it sounds a bit like an overused cliche, it’s invaluable: listen before leaping.