When you read this, you might realize this story is about you. Please forgive me. I have the utmost respect for you and your work. However, this lesson is just too valuable not to share.
Last month, I was approached by a group of professionals who had a simple yet brilliant idea: They needed $150,000 in order to create a high-quality program that would be taught to three million high school students every year. They told me that their team had the professional skills to build this incredible program. They also had connections to networks that would help the program actually reach three million high school students every year.
“How do you know that the teachers will want to teach this program?” I asked.
“It’s easy,” they responded. “We have connections that will make this possible.”
“Do you have any letter, agreement, or proof that this will work?”
“Have you asked your networks if they will do it?”
“Has anyone else pledged to fund this program already?”
There are many things we look for in projects. But, I didn’t see a reason to continue the conversation until I saw a letter confirming that the program would indeed be taught to three million high school students, as they claimed. What else can I do? The best program in the world is completely worthless if it cannot be implemented on the ground.
It’s been over a month and a half, and I haven’t heard back from them.
Here’s the thing: This is a group of very intelligent people, but I don’t know them. I’ve never worked with them and I don’t know other people who know them. I don’t have the expertise to assess the quality of their program. I like the subject, but how do I know for sure if the program is good? Professionals in high schools should make that call. All I need is a letter. But they called me before they made the phone call that would get them that letter—an easy task, according to them. They jumped to fundraising before they collected the low-hanging fruit.
Now, let’s step outside of the nonprofit sphere and into the business world. You have a product. You think it’s an amazing product. You want to manufacture large quantities of it, but you need to fundraise in order to be able to manufacture that first batch. Under what circumstances do you think it would be easier to fundraise—with or without a purchase order of three million units?
The answer is clear. Your company’s valuation will be much higher if you have a letter from someone who wants to buy three million units. As the founder, if you know that you are one easy-to-get letter away from increasing your valuation, you go and get that letter before you pitch to venture capital firms.
The situation I described happens again, and again, and again.
Recently we were approached by two young men with an amazing, out-of-the-box idea that has the potential to have a tremendous impact. I mean unprecedentedly big—at least in our sphere, in my humble opinion. The problem is that there are a few operational elements that have not been figured out yet. I offered my advice and said that we would try to help with the fundraising if they improved their operational plan. They said it would be a few days. Four weeks later they emailed to apologize for the delay. I had to respond that unfortunately, due to the long delay, we can no longer consider supporting the project. It doesn’t matter why there was a four-week delay, all that matters is that the project is not a high priority, and if it’s not a high priority for the people running it, we cannot spend the foundation’s money on it. No disrespect—these really are unusual circumstances—but whatever the circumstances may be, what matters is that we cannot be rest assured that the project is managed properly.
It’s frustrating because these are good ideas, coming from smart, capable people. These projects are not going to make them rich, but they would further our cause. They are passionate about their projects and they are reaching out to foundations that can help make their ideas possible. But by reaching out too soon, they are shooting themselves in the foot because they come across as unprepared, which raises the worst kinds of questions in a donor’s mind.
I know that feeling, the feeling of having an amazing idea, an idea so good it would make me a millionaire or change the world. But you can’t go asking strangers for money—even if they are called a foundation and even if you share the same mission—before you have taken the idea as far as you can by yourself, as a token of thoroughness, seriousness, and dedication. For more on this see my blog about the difference between foundations and bank accounts.
Another extremely talented young man I know, highly respected in our community, told me once, “Man, if only someone gave me, person B, and person C a million dollars, we would change things around.” I had to wake him up. Buddy, no one is giving you a million dollars. You need to come up with a plan, budget it, try it out, prove that it works, and then go raise the money.
If you go back to my older posts, you will see an overarching theme: frustration. There is so much wisdom out there, so many great ideas and capable people. But many of those great ideas get lost when people fail to raise funds for their unproven concepts and incoherently presented plans, and those small mistakes have a big cost.
If you have an idea that you are serious about, if you can prove that it would make an impact, and if you have done everything in your power to get the idea as far as possible, I welcome you to reach out to me so that I can potentially help you bring it to the next phase.
“Put your money where your mouth is,” they say. I’ll make it easier on you: Put your time where your idea is.