Entrepreneurs: Start Asking the Tough Questions : Under30CEO Entrepreneurs: Start Asking the Tough Questions : Under30CEO
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Entrepreneurs: Start Asking the Tough Questions

| November 22, 2011 | 11 Comments

For months we’ve been saying it at Under30CEO.  “Why don’t these startups ever get asked the tough questions?…Why doesn’t anyone have the heart to tell them their business is setup to fail?”

We’re Guilty Too

We’re the biggest cheerleaders out there.  Yay, Gen-Y entrepreneurship we say. But in all seriousness, we run Under30CEO to help young entrepreneurs and if we just hold hands and talk about how great we all are, we’re doing our generation a great disservice.  The truth is, we need to start asking each other the tough questions and not be afraid to hurt each other’s feelings.  Too many professors, peers, investors and mothers are giving entrepreneurs the thumbs up or a pat on the back, when really, they need to be grilling the entrepreneur down to every last detail.

Personally, I struggle with this.  I’m a nice guy and I want to be liked.   Shooting down people’s ideas is something that I had to work at.  Who wants to see the deflated look on a exuberant entrepreneurs’ face when you crush their dreams?  I constantly have to tell myself that I’m in business to make money, not to make friends.  It’d be way worse to watch an entrepreneur blow through someone else’s money and waste years of their life on an business that had obvious holes in it.

We Don’t Need Cheerleaders; We Need Linebackers

The two most painful conversations I’ve ever had were also two of the most beneficial.  David Goldsmith, a management consultant and NYU professor who flies in just to teach class once told me, “Matt, if you aren’t making $10k a month you might as well pack it in and go skiing.”  I almost cried.  I was doing what I loved… but it wasn’t making me any money.  David asked me the tough questions; the ones that nobody else would ask me.   You know, like the ones about our business model…He might have been blunt, but extremely constructive.

Another painful conversation kept me up for two days straight.  Brian Cohen of the New York Angels picked me apart but good.  So good in fact, that I wrote him a thank you note for smacking some sense into me.  “Matt,” he said, “you are one of the many New York City startups who is among the walking dead.”  While these conversations may seem brutal, they pointed out oversights in our business model and made us answer their toughest questions, proving to them we wouldn’t fail.

The Bubble Will Burst

Many people are predicting the tech bubble will burst, as investment in seed stage companies continues to go through the roof.  This bubble will indeed burst in my prediction, but only around the companies who aren’t cashflow positive.  More entrepreneurs will fail than will succeed and people will watch their dreams and their money go down the drain.  These are the companies who were never asked the tough questions, who’s accredited investors didn’t have a clue.  Just because someone has a $250k net worth doesn’t mean they can help your startup.

As far as an economic bubble goes, the companies who actually learned from the first dot com bubble and created companies that make money will survive.  It’s these high-growth tech companies that will help our economy fully recover, creating jobs and bringing new industry to the United States.  Sure, lots of angel investors will lose money, but to be accredited means you could afford the loss.  And yes, many companies that VC’s invest in will fail too, but venture firms are looking for exits in the $100M+ range.  Just a few homeruns will create far more jobs and return on investment to pump into new startups, than all the money wasted on the failures combined.  They aren’t too concerned if ten of their million dollar investments never see a return.  The more tough questions we ask, the more chance we have at success.

Be a Jerk

Okay, don’t be a jerk, but from now on, everyone in the entrepreneurial ecosystem needs to get better at asking the tough questions.  Investors and entrepreneurs obviously need to learn this, but developers shouldn’t be working on projects that won’t ever turn into anything.  There simply aren’t enough of them to have them waste their time.  If you are going to join a startup as an employee, don’t just drink the Kool-Aid so they will hire you; ask them the tough questions.  And please, if you are the press, I know it’s cool to write about startups right now, but educate yourself on the questions an investor would ask and make sure these startups are for real.  If we don’t, we are only perpetuating the amount of overhyped companies that think they have a chance because they are in USA Today, when we could be helping bring to market new products and services that are truly great.

Think of the most successful person you know.  They might be a jerk.  Steve Jobs? Mark Cuban? Mike Arrington? Even, nice guy Robert Scoble is chewing out startups these days.

We’re Making It Our Mantra

If people asked us the tough questions from the start, we’d be way farther ahead than we are now, so we’re going to start passing the favor on to you.  We promise to beef up our interviews with tougher questions, even though we are interviewing some of the most successful entrepreneurs in the world. (They’ve already proven themselves).  We’re also going to start throwing entrepreneurs into the Shark Tank and will be announcing some really hardcore demo events in New York and a conference all based on our new mantra.  Stay tuned, and until then, surround yourself with smart people who ask tough questions.

Matt Wilson is co-founder of Under30CEO and is looking to help every entrepreneur on the planet by asking them the tough questions.  Connect with him on Twitter @MattWilsontv.

About the Author: Matt Wilson

Matt Wilson is co-founder of Under30CEO. Wilson’s passion for entrepreneurship began after leading Bryant University to becoming the world’s #1 entrepreneurs’ organization. After seven months abroad, Matt's official title became Adventurer in Residence, heading up Under30Media's travel company Under30Experiences. If Matt is around he will be easy to spot as his long luxurious hair is generally flowing freely in the breeze.

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Category: Funding, Startup Advice

  • http://entrepreneurialambitions.com Yura Bryant

    If we are to build a sustainable future, it most be centered around sustainable businesses that will prosper into the future. Entrepreneurship is a tough, competitive world and is built were only the strongest survive. By allowing those without a strong foundation to pass through, we create an evironment with too many faults in its infrastructure.

    entrepreneurialambitions.com

  • http://thepeachdesign.com Peachanan Rojwongsuriya

    This is a very good wake up call for me. I always believe that as long as there are users, monetization will come, but after almost a year, it makes me think whether my business will be able to make money. Will I be able to earn $10k a month? 

    These questions will be the questions I’ll be asking myself everyday now.Thanks for the article. :)

  • http://www.carrisahealthservices.com/ Yang Brand

    I enjoyed the post. There is some good information here to bookmark.

  • http://www.i95dev.com Henry Louis

    I came to know some interesting concepts by reading this post. Thanks for sharing.

  • http://www.makemoneyinlife.com James Whooget

    is there a tough question at all?

  • Justin

    I love it many people forget that while we may be working on a dream, at the end of the day if it doesn’t make money it doesn’t matter.

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  • http://diamondcinema.ning.com/ Christi

    It comes down to finding out what works and what doesn’t work. Which of your products (if you have multiple products) spark the most interest and purchases. Also, which marketing method has brought in a strong or continuous stream of people to take interest in your products and services, and also interest in you as an entrepreneur. Which products/services and marketing methods gain more consumers, potential consumers and your super consumers (such as those who don’t only buy your products, but talk about you to their Facebook friends)? When you find out which is working, concentrate on furthering enhancing and expanding those things, and maybe phase out – or revamp those that are not working for you at this time. 

    I found with my digital entertainment media and publishing company that the digital music that I produce and sell is more popular than the company’s global business and lifestyle magazine. The magazine is a product that I am very proud of, but I had to switch strategies and look at readjusting the product. The magazine is still an important part of the company, but instead of remaining a monthly magazine, it is now a quarterly magazine with stronger “trendsetting topics” in global business and lifestyle. The music is now receiving greater marketing attention and development instead of it being a “secondary product” to the magazine. 

  • http://whoapi.com WhoAPI

    Tough questions can make you a better entrepreneur and can make your business profitable. If and only if you decide to embrace them. We should cherish tough and provocative questions from the person you are speaking to.

    Our startup just got funded, and I wrote 26 questions that first came to my mind, which we were asked before we got funded. I hope you don’t mind me sharing the link, I think it’s highly relevant, and I hope it helps you in preparing for some tough times.

    http://whoapi.com/blog/439/26-questions-you-have-to-answer-correctly-to-get-funding-for-your-startup/

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