The Pitch That Lost to a Tray of Cookies
Silbermann was pitching a whole group of investors up in Silicon Valley. Big names. Billion-dollar track records. He was five minutes into explaining what Pinterest was.
Silbermann: "Everyone starts just heading for the door. And I was like, man, what am I doing wrong? I found out they brought a tray of free cookies. What I was saying was interesting enough to keep them in their seats as long as there were no cookies in the background."
Even rich people are subject to free cookies. Investors are just regular people who happen to have other people's money.
The Three Ways Investors Say No
Silbermann: "'Call me back in a few months.' This is the most painful. It's like you ask someone out on a date and they're like, not right now, but maybe in November. That one is really hard to hear because you're gonna have even less money and even less leverage."
Then there's 'who else is in?' -- not good enough for me by myself, but if other people throw in money, I'd consider it. And the blunt ones: 'There's no way this is gonna happen. This is insane. It's totally crazy.'
Call me back in a few months. It's like you ask someone out on a date and they're like, not right now, but maybe in November.
Lesson One: Investors Are Just People
The cookie incident taught Silbermann something important. Investors are just regular people who happen to have money. They have opinions. Those opinions can be wrong.
Silbermann: "That was something really hard for me to swallow because I really looked up to all these people."
Investors are just regular people that happen to have other people's money or their own money. Even though they have a really good opinion on things, they might be wrong.
Lesson Two: Zero Leverage Is a Death Trap
Silbermann: "If you really need money and they have money, and they know they're the only person that can give you the money, you don't really have any leverage whatsoever. You have zero leverage."
The only way out: hack the system. Create fear of losing the deal, or make them believe you'll be wildly successful with or without their money. Those are the only two moves.
You have zero leverage. Unless you somehow turn the tables and give them a reason that you should have the leverage.
Lesson Three: The Future Is Unwritten
Silbermann: "People are going to give you all kinds of advice. And it's really easy to take that advice because you walk into a room and there's Google's first stock certificate and they invented Yahoo. But if you look at the returns on venture capital, it's pretty shaky."
For every win on their wall, there's a deal they passed on that haunts them at night. The future is unwritten. If they knew everything, they'd be done.
For all the millions of dollars venture capital investors have made, there are things that they passed on. And those are the things that actually burn them up.