One of the rookie mistakes first-time entrepreneurs often make is to be too guarded about their idea – in fact, many will actually spend their first $25,000 on patent lawyers without ever fully vetting their product. In order to gain credibility and attract investor attention, it’s critical to aggressively seek out the most relevant people in the world and get their feedback. I believe most young entrepreneurs massively overestimate the chances of someone stealing their idea versus the benefits associated with sharing it.
When my co-founder and I first had the idea for IronPort, an email security company, we triangulated a list of the 20 most relevant people in email – former CEOs, open source technologists, investors and thought leaders. After we had the target list, we got resourceful in getting to them – friends of friends, cold emails and FedExed letters. One of the tactics we used was trying to get a diagram of our technology into their hands — subject matter experts just couldn’t resist correcting our analysis. Here are the huge benefits with taking the “sharing” risk:
Fix your compass. The experts can immediately get into the weeds and help steer you around the potholes they went through and make sure you’re not headed for a cul-de-sac. The input we received proved essential to refining our idea and setting our order of battle. We gave a number of these experts equity grants to become formal advisors to the company.
First employees. Two of the people on our list became employees after we went through the idea with them. One had built PayPal’s email infrastructure and the other had built Newman, the massively scalable eGroups email engine. The experts typically know where the other best-in-the-world talents are currently working and can help you recruit them in with a credible intro.
Investors. Our friends and family seed round became a who’s who of people who had done interesting things in email. The PayPal founders, the eGroups founders and the Hotmail founders all ended up investing. You can imagine the warm VC intros we received from a massively credible angel investor right in their subject area strike zone. In fact, on more than one occasion, a VC would say, “I’d like for you to meet with so-and-so to better understand the technology.” I would reply, “Oh, so-and-so? They are already an advisor/investor…”
It’s really hard to break through the clutter and get the attention of the top investors as they typically only look at deals that come in from a warm, credible referral. There’s absolutely nothing more credible than getting an endorsement from a well-known subject matter expert who has already put their own money into your company.
This post originally appeared in the Wall Street Journal.