A single conversation can inspire entrepreneurs to build amazing things or trick them into making huge mistakes.
I suppose I don’t know for sure my startup was worth $10 million. It’s not like someone wrote a $10 million check and handed it to me in exchange for my company. However, at the time of the story I’m about to share, I’d already successfully raised a seven-figure seed round, my company was growing fast, and I was preparing to raise a Series A that valued the business at $10 million.
Yes, I realize preparing to raise a round isn’t the same as having the money in the bank, but I had all our current investors lined up for their portion of the follow-on capital, and I was weeks away from a trip to the West Coast for a series of in-person follow-up meetings with a handful of Silicon Valley VCs who’d all expressed strong interest in filling out the remainder of the round. In other words, even though the cash wasn’t in the bank, I felt pretty good about my chances of getting a term sheet valuing my company over $10 million in the next few months so long as we kept growing like we’d been.
The key to raising capital was simple: continue growing at the same trajectory and by doing the same things. Unfortunately, I couldn’t do that because I was a stupid entrepreneur who got distracted by a conversation with the wrong customer.
The fateful conversation began as a sales pitch to a senior-level manager at a well-known Fortune 1000 company. The sales pitch was for our core product — a SaaS platform helping with employee onboarding and training. We had built traction with mid-market companies but knew that landing an enterprise client could really accelerate our growth.
The Fortune 1000 manager seemed interested but threw me a curveball. “This is great,” he said when I’d finished my pitch, “but have you considered applying your technology to new franchise owner onboarding? That’s a bigger need for us.”
I was caught off guard by the question, but I was intrigued. While our platform wasn’t built for franchise owners, I immediately saw…