Simplicity Gets Financed

by Ash Kumra

This chapter is a free excerpt from Confessions from an Entrepreneur (Volume 1).

Sid Mohasseb: Angel Investor & Serial Entrepreneur

As entrepreneurs, we get caught in the trap set up by the financial schema of venture capital. The minute we have an idea the question becomes, “What’s the market size? What are your revenue channels?” So we begin to make business life complicated. We begin to figure out different revenue channels and add on top of it. Then we get to the VCs, and the first question asked is, “Why don’t you have any focus?” It becomes a non-solvable problem. If the entrepreneur starts being increasingly focused then he/she may compromise the bigger return.


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Sid Mohasseb: Angel Investor & Serial Entrepreneur

As entrepreneurs, we get caught in the trap set up by the financial schema of venture capital. The minute we have an idea the question becomes, “What’s the market size? What are your revenue channels?” So we begin to make business life complicated. We begin to figure out different revenue channels and add on top of it. Then we get to the VCs, and the first question asked is, “Why don’t you have any focus?” It becomes a non-solvable problem. If the entrepreneur starts being increasingly focused then he/she may compromise the bigger return.

The challenge becomes being simple with your product, idea, or pitch.

Convey Clarity to Investors

Investors want clarity, and your confidence in a single solution provides you with your own sense of clarity. You can do a lot of things with everything. I can say this is a kitchen knife, but it doesn’t mean I can’t go hunting with a kitchen knife. I probably could. But when I say that this is a kitchen knife, I’ve defined my product and I’ve defined my market. If I start listing out additional uses for my product, it expands my market, which makes it more attractive, but I’ve also confused my audience and reduced the clarity.

Finance Simplicity

This is because investors get the business idea very quickly. The problem is people spend a lot of time in educating the investor. Because we want to justify it, we come up with all these different revenue channels and add different aspects to it, but in doing so we lose their interest. “Simple gets financed” has a lot of implications to it. That means you’re not trying to build a market. There are specific cases when it’s been done, but for the average entrepreneur it is difficult to do so. With larger and more complicated projects, like my company, WiseWindow, the market wasn’t developed yet. There were technical complications that were challenging to convey to the audience. Consumers didn’t know what it was, so there was education involved. Essentially, we had to build the market.

Going for what is simple avoids having to build a new market. It reduces the requirement for expensive salespeople essential to educate consumers about a product or service. If it’s a big enterprise, you need higher-level executives. These people have the network and the relationships to connect you with the right people. But you need a lot of money to hire them. So, if you don’t have the money, you don’t have the best resources. If you can’t get the resources, how will you have the contacts to open the doors? I’ve been in business for 30 years, and I can make two or three phones calls to get to the CEO of a company. An average entrepreneur doesn’t have that. If it’s simple, the sales pitches are simple. If you’re not building a market, it means you’re responding to an existing need.

Conveying Value to Consumers

I always believe that opportunity resides in chaos. Where there is chaos in whatever business you’re in, there’s a lack of clarity in expressing the value proposition. In chaos, I can’t make a decision because I don’t exactly know which one of the many services a company offers is better. So if a company clarifies the value proposition for me, I’ll hang on it to it because they’ve helped me make that decision faster.

Having this focus also means that you won't spend millions of dollars in creating a market that is complicated, particularly if it doesn’t yet exist. It can get even more complicated when you get to business-to-business markets. In business-to-consumer markets, if your idea is simple, you can quickly determine whether it’s resonating due to the level of consumer interest and purchasing. It’s easy to measure that. If you observe the big companies, such as Facebook, Twitter, and Pinterest, and look at their core, you see that they are good at a very, very simple thing, and consumers understand what those companies offer.

Increased Focus

Simplifying your idea not only makes it easier to educate investors and consumers, but it also creates focus. If your idea is simple, your focus is simple, and that focus is the quality that will allow you to execute it very effectively. There’s minimal error and minimal distraction if you already know you’re going exactly from point A to point B. If mistakes are made, the time it will take for you to correct your course is significantly decreased. You won’t go down the wrong path for a long period of time, wasting millions of dollars getting there.

Having simplicity in your company also puts you in the best position to get financed.

You can easily communicate your product/service to your target market, and you’ll also be able to focus and execute efficiently and effectively.

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Sid Mohasseb is the CEO of WiseWindow, Inc., a sentiment extraction platform technology company. He is also serving as a Managing Director at Venture Farm LLC; an early stage funding and execution firm. He is the past president of the Tech Coast Angels in Orange County; the largest angel network in US with more than $100 million dollars of direct investments in over 150 companies with follow-up investments of over $ 1.0 Billion from the Venture Capital community. He is also on the advisory board of a number of nonprofit and educational organizations, including Paul Mirage School of Business: University of California at Irvine, The Southern California Technology Council, and TiE.

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