Dos and Don'ts with investors | Andy Tang

Can you stick around? Sorry. Okay, so let me keep going. So let's do some dos and don'ts with investors, okay? So let's first do the dos. I think we already touched some of these, right? Passion and pride. Passion is probably easy to— to— for you to understand what it is, it's basically, it's your— how much you love the business, right? I often ask people, if you don't get funded, what would you do, right? If someone is not passionate— yeah? What do you expect as an answer for that? I don't expect any answer, right? I will use your answer to assess and I'll give you some sample answers I've heard before, right? If you don't get funded but you still love the space, either you keep going, so that makes sense, or you go do something else. That also makes sense. It tells me you're still looking for something that's passionate. Or you would get a job in that space. To learn. To learn. I grew up in a family restaurant business and I remember my dad always tells me, before you buy a restaurant, you should really work in a restaurant. So that makes a lot of sense, right? So why would you start a business that you have never worked in? Not getting funded, especially at your stage, is not a bad thing. Go work for somebody else. Go work as an employee. Go work as a key employee. Go work as a co-founder before you start your own business. Perfectly legitimate. Take pride in your business. You tell people, hey, I want to launch a, you know, Blockchain for spaceships. People say, oh man, that's so crazy, I mean that's like the dumbest idea I've ever heard. Right? You want to take pride and A, not be offended, and B, you want to be logical and explain the reason why it's not so dumb. What you don't want to do is like, yeah, you know, it is kind of out there, but I think we could— then you lose— you already lost the battle before you even started. Remember the cold call exercise that we have you do by selling a very embarrassing item in an uncomfortable situation? It's to train for that because 9 out of 10 times anything that's visionary, you'll probably have— or 9 out of 10 times, anything that's visionary sometimes is very controversial. Anything that's controversial attracts mainstream mockery. Does that make sense? Yeah. Right? If you imagine this thing is so big, why hasn't somebody done it? It's because mainstream thinks it's stupid. Right? So if you choose to work on it, most people's reaction is this is either dumb, not achievable, right, don't waste your time, and that's why it hasn't been done yet. Because if it's so obvious, somebody has already done it, right? So you do want to take a lot of pride to defend your idea. That said, what you— When you hear something, take it home and figure out like is this person right or is this just one of those mainstream arguments already heard. So be open-minded and you may want to pivot. You may not want spaceship blockchain, but you may want like satellite, right? So it's strike a balance between taking pride and being open. So we kind of look for that, because if I could challenge you, push you, For you to give up on the idea, this is probably not going to be a person who's going to last 10 years, right? Nor do I want someone who becomes emotional and gets offended. That's also not going to last 10 years. You see that fine balance, right? Being pretty even-keeled, right? Keep going, right? Make adjustments when you need to. But then be very persistent when the whole world around you is changing. I invested in a Chinese payment company, a couple of expats, they moved from the U.S. to China. One of the first things people told me was, oh, to do payment you need to have payment license in China. I was like, oh, Well, these guys are smart enough and I think they're pretty tough, they'll figure it out. That turned out to be the right call because there were literally 100 payment companies, I kid you not, 100 payment companies in 2006 when I first invested. Most of them peeled off and they raised more funding than these 2 guys, they had government backing, right? And these guys just keep going, right? They sort of— they convinced one merchant at a time to use their payment system and they aggregated over like 100,000 merchants. And then at some point it's too big to shut down, like they have to get a payment license because people are using it. It's kind of like Uber, like sure, some— in some cities it's not 100% legal, but you're providing a good service people want. Even the toughest government in the world would say, all right, these guys, have done something, we can't just shut them down because what are these customers and vendors going to do? So let's give them a license. It worked out. What was the name of the company? It's ePay in Beijing. Yeah. And so they move like $10 billion in transactions a month now and we backed them, 2 people and a piece of paper. What else should we do? What do you do with investors? Yeah, personal credibility is very important. Anyone who invests in public stocks? Okay, good for you. Okay, so one of the things in the public market is you heard of these earning calls, right? CFOs give a guidance, we're going to make $0.20 per share next quarter, and then when it comes time, quarterly earnings release, they hit $0.20 or $0.21, stock goes up, $0.19, stocks go down, right? You've heard of that before, right? That's called management credibility, right? You tell people what you're going to do, you do what you say, right? It sounds almost too easy, but that's all there is to it, okay? So, That's all there is to it. When you're trying to sell a piece of paper, right, the only thing you can go by is the person holding that piece of paper. And how do you assess that person who you— let's assume you don't know, right? It's what they tell you they're going to do and whether they end up doing it. So if you want to raise early-stage funding, the easiest way to do it is to establish a personal track record or credibility. Right. So one quick thing is if you've already started a business and made money for the investors, people will come to you and want to give you money. But I'm going to assume— but then if that's the case, you don't need this class. This class is for people who are starting from scratch.