How does a person give you $100,000 for an idea? How does a person become your partner when you never opened a business before? How do you get someone to be inspired in something they don’t understand? Where do you get credibility to lead a company? How can someone trust you to lead people when you have no experience leading a dog on a leash?
What’s the secret?
It’s called being a Hustler.
A Hustler is a person with stage presence. A Hustler is a person who has one or two verifiable facts. The facts are always credible. The Hustler is a person awe inspiring and charismatic. A Hustler makes you believe what you are doing is the best. Being a Hustler requires dynamic. The Hustler finds a way into opportunity and capitalizes once there. How the Hustler gets in is determined by raw grit, drive, and perseverance. When a Hustler is questioned about their involvement the reason is straight forward. The lead person is usually a close friend. Often I recognize this label as “relationships”. A relationship is usually the Hustler’s single asset. Without the “relationship” the Hustler has little reason to be involved. Regardless of what the opinion is of a Hustler…the Hustler is needed in a start up.
People underestimate the worth of a Hustler. When people try to remove the Hustler early on the deal has a high chance of failure. When a Hustler is removed with their investors pending investment can unravel.
I see Entrepreneurs and Business people alike approach me with ideas. If I counted projects I reviewed over a 10 year period it is huge. I would estimate at least 5,000 different projects. In 2010 I maintained an excel spreadsheet. My spreadsheet exceeded 300 different project contacts in 2010. I reviewed everything from renewable biofuels to chicken poultry factories. There was a common thread that intertwined every successful idea.
The thread was a person. This person had a “relationship”. This person had the ability to “convince” someone tangible to get involved. If you think about it, every good endeavor starts with an idea. An idea is internal. An idea rarely has tangible value. It is a subject of debate what an “idea” is worth. Some people say their idea was stolen by others. Others say the idea could not become something without the their abilities. I say it is a little of both plus one missing component. The missing component is “Hustle” dynamic.
When you are getting a person to commit to a risky concept you need strong emotion. Invoking emotion is required to get your start up off the ground. A person with logical assumptions rarely takes on the risk associated with start ups. According to a 2013 Forbes Article by Eric Wagner 80% of entrepreneurs starting a business fail within the first 18 months. (Forbes)
What person opens up with saying, “If you give me money 8 out of 10 times I will lose it. If I am successful you can hope for an average return of around 15% per year.”
I personally think no one would invest on those terms.
Why do people purchase expensive cars knowing the cars depreciate? In the 1950’s a new concept of marketing was invented. The strategy centered on how people felt. “Buy this car because people will feel you’re the man when you pull up.” Or “Ladies put this dress on and people will feel your presence.” There was a lot of emphasis on how people “felt” versus what people “thought”. Simply type in “Emotional Marketing” into Google. You will discover it is a very well researched subject.
A Hustler is a master of “emotional” marketing. The product Hustlers market is their person. A Hustler knows how to “emotionally” connect with a person they are prospecting. A Hustler is perceptive, intuitive, and very good at being “liked”. When a Hustler promotes their opportunity it is done after building a relationship. A Hustler is smart enough to know when to present an opportunity. A Hustler is sometimes called “manipulator” but not always. The way a Hustler uses their ability determines whether the person is bad or good. Hustlers can get themselves into bad situations. Sometimes Hustlers mean well but don’t understand what the product is they are selling. It is important during a start up you monitor a Hustler. A Hustler can tell people things that are not true out of ignorance. Regardless of the fact, a Hustler is required if you hope to inspire any confidence in an idea. Without an emotional connection to your “idea” there is a high chance it will remain an “idea”. I have launched multiple start ups in my career. I have a rule that has always been about 80% accurate for me. The rule is simple. A start up can expect anywhere from 200,000 — 1.5mm in seed money depending on the idea. The raise will always take 12–18 months. There is a high chance of failure if the person fails to properly value each dollar they spend. When I say “value” I do not mean it from an “opinion” prospective. I mean according to an Accredited Financial Analyst (AFA) prospective.
Every dollar you spend must contribute to an increase in market value. If you cannot get sales you better show someone how you made your business more valuable.
The reason for high failure in a business with limited income is the Founder’s inability to grasp how to value the “market” category in their business.
Valuations have three categories. 1) Market, 2) Income & 3) Assets. If you are not able to make income or acquire assets — you better figure out how to increase your “market” value.
If you fail to increase all three categories you may not survive enough to see the other categories mature. Each category has its own life cycle. Failure is the lack of resources to see your business cycle through. Hustlers rarely understand value. Make sure you understand value if you intend to keep your Hustler’s people happy. If you are the Hustler make sure you understand how to value your business. If you do not know the fundamentals of value people will say you are a Con Artist if your endeavor fails.
To obtain more money after your seed round you will have to show something tangible (sales, technology invention, big contract award, et cetera). Your initial round is the seed round. Seed rounds are tough. Seed rounds are the barrier to most businesses starting. Seed rounds are areas that require “emotion” to sell. If you are not a charismatic person who commands stage presence…I suggest you find a Hustler.
Hustle is what is required when you first start. Hustle is not for everyone. Not hustling will be the reason your idea never takes off.
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 7.5mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com