I have a bone to pick with you startup CEOs. Some of you guys take the whole “sell the dream” thing too far. I mean like Elizabeth Holmes far. You can’t throw around numbers just because they sound nice. You have to actually convince us potential investors that you actually have a plan. Otherwise you’ve lost us as an audience.

Case in point, someone I know very well once told me about his dream to play in front of an audience of 100,000 people. Now you gotta understand 100,000 is an ocean of people. In order to draw that crowd, you’ve got to be a world-class entertainer like Bruce Springsteen, Madonna, Queen, U2 etc. This guy is a singer-songwriter-producer. He’s really good at making music. He’s been doing this stuff since he was in middle school. He’s far better at music than I’ll ever be. He’s a natural at performing. So what’s the problem? Nothing. Except for the part where he refuses to perform for a crowd of 100 people because it’s too small.

But that doesn’t mean he couldn’t one day perform in front of 100,000 people right? No, it actually kind of does.

When I asked him point-blank, “But you haven’t even performed in front of 100 people, how are you going to perform in front of 100,000 people?” he scoffed at my small-minded mentality. He exclaimed that I didn’t have any vision and I didn’t understand these things worked. So rather than explain how he was going to achieve his goal, he simply attacked my question and called me a hater.

But just how are you going to get to play in front of 100,000 if you haven’t even played for 100 people?

For the record, he didn’t make it. This isn’t a story where I tell you I was wrong and he’s actually super famous. Just the opposite. He actually put music on hold indefinitely. Because rather than create an actual game plan of how he was going to play to a crowd of 100,000, he decided to go another route; mysticism. See, he’s really into positive energy (hence why he got so upset with me). He has more crystals than I can count. And he is a fan of the law of attraction and that positive (or negative) thoughts bring positive (or negative) experiences into a person’s life. Basically he believes he can realize any dream by simply willing it to come true.

I mean, why create a plan when you already have the magical power to make anything happen? Your limitless abilities can conjure up any reality if you just will it to be true!

Okay, sarcasm aside, I think there’s a lot to be said about positive energy and projecting your energy into creating your reality. Much of what happens is a result of what and how you think. And I do believe that there’s some level of realizing your dreams that you can do right in your head. There are countless studies where the act of envisioning things actually help the synapses in your brain make the connections thereby making it easier to perform the actual task.

But playing to a 100,000 crowd is not simply a matter of willpower. Ask any band that’s made it. It’s hard work. Time. Luck. And lots of other things I can’t even imagine that created their ultimate success. If you have a dream to play to a crowd of 100,000 I’ll be the first to buy the ticket to that concert. I will root for you and hope you succeed. But my support and encouragement isn’t going to help you get from A to Z if you refuse to even get to B. As mentioned earlier, the person mentioned earlier who actually refused to play in coffee shops and smaller venues. He believed those jobs were beneath him. He felt his talent should not be limited to such small crowds. Clearly he was saving it all for the big leagues.

I think of this story nearly every time a CEO tries to sell me on some ridiculous astronomical top-line projection. When you tell me you’re going to make 50x next year and your track record reflects linear growth, you’ve got about 60 seconds to tell me why you’re not crazy. Because clearly one of us is crazy. You, for suggesting it, or me, for not believing it. So you better have a damn good explanation for how you’re going to reach those numbers. Otherwise you’ve lost me as an audience. I will literally stop listening to you and tune you out for the rest of your presentation because I will come to the realization that you are wasting my time. You’re a dreamer hoping to get lucky. You’ve got no idea what it actually takes to achieve your own projections.

I actually do believe that mental preparation is half the battle. That if you do the task in your mind first you significantly increase the probability of success in actually performing that task. But just as the biggest battles are the ones fought in your head, the biggest battles for winning your investors over are the battles fought in their heads. Like the scene from Zhang Yi-Mou’s Hero where Jet Li’s character fights a mental battle with Donnie Yen’s character Sky in the courtyard, the presentation of your business plan is first a battle in our minds for our trust. Because I need to trust you to give you my money. I need to believe that you can manage the company to an exit. And I need to understand how you plan to get from A to Z. Because you can not skip B. In fact you better have a damn good idea what B, C, D, E, and F are. If you can’t articulate what the big milestones are, then you’re just selling a dream. And dreams are cheap.

If you watch this scene closely you’ll find that the two men aren’t selling the dream that each is better than the other. Instead each fighter is carefully planning and testing his moves and countermoves against the moves and countermoves of his opponent. It is a game of mental chess where the stakes are life and death and words hold little value. There’s no room for error and the calculations must be exact. As the strings break on the Guzheng (古箏) the characters snap out of their trance and with absolute efficiency each character executes his final move to determine the single victor.

Certainly the presentation of a business proposal from a CEO of a startup is not the same. Or is it? Part of the job of the entrepreneur is to sell their vision and convince the audience they can achieve this dream. But just like the snapping strings on the Guzheng (古箏) many CEO’s jolt their audiences awake when they propose unrealistic projections of revenues with no actual strategy for achieving those projections. For the audience to follow the dream, the dream itself must first be believable and realistic. Dreams that depart from reality too much are likely to wake up the dreamer or at the very least inform the dreamer that this is not reality.

Furthermore, there’s a fine balance between optimism and realism. When a business proposal is only optimistic with no consideration for downside risks it is vulnerable to be criticized for lack of caution. As sound investors we at LUCIMA are listening for startups that acknowledge the risks and uncertainties of their business, their industry and the entire economy (e.g. COVID-19). Projections of revenue should not only be clear and realistic but also include downside risk in the event things don’t go as planned. Ideally we would like to see projections for three potential scenarios; worst case, average case, and the best case. We need to understand that the startup is well-prepared for the uncertainties ahead and is not just relying on a perfect storm to achieve the projections. After all, there’s only one certainty in running a startup; things are not going to go as planned. So you better have a Plan B. You better have done your SWOT analysis. And you better be able to present this articulately in a business proposal so you don’t lose your audience.

But remember. Every performance is the audition for your next big gig. Presentations are no exception. Play to the audience regardless of the size and let them see your vision. Use each presentation as practice; a stepping stone. And most importantly give them your best every single time.

Because in order to touch the stars you must stand on a mountain of dried blood, sweat and tears.