Create Your Own Social Proof

If you’ve got balls, you’re not an investor. You’re probably an entrepreneur. Investors really assume no risk–as generally they put other people’s money into stuff that’s already successful. Well, at least perceived to be successful–via track record of the team, traction, or social proof.

Social proof is just short for herd behavior. It’s kind of like how you can’t get a job unless you already have one. It’s why Burger King will build a store next door to a McDonald’s. Hey, if McDonald’s thinks there’s a good opportunity to serve burgers on this block, it must be true.

This is why being in stealth over a unique new business is a bad idea for a first-time entrepreneur with no track record. If your idea is truly without precedent or competition, you probably will have a hard time getting any investor attention as a newbie. The common wisdom amongst the cokeheads is that if nobody else is doing it, it must be a stupid idea.

Talk about the intimate details your concept. Tell anyone who will listen. Announce the product well in advance of its launch. If you’re trying to get funded, your best strategy is to get imitated. Once your idea is implemented and funded by others, suddenly there’s social proof.

3 thoughts on “Create Your Own Social Proof

  1. “Announce the product well in advance of its launch. If you’re trying to get funded, your best strategy is to get imitated. Once your idea is implemented and funded by others, suddenly there’s social proof.”
    But isn’t that counter-intuitive? If someone implements your idea and gets funding you’re done, they won, they succeeded where you failed. How do you turn this failure into success?

    • Well who says it’s a failure? Companies who get funded haven’t necessarily won.

      In the case of a truly new idea, if you have no track record (a successful exit) then investors want to invest in an idea that have already been done. Otherwise, it’s a liability–they assume it hasn’t been done before because it’s a bad idea. Having no competition is a bad thing to these people. Create your own competition.

      This probably only applies if you need funding–if you don’t need any capital then stealth mode has its uses, for sure.

  2. Pingback: 0 Users is Better Than 200,000 « Ralph Barbagallo's Self Indulgent Blog

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