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“I never invest in act two of a startup,” Gill’s partner Carl said to me. The meeting was going well. We had really signed our term sheet, so this was more of a get to know you meeting.
Then Carl continued talking, “I’m heartened that you have experience doing act one already. That makes me comfortable.”
Carl was referring to the first part of our strategy which was second sourcing (producing replicas) of other companies best selling parts. Then once we pivot to our own proprietary products (act two).
The strategy was sound, but it was not popular with many of the investors we spoke to. After all, you’re supposed to innovate when you’re a startup, and producing second sources sure doesn’t sound like innovating.
So a lot of investors passed on us because they just didn’t get what we were doing. No matter how hard I tried to explain we were following the same tried and true path that the two most successful companies in our industry followed (Maxim and Linear Technology), investors continued saying no.
You have to stand for something. Not two things, but one thing.
NFL Hall of Fame football coaching and business expert John Madden has a saying, “When you have two quarterbacks…
