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Yesterday, I was on a conference call with an entrepreneur that I’ve backed in the past. He wanted to walk me through the idea for a new business that he was working on. His goal was simply to get feedback from me at the very early stage of his idea – he wasn’t pitching me for an investment. We got about five minutes into the pitch when I interrupted him.
I’m an angel investor in a company that is addressing the same domain as him, uses similar language, and is going after a comparable problem. I didn’t get far enough into things to know if there was a direct conflict, but I know that the company I’m an investor in is rapidly evolving their business from what their website says based on customer reactions – and the path they are on sounded very familiar to what I was hearing from my friend.
I raised a yellow flag, paused the conversation, and expressed my discomfort. My friend knew the company, knew I was an investor, and explained that he thought they were a little different. But – I wasn’t sure – especially given where I think the company is heading. I was uncomfortable – and told my friend this – since I didn’t want him to pitch the idea to me in detail unless he was completely comfortable that all the ideas might already be being incorporated into this other business. In addition, since he wasn’t looking for any particular outcome, I wanted to give him a final chance to back out of sharing his ideas with me at this point.
He concluded – rationally – that we should stop talking. I felt better, and – while he didn’t get the benefit of my feedback – I don’t think he missed out on much since I expect it would have been an early / preliminary conversation anyway. While he could have kept pushing me to listen, he knew what he wanted to accomplish (expose me to the idea and get feedback) and – since he had this in mind – realized that the benefit to him was likely lower than the potential cost if the companies were in fact competitive.
As a result, we had a pleasant 10 minute phone call, rather than a 60 minute phone call that – in the best case – would have likely been irrelevant for him.