The L Words: Lift, Lobby & Latte, Part 3

The Latte should follow a simple pattern of “The Ask”, the pre-and-post business triangles, and next steps.  This is not a conversation of life, this is a business conversation and that means “structured improv.”  You are to already have these three section of the conversation completed in your head before you even meet the person.  Just like in NABC, you are to keep the conversation inline with the structure.  Allow the person to deviate, but bring it back on track when you have listened to their deviation.
The Ask 
Why are you sitting down for a Latte? When it is time for your Latte, you have already expressed your value.  You are there to ask for something.  This ask must be direct, and without confusion.  The softer and more artistic you are, the less you will be understood.  This is why NABC works, for it is direct and follows a formula that the listener is listening for.  “The Ask” is no different.
You should clearly state the ask early in the conversation: “I am looking for Angel investment.”  You should be prepared to state exactly how much investment, and what you expect out of the investor.  This is a marriage of sort, as the investor will now be part of your company and you part of theirs.  You might have asked for money in your head, but in reality you just asked for a long-term engagement.
If you do not ask, the meeting will seem hollow.  I have left many a meetings on both sides of a Latte where “The Ask” never occurred.  A business minded person leaves the meeting wondering what it was all about.  “Yes, I had a good conversation and I learned a lot about a concept for a company, but I have no clue what they want me to do about it.”  It is one of those unclear meetings where the long term affect is negative even though the conversation and person seemed positive.
The Pre-Ask Triangle
There are four common reasons for the Latte: raising capital, selling product/services, merger & acquisition and hiring personnel.  This is because the ask is always strengthening the business triangle.  The triangle is made of three sides: People, Technology and Customers. It is held together through capital, most commonly money. The gist of the Latte is to strengthen the triangle.
Business Triangle

Business Triangle

The conversation covers first how the triangle is today, and then how the triangle will be after “the ask” is met.
When an Angel or Venture Capitalist talks to you, there is an assumption that you are going to ask them for money.  That is natural for that is the purpose that God gave them in their life, sad as it might be.  The investor does not see it that way.  They are listening to you to determine how much of this triangle you have, and how strong is it.  They are going to listen to your dream of what the triangle will eventually look like.  They will see in their head how they can strengthen that triangle, and how much of the capital they get out of it when the relationship is over.
They will not be shy, they should ask about the triangle:
  • Who is in your group (people)?
  • What is the group’s experience?
  • Do you have a prototype (technology)?
  • What customers do you have?
  • Do you have any revenue?
  • Have you already taken on capital, such as a friends and family round?
An investor might say to you that they are investing in People, that is just a third of the story.  They are investing in the company’s technology, customers and people. They will have the same objective to make this triangle contain as much capital as possible, and they will ask for their share of it.
The conversation will actual cover a number triangles: where the triangle is today; where it will be when the ask is met; and where will it be when it is time to exit (a.k.a when it is time to get the capital out).  The post triangle is a dream triangle.  What a therapist might call thoughtful wishing, as opposed to wishful thinking.  For this is not a wish, this is a dream if executed properly will be a reality.
The Post-Ask Triangle
The main focus of these future triangles should be the “post-ask triangle”, what the investment will get.  No investor in their right mind will ever believe that the first ask is all that is needed to create the business and grow it.  They put letters in front of the rounds for a reason.  Each round must have a clear objective to how the triangle will look when the investment is completed, and what will happen to grow the triangle to the next level.  This could be seen as an investment roadmap or a business plan, but for the sake of this conversation it is a simple, what will happen when this ask is done.
Clear and Concrete.  Nothing has changed, you should be able to clearly state where you should be.  You need to be able to answer all parts of the triangle: what will the organization chart look like; who and how many customers; what is the status of the product/services being offered; finally, what is the state of capital.  Is the company at a level of homeostasis growth?
This triangle is not the dream triangle, this is what will occur after the ask.
Action Items
Lastly, the Latte needs to get a definitive list of action items. You might have heard the phrase “moving forward”.  This is done by capturing action items that are to be addressed in order for the ask to occur. If things went well, this could be a long list. Reiterate the list of action items from the meeting.
You need to focus on one thing on that list that can be accomplished, and get that done (see Drive).  You cannot have another meeting without having something changing.  Highlight in the reiteration the one thing that you know will get done.
You might need to deal with a negative response.  In this case, take down each point to which the person has an issue with.  This becomes a list of things that needs to be addressed before you have another Latte. Just like a positive response, ensure that at least one issue is resolved before you try for another meeting.  At best, choose the item that is the biggest reason for the no answer.  Even if this person does not want to have another meeting, the list of reasons will help guide you in strengthening the Latte pitch.
One caveat, before you go into a defensive mode and combat avoiding a “No” answer, consider the price. Sometimes there is simply not a fit.  You might continue to pursue a “Yes” when this person will never give you one. This occurs when the two sides have different business concepts.  Remember, this is a business marriage, and the investor might see this as you not being their type.  If you strongly believe in your business approach (which you should), you shouldn’t be changing yourself to satisfy your partner.  Just like life, you are to learn and move on.
Summary
The Latte Pitch as about asking and getting a reply.  The triangle is the base concept that a business conversation talks about.  The Latte Pitch is not limited to an investor.
It could have been an interview with a potential hire.  Here you are explaining the company by reviewing the triangle.  You then explain his role in the triangle, and how the triangle will look when he is aboard.  If you like the person, you discuss the actions that need to occur for him to come aboard.
If can also be the format to a business customer.  In this case, the triangle is their triangle.  You provide them your vision on how your product will improve their triangle.  The business customer’s need will always be based on improving their triangle in some manner.
Working on the the Lift and Lobby pitches helps one create a good focus about your company.  The Latte is a conversation that truly makes a company.  It is one that you will repeat with variations.
“Three is a magic number.”

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