Man is the most vicious of all animals, and life is a series of battles ending in victory or defeat.
-Donald Trump, politician, author and thinker
“The older I get, the more I realize how many kinds of smart there are. There are a lot of kinds of smart. There are a lot of kinds of stupid, too.”
– Jeff Bezos
A few weeks ago, I met a guy at an investment conference. He was an AI expert selling a quant investment strategy. He was no doubt smart in his own field. But he was making a fatal mistake that anyone who understands the game of raising money would spot in a second. He was wearing a short-sleeve polo. Nothing wrong with that. Except that in his case, it was exposing the fact that he had the biceps of a schoolgirl. Tragic. He had two options: wearing a jacket or actually being a schoolgirl, in which case, there’s nothing wrong with that. For many years, I was just as oblivious as this person to presentation and power dynamics. These are the lessons I learned, painstakingly over many years, starting as someone who was very unfit for the task. Though I still managed to raise money, I wasn’t very efficient at it. I think this is the way to raise money efficiently:
The one-word secret to raising money is: Trump. Please don’t unsubscribe and allow me to elaborate. The essential nature of a meeting in which you are trying to raise money is that there’s a seeming power imbalance. If you are the one raising money, your job is to even out this apparent imbalance into a level playing field. If you buy into the “frame” that you are the weaker party, then that says something about you and/or your product and it will become a self-fulfilling prophecy. Investors can easily pick up on such weakness and desperation and will reject you.
Firstly, this imbalance is mostly in your head. The reality is that capital is a commodity, while genuine opportunities are scarce. If you think there are only ten Important People who can “make or break” you and think of each meeting as do or die, that sort of desperation will come across transparently. And desperation is not seductive. The reality is that there are millions of sources of funding, the only question is whether you have a genuine opportunity and enough persistence. So I would focus all my energies on making sure that what I was selling was a world-class opportunity. And if you can convince yourself of that, then that is a great source of confidence and gets you halfway there. But unfortunately, even good ideas can go underfunded. And that is because people are not convinced by logic alone, they’re convinced by emotions as well.
At a superficial level, when you are fundraising, you might say that you are begging people for money. Have you seen YouTube videos where someone raises more money for a bus ticket while well dressed in a suit than if they are shabbily dressed? I think there’s some insight there. The definite way to even out the imbalance is to remember that humans compete on multiple dimensions. You may not be as rich as Mr. Moneybags, but you can assert other forms of dominance and status: physical, sartorial, behavioural (as in posture), expertise, etc. Maybe you are more muscular, maybe you have some enviable talent, maybe you are more famous - if only on Instagram. Being cool is super important - high school never ends. Social proof is vital. Momentum matters. Grooming and clothes - that shit matters. Get as many of those columns in your favour. Whatever that plane is on which you are better, you have to find it, embrace it and subtly signal it to the other person. That’s how you even the playing field. Otherwise, it’s never going to work. Just think about it: do you really have any meaningful social relationships with people who you consider your inferior in every regard?
People are always evaluating each others’ status - even in business. Like people ask you what floor you live on. For a practical guy like me, it would be so much simpler if they just asked “What’s your socioeconomic status”, rather than dancing around the question. Belzberg asked me within 30 minutes of meeting me whether I was married. What do you figure the subtext of that question is? Was he making friendly banter or was he assessing my evolutionary fitness as a man? Whenever two humans meet, it’s always a bit of both. The correct answer would have been: either “Yes” or “No, but I am able to attract quality mating partners on a regular basis”. People want to do business with people who, at least on some dimensions, they respect or even admire.
Biologists call the concept underlying what I am saying “signalling dominance and prestige”. To be clear, the point is not dominating but restoring the power imbalance. Once you understand that this is the goal, every other decision becomes easier. You can then critically evaluate all the other rather banal advice you get on fundraising (or job interviews or any meeting involving persuasion). A firm handshake? Yes, that’s important. That’s why Trump pulls people in when he shakes hands - to get them off balance. Should you smile? Smiling is a sign of submission in all primates - and that includes you, Koko. Under no circumstance are you to smile. Establishing rapport? F*** rapport. What you want to do is command respect. Also, don’t start grooming the other person’s fur - that’s a dead giveaway that you’re the submissive one. If you betray any weakness or self-doubt, investors will just use you for their own learning and make you jump through never-ending due diligence hoops. They will have already mentally rejected you and will just be looking for a reason to rationalize their subconscious decision. Meetings should last 50 minutes. After all, you have 5 other meetings that day. You are the hot property, not the other way around.
In the end, you have to convince yourself and the person across the table, that this is a meeting of equals. At the very minimum, the posture should be that one person has the money and the other person the expertise. But there are the other factors I mentioned as well. It helps for people like Boris Johnson and Donald Trump that they are burly. Who is going to win: Gorilla Johnson or Professorial Corbyn? It’s the preponderant factor no one talks about. But as I said, humans, unlike baboons, compete on multiple sophisticated dimensions and so those advantages can be overcome - by the right person. Provided that they know and embrace what makes them awesome and worthy of being backed. For example, if you are skinny, you can still establish dominance by grabbing your interlocutor by the head and bashing it a few times on the table. I trust this has been a useful post.