In this post, I want to share a piece of brilliant advice he slipped into one of the afterthoughts with you. If you’re an early stage entrepreneur, this advice will save you years of false starts in getting the attention of investors.
Truth be told, pitching is one of the hardest things for many entrepreneurs to do. But, there is no escaping it – a good pitch is the key to securing the resources needed to bring your vision to life.
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Now, before you sneer at yet another laundry list of business advice and miss the insights in Masiyiwa’s message, take a look at a snippet of the man’s resume:
- Strive Masiyiwa is the founder and executive chairman of diversified international Telecommunications, Media and Technology group Econet Wireless. His other assets include stakes in mobile phone networks in Burundi and Lesotho and investments in fintech and power distribution firms across Africa.
- He has an estimated net worth of $3.9 billion according to Forbes.
- Presently, he is the most influential business leader on Facebook, ahead of both Mark Zuckerberg and Bill Gates, as recorded by crowdtangle.
It goes without saying; when this man has something to say, the world listens – and it’s smart for you to do the same. In the words of Jean Case, CEO of the Case Foundation and chairman of the Board of Trustees of the National Geographic Society:
“Strive Masiyiwa’s life and his business story is impressive, but it is his lifelong commitment to helping others that set him apart…He is a crusader who has transformed countless sectors and lives while also seeking to preserve Africa’s vital resources through his own sustainable investments and environmental policy leadership.”
With that backdrop, here is Masiyiwa’s checklist before pitching to investors:
Build sales as quickly as possible. Until you are selling something to a customer who is willing and able to pay you, your business has not started, Masiyiwa says.
In his brilliant book, Disciplined Entrepreneurship: 24 Steps to a Successful Startup, MIT Professor Bill Aulet explains that the single necessary and sufficient condition for a business is a paying customer.
The reason is simple. “Investors want to see that customers like your product and there is demand based on the willingness to pay for the service. This is why investors shy away from simply backing an idea: They know that the journey from idea to paying customer is very tricky,” Masiyiwa clarifies.
“Personally, I want to see that you understand how to put in place a revenue-generating business model.”
So, how do you develop this revenue-generating business model?
The concept of a business model simply means how you plan to make money. Peter Drucker defines it as “assumptions about what a company gets paid for.” In other words, it is the assumption of what the business will and won’t do.
In 2008, Alex Osterwalder developed the business model canvas which was viewed by experts as the most comprehensive template to help create this hypothesis in nine different parts. These include the key resources and key activities of your value chain, your value proposition, customer relationships, channels, customer segments, cost structures, and lastly, your revenue streams.
It not only helps you to structure how to objectively execute the business idea but it also clearly shows your competitive advantage over your rivals.
A Harvard Business Review article, entitled Designing a Winning Business Model argues that companies make three types of choices when creating business models. “Policy choices determine the actions an organization takes across all its operations. Asset choices pertain to the tangible resources a company deploys. And governance choices refer to how a company arranges decision-making rights over the other two. Seemingly innocuous differences in the governance of policies and assets influence their effectiveness a great deal.”
In the end, the best form of capital is still sales. When you’re getting started in your business journey, it is wise to focus on creating something that people love and are willing to pay for. This will give you the needed traction to validate your claims of the market opportunity when pitching your business to investors.
Have other tips to add? Drop them in the comments below!