Here is what NO looks like

2011-02-27-NOI am an angel investor.  I invest in entrepreneurs who have taken their idea, built it, and shown some proof that there is a market for what they have created.  I am engaged with the companies that I invest in.  I make these investments my full time job.  I do everything I can to help them grow.  I am also brutally honest. 

I have met with countless entrepreneurs over the past 5 years, actually past 25 but in the past 5 they are having face to faces with me.  I have made a commitment (some of the deals have yet to close) to over thirty companies.  I have said no countless times.  When I say no I usually say this it not for me or I just don't see how this is going to scale but I always give a reason and some feedback which they can take or leave.  That is what no looks like.

As I help the companies I am involved with as well as others that I might just give advice to, I also want them to understand what no looks like.  When you pitch a VC or person and they spend an hour engaging you about your business that does not mean yes.  When they tell you that they are interested in what you are doing and want to keep in touch, that does not mean yes.  When you leave and they say to keep in touch as you raise a round, that does not mean yes.  When you try to get in touch a few weeks later to tell them where are you and they never email you back or return your call that means no  They might not feel comfortable just saying "no, this is not what we invest in, we don't think this is scaleable, we don't even understand the idea, we are glad we met you but the answer is no". 

Here is what YES means.  You go meet someone and their eyes light up and they ask you back to meet with his/her partners and schedule a date.  When the hour meeting turns into two.  When they start talking real numbers, when they say they are interested in doing some diligence.  That means you have a really great shot of having that person/company invest in you.

As an entrepreneur when you grow your business and it morphs over time you spend a lot of time reading between the lines and listening to the market.  Use those skills when you go ask for cash.  It isn't fun raising money but it can be a lot more productive when you read through the lines and push for real answers. If you aren't sure, there is nothing wrong with saying "should I take that as a no"?

Comments (Archived):

  1. awaldstein

    There is a big difference between no and not yet.Selling and listening are really connected skills. The best hear what helps, ignore what doesn’t.

    1. Gotham Gal

      there is a huge difference and it is not always easy to read but if you ask, you can find out.

      1. awaldstein

        Yup….This is why I’m more and more drawn to hybrid, semi-marketplace models.Step 1 is on the streets, talking with merchants. Face to face is the only way to really understand.And I hold to my long held belief that the best way to kickstart any facet of an online community is offline connections. The more the web is an extension of these connections, the better.

  2. Mark Birch

    Yes really is not “Yes” until the ink is dry on a signed term sheet. Plenty of angels and VC’s have led entrepreneurs down the path of Yes, only to welsh on the deal at the very last second.

    1. Gotham Gal

      that is a whole other ball game. i believe a commitment is a commitment unless there are caveats with that commitment such as once the diligence is in, etc. but at least there is hope of participation.

      1. Mark Birch

        As I do as well and most investors I know that respect commitments.Some of the things I referred to in my comment were events I had seen or heard about that were egregious and cowardly. It has happened enough times that I warn entrepreneurs to always be on the look out for behaviors that could upend a funding or M&A deal. It may instill too much paranoia into the proceedings, but I do believe you need to be vigilant and always fight for your deal even in the midst of wide-eyed enthusiasm by eager investors.That being said, absolutely agree on what you say about “No”. Too many times investors lead on entrepreneurs and those entrepreneurs are not clued into the signs.

  3. Mark Gavagan

    Helpful insight, but I hope it’s not lost on investors how valuable and respectful your clear and direct “no” (with or without a substantive reason) is to all involved. Also, you never know where someone treated poorly is going to end up.

    1. Gotham Gal

      absolutely. the first company is not the last company that an entrepreneur might pitch. keep the relationship but be honest about “not this time”.

    2. takingpitches

      Nice point. Practically speaking, this like other things in life may be a repeated player game. And, even if not, cosmically speaking, there is karma!

  4. Maya S. Penn

    A lot of entrepreneurs are thick-skinned. We would rather hear “No”, so we can move on to other possibilities. A lot of entrepreneurs don’t go crying in the corner when they hear the word “No”. It will just make them fight harder to make their idea work. You have to persevere no matter how many No’s you get. That is what makes you successful.

    1. Gotham Gal

      Absolutely.thick.skinned. You have to be

  5. bijan

    great post. nailed it.

  6. patrickdh

    Doing the asking, a must to get into the know

  7. Lisa Abeyta

    One of the best succinct pieces on deciphering reactions within the VC experience. All I can say is that in my experience, yes is a whole lot easier to decipher than no.

  8. Erin Newkirk

    This is an amazing post. Honestly one of the best I’ve ever read on this subject. Signed, An entrepreneur who has been told just about everything. Including the “yes” no.

  9. JLM

    .There is a bit of unnecessary uncertainty — gamesmanship maybe — that is created by not concluding any conversation on a definitive basis. This is true in business and socially and in politics and in our familial relationships.Any entrepreneur pitching a deal has to inject a “trial close” at some time in the process. This is just basic “pitching” tactics.When you hone your pitch to that razor sharp essence — 15 minutes is enough to describe the Manhattan Project — you have to gauge the sentiment with body language, the spoken word and then you have to probe for the trial close.”What have you not heard that you want to learn about?””Is this deal in your comfort zone from an industry perspective?””Do you have any other similar investments in this space?””Is this something you might give favorable consideration to?”The two best answers for the entrepreneur and the VC are a quick “yes” or a quick “no”.Don’t take it personal but take it and move on or snuggle up. Deal with reality and bring the conversation to a realistic conclusion.Both parties have an obligation to be efficient, direct and candid in the dialogue. It is honest, safe and respectful.Entrepreneurs also need to remember that they are also interviewing the investor as a possible team member. Money is just a commodity. That relationship with the VC can become a priceless element in the success of your endeavor.One last bit of advice given to me by a very wise man: “Never get mad at the money. It will change its mind.”.

    1. Guest

      JLM, I love your quotes, “Never get mad at the money. It wil change its mind” Priceless.

  10. markslater

    I pitched 30 VCs including your husband. He said NO.We just closed our series A with a good friend of his.No should not be a negative. NO does not mean that your business is univestable – in Freds case – it just was not for him.Put no in context – dust off and go find the yes.

    1. JLM

      .Congratulations. Well played.Keep pitching your deal until you feel the dirt hitting you on the face..

      1. JamesHRH

        Jeff Bezos & Howard Schulz pitched, literally, 100’s of investors.

    2. JamesHRH

      Exactly. USV said no to Pinterest. Bessemer has their hilariously awesome Anti-Portfolio.It is about fit. Go find it.Always surprising how emotion gets a YES started & thinking gets a NO started.

  11. falicon

    I always struggle on the long no because internally I know I’ve got to cut the cord and move on to more productive things…but at the same time, I’m often hung up on trying to understand what the real hang ups are and what I can learn from the pushback (the downside to *always* trying to perfect the product/service and understand all view points).Of course I’m probably just as bad on dealing with the yes…but sadly I haven’t had to cross that bridge…yet. 😉

  12. David Wieder

    p.s. Many entrepreneurs don’t hear no response or even “no” as no. I always here it as “not right now, but maybe later.” I’ve turned many nos into yeses. That’s also what makes an entrepreneur an entrepreneur. 🙂

    1. Joanne

      Me too 🙂

  13. Nate Westheimer

    This is great. As a n00b angel investor this has been the hardest part: communicating “no” in a productive and clear way.It’s hard to be clear while being helpful because I can still be extraordinarily excited for the vision of a company and for the people doing the company while at the same time I would not be excited to be an investor.Tough.

    1. falicon

      I am almost always excited for the vision of the company and the people that I meet…if for no other reason than they are actually trying to make something happen…makes me *always* want to pitch in and help in at least some way…but I agree, many of them are things I would not put money into and/or just don’t have the passion myself for to really get involved…

  14. Abdallah Al-Hakim

    So you are saying there is a chance 🙂 I think being brutally honest in dealing with these matters is the best way forward and avoids wasting time for both sides. I would imagine that good entrepreneurs would be talking to several investors and should not get too hung up on just one person saying no. In the end, you want the people investing in you to be genuinely excited about the idea.

  15. Guest

    VCs take note. “Keep me posted” is one of the most obnoxious lines an entrepreneur can hear. What keep me posted is a polite way of saying “I’m not interested in you, or what you are doing, and I don’t think it’s going to work. HOWEVER, if I’m wrong and this does become something, I don’t want to be seen as the person that made a mistake.” The best thing to hear is a no and to hear it fast. I got this yesterday from a very nice VC. I wrote him back a huge thank you note. He wrote back and said he felt like a douche. Trust me, there is nothing douchey about no.

  16. Kirsten Lambertsen

    This is why I really like the dating/marriage metaphor for the startup/investor relationship.Sometimes it’s love at first site. Sometimes it takes a while to blossom. And most of the time the sparks don’t fly. The metaphor works for every facet of the relationship I can think of.I think it’s fair for investors to want you to keep in touch if it isn’t love at first site. And investors who have the class to say a firm No are greatly appreciated.

    1. JLM

      ,Now is “love at first site” the subtlest bit of humor or a typo?.

      1. Kirsten Lambertsen

        Ha ha! I have to give my subconscious full credit for that one. I never noticed that I wrote it that way.

  17. Zubin Wadia

    Agreed. I made you matching YES and NO cards from my app, @QuipioApp.

  18. rachel

    i have the same conversations with my friends regarding dating. reading peoples cues and listening to what they are saying is a critical life skill!

    1. Gotham Gal

      yes it is.

  19. aarondelcohen

    This is among your best instructional posts. You should sent to Mark Suster, Chris Dixon, Brad Feld and Paul Graham and get broader distribution because this is really helpful for those new to process. I’ve not seen it so cogently explained on anybody else’s site.

    1. Gotham Gal

      wow. thanks aaron.

  20. Andy Ellis

    I know I’m late to the party but this is a terrific post Joanne. I’ve certainly fallen through the cracks online over the last few months but I’ve been lurking and reading. “No” is so much better than “maybe later” or “keep me posted;” In the early stages of a company, cutting loose ends and focusing on actionable items is super nice. A clear “No” goes a long way to helping with that. Thanks for being awesome and putting this stuff out there!

    1. Gotham Gal

      thanks andy

  21. Chris Johnson

    A salesman is got to dream, boy.I would think that anything other than “yes, let’s do this” fast…means “almost certainly not.” I’ve had meetings with others that went nowhere, I knew that they were going nowhere, I knew there was no “real interest,” but if I had taken things at face value, I was encouraged to keep pitching, come back later and all of that.A fast no is welcomed. Way better than a delusion-inducing “call me, maybe.”

  22. Alex Iskold

    I think a straight NO is what’s needed in 21st century. There is no time to read between the lines anymore and no one should be offended with a NO or hold it against you in the future. Its that simple.

  23. John Andre's Braid

    Love this piece and the comments. “Here is what NO looks like” can also be very applicable to executives in charge of business development and/or partnerships.

  24. paramendra

    Pinterest got rejected by every investor in the Valley. I guess raising money truly is a numbers game.

  25. Dan Farfan

    Interesting.I’m guessing someone who flaunts with such openness their own honesty respects honesty from others. Or not so much? Let’s see.Here’s a thought. Keep your day job angel investing (or hire someone with language skills to be your editor). lolThe following sentence, dismantles your thesis entirely (probably without you realizing you had one ;-).”That means you have a really great shot of having that person/company invest in you.”So, the details in the contrast paragraph that supposedly mean yes (“Here is what YES means.” … which you meant to be, “Here is what means YES.”) actually mean MAYBE, not YES.So really all the clues listed actually mean “NOT NO.”My hunch is you are a good investor/partner – someone who wasn’t probably would be more careful to not make such high school composition class type mistakes in public. It really won’t cost you very much to get someone to help you prevent such things. Honest help is out there.@DanFarfan

    1. Gotham Gal

      There is no doubt my command of thr english language is weak. Its about my education which is a story in itself