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Can't put lipstick on a pig

The Starbucks at Capital Towers brings back memories of how I was helping a company look for investors some years back.

I was sitting with a client to debrief him on the feedback from a week long investor roadshow.


It was the year that Joseph Schooling won Singapore’s first-ever gold medal.


The nation celebrated.


It wasn't only a victory in the local sports scene but also a symbolic inspiration to everyone that: Dreams and ideas, no matter how small they were, could come true.

But none of the investors said ‘yes’ to those dreams in that funding round.


We had successfully assembled a string of eleven meetings within a span of over four days, each meeting lasting around an hour or so.


It had been a productive dialogue in every session. Both sides introduced themselves, talked a bit about each other, the founders, the history, the company, the technology, the opportunity, etc.


But even having orchestrated a highly professional and well-staged roadshow, no one would put any money in.


The week after the roadshow I met up with one of the founders of the company at Capital Tower Starbucks, where he stared at me point blank and sternly asked:

Why did Joseph Schooling win?

Erm...cos he trained hard?


"No!! It was because he believed in himself!", alluding to the possibility that we didn't believe in the business enough to sell the story.


Thereafter, he continued to ramble about how (Schooling) a young boy born and bred in Singapore, a small city seemingly insignificant to most parts of the world became a global champion, likening it to the company: A champion in the making.


He then went on to say:

“It is a no brainer! People should be lining up for this! Why aren’t investors buying our business??”

As he raised his voice and slammed the table, I stood there, wide-eyed and dumbfounded with the fact that this guy was putting the blame on me for the apparent “lousy-ness” of his company.


A couple of weeks later, the company put together a product demo on my suggestion and also part of a follow-up from the roadshow.

We had sent memos out to the folks that had graciously sat in our meetings to inform them about the proposed two-hour session to be held in the company’s office. I thought it was a good idea. It was an opportunity to see it how the product worked in real life, and more importantly, a second chance for the company to make an impression if it hadn't done so in that first meeting.


Of the 10 emails that we sent out, only two replied and eventually one showed up - largely because his office was located around the vicinity.

The session went ahead as planned, but the demo was unimpressive - the platform didn't function as smoothly as we expected, largely due to some technical issues. Long story short, to put it in context: it was almost similar to selling an older version of a software --- archaic, full of bugs and over-priced. Fortunately (or unfortunately) we had only one investor on scene to watch.


After that, we stopped the roadshows.


That day I learned a few things:

  • You can't put lipstick on a pig. A commercially viable product is at the heart of any start up. No company should go out there to raise institutional capital without being able to produce either (i) a working prototype or (ii) demonstrate that there are customers lining up to buy.

  • Self-bias is a very real. What I saw in the founders was a blind and almost religious belief in their product. To the extent they weren't open to candid feedback. Having devoted almost all their time into the product, it's easier for founders to be oblivious to the shortcomings of their own business.

  • A CEO (who is a non-founder) employed to raise capital for a startup is almost doomed to fail. There is no skin in the game. A founder that throws money to delegate a CEO for fundraising can be a huge red flag and a potential recipe for disaster.

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