How to Answer the Harder, Unanswerable Questions

When I was still an investor at Ocotopus, I tried to keep away from asking the unanswerable questions to founders.

But sometimes as an investor it’s basically impossible.

So, what do you do when someone asks a fundamental, unavoidable risk?

E.g. “What if Google or Apple makes what you are building?”

Or, “Isn’t this market too competitive?”

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Your initial instinct is to turn these into a discussion, to see how the investor would tackle this.

Another method is to create a conversation together on how you would solve this.

And for the rest of the questions you answer with investors I would agree with this.

But unfortunately, this is where the problem aligns.

These types of questions aren't like other ones.

They aren't asking you these questions as an interest, they may genuinely believe you can never compete with Apple.

Because they don't know as much as you.

So when you post it back to them as a question on their knowledge; it devolves into a long, negative conversation that doesn’t resolve the issue. Which makes it seem like an even bigger deal than it is.

They are horrible questions asked to you. I get that.

But you will be asked something like this during your fundraise.

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So… how do you get past this?

I have found that you can have the most success on this question when you stand your ground. You have to show you are the expert. You have to answer with a strong counter argument that doesn’t leave too much room for discussion.

E.g. let’s say an investor asks you, “What if Amazon enters your market?”

You could answer back something like,“Amazon has shown they don’t care about this market, the last 5 products they launched were a flop and it’s a huge market. All backed up by data, data, data.

We know we are better, more agile and have this unique insight that means we will win”

The key is to have real counter arguments that you believe in, and an informed confidence that this big, hairy risk is actually not a worry to you.

Now…

This takes experience to get this right in meetings. This isn’t an easy skill.

You have to understand:

• When an investor is asking this question

• When to move from discussion to explaining
• When to push back (covertly) when asked a bad question

But when you do this correct, you can move into that “it” factor as a founder.

During a fundraise there will be 2-3 main questions that arise around your fundraise.

At least one of them will be an unanswereable question.

This is why its so important to get practice calls in and record them.

This is why its so important to build out your FAQs as you prepare your fundraise.

So you experience and see when these questions get asked, and can make sure you answer them in the right way.