How Good Are You at Noticing the Entrepreneurial World Around You?

Entrepreneur Office Hours - Issue #225

I was sitting in a Japanese restaurant earlier this week. It was one of those places with the hibachi grill in the center and the dude who cooks in front of you. Very cliche, but always a fun guilty pleasure.

My family of four were the first people at our table. The waitress diligently took our order, and then she came out a few minutes later with the usual soup and salad appetizer. As we were eating, my 8-year-old asked, “Why do they give us soup and salad?”

“I don’t know,” I shrugged. “I guess it’s a Japanese tradition or something like that.”

Curiosity got the better of me, so I took out my phone and asked Google. Apparently there is, indeed, an element of tradition. However, as I sat there munching on a carrot drowning in ginger dressing, the more cynical side of my mind took over, and I began wondering if the salad was serving a practical, operational purpose. Specifically, Japanese restaurants don’t like to start cooking meals until all the seats around a grill are filled with customers. In our case, had it not been for that 50 cents worth of iceberg lettuce and vaguely flavored water, we’d probably have gotten annoyed by the wait. However, thanks to our “traditional” Japanese appetizer, we comfortably waited 10 minutes for another family to show up.

I love noticing small, practical operational moments like these within businesses. No, they’re not the kinds of sophisticated entrepreneurial tactics that are going to help startups become billion dollar unicorns, but they’re still interesting and potentially useful.

For example, ask yourself this question :Are there moments in your product or service causing customers to get annoyed/angry/disgruntled? If so, maybe you can find a way to easily pacify them with a 50 cent “feature” that feels like an integral part of the experience.

-Aaron

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This week’s new articles…

The Giant Lie About Startups I Wish Successful Entrepreneurs Would Stop Repeating

Some entrepreneurs are doing enormous harm in the startup community, and they don’t even realize it.

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5 Strategies for Hiring Employees I Wish I’d Known Before Launching My First Startup

Hiring is one of the most important skills an entrepreneur can have, but it’s also one of the hardest to develop.

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Office Hours Q&A

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QUESTION:

Hello Aaron,

I have a question about getting letters of intent. I feel like I often hear people describe getting letters of intent from potential customers as a way of getting venture capitalists to invest in a pre-product, pre-revenue startup.

How legitimate is this approach to fundraising? I have tried pre-selling my product and had zero luck. Are other people really able to convince customers to buy something before it exists?

And, if so, how are they doing it?

Enquiring minds want to know!

-David

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I don’t have a ton of experience with letters of intent (LOIs), and that’s because I’ve mostly built companies in the B2B software space. Since I was capable of building the softwares myself, I always had them built before I tried selling them. To be clear, that wasn’t necessarily the best strategy, but it’s what I did.

My inefficiencies aside, securing LOIs before you've got a product or revenue is absolutely a legitimate and strategic move to attract venture capital investment. The essence here is not just about convincing customers to buy a pre-existing product. It’s equally important to be demonstrating market demand and validating your business idea.

How do entrepreneurs sell something that doesn’t exist? It's about selling a vision and a solution to a problem that resonates deeply with potential customers. Successful entrepreneurs are storytellers who can compellingly articulate the value their solutions bring even before those solutions exist. These entrepreneurs focus on building strong relationships, often leveraging their existing networks where trust is already established.

Moreover, offering incentives for early commitment, like special pricing or exclusive access, can sweeten the deal. Remember, it's less about the product's specifics and more about the problem it solves and the value it adds.

In essence, it's a mix of vision, persuasion, and relationship-building. Keep refining your pitch, understand the problem you're solving deeply, and the LOIs will come. And remember, if they don’t come, don’t assume getting an LOI is impossible. If you can’t get an LOI, it means you’re not addressing a meaningful enough problem. After all, if you’re addressing a genuinely painful problem for potential customers, they’ll happily sign an LOI because even the potential of having the problem solved is worth the commitment.

-Aaron

Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!

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