Not a Fit Right Now

The founders with the worst ideas need specific feedback the most, and they’re the least likely to get it. My undergraduates are giving their midterm pitches this week, five minutes of presenting and ten minutes of questions, and I’ve spent a lot of those ten minutes trying to strike a balance between grilling them hard and not demotivating them too much. I can at least set my expectations with my undergraduates, with actual founders, it’s harder to do.

The eight ideas being presented came out of the class itself. Every student pitched an idea of their own in September, the class voted on the written executive summaries, and the top eight became team projects. So these are ideas they came up with, voted on, and decided to do, which makes it hard to know what to do when one of them really isn’t viable. Just hammering a team on that fact isn’t educational, but holding their hands and pretending the idea is good doesn’t do them any favors either.

Ten Minutes of Questions

Nobody has to build what they pitch, and there isn’t enough time in a semester to build it anyway. So all I can grill them on is whether the idea makes logical sense, and not whether the platform they’re describing would be bug-free or even plausible. That gets really tough with the AI companies, because some students handwave AI as if it can do it all without a doubt, when the technical details and the cost of tokens are what would sink them if they ever tried to turn these projects into real startups.

The best tool I have is a question they can answer themselves. Unit economics isn’t on the midterm (we cover it next week), but the math is simple enough to do in the room. Say a team charges $10 a month and each active user runs 50 requests a day at two cents a request (the numbers here are illustrative). That’s $30 of cost per user per month against $10 of revenue, so every new customer loses the company $20, and growth only makes the hole deeper. Once a student works that out on the spot, I don’t have to tell them the price is wrong.

To be fair, the students aren’t the only ones in the room who could be wrong. I make the final call on which eight ideas become projects, so if a team is stuck with one that doesn’t work, part of that is on me. My instinct is to be honest and not sugarcoat things, but I’m also not infallible, which is a big part of why a question works better than a verdict. If the team comes back with a number I didn’t think of, I learned something, and if they don’t, they found the problem themselves.

My syllabus says I’ll tell students exactly what didn’t hold up and what would change my mind. The final pitch in December raises the stakes with a panel of outside judges, who score each team out of 100 with 30 of those points on Q&A. Each judge also gets a hypothetical $1 million to split across the eight teams, and they can fund at most three, which means every judge passes on at least five. So in class, hearing no is built into the format, and my half of the grade makes sure it comes with a reason. The market guarantees neither.

The Polite Pass

I have a hard time with this conversation with founders too. There are moments when I meet a founder and know right away that the idea is either not well thought through, too derivative, or technically impossible. I also try not to speculate, so I only give a real answer to founders I’ve done some diligence on, and with them I’ll say what didn’t hold up and what I’d like to see next. Diligence can take weeks, so it goes to companies that already look plausible. The founder with the weak idea, the one I had a read on in the first five minutes, gets “not a fit for us right now,” which tells them nothing.

There’s a less flattering reason too. A specific no can be argued with or proven wrong, and a vague one can’t. “Not a fit for us right now” also keeps the door open in case the founder pivots into something good, so for the investor it costs nothing and keeps an option alive. To the founder, though, “right now” reads as “not yet,” which means the weakest ideas get the most encouragement to keep raising.

The Backup Plan

Back in The Win Condition I wrote that being rah-rah about everyone in the ecosystem is no good, and slapping everything down isn’t helpful either. The classroom makes that balance easier than it is with founders, because a student whose idea falls apart in Q&A still has the rest of the semester to fix it and the rest of college after that.

Founders don’t get that cushion. The hardest conversation for me is with a founder whose idea is terrible and who has no backup career or plan for a job. Having conviction is good, but there are moments where I’m like… really? This is what you’re trying to build? What that founder needs to hear is that maybe they should have a backup plan, and most of the time I haven’t done enough diligence to be sure enough to say it.

There was one founder where I said it anyway. He was really frustrated because he’d been trying for over a year and had no customers and no interested VCs, and he was still looking for advice on how to keep going and how to attract people. I told him the market was telling him something, and that perhaps it was time to pivot or try something else. I didn’t need to know his company better than he did to say that, because a year with no customers and no investors was his own data, the same way the token math is a student’s own number.

So the closest thing I have to an answer on how hard to push is a question the founder can answer with their own numbers, whether the idea is strong or weak. My students get ten minutes of those questions this week, and another ten in December in front of judges holding a hypothetical million dollars. What I’ll be watching is what the teams I pushed hardest this week bring back in December, whether that’s a better version of the same idea or a different one… and whether I turn out to be wrong about any of them.