When a founder, I had the amazing opportunity pitch to a room of 40 investors. It was on that stage that I made a fundamental error.

During my pitch, on one of the opening lines, I said, “We are in conversations with Vanguard, which cold-reached out to us on our website.” 

It was true. Two weeks before, Vanguard, with over $9 trillion assets under management, randomly reached out to us, a two person FinTech startup, through our website form. 

Epic, baby. 

I gave the impression that Vanguard sought us out. 

They did. 

But I will tell you that it was a long stretch to say that we were in “partnership discussions.” 

What I had just done there was something that founders, as well as investors I might add, do frequently:

Flexing. Posturing. 

Statements like this are designed to impress. 

If I’m being honest, I fundamentally felt insecure with the lack of traction that we had at the time of that pitch. 

We were still building our product. We didn’t have any live users on our platform. 

As all founders well know, it’s hard to raise investor funds when the traction story is thin. So, I was trying to bolster up what I saw as an otherwise unimpressive traction story. 

The Flex and the Facts

Flexing is natural. Flexing is also important in order to impress the other party, namely, the investor. But if not done thoughtfully, flexing can put the founder on dangerous ground. 

Founders and investors get into trouble when they flex without having a defensible set of facts. 

✅ Founders need to own the delta of what I call The Flex and the Facts 

What they say is happening (the flex)

Versus

What is actually happening (the facts) ✅

One of the things that has made me a much better investor, but also a better business-person, is to push past the flex and get to the facts. 

In fact, I will tell you that as an investor, this disconnect is one of the areas of lowest hanging fruit when investors evaluate a founding team. 

Knowing what I now know as an investor, it was ludicrous for me to base a point of company traction on a simple email outreach. That is a very, very unwise idea.

It is within the delta of the Flex and the Facts that founding teams and their startups can disintegrate quickly. Or, stay intact for the next round of due diligence.

Flexing Does Two Things 

Flexing, posturing, is something that we do as humans. It’s natural. 

✅ Founders don’t realize this - when they flex it creates two things - 1) An expectation, and 2) Another line of questioning. ✅

All the time, I am hearing statements like this from founders. 

“We’re having conversations with ___________”

"We got connected to the C-suite at [customer]___"

“Our customer contract is on the CEOs desk right now waiting to be signed…” 

“We’re going to launch our MVP in two weeks.” 

“Whole Foods reached out to us and wants to put our product on the store shelves.” 

“We got an interview with Y Combinator!” 

“We are in final stages of due diligence with XYZ VC firm.” 

Now, these statements are natural and important. If founders never flex, investors won’t be impressed. So you need to flex. 

But founders need to understand that flexing inadvertently sets an expectation. An expectation that the investor can double back on at a later date. 

Suppose a founder tells me, “We are going to launch our MVP in two weeks.” Noted. 

Then, I follow up in 8 weeks, and ask how the MVP launch was. 

“Oh, we didn’t launch yet. Lots of bug fixes.” 

In this case, it becomes a question of whether or not the founding team can set appropriate goals and timelines, or even execute on what they are setting out to do. 

This has happened countless times to me. Seemingly…

The next milestone is always lying a few weeks around the corner. 

The customer contract always seems to be on the CEOs desk waiting to be signed. 

There is always a marquee customer that is says they are ready to go live once a feature set it built out. 

You feel me? Be honest, you’ve been there. I’ve been there!

Flexing sets an expectation. An expectation that can be doubled back on. The story should be solid. 

If you are going flex, you should have a defensible set of facts. 

Flexing Also Opens Another Line of Questioning

✅ When a founder or even investor flexes, inadvertently, they actually open up a line of questioning for the investor. ✅

I once spoke to a founding team whose startup had generated a lot of sales through different accounts marquee CPG customers. It was impressive. 

Then, I asked about the sales this year in those accounts. 

The founder shared that they got pulled from several of those accounts due to restructuring in several organizations. 

Oh.

So, several of the CPG accounts they had sales in were no longer active accounts. 

What the founder initially flexed on opened up a line of questioning for me. But then when I pressed further, that same statement moved quickly into being a liability. 

There was a delta between the flex and the facts. And I didn’t have to push hard to get to what was actually happening.

Another common example is with go-to-market channel partners. I speak to a lot of startups, and some of the Tundra Angels portfolio companies, that go to market via channel partnerships. 

A typical conversation with a founding team is, “We’re about to sign a partnership agreement with ABC Company which will give us access to 15,000 users,” or, “4,000 potential customers,” or “This influencer has 100,000 Instagram followers.” 

But this opens up a line of questioning for the investor. This example in particular has a major logical flaw. 

Signing a partnership with a channel partner with a base of 4,000 potential customers is way different than the startup having 4,000 customer contracts and money in the bank. The startups' win/loss column starts with 0 customers in this partnership.

This flexing may seem like it’s impressive to the investor, but its easy to push past the flex and get to the facts. 

In this case, I would go straightaway and ask for a detailed understanding of how the customer acquisition process happens within the channel partner. 

On a big picture level, investors hear versions of stories like these and otherwise all the time across all aspects of the business  - across fundraising, across customer acquisition, across hiring potential top tier talent, etc.

You would probably be surprised how often I or other investors push on these flexing statements and then realize, “Oh wow, the story about this is actually very thin. There isn’t much to this at all.” 

The flex quickly disintegrates when we push to the facts. Red flags get thrown.

But my contention is, the founder put themself in that position! They walked right into a trap of their own design. 

Don’t misunderstand me. If startups never flex, investors won’t be impressed. So founders need to flex. But if you flex, you should have a defensible set of facts. 

As an aside, I’m going to address an elephant in the room. I know that I’m directing my writing to founders, but investors, advisors, consultants, etc. are just as guilty of this as well. If an investor flexes and talks about the connections they have in say the FinTech payments industry, it's the founders job to push past the flex to the facts. Hone in on the expectation and follow the line of questioning. 

Don’t be afraid to push past the flexing that investors, advisors, etc. do and get to the facts. 

Keep me honest. Keep us honest. Push past our flexing to the facts. 

Closing Thoughts 

Flexing is important for startups to gain attention and to impress. But if not done well, flexing can put the startup on dangerous ground. 

I was skating on thin ice when I said to a group of 40 investors that we were in partnership discussions with Vanguard when they reached out on a cold email through our website. That was very unwise. I had zero substance behind the partnership discussions. The story would have quickly disintegrated.  

Flexing does two things: It 1) Creates an expectation and, 2) Opens up another line of questioning. 

That’s why founders, and investors, need to own the delta between the Flex and the Facts. The delta between:

✅ What they say is happening (The Flex)

versus

What is actually happening (The Facts) ✅

When you flex, you don’t pull a muscle and create a self-inflicted injury to your progress. 

When you flex, make sure you have a defensible set of facts. 

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