—> If you want to book a 1:1 call with me, then click the link here.

There are three to five core things that prospects assume about what you are doing that actually are not true.

These three to five core things act as poison for customer prospects. Poison that inhibits them from making a move towards you and your solution. 

I call these the Major Misconceptions. In this article, I will go into detail on how pervasive these can be, and how to correct them. Let me explain. 

Assumptions Define the Category. The Category Defines Reality. 

Humans tend to think in categories. 

Christopher Lochhead writes in his book Play Bigger, “For potential customers, categories become an organizing principle.” 

There is a difference between your customers and your prospects. Your customers have “seen the light.” They have experienced your value proposition. They have total clarity on what you are doing and more importantly, not doing, and how that relates to what else is out there. 

For your prospects, over time, they pick up inputs - observations, anecdotes, writings from you and from the people in their network - which frames what you are doing into a category. 

Over time, dangerously, these categories define reality. Your prospects lose sight of what is assumed versus what is actually fact. They categorize the company, the opportunity, etc. into a set of facts. Facts, that may actually be misconceptions. 

But I made recent discovery. I’ve seen that these misconceptions tend to cluster. 

They cluster into three to five core pieces of incorrect information that is common across a broad swath of your customer prospects. 

That is what I call the Major Misconceptions - the three to five core things that prospects assume about your business that actually are not true.

My Accidental Discovery 

I discovered this by accident. 

To back up, Tundra Angels is a membership-based group where individuals pay an annual fee to be part of Tundra Angels. In exchange, they get access to curated and investible startups, a network of experts, and the opportunity for financial and societal impact. 

Recently, I reflected on the customer journey of an individual that decides to become an investor in Tundra Angels. 

I specifically considered one step in my process - the step when I meet the potential investor for coffee, hear about their story, and share Tundra Angels to them. 

When I explain Tundra Angels, I have a similar talk track and pieces of information that I want to make sure I communicate. Thus, the set of information that I communicate to the potential investor is largely the same from conversation to conversation. 

I asked myself if any patterns emerged from the aggregated coffee conversations over the years. 

I specifically honed in on the moments in the coffee conversations that I noticed the energy had shifted. When there appeared to be an “a ha” moment for the individual, where their eyes would widen, their body language would loosen up and indicate a positive and upbeat tone. The moments where the conversation appeared to cross a threshold in the individual’s energy around joining Tundra Angels. 

Then, I thought about the specific information I was sharing when those moments occurred. Interestingly, all of those moments seemed to follow a common pattern - they were moments of enlightenment. Moments of clarity. Often, the individual would say something like, “Oh that’s interesting. I thought it was like [example].” 

Moments of enlightenment. That’s interesting. 

But then I observed something further. I further discovered that these moments of enlightenment tended to happen when I would share the same three to five core pieces of information. I will share them below so that you can see what I am referring to. 

I concluded that there were three-five core pieces of information that the individual had misjudged or wrongly assumed going into the conversation. 

Once I broke that way of thinking and corrected it, enlightenment happened. “Oh, that’s what you are doing. I definitely could be into that!” 

For Tundra Angels, those 3-5 Major Misconceptions are: 

1. What they assume: Prospects assume that they do not have control over making the investments. They assume that they are allocating money to a fund for me to have the decision making power to deploy. 

   1. What is actually true: Investors have the decision-making control over the investments that they make and the check sizes that they write (above a minimum). 

2. What they assume: Prospects assume that it is an onerous process to invest in these startup companies.

   1. What is actually true: We use a third party platform to do all of the administrative work to make the investment and actually executing the investment takes five minutes.

3. What they assume: Prospects assume that they may not know anyone in the network. 

   1. What is actually true: Our network has a strong density such that members tend to know a handful of people that are in the group already. 

4. What they assume: Prospects assume that it will take many months to receive their K-1s for the tax deadline. 

   1. What is actually true: We use a third party platform that automates the tax process and delivers K-1s well in advance of the April 15th deadline. 

To recap, these 4 Major Misconceptions were the main core pieces of information that they misjudged going into my conversation with them, and were the main drivers of what changed their intrigue in Tundra Angels coming in, to a strong interest to participate as an investor.

The Major Misconceptions as an Investor

The Major Misconceptions isn’t just a singular discovery that I made in Tundra Angels. 

After making this discovery, I reflected on the conversations that I have had with investors when I pitch our portfolio companies to them for consideration. 

Interestingly enough, for a given company, I tend to find that the pattern of three-five Major Misconceptions that investors assume or ask questions about seem to hold true. 

But here is the most perilous part - they didn’t even know that their misconceptions were not true. 

The deadly poison of the Major Misconceptions is that they are not misconceptions to the prospect or the investor. To them, it is fact. It is reality. 

They are misconceptions only to customers who have experienced the value proposition in its true form or the investors who have invested in that startup and know what it is and what it is not. 

What your prospects believe to be true vs. What your customers know to be true. 

When I Almost Believed a Major Misconception

✅ An investor’s misconceptions is the #1 factor that can kill an startup opportunity before it’s even begun. ✅

With one of our companies, EVEN, I held a Major Misconceptions that nearly tricked me into missing the opportunity to invest in this company.

Years ago, I had heard about EVEN after their pre-seed round was announced in April 2023 in this article. 

Here is what I thought - “The world doesn’t need another Spotify.”

At the time of the announcement, I skimmed the article. I concluded that EVEN was in the same category as Spotify, Apple Music, taking the content of the artists and monetizing it via a subscription model. I had this Major Misconception for two years! Yet, I was never confronted with a context to check my assumptions about EVEN. 

In late Summer 2024, I saw from a deal flow channel that EVEN was raising funds. 

Keep in mind, I saw EVEN and seeing the company name, I consciously ran through the assumption that I had - “This is probably just another Spotify competitor,” not realizing that it was actually a Major Misconception. 

But despite my assumptions, I still decided to reach out, just in case my assumptions were incorrect. In my head, it is better to give ourselves the opportunity to invest rather than to decline the opportunity without true knowledge of what it entails. 

I’m so glad I did. Over the first and second conversation, my Major Misconceptions broke down. 

Here they were: 

1. What I assumed: EVEN is just another Spotify competitor and these larger companies will crush them. 

   1. What is true: EVEN works in harmony with Spotify, Apple Music, and other streaming platforms. EVEN positions itself as a platform for artists to build community and pre-release their music 14 days out, 30 days out, etc ahead of going onto streaming platforms. As Mag says, “It’s not EVEN or streaming, it’s EVEN and streaming.” 

2. What I assumed: EVEN is trying to acquire artists independent of the labels and distributors, which is a strategy that I had seen other musictech startups do, so I assumed it was true here too. 

   1. What is true: EVEN’s go-to-market is partnering with labels and distributors, adding tons of value to them, who then onboard their artists. EVEN just last week announced a partnership with digital distributor Too Lost, giving 400,000 artists turn-key access to EVEN in their artists’ dashboard. 

If my Major Misconceptions remained unchecked and I didn’t choose to reach out to Mag, how Tundra Angels would have missed an amazing opportunity. 

One Quick Note

To me, the Major Misconceptions holds way more weight for customers than it does for investors. 

The fundraising journey is a unique process. Everyone is asking questions from their context. In investor-land, context all over the board. 

If the startup does their product and marketing job right, the context that your customers are facing is largely the same - which increases the likelihood of them to hold the same three-five Major Misconceptions. 

But for investors, founders are pitching to investors in so many different headspaces, industry expertises, fund life cycles, generalists investors vs. subject matter experts, that I would encourage extreme caution when thinking about what the Major Misconceptions that your potential investors have because the ICP is so all over the board. Thus, I really think the Major Misconceptions applies much more directly in a customer and prospect context. 

Speaking to the Major Misconceptions 

Maybe we are not as much selling to the customer prospect as we are speaking to the Major Misconceptions. 

The most important work that a startup can do here is to identify the Major Misconceptions that your prospects have. 

Reflect on your conversations with your prospects. In those conversations, what are the moments of enlightenment in those conversations? 

Do those moments of enlightenment follow a pattern of 3-5 core pieces of information?

You may have found your Major Misconceptions.

Once you identify your Major Misconceptions, it is your job to wage an marketing air attack, putting content, messages, and speaking one singular Major Misconception over the marketing airwaves. Correct the thinking in unique and creative ways. 

Also, your prospects will not come to you to check their assumptions. You need to go to them and correct what you assume are their 3-5 Major Misconceptions.

With all of this, let me leave you with a question: 

Are you certain that you know what your prospects are saying, “No,” to? 

—> If you want to book a 1:1 call with me, then click the link here.

Click here to access the rest of the newsletter articles.

Here are some of the recent ones!