$150 bet with FoodCircles team in Grand Rapids, MI
As an entrepreneur I love risk, moving fast and taking action. When I come up against a challenge I scheme to overcome it. But as I travel around speaking to entrepreneurs regarding lean startup philosophies, I hear stuff like this.
- “I’m scared to launch cause I might not be able to handle the demand”
- “We don’t want to charge because we want to make it easy for businesses to sign up”
- “We need to add a few more features before we invite anyone to use it.”
Most startups aren’t accountable to anyone but themselves. That’s not always optimal.
My response to these fears and obstacles is some variant of “bullshit”, so I’ve come up with a way to help entrepreneurs overcome them. It involves a short conversation, a calendar, and my wallet. As coined by my friend Trevor, here’s the “Martell Method”.
How I put my money where their fears are
The Martell Method sees me make a ‘bet’ with an entrepreneur:
1) We agree on a metric they want to reach, and I bet they won’t reach it by a certain date
2) I give them the bet money right away
3) If they don’t win they have to repay my seed bet, plus what they owe for losing
4) I’m allowed to use them as a case study in my talks
Note: Only do one bet per event.
This process leave me with a calendar full of “time bombs” that pop up and remind me when I made a bet and it’s time to check in. Here’s how it typically goes down.
We negotiate
I’ll usually ask some open-ended questions like “How much demand do you expect? By when?”, or “What do you think would happen if you launched now, or asked for a financial deposit from the customers you’ve been talking with?”.
Once I figure out some metrics that seem aggressive but not ridiculous, I move onto the next step.
We set terms
The bet is always SMART. Specific, Measurable, Attainable, Realistic & Timely. This means it’s very clear what metric we’ll be using to evaluate if they hit it, and the specific date that things come due.
I tend to keep the dollar value at around $100 bucks. But I may even start at $500 to show them how serious I am. Regardless of where we end up, I usually try and land on a number that’s meaningful.
and quickly grab one of their business cards and outline the details. For most, it means outlining a specific goal with the expectation that they send me something on that date to verify they met it.
I send the money
I PayPal the money on the spot. Some people might find that weird, but I see it as legitimizing my commitment to the agreement, and I think sending the money over solidifies things. Once they accept it, it’s tough to make excuses.
After that it’s a done deal – they can use it, spend it, etc .. but once that date comes due – if they don’t hit their goal, they need to pay up, including the initial deposit.
Time starts ticking
The fun part of this method is I have a calendar full of “time bombs” that pop up and remind me when I made a bet and it’s time to check in. For the most part, the entrepreneurs are very active in tweeting or emailing their progress.
Winning is not really winning
I’d rather lose the money than be right – it’s more about helping them stay accountable to the team and to themselves. The real value is for them is to have someone external that cares if they make progress or not.
Most startups don’t have anyone other than themselves to be accountable too, that’s not always optimal. I know for me, when I took the first dollar from an investor, I felt a deep sense of responsibility to not only return the capital, but to make them money for being an early believer. I’m more concerned about them making returns then myself cause at the end of the day, it’s my decisions that will make or break my startup.
So what do you think about the “Martell Method”? Have you ever done something similar? If so, leave a comment with the back story, love to hear from you.
Comments.