'Perspective-Taking' and How to Close an Investor in 3 Minutes
Now that you have your big idea, how do you launch the venture of your dreams? This question is a tough one to answer. Your friends, family or colleagues will advise you that the next step to launching a venture is raising money. But raising money for a startup is insanely hard when you have no network, no track record and, at best, only conceptual knowledge of a term sheet.
Even harder is raising money without a network, we hear from friends and fellow entrepreneurs. With that in mind, my friend Evan Baehr and I decided to share one of the biggest secrets we wished we'd known when we launched our own ventures: Successful fundraisers don’t raise money; they raise friends.
And to raise friends, you must first build relationships with investors, not simply present an idea accompanied by a fancy pitch deck.
So, how do you build those relationships that turn into fund-raising conversations? One way is to master the art of what psychologists call "perspective-taking": the science of recognizing and even anticipating initial reactions from the person you’re talking to.
Want to learn to do it? The next time you meet a new investor, here’s how to use perspective-taking to close that investor in three minutes.
There are certain clues and cues -- the presence or absence of eye contact, tone of voice, body language -- that give us insight into what a person is thinking. If we pay attention to those cues, we can understand the world from that person’s viewpoint. If we understand his or her view of the world, we can anticipate that person's behavior and whether he or she will want to invest in the deal.
And we can anticipate that before it actually happens.
In the first moments you interact with someone, your brain moves through a series of conclusions, some conscious, some not. With perspective-taking, you can learn to recognize and even anticipate those initial reactions. Understanding someone’s world through his or her eyes allows you to anticipate the next move or comment.
People often confuse this perspective-taking with empathy, but the two are distinct. Empathy is about emotionally connecting with someone else or feeling what he feels. Perspective-taking is about understanding someone’s thinking, about seeing what he or she sees. Perspective-taking asks questions like:
- What might this person have been thinking and feeling before he or she entered the room?
- What is he or she doing here in the room?
- And, most important, why?
The first three minutes
Psychologists have found that humans begin to categorize the people around them within 150 milliseconds of meeting them and, by the end of a first meeting have likely made character judgments that can endure for a very long time. In the very first moments of your interaction, here are some of the questions a person may be asking:
- 15 milliseconds: Should I trust you? Long before you have said a word, the person you are meeting has made an unconscious mental judgment of you, while you've made your own. The amygdala -- the part of your brain that you share with reptiles that tells you whether or not to punch someone, run away or play dead -- makes a nearly automatic conclusion about your surroundings that answers the questions: Do I trust this person? Does this person look like someone I might like?
- 10 seconds: What kind of person are you? Are we connecting? In the seconds that follow, two other processes begin. The first, which one researcher calls “prototype matching,” searches through the listener’s preconceived notions and stereotypes to compare and contrast you with what he or she already knows. Are you the creative type? Can you tell a good story? Can you get the job done? Do you have what it takes? The second process is self-reflective; it pays attention to what the listener is doing and feeling in order to find clues as to the kind of relationship being formed. It asks: Am I being “swept along in the magic of something bigger?" or, "Am I bored and distracted?"
- Three Minutes: What Am I Going to Do? Eventually (in around three minutes), the prefrontal cortex kicks in to start making decisions about what to do with the information the person is taking in. It starts by coming up with a set of potential actions -- invest or not invest, for instance -- and then does a risk/reward calculation for each of those actions. Before long, you have a pretty strong idea of which action is worth pursuing.
Exercises to improve your perspective-taking
- Read more literary fiction. A recent study found that reading literary fiction can increase a person’s ability to recognize someone else’s mental state. These kinds of works, according to the research, cause people to use their imaginations to make inferences about what someone might be thinking.
- Take an improv class. Improvisers have to pay attention to subtle clues in their partner’s words, movements and body language, to fill in the gaps of knowledge between them. In other words, improvers have to learn to read one other’s minds.
- Lead with the most controversial part of your venture. Choose the most controversial aspect of your pitch, and the next time you meet with someone, make it the first thing you talk about. Then, watch his or her response. Use it as a litmus test for gauging his or her interest in your venture.
Parts of this post were adapted from the book Get Backed: Craft Your Story, Build the Perfect Pitch Deck, and Launch the Venture of Your Dreams, Evan Loomis and Evan Baehr. Harvard Business Review Press, November 2015.