He told Disney execs why they shouldn’t buy his company. They still bought it for $40M
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Photo credit: Rufus Griscom

Photo credit: Rufus Griscom

This technique works on one condition

Tech in Asia

Rufus Griscom, the founder of online parenting magazine and blog network Babble, faced trouble at his board meetings. He told board members about what was going right with the company, but got skeptical responses in return.

So for the next board meeting, he changed tack. He started off by discussing all that went wrong in the firm. This had a positive effect. Instead of questioning Rufus’ every move, the focus shifted to problem solving.

Rufus had an idea: what if he pitched to investors this way too? So he added a slide to his investor deck listing the top five reasons not to fund his startup.

It worked: he raised $3.3 million in 2009 at a time when fundraising was hard due to the Great Recession.

If something works, do it again and again. That’s what he did. Two years later, he tried to sell his company to Disney. He included a slide which read, “Here’s why you should not buy Babble.”

He talked about how user engagement was lower than expected, and how the backend was dated. He sold the company for $40 million and ran Disney’s interactive media division for two years.

“Unbridled optimism comes across as salesmanship; it seems dishonest somehow,” he says.

Rufus narrated his journey in the book Originals: How non-conformists move the world by Adam Grant, which I described in a review as a “bible for changing the world.”

While unconventional methods often fail us, several factors led to Rufus’ success. Here are some reasons his tactic works well with a skeptical audience:

1. Revealing flaws makes you seem smarter.

An experiment found that expressing skepticism about an idea makes you seem more intelligent. Book reviews that were written in a scathing tone were judged by subjects in the study as more intelligent. On the flip side, flattering reviews were perceived negatively.

“Merely changing a handful of words from positive to negative […] was sufficient to make the critical reviewer sound smarter,” writes Adam.

2. Revealing flaws makes you seem honest.

He then cites a study which showed how we tend to put up mental shields when someone tries to persuade us. The more enthusiastic the person, the more skeptical we become.

On the other hand, when people talk about their weaknesses, it feels sincere. People let their guard down. It no longer feels like a sales attempt, but an honest conversation.

When your audience is skeptical, they’ll find flaws with your ideas sooner or later anyway. Surfacing your weaknesses before your audience does means you’re helping them do their work.

That builds trust and it also makes you seem more credible, because if you’re confident enough to talk about your flaws, it probably means you have a lot going for you.

3. Revealing flaws makes people judge your idea more favorably.

Finally, talking about your idea’s weaknesses strengthens people’s perception of the idea itself. A study found that the easier it is for us to mentally retrieve a certain piece of information, the more common and important we think it is.

The reverse works too: the harder it is for us to think of something, the less important we think it is.

So when Rufus talked about Babble’s problems, investors found it harder to think up their own ideas about the company’s flaws. And that improved their perception of the company.

This technique works on one condition: if the listener is already skeptical about your idea. So if you’re a startup seeking funding from a venture capitalist who has heard thousands of pitches, or a company trying to win business from a client, being upfront about your weaknesses could help you seal the deal.

This move backfires if your audience has already bought in to your idea. In this case, talking about the negatives gives them more ammunition to take you down.

So, before you try anything, know your audience first.

Editing by Steven Millward

This post was originally published on Tech in Asia

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Terence Lee

About Terence Lee

Based in Singapore, Terence writes about technology trend and startups in Asia. Passionate about harnessing tech for storytelling, he has picked up web development, sniffing his way around Ruby on Rails, Javascript, and D3.js. His articles have been published on Venturebeat, Yahoo!, SGE, Straits Times, and Today. He digs movies, computer games, and food porn.

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