Differing Expectations
(Photo from Ciudad de México by Juan Velazquez at Scopio)
During the Great Recession, like many people, I was not finding enough work and enough income. At the time I was still on a visa, not yet a citizen, so I was hobbled by the stance of officialdom toward immigrants that was later dubbed the hostile environment. It affected companies’ willingness to engage me.
From one of the business networking groups I attended, two men in business together approached me about collaborating on their efforts to help take innovations to market.
To cut a long story short, our efforts turned out to be like spinning our wheels in the sand. It wasn’t a moneymaker, but I learned a lot.
Circulating at a New Level
One of them funded the effort. The other did the actual work and I worked with him.
He could get meetings with people I had never dreamed of getting to speak with. I was well received in those meetings. My past in the American space program mattered to that audience. After getting turned away for more typical contracts with sneers and demeaning remarks, it was a revelation.
Later I learned how to get the attention of high level people myself and better ways of taking clever new things to market. That’s a bigger topic than I can delve into in any detail here.
Grants
We applied for grant funding for one of the innovations we sought to advance. That was frustrating. The grants required a consortium of organizations, one of which failed to meet the deadline for its portion of the application. All the rest of us turned on the afterburners to get our parts done and one laggard wasted our efforts.
I’m not sure that was as bad as it felt at the time. Business owners who have gotten similar grants tell me that the bureaucratic reporting and auditing they have to do to satisfy the funding authority takes a larger proportion of the money than they expected. It squeezes the portion of the grant they can truly apply to productive activity.
Pursuing grant funding also involves a lot of delay. It takes time to write, polish and submit an application. The funding authority takes time to evaluate the application. If funding is awarded, it takes months to come through. The window of opportunity isn’t always long enough for so much delay.
That’s no better now than it was then. I’m working with another effort that wants grant funding, and I’m uneasy about how readily months slip by while a grant application percolates and a patent creeps closer to expiration.
A Taste of Expectations
What was the most stunning thing I learned in those months? What did I see that I expect to flare up now that the economy is tough again?
The vast gulf between the expectations of the wealthy and the rest of us.
I’ll start with the ho-hum part, then get to the big piece that I expect to become more prominent.
They expected to deal with men. We met with one billionaire (yes, with a B) who really, really knew about investments and making money, but had no idea how to have a business conversation that included a woman. Watching him struggle with wording was painful. He didn’t know what pronouns to use. He didn’t know what other words he could use. His suit probably cost more than many months worth of my rent, at the least. He seemed to be the epitome of poshness and elegance, yet he did not know how to discuss business without using language that would be insulting to me as a woman.
That part has gotten better in the past decade or so.
The Stunner
They expected to get a lot for free. The wealthier they were, the more they demanded the small businesses we represented must dig into their pockets to serve up enticements. It wasn’t a matter of wanting a proof of concept before launching product manufacture or anything like that. It was demanding large amounts of labor and materials expended on their behalf before they would think about perhaps, only perhaps, an engagement they would be willing to invest in.
How much did they want for free?
More than these businesses, struggling in the recession, could have afforded in good times, let alone bad times. The businesses had to say no. The demands were impossible for them to meet without at least a promise of money instead of only a faint maybe.
For example, a multimillionaire wanted a small business to provide £70,000 worth of devices. Most of the cost would have been for materials and contracted manufacturing facilities. From that point, going into full manufacture and release to the market would have been easy, but the business was out of cash. All available resources had gone into developing the invention to the point where we could demonstrate it. That’s why we were meeting with him.
The millionaire didn’t want to spend even one red penny until he got his wish. If the business went out on a limb to somehow fulfill it, the millionaire was only willing to say he would consider going into a deal after they fulfilled his wish. He liked the way the prototype we demonstrated made all the colors in the paintings on his walls become breathtaking. He didn’t seem so enthusiastic about taking the product to market. We didn’t trust him to do anything further once he got his freebie.
What was on the table? What money didn’t come in because of this? At least a million a year.
The deeper the recession became, the more greedy people like the multimillionaire became. They wanted more and more from small businesses that were struggling to survive, and they were less and less willing to make commitments themselves.
Small businesses with genuinely good, value-adding new products expected to give up an appropriate proportion of equity and profits to an investor who helped them take their innovations to market. Investors expected, without making any commitment themselves, ever-larger donations from the innovators as enticements.
There are exceptions to every rule, of course, but this set of divergent expectations held true more and more often as the economy got worse and worse.
This part hasn’t gotten better in the past decade or so, to put it mildly.
From Those Times to These Times
Are you a small business or an inventor with a genuinely clever innovation that isn’t ready for prime time yet, but could add value once it gets there (especially if it can increase the profit margin and/or competitive advantage for other businesses)? Great! But don’t expect to go to market in the conventional way. In these times, you’ll bash your head against the same brick walls we found in the Great Recession. In particular, these times will magnify investor greed.
Too many investors get rich partly by maneuvering other people into giving things to them, suckers like you or me.
There’s a way to go around the brick wall, but going head-on against it will only bring you headaches. Especially now. Don’t go at it head-on, and don’t give your clever stuff away. As I said, I’ve learned a better way since then. It can be done. If you don’t know a way to go around the brick wall, don’t be shy about getting help to do it differently. Sidestep the greed.
