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Wednesday, February 29, 2012

Putting Lipstick On The PIG

You may have heard someone say “Let’s Put Lipstick on the Pig”, or maybe they use language like “Perfuming the Pig.”  The phrase conveys trying to sell or promote something that may be less than popular by making it look more attractive.  For example, a company has a technology that is not in its primary core activity.  The technology may be a candidate to sell off.  It may even be in your primary area but your primary business has not gotten traction.  The goal would be to make it look more appealing to someone in order to gain a financing or have the business purchased.

The fact that the concept is so common that the language reflects dressing up something prior to promoting it for sale or financing, should tell you something.  It happens a lot!  Your startup goals are always to create the best business that is possible.  This includes the technology, staff, leadership, products and structures.  Failing in any key area can result in a business that is suboptimal and attracts less attention.  Your only way out could be a sale of the pig.

You should always strive to improve the business.  Those steps that generate real change and an improved business do not fit with the phase above.  Use of the phrase occurs when you cannot improve the business and your primary efforts are trying to make it look better via a cosmetic approach.  The underlying business may still be suboptimal, yet by changing how it is presented, or by cleaning up just enough to hide flaws, the business starts to look better.   A very simple example might be in a corporate presentation.  The underlying data is the same as is everything else about the slide show.  Yet, your hope is that by changing the slide show it will sell better.

The approach cuts two ways.  In a previous article, “Got a Great Pitch, GET IN LINE” described the fact that buyers and sellers have pitches and it is important to see the facts in addition to the hype.  It is hard to tell how the business has changes unless you have seen it before.  Most interestingly, may on the financial hunt for funding will revise their slide deck and present it to financial investors.  An interesting point is that the sophisticated investors keep the OLD SLIDES.  Trying to convince them with NO NEW DATA is a hard sell unless their investment philosophy has changed.  In fact, I have had some say, “So nothing has changed since I saw you last?”  Those that are not so direct might say, “What is NEW since you were here last.”  You would be surprised how many entrepreneurs keep presenting the same old stuff hoping for a different response from an investor.

The company should strive every day to make progress.  Adding new data and company enhancements greatly improves the pitch for funding, sale, or partnering.  It often takes several visits to consummate a transaction beneficial to your company.  The gradual improvement in the pitch showing the NEW stuff really helps provide confidence to the listener.  The ability to make that sale to the listener based on real data is one of the reasons that the entrepreneur must keep the company on track even in difficult times.  It is so much easier to make the sale based on solid and real data rather than old tired data or product that is dressed up.

There may come a time when your business has decided to stop all work on a technology or product but want to recover some of the costs by selling it off.  In that case, you just may want to “PUT LIPSTICK ON THAT PIG” to sell it off.  Just keep in mind that for your core holdings, try to show continual strength and progress.  Try to keep the lipstick for the things you can afford to keep any more.