Early in startups, management devotes extended time and effort planning for budgets, timings, and goals. Corporate presentations will contain key areas that you wish to communicate in an investor pitch. Eventually, you may add a positive spin to some portion of the data or answer to a questions to try to gain a more enthusiastic response. Presidents do it all the time. Just watch TV and you will see the Spin-Doctors going to work. We always tend to reinvent or create a story that is more easily understood or better explains events that took place in history. This tendency to revise history to explain events is a topic covered in several books.
One of the more interesting problems comes when you are asked questions and you are unsure of the answers. Sometimes CEOs will create a response on the spot and it will not have been fully thought out. Standing there with everyone looking at you waiting for a response can be unpleasant when you feel unsure of answers. It at this moment you use one of your lifelines and use a WAG for the answer. Yes, it does happen and most people in the right situation will do it!
A CFO first introduced me to the WAG about 10 years ago. We were making a corporate presentation to potential investors. One of the group asked an unusual and unexpected financial question. As a team, we were quite analytical and most of our financial issues were well thought out. We were prepared to answer key questions and had practiced the responses. The unusual question was interesting. Clearly, I was caught off guard and unsure how to answer. Then my CFO came to the rescue and offered a response. It sounded great and I thought I was off the hook. The investor then asked how the answer was derived and the CFO said, “It’s a WAG.” I did not know what that meant at the time and just thought it was a financial term.
I guess I was not the only one in the room that did not understand this new term. Another person in the room said, “What is a WAG?” Then in a very serious tone, the CFO says, “Wild ASS Guess.” The tension was broken and we engaged in a dialogue to address points around the financial issue. If the WAG had been too far out of line, we may have been asked to exit rather than continue to talk.
The point is that when you are asked really difficult questions that you are not prepared for, you may decide to GUESS. It is possible to get into trouble at this point. Investors are trying to learn facts. Leaving them with information that is not accurate is WRONG and can lead to legal problems! If you are guessing, you need to make sure they understand the answer cannot be taken as fact. One alternative is to say, “we need to review this question and will get back to you with an accurate response.” It is OK to not have all the answers it is NOT OK to leave behind misleading information. Just make sure if you offer a WAG it is identified properly and has some measure of creditability. Then follow up with more solid information when you have worked through the problem.
Taffy Williams is the author of: Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon