A founder recently showed me a deck that described how she wants to build a low-investment company. Move only as fast as the science allows, make her own timeline decisions, grow as sales revenue allows.

A week later she sent me an accelerator application she'd written. It contained two more plans: On page four, the company was going to become the industry standard, grow into a $100 million business and go public. On the same page, under “exit opportunities,” she listed four large companies that might buy it.

That's three different futures for one company. Only two of them are products an investor can buy. The first one is a company that hardly needs investors.

Founders spend months designing the product they'll sell to customers. Only a few consciously design the product they're selling to investors. An investor isn't really buying a piece of your company. They're buying an outcome: the day their shares turn back into more money than they put in. That day is the product.

Previous Frame Control articles:

0. Introduction

1. Claim (Frame or Get Framed)

When there is no vision for that outcome (or, in this case, three semi-considered ones), it reminds me of the South Park underpants gnomes where they lay out their business plan. Phase one: collect underpants. Phase three: profit. Phase two is a question mark.

Set expectations at the right time, intentionally

You might think that an early-stage company doesn’t have to worry about the exit yet. There’s truth to that. When I see a seed deck with an Exit page, I tell founders to take it out. Investors are looking for someone ready to walk through fire, and a founder looking for the door before even walking into the room doesn’t sound committed. Step 1 is to prove value exists.

But indications of how a founder sees the outcome of their startup can remain, even at the seed stage, and I want any that remain to be intentional. The ask, milestones, competitor set, and market slides all hint at the investment product you’re building.

One clear fork in the road

Many business decisions don’t impact exit optionality. One represents a real fork in the road. The first time an incumbent asks to license your technology, invest, or get an exclusive, you need to decide which investment product you're building. If you're building to sell, that relationship is how the deal gets set up. If you're building to keep, you say no to exclusivity and to any right of first refusal, every time, because your value is your independence and owning the customer relationship.

The decision is asymmetrical: Keeping the company preserves the option to sell. Once a strategic holds a stake or an exclusive, the independent story is gone.

The 4-part claim test

In the last issue I gave you four questions for the claim you make to customers. They work just as well as a spec sheet for the product you sell investors.

• Comparison set. Which exits will yours be priced against? Call yourself an input technology an incumbent needs, and you'll be compared to the last few acquisitions in your space. Call yourself the new standard, and you'll be measured against companies that went public. Your description picks the comps, and the comps set the price.

• Budget line. Who wants this investment product? A venture fund needs an outcome big enough to return the fund. A strategic investor wants a technology it may one day own. An angel or a specialist fund can be delighted with a $150 million sale. Pitch the right opportunity to the right customer.

• First skeptical question. “Isn't this niche?” usually means “is your product big enough for my fund?” If you're building to sell, smaller might be perfect. If you're building to keep, make sure to name the next three markets.

• Durability. Would a customer who overheard your investor pitch still recognize the company? The investor story can be wider than the customer story, with more markets and a longer sequence. It can't describe a different company.

Every move in this series buys something and costs something. The investor claim buys a round. It can cost you twice. It rules out other endings, often before you notice you've chosen one. And it can run up a debt with your customers, if your investor story describes a company they don’t recognize.

So how should my founder choose? The same way she'd design any product: by asking the people who would buy it. Two of the investors already reviewing her deck know her market well. That's customer discovery for her investor product, and it costs two phone calls and one question: which of these outcomes would you buy, and at what stage?

Then do the same with yours. Open your deck to the ask slide and think about phase two. Who buys this company, when, and for roughly how much? Then make sure your whole deck and strategy match.