Stop Treating “This Has Been Tried Before” as a Verdict
How founders can separate market evidence from investor logic, category bias, and outdated comparisons.
I once drove two hours for a ten-minute venture capital pitch. And then two hours back.
The company I co-founded developed predictive software for collection and supply operations, addressing a vehicle-routing problem with multiple constraints. Instead of sending trucks with fixed loads along fixed routes on set weekdays, sensors measured container fill levels, predicted when containers would need to be emptied or replenished, and helped operators plan their routes accordingly. We found that transport efficiency could be improved by almost 40%, while greenhouse-gas emissions could be reduced by roughly the same amount and capacity freed up to serve new customers. So far, so good.
Ten minutes into the meeting, the investor stopped me.
“This IoT-sensor case has been tried before.”
He was not wrong. The technology was not entirely new. Sensors had been placed in containers before, route optimization had existed for years, and other companies had attempted similar solutions.
But that was not the argument I was making.
“Technologically, yes,” I replied. “But not now with this business model and not under these shifting market conditions.”
Fuel costs were increasing. Labour and industrial processing were becoming more expensive. Margins were shrinking. Recyclable materials that had once generated revenue were losing value and sometimes becoming a disposal cost. Fixed collection schedules had always contained inefficiency, but the economics of that inefficiency were changing dramatically.
The investor heard a familiar technology with a history.
I saw an old operating assumption becoming expensive and more and more inefficient for the future (inflection point).
My answer did not land well. It probably sounded offensive, even though it was not intended as a provocation. It was simply the compressed version of the question I wanted us to examine:
Tried before under which diesel prices, sensor costs, labour constraints, customer pressures and business model and naturally with which technical developments?
Driving back home and reflecting from this meeting taught me something I now tell founders when they show me a rejection email.
Not all investor feedback is market truth.
Sometimes it is the risk logic of an investment system expressed as though it were a verdict on the business.
What an investor’s “no” actually tells you
Founders often read a rejection as a judgement on whether their idea is good.
That is rarely the precise decision the investor is making.
The investor is deciding whether this particular opportunity fits a particular fund, portfolio, expertise base, risk tolerance, ownership model, time horizon and return expectation. The decision is made with incomplete information, limited time and no direct responsibility for operating the business.
A “no” may mean:
I do not believe this market will become large enough.
I cannot see how this reaches venture-scale returns.
I do not understand the category well enough to price the risk.
The timing does not fit our fund.
The evidence is not yet strong enough.
This resembles something that previously failed.
I cannot explain the opportunity convincingly to my investment committee.
These are not the same statement.
Research on venture investment shows why the distinction matters. A study of more than 29,000 venture deals found that companies spanning less familiar subcategories tended to receive lower valuations. The penalty diminished as investor expertise increased. The issue was not necessarily that category-spanning ventures were objectively weaker. They were harder for less specialized evaluators to interpret coherently.[1]
This creates a structural problem for ventures built around emerging combinations.
A company may sit between waste logistics, industrial IoT, software and resource economics. Another may combine local-grid management, electric-vehicle charging, solar generation and decentralized prediction. The operating problem may be clear to an industry insider while remaining difficult to place inside the categories used by a generalist investor.
Markets require categories because categories make comparison possible. Investors need to compare opportunities, estimate returns and communicate decisions. The category is therefore not merely a limitation. It is part of the machinery that makes investment possible.
But categories are built from what has already existed.
When conditions begin changing faster than the category, the machinery starts misreading the opportunity.
“Tried before” is relevant—but incomplete
Founders should not dismiss the sentence.
Previous attempts contain information. Someone may have discovered that customers would not pay, integration costs were prohibitive, user behaviour did not change, procurement took too long or the economic advantage disappeared outside a controlled pilot.
Ignoring that history is not visionary. It is wasteful.
But “this has been tried before” is not yet an analysis. It is the beginning of one.
The useful follow-up is:
What exactly failed, and is the condition that caused the failure still true?
A previous solution may have failed because sensors were too expensive. That conclusion matters only if sensor economics remain similar.
It may have failed because diesel and labour were cheap enough that fixed routing was still acceptable. That matters only if the cost of the existing system has not changed.
It may have failed because the user appreciated the product but the buyer did not feel sufficient financial pressure. That matters only if budget ownership, regulation or operational exposure remains unchanged.
Technologies often return because the surrounding system changes. The underlying invention may be familiar while the cost of the old default, the availability of infrastructure, the buyer’s urgency or the viable business model changes substantially.
The question is therefore not whether the solution has existed before.
The question is whether the conditions that previously prevented adoption still govern the decision.
The investor may be evaluating a category while the founder is observing an inflection
I encountered the same pattern later in a grid-technology venture.
From outside, the category could easily be labelled “AI for energy.” That framing made the opportunity sound broad, fashionable and difficult to distinguish from dozens of technology pitches.
Inside the operating environment, the problem was more specific.
Electric-vehicle charging and rooftop solar were changing assumptions about how much electricity a local distribution grid could absorb. The relevant constraint was not whether AI could optimize energy in the abstract. It was whether better forecasting and decentralized control could delay expensive grid reinforcement while allowing more electric vehicles and solar installations to connect.
The category hid the operating pressure.
This is common near an inflection. People closest to the system often notice a constraint before the market has stable language for it. They see the maintenance issue, procurement bottleneck, cost shift or behavioral change before it appears in market reports.
That proximity does not automatically make them right. Insiders have biases of their own. They can mistake local pain for a scalable market, confuse technical possibility with customer demand and assume that a change visible to them will matter equally to a buyer.
But an outside investor also operates with incomplete knowledge. A systematic review identified numerous biases that can influence venture-capital decisions, including representativeness, anchoring, familiarity and overconfidence.[2]
Another study of US venture exits found that measured VC overconfidence was associated with faster fundraising and shorter times to exit. This does not mean investor confidence is always misplaced, but it is evidence against treating investor judgement as a neutral measurement of market reality.[3]
Both founder and investor are interpreting uncertainty.
The difference is that the investor’s interpretation often arrives in the grammatical form of a fact.
What founders lose when they accept the verdict
The immediate cost of a rejection is obvious: no investment.
The more consequential cost can appear later.
A founder begins editing the opportunity to fit the feedback. The unusual combination is simplified into a familiar category. The difficult business-model insight is replaced with a comparable investors already understand. The company starts optimizing for fundability before it has established what would create customer value.
Sometimes this is useful. A founder may genuinely have communicated the opportunity badly. A clearer category can reduce unnecessary confusion.
But sometimes the business is gradually changed into a smaller and more conventional version of itself.
Years later, the founder is running a company that investors could understand but that no longer captures the inflection that made the original opportunity important.
There is rarely one dramatic moment when this happens. It occurs through a sequence of reasonable adjustments:
make the market look more familiar;
remove the part that requires explanation;
avoid the business model investors disliked;
pursue the customers that resemble existing comparables;
add the features that make the company easier to categorize.
The founder eventually receives better feedback because the company has become easier to recognize.
Recognition and opportunity are not the same thing.
Where founders fool themselves
There is an equal and opposite danger.
“Investors do not understand it” can become a convenient defense against evidence.
Some founders reinterpret every rejection as proof that they are early. Weak demand becomes a market-education problem. Poor retention becomes a product-maturity issue. Unconvincing economics become evidence that the business model is disruptive.
This story can protect an idea for years.
Disruption research itself contains a warning. A recent academic review found substantial controversy around the predictive usefulness of disruptive-innovation theory. Many examples are easier to classify as disruptive after the outcome is already known, creating a risk that hindsight turns an uncertain opportunity into an inevitable historical narrative.[4]
Founders can make the same mistake prospectively. They tell the future success story so convincingly that the absence of current evidence begins to feel like part of the hero’s journey.
Being misunderstood does not prove that you are right.
Being early does not prove that the market will arrive.
A changing cost curve does not prove that customers will buy your solution.
The burden of evidence remains with the founder.
Feedback is data about two systems
A rejection contains information about the venture.
It may reveal weak evidence, unclear economics, an implausible distribution model or a market that does not justify venture capital.
It also contains information about the investor.
It reveals the categories they use, the risks they can price, the time horizon they require and the kind of opportunity they are equipped to support.
The mistake is treating feedback about both systems as though it described only one.
“This has been tried before” may mean the opportunity has a fatal historical problem.
It may also mean the investor cannot yet see why the current opportunity is different.
A founder’s job is not to reject the feedback or obey it.
It is to translate it.
The free diagnosis is complete:
Investor feedback is neither a verdict to accept nor noise to dismiss. It is a claim that must be separated into its underlying assumptions and tested against the conditions of the opportunity.
The founder still has to determine whether the rejection contains market truth, fund logic, category blindness—or an uncomfortable combination of all three.
The rejection translation test
Take the most recent rejection that still bothers you.
Do not begin by writing a reply. Do not defend the company. Do not add the investor to a list of people who will regret saying no.
Translate the rejection into a claim that can be examined.
For example:
“This has been tried before.”
becomes:
Previous attempts failed because one or more conditions prevented adoption, and those conditions remain sufficiently similar that this attempt is unlikely to succeed.
That is a much more useful statement. It identifies what must be investigated.
Step 1: Reconstruct the previous failure
Ask the investor which specific attempts they had in mind. When that is impossible, research the most relevant examples yourself.
Do not stop at the company name or the fact that it closed. Identify the mechanism.
Did the previous attempt fail because of:
insufficient customer urgency;
weak willingness to pay;
high technology costs;
unreliable performance;
difficult implementation;
slow procurement;
poor distribution;
low user trust;
bad timing;
an unviable business model;
inability to raise further capital;
execution unrelated to the opportunity itself?
“Failed company” and “failed market thesis” are not interchangeable.
A company can fail while identifying a real shift. It may have entered too early, used the wrong model, selected the wrong buyer or simply run out of capital before the market changed.
Conversely, a previous company may have executed well and still demonstrated that customers did not care enough.
Write the failure mechanism in one sentence:
The previous waste-routing solution failed because hardware and installation costs exceeded the operational savings available under the fuel and labor economics of that period.
You now have a claim that can be compared with present conditions.
Step 2: Identify what has changed
Create a before-and-now table.
Do not fill this table with general trends alone.
“AI is improving,” “sustainability matters more” and “the market is digitizing” are not decision-grade evidence. They may be directionally correct without changing the buyer’s behavior.
A meaningful change should affect at least one of four things:
The cost of the existing default
The performance or cost of the new alternative
The buyer’s urgency and authority
The organization’s ability to adopt
When none of those has changed, the investor’s historical comparison may be more relevant than you want it to be.
Step 3: Find the changed buyer
The user experiencing the problem is not always the person who can fund the solution.
Ask:
Who suffered from the previous problem?
Who carried the financial consequence?
Who controlled the budget?
Who carries it now?
What changed in their incentives, exposure or authority?
In the waste example, drivers may experience inefficient routes, but they do not necessarily own the economic problem. The buyer becomes urgent when an operations director, municipal operator or waste company sees fuel, labour and processing costs damaging the unit economics.
The existence of pain is not enough.
The pain must reach someone capable of acting.
Complete this sentence:
The buyer is now more likely to act because ______ has changed, creating a measurable consequence in ______, for which the buyer is accountable.
When that sentence remains vague, the commercial inflection may not yet exist.
Step 4: Separate the wave from your solution
A founder can be correct about the change and wrong about the company.
Fuel costs may increase without making sensors the best answer. Grid constraints may become severe without creating demand for your architecture. Regulation may generate urgency while favoring an incumbent solution.
Write two separate theses:
The change thesis
What is changing in the customer’s environment, and why does it matter now?
The solution thesis
Why is our approach a credible way to capture value from that change?
Test them independently.
If the change thesis is weak, you probably do not have an inflection.
If the change thesis is strong but the solution thesis is weak, the investor may be rejecting your implementation rather than the opportunity.
That is painful feedback, but it is useful.
Step 5: Build an evidence ladder
Not all supporting signals deserve the same weight.
Level 1: Narrative evidence
Experts agree. Reports describe the trend. Customers say the issue is important.
Useful for forming a thesis, but weak for commitment.
Level 2: Problem evidence
Customers can describe specific consequences, workarounds and costs.
Stronger, but still compatible with inaction.
Level 3: Behavioral evidence
Customers provide data, involve decision-makers, change a process, run a test or allocate employee time.
The problem has begun to compete for resources.
Level 4: Commercial evidence
A buyer signs, pays, accepts a trade-off or makes a credible procurement commitment.
The opportunity has survived contact with a real budget.
Level 5: Repeatability evidence
Multiple customers buy for similar reasons through a process that does not depend entirely on the founder.
This is where an emerging company begins to look like a market.
Identify the highest level you have actually reached. Do not upgrade interest into behavior or a pilot into adoption.
Step 6: Classify the rejection
After completing the analysis, place the rejection in one of four categories.
Accept
The historical failure mechanism still applies, and your current evidence does not overcome it.
The investor may have saved you time and money.
Test
The investor has identified a meaningful uncertainty, but neither side has enough evidence to resolve it.
Design the cheapest test capable of changing the decision.
Translate
The opportunity may be sound, but your framing led the investor to compare it with the wrong category or generation of solutions.
Change the explanation without changing the underlying thesis.
Disregard
The rejection primarily reflects fund fit, category familiarity or investment logic that is not relevant to the customer opportunity.
Do not argue. Find an investor whose expertise and mandate fit the business—or build further evidence before returning.
The difficult part is being willing to use all four categories.
Founders who classify every rejection as “disregard” are not learning. Founders who classify every rejection as “accept” are allowing outsiders to design the company.
The one-page rejection worksheet
Use this after every consequential investor conversation.
The feedback
What exactly was said?
The implied claim
What must the investor believe for the feedback to be correct?
The historical reference
Which previous company, technology or business model is being compared?
The previous failure mechanism
What specifically prevented success?
The changed condition
What is materially different now?
The unchanged condition
What might still make the old failure relevant?
The buyer shift
Who has greater urgency, budget or exposure today?
The current evidence
What have customers done, not merely said?
The missing evidence
What result would make you change your own mind?
The classification
Accept, test, translate or disregard?
The next commitment
What is the smallest justified action now?
Applied to the waste example
The investor’s claim was not simply that sensors had existed before.
The implied claim was that earlier attempts demonstrated insufficient economic value and that the conditions had not changed enough to justify another company.
The founder’s counterclaim was that several conditions had changed:
the cost of fixed routing had increased;
pressure on operator margins had intensified;
sensor and communication economics were improving;
the value of collected materials had weakened;
the proposed business model differed from earlier hardware-led attempts.
The unresolved question was not whether either side could tell the better story.
It was whether the economic shift was strong enough to change purchasing behavior.
The next useful evidence would therefore not have been another technology demonstration. It would have been proof that an operator would alter routes, provide operational data and pay for measurable savings under current conditions.
That is the distinction the original pitch compressed too aggressively.
The investor may have been trapped by a category. The founder still needed better evidence.
Both could be true.
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A practice for the next four rejections
Do not evaluate this method using one conversation.
Apply it to four investor responses and look for patterns:
Are several investors identifying the same unchanged condition?
Are generalists rejecting the category while specialists engage with the mechanism?
Does the feedback change as your evidence improves?
Are you repeatedly explaining the inflection without demonstrating buyer behavior?
Are investors rejecting the venture—or the kind of return and timeline it offers?
Bring one translated rejection into the comments without naming the investor. Include the original feedback, the implied claim, what changed and the strongest evidence you currently have.
Cases from different industries will help us build a more useful library of rejection patterns: when “tried before” identifies a real structural failure, when it reveals category blindness and when both sides are partly correct.
The objective is not to help founders ignore criticism.
It is to help them extract more truth from it.
“This has been tried before” is not the end of the conversation.
It is a request—usually an imprecise one—to show why this time is materially different.
Sources
Cudennec, A., & Durand, R. (2023). Valuing Spanners: Why Category Nesting and Expertise Matter. Academy of Management Journal, 66(1), 335–365.
Sachs, M., & Unbescheiden, M. (2024). Biases Influencing Venture Capitalists’ Decision-Making: A Systematic Literature Review. SSRN Working Paper.
Ben Amor, S., & Kooli, M. (2024). Does Overconfidence Affect Venture Capital Firms’ Investment?. Journal of Behavioral and Experimental Finance, 41, 100884.
Lile, S., Ansari, S., & Urmetzer, F. (2025; published online 2024). Rethinking Disruptive Innovation: Unravelling Theoretical Controversies and Charting New Research Frontiers. Innovation: Organization & Management, 27(3), 394–416.