TSP003 | Eva Ho – Transcription

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Welcome to The Successful Pitch, where we interview start-ups who have received funding, as well as investors who share their criteria for what makes a winning pitch – with your host, author and funding strategist, John Livesay.

John Livesay:
Hi and welcome back to The Successful Pitch. Today’s guest is Eva Ho, she is now the co-founder of Susa Ventures, that specializes in early-stage tech companies. But she has a fascinating story that starts way before that – she worked at Applied Semantics, where they got bought by Google when there was only 50 people at the company in 2003. She shares her story of what it was like to find out the news that they’d got bought by Google, and the next thing they knew, they were at Google Head Quarters and it totally transformed the 50 people’s lives that were working there.

She tells us all the secrets that she looks for when someone is pitching her for an investment. It all has to do with being authentic and coming across as someone who has integrity and passion. She said something that I think is absolutely tweetable, which is: You can’t fake passion. It’s such a true story. They need to know why you care about something. And she’s really not interested in knowing what your exit strategy is; she’s more interested in knowing why you’re so passionate about what you’re doing.

So the big mistakes that people tend to make when pitching her include saying they don’t have competition, and they don’t have a lack of validation and many more. Be sure to stay tuned to listening to Eva tell all the secrets of what it’s like to get bought by Google, and what she looks for when someone’s pitching her as an investor.

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Welcome, everybody, to The Successful Pitch podcast. Today’s guest is Eva Ho – I’m excited to have her with us because she brings such a unique perspective. She has been at start-ups that have been funded and bought by Google, and now she’s an investor herself. She started her career at Applied Semantics, which was sold to Google in 2003, so then she became an employee of Google, so she has an incredible perspective of what it’s like to work at Google and what it’s like to work at a start-up that gets bought by Google.

And then from there she went to another start-up called Factual, here in Los Angeles, and was in charge of marketing, sales and operations, and she did everything from working with the tech people to crafting a keynote for the CEO. Now she is at Susa Ventures, which is investing in early-stage technology. So she’s going to give us an incredible insight into her journey, how she got started, what it takes to be successful at a start-up, and what it takes to get investment.

Welcome to the show, Eva.

Eva Ho:
Thank you, John, for having me.

John:
It’s great to have you here. So I gave the audience and listeners a little snippet of your background, but I’d love for you to just take us on your own journey of what made you decide that technology was for you?

Eva:
That’s a great question. So I don’t have a typical sort of tech background – I didn’t own an Apple2 or anything like that.

John:
[Laughs]

Eva:
I grew up actually as a refugee. I was born in China, I grew up in Mozambique, Africa, and through a very curvy journey, we ended up as refugees in the US, so a combination of public housing and all the various life factors, I didn’t actually get introduced to technology til I was in my mid-twenties. I randomly moved out to LA, and it wasn’t like I was previously inspired by technology, but I got here and met two inspiring people, by the names of Gil and Adam, who were the founders of Applied Semantics. I didn’t know much about what they were doing – they were building this interesting thing, what they call ‘meaning-based search engines’. I knew a bunch about marketing, we didn’t really speak the same language, but we connected much more on a personal level, and actually, we connected on the love of running, interestingly.

So I became their marketing person, and lo and behold, three years after that, the company grew into something that was very meaningful, and we were with the people behind AdSense and then got sold to Google. In many ways, it was sort of a dream journey. So that’s how I got started in tech, and after that obviously it became a love affair.

And not only being a part of Google, but I left and started a company between Factual and Google, called Navigating Cancer so I was coming full-circle to my science background and my undergrad with my strong passion for health. I did that for a little while, so just a myriad of experiences in tech. It was really a privilege to have met Gil and Adam early on.

John:
That’s such a great story, I love the fact that you’re really living the American Dream, right? Which is that anybody can make something of themselves, even if you aren’t born with a silver spoon in your mouth, basically. And I love the part where you talk about connecting with them on a personal level – you both were into running? Is that what it was you said? You’re both joggers?

Eva:
Yeah, that’s right.

John:
Because one of the things I talk about with my clients is how important it is to have a connection – not only with the team that you’re working with (I know that you consider the people you work with to be family), but also whoever you’re working with as an investor. To connect with people first on a personal level, before you start talking about the technology – would you agree?

Eva:
Absolutely, and I think if you’re lucky and you have a previous relationship with the potential investor, that’s easier, but for a lot of folks, it might come through a warm referral. If that’s the case and you haven’t met them before, it’s important to do your homework so that you know what they care about, what they’re passionate about, and I always like it when they actually know a little bit about me outside of the deals I do. If they say, ‘Oh, Eva, I actually see that you really like STEM education for children’, I’m immediately wowed that they actually took the time to know me a little bit. And vice versa. This is not a one-way thing. If there’s an amazing entrepreneur that I’m excited to meet, I will also do homework on him or her, so it goes both ways. I think you’re actually right, John – that connection resonance up front is really important.

John:
And what’s your favorite way to do homework on someone? Do you just go to LinkedIn? What do you use?

Eva:
I guess it’s so much easier today than it was even 5 years ago. Everything from if they do podcasts, like the wonderful ones that you’re doing right now, to basically anything that they have online, which is the somewhat obvious answer. A lot of it is really talking to my network and seeing if they know this person. That kind of comes full-circle to the importance of your own brand and reputation, and the fact that the investment and entrepreneur community in LA, specifically, is still highly provincial, meaning that everyone knows everyone and the first call is probably to someone that’s one degree away, or knows you personally. So it’s really important that we do a little bit of a background-check before we speak to you.

John:
So the due diligence starts even way before you start talking to someone? A lot of people who are looking for funding think ‘Oh, well the due diligence doesn’t start until after they like my idea’, and that’s such an important point for our listeners. The due diligence starts before you even get in the door, before they even look at your pitch deck. I love that. Especially with your background at marketing – can you speak a little bit about the importance of someone having a brand for themselves separate from their company? How do we brand ourselves? What would be your two or three tips that you would give someone who is an entrepreneur that wants to brand themselves, in addition to who they are as the entrepreneur of that company?

Eva:
Yeah, that’s a great question, John. Some of it is brand, and some of it’s pure reputation. I think if you are brand new and out of college, it’s very different than someone who’s been in the industry for a while. But I think the combination of having done good work in the past and having people that we know in common is the first sort of check for myself in terms of what type of reputation you have. From a brand perspective, I do go and read your blogs, I go to Twitter, I go to LinkedIn and see who else you’re connected with, so that sort of gives me a fuzzy, yet some sort of picture about who you are, what you care about. I care less about whether you are famous or well-known in terms of a brand, but much more about whether you’re a high-integrity person, and that you have built long-standing relationships. Those are the qualities I look for – the softer qualities.

John:
Yes, they’re so-called ‘soft qualities’, but my goodness! What investors are looking for when they decide whether they’re going to invest in a start-up are those soft qualities of character – is this someone of integrity? Is it someone who does what they say they’re going to do? Is it someone who has the ability to not give up easily and has perseverance? And who not only has passion, but also has a real explainable vision. Do you have any tips for someone on creating a pitch deck that expresses any of that?

Eva:
Yeah, so I think you’ve mentioned a lot of the core things that they have to be able to show within, literally and honestly, seconds or minutes. You have to convey everything that you talked about, so a combination of experience, leadership, commitment – all these things – integrity, authenticity, very very quickly. For most people, the attention span is short, so you only have a few minutes to convey and to bring all that to the table. I think coming forth and making sure that the initial delivery of your story or narrative starts off with the very powerful beginning of the arc, and it’s about pulling them through that arc where you take them through somewhat of an emotional journey of why you’re doing this.

John:
Yes.

Eva:
I always look for the why. A lot of people have the skills and the confidence and the experience, but they can’t convince me that they’re truly passionate about this. That’s the hard part – you can’t fake passion.

John:
You can’t fake passion. Boy, that’s a tweetable quote right there! Right from the podcast – we’re going to be putting that in the transcript, you can be sure. That’s great! Can you give us an example of how Factual would give an elevated pitch? I know you have a YouTube video out that I watched on your own personal passion for solving a problem and actually making datasets, as opposed to just aggregating data – I thought that was really fantastic. But I would love to hear you give our listeners an example of this passionate ‘why’. You can pick any of the companies you worked for; we’re just trying to get an example of what you think an example of good, passionate storytelling is.

Eva:
Sure thing. With Factual, when we started 7 years ago, the notion of big data was not a common household meme or topic, and that’s changed a lot. I think it’s pioneers and companies like Factual where our early mission or thesis is ‘Data’s going to be a core input engine to a lot of different types of businesses’. And most important, at a computer level, is where you need scale, so our initial audience was developers.

How can we open up and provide access to really important core data to a wide group of developers who are building really important things? That was our initial mission, and over time, we’ve learned that making big data sets is very complicated, so we started focusing on location. And now, Factual is one of the largest location databases out there, and we power lots of companies like Yelp, Twitter etc.

That’s a little longer than an elevated pitch –

John:
Right.

Eva:
But I think both Gil and I – and especially as Gil started and I joined him – we’re just super excited that we believe the world is going to be transformed by this really massive deluge of data, and it’s so important to make it accessible for machines to compute. He’s very much stuck to that, and even though I’m not at Factual anymore, it’s a delight to watch him carry this mission through.

John:
And you’ve followed him from your first company. Is that correct?

Eva:
Yeah, I have. Gil and I have been working together in some way for 14 years.

John:
Now, as an investor, and as someone who’s experienced that, can you speak to that? Everything I’ve heard and talked to from investors is that they love serial entrepreneurs, and they really love a team of people that have worked together before. Anything you can talk about in terms of the importance of the team and the importance of serial entrepreneurs with that team would be really helpful.

Eva:
Yeah, it’s interesting because I think there’s a lot of discussion around if you’re building a business and say you’re getting to a stage of presenting to investors, whether you want to be a solo person, two people, three people. There are lots of statistics and data around that. I just take it back one step – it’s much more enjoyable to share it with somebody else! Whether that’s one person or two people at the beginning, it’s a very tough thing to pursue, and it’s more fun to have that person. I’ve been lucky to have Gil, and in some of the past companies, I think for young folks who are starting off, what I look for is chemistry among the original founders – whether you went to college together, whether you played a sport together, whatever the reason that you guys came together.

I would say of all the companies that we look at, only I would say 10% really have a story that they bring together. Often, nowadays, it’s somebody who has a great idea and then they go out and find a technical co-founder. They might have only known each other for a few months, and that’s not a deal-killer, but it’s definitely more compelling when the two or three people have said ‘You know what? We’ve been thinking about this for 4 years, now we’re all at the right stage in our lives to pursue this and we’ve been excited about it for a while, and this is the reason we exist’, type of thing.

John:
It’s a mutual passion – we’ve been in the trenches together and we know we can conquer any problems that might come up along the way. It sounds like that’s what you’re saying, right?

Eva:
Yeah. Part of it is also because the journey ahead of you is so long that it’s better to have your trusted cohorts with you, who get you and understand with you. The turn-over in the early days is really high, and for us, we want to feel confidence that you’ve worked together and you get along. It’s kind of like a marriage: you get along and there’s a good prediction that you will get along in the future.

John:
Sure, almost like a marriage!

Eva:
Yeah, exactly.

John:
Can you take our listeners on that journey, because it’s such a unique, unicorn story that you were working with Gil at Applied Semantics. Tell us how long you were working together before Google said ‘We want to buy you’. What did it feel like that day? Where were you? How did you guys celebrate when you got the news?

Eva:
I was there for about 3 years, and it happened rather quickly and unexpectedly. The company wasn’t up for sale, we weren’t looking for a buyer, and as many know, that’s sort of the best position to be in. Google basically pursued us, but the acquisition happened over a very quick period of time, so I think we were all kind of in a cloud. Or at least I was, I don’t know how Gil was. But because it happened so quickly, it was almost like a dream state, none of us really believing it was happening. Even when it happened, I couldn’t actually even believe it because the next day, or within weeks, we were up at the Google Head Quarters, and they were announcing us on the Friday at their tech hangout, or whatever. It was honestly quite unbelievable.

I know that happens to very, very few people. There are times where we re-live it, but honestly, as much as that was a high, the high was more after the fact when we got integrated into Google and we actually saw the product take off and now become a truly significant part of Google’s revenue stream and monetary strategy, which is pretty awesome. A lot of companies get bought –

John:
Yes!

Eva:
And you have the high, and then quickly after, you have the low.

John:
Right.

Eva:
Meaning that if you don’t integrate it correctly, they fire a bunch of people. We never had that happen. It was actually very synergistic and happy.

John:
How great. Well I find it most fascinating that you just stayed focused on staying in your lane and weren’t trying to get someone to buy you, and that’s almost like dating again, right? You can’t be trying too hard to get someone to be interested in you. Do you have any suggestions for people who ideally would love somebody big to buy them? Like what to do to be attractive to someone like Google?

Eva:
I think one big tip is when you’re pitching to investors, don’t focus on your exit strategy. I think a lot of younger folks come in – I may even trick them as an investor, somewhat cruelly, and say ‘Hey, do you want to be sole in 2 years?’ And if they quickly say yes, I’m not the right investor for them. There might be investors out there who are looking for first or second base wins, but I think for the best founders that we like and that resonate with us are folks that are playing the long game. If they’re playing the long game and they’re building something great, selling to somebody should not be really top of mind. They love solving this thing so much, and they’re going to do it for a really long time. But the reality is that people tire.

Even in the most perfect world, after 6 or 7 years, often being an entrepreneur is very, very hard and there might be some folks that say ‘You know what, I may want to sell because I’m just exhausted’, or ‘I want to be a father again’, or whatever that might be. And that’s okay, too. We respect that from an entrepreneur, and if they’re looking for a buyer, I would say work with your investor, and they will help guide you through a process. Again, it’s most ideal if you don’t have to sell. When you have to sell, there’s a whole other process, but I think as long as you keep building value and product, and you say ‘Hey, maybe at some point I want to be sold to one of these big companies’, your investor team can actually be very helpful in helping guide you through that.

John:
Well it sounds like what you’re saying, Eva, is that if the passion is there and the reason why you’re in business in the first place is strong enough, the only reason you would want to get bought would be to make the product better, as opposed to being focused on the money, and that that’s what you’re looking for when you talk to potential people you want to invest in. Their passion and their ‘why’ is so specific that it’s not about the exit strategy, it’s about ‘I love what I’m doing so much’, ‘I want to make a difference in the world’ or ‘I love this product solution’. Is that accurate?

Eva:
That is accurate because I think any of the products and services that are useful and exciting, you’re going to get tons of acquisition offers. As a founder, you’re often faced with a good problem, which is ‘Do I sell now or not?’ You don’t have to sell, but every six months, you’re going to be approached by somebody, maybe you’ll be approached by an investment bank, whatever, and I think you have to have quite a bit of fortitude to resist and say ‘Hey, you know what, I think there’s a lot more value I want to create over time and I want to keep going at this’. Again, there’s no judgment if you do want to get out. I don’t think you’re a worse person. At first, for some of our founders, making $5 million is a lot of money.

John:
Of course!

Eva:
There’s a chance for you to make $50 million or $500 million, but we can’t ignore that feeling.

John:
Yes.

Eva:
And we will help you work through that, and whether that’s the right move or not. That’s sort of our job as investors, to help you think through that.

John:
Got it. What was the biggest difference between working for Applied Semantics before Google and after Google?

Eva:
Well, I think we just had so much more resources. We were this tiny company that was climbing up a hill – there was competition around the corner. In some ways it was wonderful, because it was a family of 50 of us and we all got along and hung out on the weekends, and it was quite a joyful and often, albeit stressful period. Like every little company, there’s some dysfunction in that, but in that dysfunction, there’s a lot of highs and camaraderie. I think once we moved over to Google, it was just kind of this wide open space where anything can happen, and now the resources have quadrupled.

I think, certainly it’s less stress because the risk is removed, but I think that the experience of being part of Google early where they still had a lot of that start-up energy. Being bought by Google today is very very different than being bought pre-IPO. It didn’t feel so different from Applied Semantics, and that’s why I think Gil and Adam were willing to do it because culturally, it was very symbiotic. We knew that going over to Google was an extension of our family, and we didn’t have to tweak ourselves to something we’re not. I think that’s why they were willing to do that.

John:
Another question I have for you is: What made you decide to go to the other side of the table and go work for Susa Ventures?

Eva:
I was one of the folks who founded Susa Ventures, and I think I had never really thought about going on the investment side until probably about 2 years ago. Just working at Factual and seeing all the big and small companies out there that need various data solutions, a lot of them could be solved by Factual, but honestly, some of them could not. They needed, say, Genomics Data, or they needed some other type of data that Factual didn’t carry, and I was so passionate about the data side and the extension of everything that I’d learned at Factual that I thought ‘What’s the best next step to scale myself and actually support people who are honestly smarter than I am?’ I think starting a fund was one way to do that, and I’m pretty happy to see how Susa has evolved. We’ve made about 25 investments and stayed very true to our data-centric thesis and mission, and I’m really proud to be a part of these young companies who are working on Fintech, or commerce, or mobile – things that were sort of peripheral to Factual, but not the core of Factual. I could leverage some of the experiences and skills that I learned from being at Factual.

John:
I love that question you asked yourself: How do I scale myself? It’s a great question that I’ve never heard anybody phrase quite like that. We always talk about how do I scale my business, but how do I scale myself? And that’s what was sort of the impetus for you to start being a co-venture in this, what a great line. You’ve made 25 investments already? Can you give us a range of what your average investment is?

Eva:
Our sweet spot is between $250-500,000, and we only do seed stage, so sub-$10 million in valuation is where we excel.

John:
Right. And if you had one piece of advice to give someone who wanted to get your investment, what would it be? Have a great pitch deck? Would it be get to know me first? How would somebody best get your attention? Or get an appointment to pitch you, even?

Eva:
I think a warm referral is always good. I think sending a cold email, not only for myself, but for most VC firms or funds, doesn’t really work. I think a lot of people do that – not a lot, I get pitches through emails, and those almost never work. I wouldn’t waste your time doing that. I would always say try to find somebody who knows somebody at the firm, and then come in that way. If you come in through a warm referral, we will always take it seriously. Certainly, having a deck that’s compelling is great. Having a good background is great. But that’s really it, there’s not a whole lot of magic.

We’re very thoughtful about what fits with us and what doesn’t, and if we’re not, we’ll respond very thoughtfully to you via email. If it fits and you have a chance to have a conversation with us, and it’s in that conversation of 30-45 minutes where you can make your case of why this is something worthwhile for us to invest in, and we talked earlier about how to think about that. That’s basically it.

John:
That’s great. Is there one mistake that you see fairly consistently when someone comes and pitches you? Where you’re like ‘God, I wish they would learn how to pitch better’, or ‘I wish they could explain what their product does in 2 or 3 sentences’, or ‘I wish they could tell me why they want to do this more’. Is there something consistently that you see and go ‘Oh, that’s a mistake’, or something that somebody could work on before they come to you?

Eva:
I think there’s a few. I think having authenticity still remains really core. I think a lot of people wonder how you can show passion and commitment without showing arrogance. And that’s the hard part. Basically when you come in and pitch, I want to push back. I’m going to say ‘I don’t think that’s going to work’, or whatever you face, we’ll push back, and you have to keep pulling that person over that hump. That’s not a mistake, but I think if you come in with too much of an attitude, that’s difficult. I think having unrealistic financials is also another one that’s hard – meaning I think a lot of people try to show the hundred million dollar at year 5, or profitability by year 2. A lack of validation, I think is huge. You can make all sorts of claims, but if it’s not backed up by customers or testimonies, stuff like that, [it’s a mistake]. And things like mentioning that there’s no competition, which is never the case, because there’s always competition.

There’s a whole set of – I don’t call them mistakes or pitfalls, that folks can do. I think if you’re pitching within ten minutes, you can gauge something like that, then I think the VC person can lose interest. The great thing right now is that there’s just so many great pitches that you can see on YouTube – watching somebody like Y Combinator and seeing those guys who are trained to be professional pitchers. Watch those and you will actually get a really good sense of how to do this well.

John:
Oh good, I want to put that link on the transcript. Who is it again, can you spell that name for me?

Eva:
All the pitches that are online are from Y Combinator.

John:
Y Combinator, of course, yes, got it. I thought it was somebody’s name, but now I’ve got you. Oh, it’s my bad hearing.

Eva:
No worries.

John:
Is there any one or two books that you really love that you think start-ups should read?

Eva:
There’s so many books, but I think The Lean Startup by Eric Ries. There’s so many, it’s hard. I actually read a lot of biographies, like by Andy Grove, so any of the great leaders – the books on Jobs are all really good. I loved recently Peter Thiel’s book on Zero to One. I read less of the classic management books, but take more inspiration from folks who have done this in such a big way, and I think that can really help a start-up founder to at least aspire to what they actually can be through hard work. So those are some of the books that are cool.

John:
My big take-away from talking with you is it’s all about authenticity, and even the books that you read. You’re reading books about people who are authentically themselves, and using that for inspiration for how can I be my authentic self. Great. Is there any last idea or quote or comment that you want to leave our start-ups on how to persevere, or how to think of something to do when they’re pitching, or before they pitch?

Eva:
Maybe one note for women, because I get asked a lot about that.

John:
Yes!

Eva:
I think there’s been more content written about this because a lot of women founders ask me: How do I do this? Can I do this? And is there any preference if they pitch to me versus. to an all-male team? So from my perspective, I’m pretty gender-blind, meaning I think there are a lot of innovations and amazing things to be built in the world, and will be built, and I think a lot of them will be built by women. I don’t lean forward in terms of saying ‘If you’re a girl, somehow I would treat you differently, or I see you differently, or I’m more inclined to invest in you’. I think there are plenty of competent women out there, and I think for women, in my career, being a girl has actually been a huge advantage versus a disadvantage. I think that’s what I try to look for with young women on believing that they can build the confidence to say ‘Hey, it’s actually pretty awesome being a woman in tech’, and if you have the hardcore skills and the confidence and the know-how, you actually are at a great advantage in tech.

John:
Fantastic, what a great way to close! If someone wants to connect with you, learn more about being inspired – especially if they’re women and believing that they can do that and see you as a role model or even learn more about your stem-cell education, you said, right?

Eva:
STEM education.

John:
STEM education, sorry. What’s the best way for people to follow you? Is there a website you want to send people to, or a Twitter handle?

Eva:
Well, thank you for all those kind words, John. My email is just: [email protected], I’m super accessible. And my Twitter handle is just: eva_ho.

John:
Okay, great. Well, you’ve been an incredible guest, thank you so much for your insights, your generosity, and most of all, your authenticity.

Eva:
Oh, thank you so much, John, for having me. I had a great time.

John:
My pleasure.

Thanks for listening to The Successful Pitch podcast. People say that the longest distance in the world is between someone’s mouth and their wallet. People can promise to invest in you, but then when it comes time to open up the checkbook, it doesn’t happen. Another way to look at getting funding is you’re on the left side of the riverbank, and you have to cross that river, and on the other side, is where funding happens. On the left side of the riverbank, you first have to make up your idea. Then you have to make it real. And then you have to make it reoccur. Once you’ve done that, you start to dip your toe in the water and you start to cross that river. That’s where I come in. I can help you get across that river faster than you could on your own, with a lot less frustration and confusion of ‘Why are you getting no’s’. So if you’re interested in learning more about how to get funded fast, go to www.SellingSecretsForFunding.com/webinar, and watch my free presentation that will give you a lot of free content that will prove to you that you can get funded fast and make your start-up a reality. Thanks.