What Makes A Good Pitch – Interview with Charlie O’Donnell

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Episode Summary

Charlie O’Donnell is the founder at Brooklyn Bridge Ventures and has been an active member of the New York City startup community for over a decade. As an investor, Charlie looks for New York-based startups that have yet to raise 750k in a previous round. Charlie discusses the key lessons he’s learned from pitching to various companies in his career on this week’s episode.

What Makes A Good Pitch – Interview with Charlie O’Donnell

Hi. Welcome to The Successful Pitch Podcast. Today’s guest is Charlie O’Donnell who is the sole partner and founder at Brooklyn Bridge Ventures. The firm makes seed and pre–seed investments and was the first venture firm located in Brooklyn, where Charlie was born and raised. I love the fact that Charlie says he nebver spends more than three consecutive weeks outside of any of the boroughs in New York City.

He is a hard fast New Yorker, he’s done Ford triathlons. What’s even more impressive is his reputation for being able to spot important companies early in the process. In fact, he’s been identified as an early Twitter investor.

I nudged the early Twitter investor part.

You nudged him.

It didn’t have a fund at the time.

You were able to capture that, yes. Since you were working in venture capitals since 2001, you have apprenticed your way through the asset class with roles on the Union Square venture team and you were involved with General Motors pension fund.

What’s impressive to me Charlie, is you’re only one of a dozen people to be named Business Insider’s 100 Most Influential People in New York Tech five times or more. You’ve served on the board of the New York Tech Meetup and you write a great blog called This is Going To Be Big. You’ve spoken at all kinds of great places. Without any more intro, welcome, welcome.

Thank you. Thanks for having me. I’m beginning to think that maybe I need to … That my bio is a little over the top. It feels a little overwhelming.

When you’ve accomplished that many things, people love to know what that is. Everybody wants to be an influencer and everybody wants to know what it takes to get their pitch funded. Before we get into all of the experience you’ve had, obviously growing up in Brooklyn, can you take us back to when did you decide you wanted to get involved in tech startups?

Brooklyn is not exactly, or at least when I was growing up, not exactly a Silicon Valley East. There are pieces of what I do and how I do it that showed up early on. We were pretty early to having a computer in the house.

My dad came home with an IBM PS2 in 1987, when I was eight. I don’t think we’re totally sure what we are going to use that computer for. I think my parents just felt like we should be a house that has a computer in it. I took to it early and got very comfortable with it.

I think on the investing side, when you grow up in New York, Wall Street looms large. Both of my brothers were in the brokerage industry, my godfather bought me some IBM stock when I was born. I knew what stocks were from a very early age. I used to track them. The nice thing about, even in pre–internet days, having a couple of shares of IBM, is that every night on the local news they would tell you what IBM did because that was one of the biggest companies out there that people were following.

The other thing was being very community oriented. I grew up in a great neighborhood. I grew up in Bensonhurst, which is at the time the largest Italian section in the five boroughs. It was a place where you knew your neighbors and you knew your friend’s grandparents because they lived on the same block or next door to you. Your neighbors are called aunt and uncle.

There was this community feel that I always looked for. If I didn’t find it, strove to create it. When I joined the tech community very early in some of the early days of the New York tech community, where I couldn’t find it, I tried to always put people together because I was used to just knowing the people around me by name and knowing who they were connected to.

All of those things go hand and hand with how I do my job. I’m into tech and on the investing side of tech. But the knowing that venture capital really existed and how it worked, actually I got lucky with a high school internship.

My high school, Ridges High School in New York, is a really fantastic school. They knew better than to keep a bunch of seniors around in the third semester after we applied to our schools. They basically kicked us out. They said, “Either do a community service project or do an internship, but don’t hang around and interrupt everybody else’s learning.”

I wound up at the General Motors Pension Fund from February until June on my senior year of high school, doing some pretty interesting projects. Largely because I knew how to use spreadsheets because we had had a computer in the house for ten years.

Because I went to school locally at Fordham, I bounced back and forth during the school year, was able to intern there throughout the summer, part time during the year. I stayed there at that internship for four years. Venture capital happened to be the asset class that had an opening when I graduated.

I could have just as easily wound up in real estate or fixed income or anything, but the venture capital and private equity group had the opening. GM had been invested institutionally in a lot of the top tier funds, excels and cliners and batteries since like the late 70s. No one ever thinks of VCs as having to pitch for their money, but that’s what they did with us in that group. All those funds came to pitch the group I was working in.

That’s interesting. No one’s ever brought that up quite before. I’d like to hear a little bit more about that. Obviously investors like you get lots of pitches, but I’m sure you have a lot of expertise in what makes a good pitch from having to pitch yourself. Can you explain when you were pitching for getting the money for your fund, what you learned and how that’s helped you evaluate?

First of all, knowing who to pitch is half the battle. When you have the right person sitting across from you, it makes things so much easier. One thing I learned early on in my fund raising is figuring out who a small venture partnership that was doing very early stage seed investments was right for. Because most of my network was institutional investors like CalPERS or Canadian pension plans or people who are way too big for the size fund that I have. Then other VCs don’t usually invest in each other’s funds.

[Tweet “What makes a good pitch: Knowing who to pitch to is half the battle”]

I had to build up that limited partner network, that high net worth network from scratch, because that’s one thing I didn’t have in Brooklyn. My dad was a fireman and my mom worked in the school system. We didn’t really have that kind of a network. I didn’t go to an Ivy League school. It was all about leveraging my existing network and leveraging my brand to. Actually a major driver for getting in front of the right people to pitch was actually PR, was having relationships with media.

I got a really fantastic article in Crain’s that announced the launch of Brooklyn Bridge Ventures, which was sufficiently vague as to not worry the SEC. I got a random inbound from a person who was at a pool of partners’ capital from a hedge fund. They said to me, “We’re looking to diversify our assets. This seems like a strategic fit. It’s in our backyard.”

[Tweet “What makes a good pitch: Figuring out what is it that this other person wants”]

It wasn’t pitching them from zero. It was making sure the other person on the table was halfway there. Then figuring out what is it that this other person is wanting. A lot of it is being empathetic, which I think that a lot of people who pitch … Sometimes I’m on the receiving end of pitches where it literally feels like someone has pointed a fire hose at me and just let it go full blast and has not asked any questions about what I’m into or what my concerns are or whatever and crafted the pitch accordingly.

That’s so important. I think that’s where I have excelled and where my fundraising success came from. I’ve identified the right type of individual that my fund was a fit for and I was very authentic about it. I really believe it is. I can list a bunch of reasons why and have a really good conversation around that. It comes from a really authentic place.

There’s so many great takeaways there, Charlie. We’re going to tweet out, “Knowing who to pitch is half the battle.” That’s a great line. This whole concept of when you know who you are and that you’re authentic about your brand, that gets you in front of the right people. That’s a great combination of that. Let me ask you to expand a little bit on this authenticity, because people hear that a lot and I’m not sure everybody gets what that really means.

The thing that makes me so happy to have you on the podcast today is this blog you wrote about the things you believe. To me, that is such a great example of authentic branding. There’s so many of them. I’m just going to read off two or three and ask you to expand upon where did you get that belief and maybe tell us the story.

Sure.

I believe that if you aim for compromise, you will be less successful than if you aim for creativity. That’s good. Let’s talk about that one.

I think compromise is one of those words that people say, “You’re always going to have to compromise.” It, on one side, can ring as two people meeting in the middle, which is better than them fighting it out forever or never coming to agreement. It always struck me as each person getting half. I just never really been comfortable with that. You want one thing, I want the other. We’re both going to have to settle? What if there was some third thing that we could come up with?

That maybe going into this conversation neither one of us had expected or wanted or whatever, but it could make us both feel fulfilled. That’s really what I seek is, is let’s satisfy everybody but let’s keep an open mind that the answer to satisfying everyone may not be something that either one of us are thinking that we want.

[Tweet “What makes a good pitch: Aim for creativity over compromise”]

Sometimes that involves really going in and understanding the other person. “I see you don’t want to take X amount of dilution and I really want to put this much money into the company. Let me ask you, why are you concerned about dilution?” “I’m concerned about dilution because I don’t want to lose control of the company.” “We can accomplish that using the board. The ownership doesn’t necessarily mean control.”

Maybe you just didn’t realize that and I thought it was a push and pull over price but it’s not really about price. It’s this other thing that we didn’t go in and talk about. Trying to come up with creative solutions I think is something that I think is a better thing than always settling and compromising. I don’t want to say that I think people should just dig their heels in and fight it out forever, but I think creativity can solve a lot of problems.

It ties right back in what you said earlier about the importance of empathy and asking questions like, what is your concern here, and getting clarification on that. Let’s dive into one of the other things you talk about since you said, clarifying on a word. I believe that actions speak louder than words but that language has immeasurable impact. Can you give us an example of language having immeasurable impact?

Absolutely. This is a more recent lesson that I’ve learned. A lot of it has to do with these ideas of empathy. For example, there’s a lot of conversation about diversity in the tech community right now. There has been a growing volume of conversation around it over the last couple of years.

[Tweet “What makes a good pitch: Language has immeasurable impact”]

When you ask people how different things make them feel and you explore that and you accept without judgment, your minds opened up to a lot of things about language. For example, somebody was asking me about, how do we get more female founders to come and pitch at our venture? I think they called it battlefield. I just sat there for a second, I was like, “I think I know the problem.”

The word battlefield.

The fact that you’re equating pitching your company with a fight. To totally generalize this, that the level of aggression embedded in that language is going to skew more male or with people who identify as male. You don’t think about that until you talk to somebody who may not identified as male and voice their concern about that. I get that. I never really thought about that, because as a white guy there is a lot of things I don’t really think about.

I try and be a little more conscious of that type of thing. Language means a lot of different things to a lot of different people. What words you use is very important. It’s important in things like titles in organizations, it’s important in how you approach people. Some people can’t even identify the word that makes them feel not right. They just get an email and they just say, “I don’t know if this is the type of person I want to work with.” There’s just something in there about word choice or whatever that really makes a difference.

Wow, that’s great. I’m sure you have a big philosophy around the importance of a team when you’re listening to a pitch. You have this quote here, “I believe that if you treat people like you believe they can be better than they are, they will be,” which I think is a perfect platform to jump off about that quote and just your whole philosophy of how important the team is when you invest.

Absolutely. I think you should have high expectations of people. I think you should do everything that you can to get them there. I think sometimes we are very supportive of founders and new ideas and all that sort of stuff. We say that we’re supportive and we think about it as like a pat on the back. Sometimes, we don’t deserve a pat on our back because we didn’t do our best or we didn’t meet our potential.

[Tweet “What makes a good pitch: Treat people like you believe they can be better”]

You can applaud the effort, but sometimes you need a little bit of a dose of reality that say, “Hey, that pitch wasn’t very good, actually. It wasn’t very convincing. Let me tell you why.” I’m not telling you that to put you down. I’m telling you that because I think you’re capable of more. If I didn’t think you were capable of more, I wouldn’t bother giving you any criticism over it because what would be the point? I would just be wasting my breath.

There you go. Nice. Nicely said because the intention behind the feedback makes all the difference in the world, doesn’t it?

Yes.

Let me ask you Charlie, about what is it in your gut instincts that made you say, “Twitter and Foursquare are going to be good investments”?

To put it in a context, I am a portfolio thinker. I am not a deal guy. I got trained at an institutional investor that had fiduciary responsibility over a task, so General Motors Pension Fund, where I kind of grew up as an investor, is big into asset allocation and portfolio risk. These concepts that don’t usually pop up in venture capital. When I think about an individual deal or an individual company, I think about it in the case of this deal is the right amount of risk I should be taking, has the right amount of upside and has the potential to get there.

[Tweet “What makes a good pitch: The right amount of risk and upside.”]

I don’t convince myself that I know that this company versus that company is going to be a winner. You don’t know. There is a heck of a lot of things that could go wrong from Point A to Point B. I think what I look at is this is the type of deal, or if I did this kind of deal 30 times over in a portfolio, we’d be doing fine. I differentiate between good decisions and good outcomes.

There are lots of instances where I think people have invested in companies that shouldn’t have had a good risk profile and made it work anyway. It feels a little bit lucky but I’m pretty sure if they did that 30 times in a portfolio, it wouldn’t work out.

I guess the Twitter reference comes from, there’s a small mention in Nick Bilton’s book, Hatching Twitter, about how as a former Union Square analyst who still had a connection to Fred Wilson. I was at South By Southwest in 2007, which was the kind of Twitter year and the thing that sort of kicked off South By as the place to find the next big thing. That’s when Twitter really took off.

It took off because nearly 80% of the people who were on Twitter were at South By. You got this really funny sort of glimpse into the future of like, “This is what it would be like if everyone was on Twitter.” To me, if you were at South By, it was just really obvious. I don’t think of myself as being special.

I would have been really special had I noticed that before I saw that critical mass, because my tenth Tweet that February was, “No one seems to be on Twitter. Am I bored of this already?” Once I got to South By, I was like, “I kind of get this.” What’s fascinating is the parts of it I found interesting, the idea that you could text somebody without giving them your phone number. This layer of identity on top of the phone but not tied to your number was really interesting to me, intellectually interesting.

Not too far after that, we went to a mostly app driven world that had nothing to do with text. That wasn’t the thing that drove Twitter. I also thought that it was a great way to pull a community together, because there was a nice balance of the number of people at South By, the number of texts that came in and all that sort of stuff.

Really, once Twitter got into scale, it became much more of a broadcast mechanism than anything. They largely turned off some of their community features. You can’t see when someone @Messages someone else unless you are following that person too, the reply thing. Some of those early features weren’t necessarily ultimately what made it scalable.

But it was certainly, to me, an interesting enough experiment and certainly an interesting team and a growing mobile market. I was like, “That’s the kind of thing that if you were a high risk, high return kind of player, you should probably be around that.” I can’t say it was any kind of Nostradamus like, “We’ll all be tweeting in the future.” There is this thing like, “You should be doing this kind of thing.” That’s the way I look at that.

I love what you described as Twitter pivoting within what originally started off as and what it actually has it become, because I think so many people forget that. They forget that even the best team and the best idea still makes minor pivots along the way until they really hone in on what people want and how to use it.

Could you imagine at South By Southwest that there used to be a feature called Track that you could pick a phrase like SXSW and have it texted to you every single time anyone mentioned that? That seems like a nightmare today.

Yes. Right. The volume.

At the time, there was not that many people on Twitter and not that many people at South By that it was actually a nice pace. Product decisions that were made then are completely different than the product decisions that we need to get made now. I think that’s a struggle for a lot of companies, especially a lot of consumer companies, where your initial user base may not be the masses and may not be where it scales. Maybe your initial trendsetters and early leaders, you might have to abandon a little bit to take it to the rest of the community, which is hard for a lot of companies.

[Tweet “What makes a good pitch: Product decisions made then are different than now.”]

Is there any type of tech startup now that you specifically are looking to fund or something that you’re working with now that you want to talk about?

Early. That’s basically the category. My rules are very basic. I focus on New York companies. If the company has already raised $750,000 in a previous round, then it is too late for me. I want to be a part of your first million dollar spent. I want to be there from the beginning, helping to put in best practices, helping to figure out what the goal should be with the seed round, work through those early hiring decisions, which you can make a huge impact on.

Other than that, I could not have a more diverse portfolio. I led the investment in a consumer electronics company called Canary, which is doing extremely well and can be purchased at your local BestBuy and Amazon and all sorts of other places. I’m in a brick and mortar ice cream shop, the number one rated ice cream shop in the country, Ample Hills, which opens up in Disney in May and is absolutely the happiest place on earth per square foot.

It doesn’t have to be tech, it sounds like if it’s an ice cream shop.

No, it doesn’t. To me, it’s more about the aim of the amount of enterprise value you’re trying to grow in this company. Usually, you get up to a certain size and it is mostly tech businesses. If you go back, call it 25 years ago, in venture capital, a good chunk of the venture capital world 30 years ago was retail rollouts. Staples, PF Chang’s, Dick’s Sporting Goods were venture backed companies.

That was a way to get growth. You figured out a store model and a second store model and a third store model and you just keep building stores. You grew some pretty large companies that way. Who wouldn’t have wanted to be an Angel investor in Shake Shack or SoulCycle or any of these types of retail businesses.

In the late 90’s, when all of this sort of eCommerce, dot coms took off, most of those retail investors shifted over to the internet. Retail investors, if you weren’t doing this dot coms and IPO nine months after you invested in them, you kind of missed out. People shifted their focus and they didn’t go back. There hasn’t been a ton of retail investing.

It’s actually come back into favor a little bit now because some of the VCs started doing it as Angels. Their favorite restaurants, their favorite coffee shop. It’s a fun new set of challenges. It’s interesting. It’s all about place making. There’s that but there’s also the realization that just because you don’t have a roof over your head doesn’t mean you have very good economics.

[Tweet “Having a roof over your head doesn’t mean you have good economics.”]

The Blue Aprons of the world still spend a lot of money on customer acquisition, whereas Ample Hills doesn’t have a marketing budget for customer acquisition. We make stores and we put an ice cream shop in the line forms and people pass by it because they like ice cream. We don’t need to spend dollars to acquire customers, we just need to spend dollars on rent.

Interesting. You’ve said some really great things here about what makes a good pitch. Don’t make the investor feel like they got a fire hose coming at them, be authentic, be empathetic. Is there anything else you want to add to that great advice before I let you go as to what makes a good pitch for you?

I think one thing that is important is to listen specifically to what the objections are and make sure your answers really specifically address the objections. If I tell you, “I’m just not sure that this is a venture sized opportunity that can create $250 million of enterprise value.” To respond with, “This is a really big opportunity because a lot of people have this problem.”

[Tweet “What makes a good pitch: listen to objections and answer specifically.”]

That doesn’t really address the problem on two levels. One, is how big is big? Because there could be a big problem that has a $30 million exit as its natural life, which should be plenty great if you could bootstrap it. It’d be pretty good if you could Angel invest. But probably not good enough for a venture firm. Just saying that something is a big problem doesn’t mean there’s a lot of value to be extracted from solving it for customers. There might be an unwillingness to pay or whatever.

I think just making sure you get investors over each of those hurdles very specifically to be able to say, “Each one of my customer is worth X and I have pipeline for Y. If I have this much growth or every salesperson can generate this many dollars. Look, I’m already doing it with two sales people. It only takes $5 million to ramp it up to 30. Here’s what exit multiples are for this business.”

Granted, we know that this is not the way it’s going to pan out, but at least you’re giving me back what I was asking about. Versus these vague, “Big and important.” I don’t know what that means from a sizing perspective.

Language has immeasurable impact like this quote you said earlier. Final question, what kind of book would you recommend listeners to read, either about investing or entrepreneurship or life in general?

I think I will go with the life in general category. I am a big fan of taking thought models from completely other random places and reapplying those, because I think it’s great training for how to approach new problems. There is a book called The 48 Laws of Power. It was a very popular management book. The author of The 48 Laws of Power collaborated with 50 Cent, the rapper, to write this book called The 50th Law.

It was all about 50 Cent’s career, both legal and illegal, and the principles of management that you could distill out from his success. Now, I’m not saying that you should go out and be a drug dealer and then try and turn that into a rap career. But the idea that you can pattern that across such diverse situations, I think it’s just really good brain training. Go pick some completely other hobby, beekeeping or whatever it is. I think you will find many different facets of the world operate a lot more similarly than you think.

It’s part of the story behind Where Good Ideas Come From, a Steven Johnson book, where it’s all about cross pollination. No pun intended with the bees. Take ideas from one place, turn them slightly a couple of degrees in one direction, bring them to something else. That’s where creativity comes from. Because if all you’re doing is reading startup book after startup book, you’re just going to be thinking the same as everybody else versus somebody who comes at things from a new angle.

I love that. We’ll be sure to put both of those books in the show notes. I’m sure you are able to take a lot of the athletic endeavors that you do and transfer that to being an entrepreneur, as far as stamina and tenacity and all that good stuff too.

I do a lot of thinking on my bike.

People can follow you at Twitter. You have one of the most unique Twitter handlers I’ve ever seen. In fact, when I saw it I thought, “How was that not taken?” But I’m guessing it’s because you were an early Twitter user, is that right?

CEO is actually my initials. Charles Erik O’Donnell, CEO is always a thing even before I wound up in venture. It doesn’t really have much to do with starting companies or being in charge of stuff.

Got it.

CEO NYC was just, that’s who I was. I am CEO and I live here in NYC. Nobody else took that.

The double meaning is fantastic, you have to admit.

Absolutely. I will admit to people tweeting at me, telling me that they have seen my car parked on the street, because I am one of those people that has a custom plate. It’s very easy to spot my car.

Nice. You have consistency in your branding, that’s why you’re so successful.

There you go.

Charlie, it’s been such a pleasure. We’re going to have people follow you @CEONYC. Of course, I want to give a shout out to your incredible blog. Tell people how they can find that. This is Going to be Big is the name of it.

It’s ThisIsGoingToBeBig.com or they can Google my name. I’m usually the first ranked person, either that or the Wheel of Fortune announcer. I’m not that guy.

Fantastic. Thanks again.

No problem.

Links Mentioned

J Robinett Enterprises
John Livesay Funding Strategist
This Is Going To Be Big Website
Brooklyn Bridge Venture Website
Charlie on Twitter
Charlie on LinkedIn
The 50th Law by 50 Cent and Robert Greene
The 48 Laws of Power by Robert Greene

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