TSP009 | Paul Grossinger – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John Livesay:

Welcome to The Successful Pitch podcast. Today’s guest is Paul Grossinger who at a very young age has been winning pitches left and right. He shares the secrets of winning pitches, unfortunately it’s what people don’t like to do and that’s practice, practice, just like the joke about how to get to Carnegie Hall, but he said no matter how successful you are, that is one of the key criterias to making your pitch flow in a way that tells people who you are, what problem you’re solving and why they should invest with you. He also goes into great detail about how important it is to get to know the investors before asking them for money. Timing is everything. Enjoy the interview.

Welcome back to The Successful Pitch podcast. Today’s guest is Paul Grossinger.

Paul Grossinger:

Hi.

John:

Welcome to the show, Paul. Paul, you have an incredible background, which is from journalism to being an investor and I’d love to have you tell our listeners.

Paul:

You skipped the entrepreneur part in the middle.

John:

Yes, so tell us. You majored in journalism and then you became an entrepreneur and then you became an investor. So, I know there’s many steps from journalism to investor and we’d love to hear how you made that journey.

Paul:

Well, you know, I actually started as an entrepreneur first in college. So, when I was at Hopkins we did a network of sports websites and we built that out for a little to be a essentially a mid size sports network and that was how I got into content and really enjoying content as a medium and that was what convinced me to go study journalism at Columbia.

That’s what brought me to New York and so in the process of that term, I really enjoyed journalism and I still do quite a bit of writing for TechCo and occasionally for VentureBeat and other sites, but I didn’t want to do it for professionally for my entire career and we managed to finish with all the media successfully with my first startup and started pervasively through my second startup and so that was how I got to be an entrepreneur in New York and stay an entrepreneur in New York.

I really like the circuit and as the result of the first one, I started investing in companies, first dabbling in it and joined a few angel groups. I particularly like Golden Seeds and then evenutally now in the last year or two, I’ve really morphed into creating my own syndicates and leading my own deals. The largest, which of course is Gaingels. We invest in founders of at least one LGBT founder.

John:

Great. Tell me a little bit about your first step from being an entrepreneur to becoming an angel investor. Was it helpful that you had already been an entrepreneur just when you became an investor to see – you knew the path that some of the startups were going on?

Paul:

Yeah, it was. I think when you’re an entrepreneur to be able to see in the path the beginning and to take the company from being absolutely nothing to being a success at one ilk or the other, whether it’s a small business all the way up to Facebook as something as important and certainty I have a ton left to learn. I am not by any means have accomplished everything there is to accomplish in a career. I’m learning a lot everyday, but I think in the boarder terms of being an active entrepreneur who is sort of in the trenches the same way as the companies that I was investing in.

I really enjoy investing, because it broadens the mind. I think it exercises a whole other part of the brain that really helps you to learn how to engage with companies that are going through a lot of the same challenges yours are, just in different markets, different mediums, and different types of clients and companies and I really enjoy that and I also enjoy what it does for building my network and for me the great – the thing I really like both entrepreneurship and investing is making impact, really. Creating value and creating things that matter so entrepreneurship and investing do that in both the same and very different ways at exactly the same time.

John:

I’m really fascinated by the whole concept of what you said about how investing is a different part of your brain than being an entrepreneur, because I am all about left brain being analytical, numbers oriented and trying to get startups when they do a pitch to get to the right brain story telling, emotional connection so people can fill their passion and be inspired. Can you speak a little bit about what you look for when you hear a pitch around the brain stuff?

Paul:

I think it’s both. I mean, for me the difference between being an entrepreneur and being an investor in different part of the brain is one is operative and one is more analytical and advice oriented. You know, as an entrepreneur, you’re really operating. You need to grow the company, you have one focus and you focus only on that goal. As an investor, you really see things more from the outside. You are able to tell entrepreneurs things that they don’t really see about their own company when they’re in the trenches and you are also able to give them outside opinions about, for example, what does the company look like to another investor.

What are the actual weakness to address. What is the company look like to a potential client, one of the things to address. Does the product adequately address their concerns, is their product market thin. I mean, those are things that entrepreneur can analyze for themselves, but I think sometimes have trouble seeing that and frankly, as an entrepreneur myself I have trouble seeing that in my own companies. We all need our own advisor, it’s why therapists need therapists for themselves.

John:

Yes.

Paul:

So, in terms for what I specifically for in a pitch, you know, I care a lot about understanding the story and understanding the team and why they are the right people for that particularly company and trying to get a deeper sense of understanding of why it’s them that’s going to be able to scale that particular idea and also I like to get a sense of what the numbers are behind the market. Why is their product market there, why is this important, why is it unique, different, why is this something that’s going to actually engage me mentally and make an impact in this market.

For me, impact is not necessarily about whether or not you’re saving Nepal, although that’ll be very important, it has a much broader base and so you can make an impact by creating say, a new home security company. You can make an impact by doing a new type of health care that does home care more properly. I mean, those are both companies that I’ve invested in the last couple of years. So, you know, for me, I scare away from stuff that I think is that A) I don’t really understand and B) it doesn’t necessarily make as much of an impact on people, which I guess for me is often direct consumer related technologies around certain types of ecommerce. Sometimes I invest in that stuff, but less so.

John:

Can you tell us one or two that come to mind that you thought, wow, this is a really great pitch and how fast did you know that you probably wanna invest in that time.

Paul:

So, when PuzzleSocial pitch to us at JumpStart last year Jeb was just sensational. He had a really clear, the founder of Jeb Social’s name is Jeb Ballise and Jeb had a really amazing, crystal clear understanding exactly who his client was, exactly who his market was for the digital cross word puzzle that he built and exactly how he’d acquire new customers. He knew exactly what his metrics were per acquisition, how long the customers stayed around and how fast he paid back the customer. He broke it down for us for beta. I think he had 15 members investing, a good quarter of a million after a 45 minute conversation. Wouldn’t want to bet my life on those numbers, but clearly it was very well received and I think entrepreneur have a very direct, crystal clear understanding of what their business is and why [cuts out], where they add value, who their end user is and why their end user will pay for it, do very well.

Another one that comes to mind is ThinkCERCA. Eileen, the founder, was the former head of the curriculum for Chicago public schools and she did a pitch to a group of YPO, Young Presidents Organization investors last year and she – what ThinkCERCA does is they created a new system for managing the common core education scanner and she just, she knew everything there was to know about education (#7:59?). You could just tell that she knew that and she also knew a lot about managing a team and clearly had built a product that fit exactly what she saw the need as in the Chicago public school system from being inside it and you just knew that she was going to succeed and then PuzzleSocial are both doing very well right now. So, I would say those were two pitches that just hit the nail on the head for me.

John:

That’s great and what I really hear is the common theme with those two examples is in depth understanding of the market and an in depth understanding of the customer and that’s where I feel a lot of people try to pitch maybe a little too early. They haven’t done their home work if they haven’t lived and breathed that particular market so well, they don’t really what’s going to motivate a customer, they just think they have a good idea and they want money to flush it out.

Paul:

That’s true. The most successful entrepreneurs we see are ones that have a deep understanding of their market. Another good example of a company that has come to me and that I am in through a vehicle or two is Canary. I mean, when Adam pitched canary particularly from Charlie from Brooklyn Bridge Ventures who eventually lead his seed round and those of us who were LPs in Brooklyn Bridge Ventures were also present and part of that.

Adam had come from a partial military background, the Israeli military also had a background in security and along with his developer who was a real ace machine specialist, you could just tell that they deeply understood how to create a new [cuts out] security and they could really – you knew Adam and his colleague could really revolutionize the home security market in that regard even tho they were basically pitching us on a device cam with wires and then of course Canary has developed into a very, very successful company that’s in now deployed a bunch of different retail stores and a really huge [cuts out].

So, that’s definitely true. People who have a domain expertise in what their doing, people who really understand the market or taken the time to really get to know, that’s really important. Ace entrepreneurs who also just understand how to lead people and have charisma and drive really work, but I would say that’s true, I would say that I scare away from people who just seem to have thought, hey, you know, I discovered this problem and I can build an app to maybe try and solve it. That’s not something I really invest in or dig deep on. I scare away from companies like that.

My model which comes partly from being an entrepreneur is to really get to know companies for a while, to do my homework for several months. The only exception is when a VC that I trust is leading round, I do my homework and I meet the people and I really like them then maybe if I have two meetings with them and I know the VC leading and I really trust them, I’ll invest in a side part with them, but generally for my own syndicates and for deals where we lead it out right, you really, really got to get to know them for a while and the two deals that I’m leading right now which I can’t speak the details of them, but I can say that myself and also at least five or six other members of our syndicate new each of the founders for several years. So, it was not a situation where we just like, you know, founded on angel list and invested like an hour. I don’t do a lot of that.

John:

Do you think it’s valuable for startups to put their pitch deck on angel list or are they better off..

Paul:

Angel lists are incredibly valuable, but it’s all in how you use it. I think that angel lists, ou know, if you’re investing with a regular investor that you trust who is the lead on a syndicate deal and you know that investor has known the entrepreneur for a long time, then that’s great. If you know the entrepreneur yourself and you’re backing their deal, which is what I did with say, Datch, that also makes sense. I think it’s where you don’t know anything about the company or the investor that you’re facing problem. I really don’t know a lot of people who do that. I know there are many, but I think that generally you want to get to know the person your syndicate is backing.

John:

What’s the average amount of money that, like, they are all over the map where some say..

Paul:

Investors are all over the map. There’s no answer to that.

John:

Because a lot of startups will say, oh, I need $250,000 or somebody says, oh I need a million, and they don’t even have proof of concept yet. The odds of them getting that are pretty slim, wouldn’t you agree that they need to get some..

Paul:

I don’t invest in concepts.

John:

Got it.

Paul:

I mean, I know that’s sort of a crude answer to the answer. I just don’t. I watch a concept and I’ll watch people and I’ll help them and I’ll be a little bit of an adviser and I’ll make some intros. It’s all about relationship building, but my money will not go in until the company has developed something and proofed it out a little bit at least with beta users. Even then, you know it’s still very early and I’m stuff helping the company grow a lot, but to me, there’s no value whatsoever in the concept level. You don’t really see a premium on value and there’s just, you’re taking a massive amount of risk that’s just unnecessary.

John:

Can you tell us one of the ways that you think companies should get good traction with a potential customers? Should they – with the beta tests that you..

Paul:

Are you talking about B to B or a B to C company?

John:

B to C.

Paul:

B to C company I think that you create a beta network of a 100-200 people. So, really, that’s the alpha. Test it out first, make some changes, then use your investors combined with your personal network combined with potentially some customer partners to come up with a beta network of a few thousand then you release it. On a B to B front, I think you use your network of investors and your personal network to find 5-20 really good clients that are willing to work with you on a daily/weekly basis in beta testing.

John:

Right. I think one of the things you’re really talking about Paul is how important relationships are not only with the investors that you already trust, but also knowing these startups for quite awhile or knowing someone in your network who knows them. The odds of someone finding you that’s a stranger and having an idea and not really having any warm contacts and pitch you once and walking away with x amount of money is just – no body really does that, right? They need to know you and have several meetings. Just trying to get people a sense of expectations of how long it takes to get funding and the steps are needed besides the initial pitch meeting.

Paul:

I would turn that on its head and I would say you want investors who know you well and taken the time – were able to assist you in the round. You don’t necessarily want investors who are not valuable in that round or if you do have them in the round, you want them following on to other value-added investors. So, one thing that my best companies have done, they do what essentially is a proto seed round where they get the advisers that they want in the company with real capital. You definitely – it’s always a good idea to do that early round week and then what they also do is they then add a few important investors to that round as well and then they can add friends and family and some less valuable investors if they wish behind those and then they get that company going and then they raise the real round.

I think it takes, good investors tend to take not a lot, but a decent little bit of time to get to know the company and/or they tend to go through someone that they trust implicitly. There’s nothing wrong with what we call ‘dumb money’ in a round, but it should be following very clearly smart money. I would add further that ever single successful company I have in my portfolio has smart investors adding value and I don’t know a single company in my portfolio that only raised money from unsophisticated investors and has succeeded. Frankly, I’m not even sure I know any that survive, even those that looked like they might have, you still know for a fact they have three or five value-added bides, so put capital in your helped on the (#15:25?) as far as raising funds for your goal then maybe, you know, in those cases it might be borderline, but they still have some value on people.

John:

When someone pitches you, because you, I saw you judge people pitching and you’ve obviously won several awards. Can you talk to us about, I saw on your LinkedIn profile you won a lot of awards for best mobile app and give us an experience..

Paul:

Yeah, we won a few. We were lucky to win a few awards for Pervasive.

John:

Yes, lucky. Tell us about what’s that like and how to win something like that, because obviously that gives you so much credibility and what does it take to win when you’re pitching like that.

Paul:

You have to have confidence in your delivery. You have to practice your delivery at least 50-100 times.

John:

50-100 times everybody! I don’t think people realize that. I love that. Thank you, Paul.

Paul:

Or more. I mean, I used to, I remember when we won the New Jersey Tech Venture, New Jersey Venture Tech competition, which was a train for me from upper west side to Pen station then Pen station to Princeton, I think it was. I just practiced the pitch back and forth, back and forth the whole way and it turned out actually, it was a an hour and a half trip, but it was a three or four minute speech, so I probably practiced it 80 times just there, so by that point,because it was like right before I knew it pretty much word for word.

I think though that what you know is you want to be crisp and clean, but you don’t want to try to memorize it, because what happens then is if you stumble on a word, you’ve lost your whole setup whereas the intelligent thing is to memorize basically each sector of what you want to do. Each point you want to make and then be able to re-phrase it or permute it whichever way you need to in that situation.

That’s what I always try to do. I basically have a sense of what were the eight things I want to get across for the audience. What was the order in which I wanted to get across some of it, how much time that I have, and I’d make sure I hit all eight and I sounded crisp and clean and delivered with what you call a loud-bear tone voice and you go from there. I think generally if you pull those things together you’re going to do pretty well.

One other thing I would add and I’m sort of ad libbing on some, but don’t.. it’s never a good idea to just sort of number off the sections that you’re doing in the speech. You want to flow seemingly from point to point and you want to emphasize your strengths first. So, generally that means you emphasize the strengths of the team and why their fit for what you’re building and why this product is a good fit and then you go into other sort of minutia like, you know, what else you’re doing, basically go into team, fit, clients first.

John:

Team, fit, clients, and before the team do you talk about the problem you’re solving so people have a clear understanding of what it is?

Paul:

I always basically go with a 20 second version of what problem we’re solving and what it is in. Problems 1-2 sentences and then I go into other stuff first and then I come back to, because the reality is until people understand who you are, why you are valuable and why there’s a fit for what you’re doing, they are not going to listen huge depth about you. They want the problem is statistically, but what your solution is. So, I don’t want to say you should bury the problem or bury the solution, you definitely put it at a top, but I generally split it between putting one sentence on each that will know what you’re talking about at the top and then delve much deeper into after you’ve gone into team and the why.

John:

That’s great. That’s so helpful. I love it.

Paul:

I’ll give you an example. So, one of the companies we are investing in is, we haven’t closed the deal, so I can’t say the company’s name, but it’s a company for revolutionizing home care, right, on the health care side. Everybody knows health care is a big problem, right, so you have to say that and you have to say what the solution is in the first 20 seconds of the pitch, but going into two minutes on why home care is a deep problem before you say anything why your team is great and why you have created value-added for the problem and why you’re the product market that solve it is the wrong way to go about it, because the audience knows that there’s a problem with the employment of health care, particularly home care and its inefficiencies.

So, state that’s the problem, state that you’re in the solution and then go into the depth of why you’re unique and then you can port back actually giving the statistics on why it’s a huge problem. Does that make any sense?

John:

Yeah, it makes compete sense.

Paul:

I’m curious whether the audience would appreciate that point or whether I kind of convoluted it, because..

John:

No, I think it..well, I’ll just try to recap it the best I can is, don’t spend too much time on defining a problem that people are generally aware of. You have to initially hit it is what you’re saying in the first 20 seconds, but people need to know who you are and what your expertise in that before they’re going to be really interested and what the market fit is before they really wanna have you go into depth about how you’re solving that problem.

Paul:

That’s exactly right.

John:

The other thing I love that you said, because when I saw you judging the pitches is really, you can almost see when someone isn’t comfortable that they’ve got, okay, step one, step two, now I’m going to talk about the third step is to practice so that it’s conversational and has a flow and that’s really when you know your stuff.

Paul:

That’s exactly right.

John:

Yeah and that comes across and that’s what gives you confidence. So, it’s a catch 22. You know, the key to confidence is preparation and I love that you said you practice something 80 times just on the train ride to get to the pitch.

Paul:

Yeah, I mean, no body is perfect. So, if you don’t practice, you will not do well. I mean, anyone who thinks they can just wing a speech. I’ve given hundreds, thousands in my career and I still practice. There is no exception.

John:

Right, there is no exception to practicing. That’s going to be one of our Tweetables moments, because people think that they get to a certain level, they don’t have to practice anymore or I’ve heard people say, oh, I don’t want to over think it and I’m like, when you have a chance to pitch somebody, that’s your Superbowl of meetings, you know, athletes, since you come from a sports background with a sports network, incredible athletes at the Superbowl, they do an amazing amount of preparation and you have to think of yourself in that same vein, I believe.

Paul:

Yeah, everything that one becomes an expert in I think is a matter of practice and is a matter of running through. You know, entrepreneurship is a matter of practice. My first company I made a tremendous number of mistakes, and I think I mentioned that at the start out, on a daily basis and that’s part of growing as an entrepreneur is that you’re continually learning from your mistakes. At Pervasive we’ve made an equal amount of mistakes, you know, the funny thing is both of them are working out nicely or either have worked out or working nicely so that’s great. I mean, they’re not the next phase book, but we’re very happy with them and now working on my third company.

I mean, I am now making what I would call second mistakes, so the basic ones we’ve taken care of, but now you make second level mistakes and that’s okay. I mean, it’s part of growing and it’s part of learning and frankly, you know, part of why we do this is to learn a topic. The reality is that if you knew everything and you wouldn’t make any mistakes and there weren’t any learning moments, then it would just be boring. I mean, why would you go to work everyday?

John:

Exactly.

Paul:

If you already know everything, then wouldn’t you just lay at home and just read about history. Some thing about the past. I mean, seriously, the whole experience of what I think makes work, what makes what we do exciting is learning and creating things that haven’t been therefore, making a dent and impact in areas where there wasn’t impact before and the ability to do that is what’s so exciting and what actually makes me get up every morning in the day and set an alarm. In fact, if I knew everything that was going to happen and what’s not going to happen and wouldn’t make any mistakes in my startups, it would just be dead boring.

John:

Right. Well, that’s what, that curiosity factor that is so key to being an entrepreneur and a startup is what makes people excited about investing as well and when you can convey that passion for how you came up with the idea and how you got this team together and why you feel this is going to make an impact..

Paul:

It’s a journey.

John:

Yes, can you share with us sort of when you’re hearing someone pitch and you go, oh, that’s a very common mistake that a lot of startups made, I made it myself. Is there any one mistake that is a common mistake across all industry that you see people tend to make that maybe they could be aware of so they wouldn’t make it as much?

Paul:

There’s a lot of common mistakes that people make that I’ve made myself. I mean, one of them for example from a fund raising perspective is to start the fund raising round and incredibly early thinking that the earlier you start it, the earlier you’re going to end it. The reality is you start the fund raising round when the company is prepared to fund raise and you’re able to give the investors what they need to commit, because investors just wait until you’re ready. So, that’s one big mistake hat we make.

Another one is people tend to try to push the investors too hard before they’ve really shown value and shown why they should participate and they just assume that they meet the investor and they tell them how great they are, the investor is going to immediately invest and that’s not the case. So of my absolute favorite companies have took me awhile to really warm up to and get involved in, but once I did I really understood the value.

The other thing too is that, I tend to be a very analytical in terms of getting to know companies. You know, I take my time and I’m willing to put the time in to give companies advice on things like running through their deck. You know, just pro bono, just like to help them out or to sit down with them over coffee and give them strategic ideas or to make intros for them. You know, that’s not the kind of thing that I wanna charge for.

I mean, I know that there are people who advise and charge for that, you know, cash. I don’t do that. I do of course take advisory equity in the companies where I invest in order to have a little additional upside, but you know, the reality is that I believe in sort of providing that sort of informal help to companies, because it’s part of the value added. It’s fun for me and also builds a relationship and so as a result of doing that, I can really take my time on getting to know a company and sometimes I even invest outside of what is typical.

So, for me, companies have to be willing to allow the best investors to get to know them, but then eventually they have to present a value product and a time frame that makes sense for the investor to jump in. I don’t know if I should break that down further. Basically, it has to do with finding the right balance between, you don’t want to push to hard, but at the same time you wanna make sure that people have an ability to come in when they need to.

John:

Well, yes. What you’ve said, don’t come in too early, because if you don’t have anything that an investor needs, they are not going to say yes and even when you do have what they need, don’t push too hard.

Paul:

The other thing and I can only speak for myself, because every investor is different, but I tend to be both the hardest money and the easiest money in the sense that like, a good example is there’s a company I was getting to know for about seven months and they weren’t ready, they weren’t ready. They haven’t even been raising a round.

We just were building their stuff up, helping with their IP, helping with growth, and then all of a sudden, they – we had begun discussions about what their fund raising was and he ask me, so how do you feel about, you know, both a formal adviser and investing and it had been enough time and I said, look, I really like you guys, I really like the team, so you know what, why don’t you put me down as an investor and I don’t know the exact amount is yet, but I will invest and I’ll sign your sheet and I’ll be an adviser.

You can use me as a co-lead for the terms and it was literally a three minute discussion, but it had come because we got to know each other over such a long period of time and I really appreciated what they were doing and it was the right time. You know, if he had pitched me on investing within a month and a half when they really weren’t ready at all. They had no file IP, they had no full product employed, they had no users outside of alpha, I would have been like, look guys, you need to wait, but they came at the right time and we were close enough and I really believed in what they were doing and so literally, it was a three minute discussion. I said yes and then great and let’s move on.

John:

It’s like dating almost, right? Timing is everything. You don’t ask somebody to marry you if you’ve only known them a short time, basically.

Paul:

But, when you do ask somebody to marry you, if it’s at the right time, they tend to say yes.

John:

Exactly, because you know it’s a sympatico..

Paul:

Except when you’re at a Toronto Raptor’s game, I think it was. Like that horrible Youtube clip. I felt so bad.

John:

Yes, nothing more humiliating than that. What books do you recommend startups to read especially as it relates to pitching and getting funded.

Paul:

You know, it’s fascinating, I’m not a huge proponent of going by the book. I tend to think that every entrepreneurial experience and everyone’s companies [cuts out]. For example, I have heard certain venture capitals go out there an say everyone needs to quit their job from day one and commit to a startup and that’s just BS in my opinion. I think people have different needs. People have different families and it’s not great when someone who has a 100 million dollars plus some money they need to quit to pursue their dreams before they’re ready. So, you know, for me, it’s like, when you reach a point where you put together a team, you have a product already fit, you have people going to pay and actually create a company. Well, maybe you quit your job, you know, especially if you have kids. This is one example. I do think that Lean Startup is a good book. I think that Drive by Dan Pink.

John:

Drive? Okay.

Paul:

Purpose Economy by Aaron Hurst is a really good one to read about what drives people to succeed. What their dreams [cuts out]. Those are three zero to one [cuts out] is one we do think is a good read. Generally I think those are some good books, but I think people have to carve their own path and I think that it’s not good to say, you know, I want to be the next PTO or I wanna be the next Mark Zuckerberg. You wanna be yourself and succeed as yourself and carve your own story in the mail as it were.

I mean, we are all different. I look at myself. I haven’t created anything specular. I haven’t even created a company that would be compared as a global brand, but I’ve been lucky enough to create two good companies that are succeeding and invest in other really good companies, some of which are global brands and I’m 25. So, we’ll continue to grow out from there. I mean, we’ll check in ten years from now.

John:

Yes, my goodness I can’t wait. You’ve done a lot at 25, that’s for sure.

Paul:

A lot, a little. I think that’s great, but I think for me is just thinking about the fact that we each carve our own path and it’s different and I really have no desire to be the next anything. I like being me and I think that everyone else, you know, is in the same guard to b themselves and end up where they end up and that’s the path.

John:

That’s great. Carve your own path. That’s a great place to finish the interview. I thank you so much, Paul. Great insights and great inspiration.

Paul:

Thank you very much. It was really fun.

TSP007 | Ben Larson – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John Livesay:

Today’s guest on The Successful Pitch is Ben Larson who is the director of the Founder Institute from Silicon Valley. Ben has an amazing background where he just got back from Europe and he works with startups across 70 cities in a four month program. He has an incredible smart story telling acronym to share with us on today’s show. Let’s start with welcoming you to the show and tell us how you went from a professional photographer and even before that a civil engineering into being an expert in the start up world.

Ben Larson:

Thanks John. Yeah, so my background is quite varied, not very often do you hear the combination of civil engineer and photographer.

John:

Right.

Ben:

But what it paints in a, I think what makes it most unique is the fact that it’s a combination of and desire to kind of really express myself per both my left brain and right brain. If people still divide it like that.

John:

Yes, they do. I talk about that all the time about trying to translate left brain into right brain emotional story telling, because, I’d love your opinion on this, but my take is that’s where all the selling happens. People buy emotionally and then back it up with the left brain logic.

Ben:

Exactly, exactly. Yeah, you know, it’s interesting, another, well, it’s not the best acronym, but one I kind of developed over the last few months was one included the words passion and intelligent and grit and so it’s an unfortunate acronym, so that spells PIG, but passion is something that really comes out of your right brain, I feel like, and it’s that ability to be so enthusiastic about something and it’s kind of brings out the artist in you, you wanna be creative and do all of that, but the intelligence side and being able to structure your thoughts and really think intelligently about everything is the other half of the brain and, you know, being more analytical and putting together all the pieces and painting the right picture.

You know, it’s really a combination of everything. So, that diverse background that I have has really lend me into this kind of generalist position, which is very important kind of when you are first launching the company, because you are wearing so many different hats.

John:

Tell us about the grit part of the PIG acronym.

Ben:

Right, right. So, the grit part is essentially what I look for when I’m [cuts out] founders. It’s just the ability to keep going. It’s really easy to get excited about a new idea, put together a lot of stuff in a short amount of time, but once that honey moon phase is over, you know, what’s going to keep you going. What’s going to keep you going through all the noes and the naysayers and it’s grit. I think it was the, one of my favorite stories in the tech industry around here is, you know, the founder and CEO of Pandora. Right now it’s a household name. It’s like, oh, internet radio, of course. It seems obvious, what most people don’t know is that he went through 300 investor interviews before someone said yes.

John:

Wow.

Ben:

That’s an incredible level of grit, right?

John:

Yes, reminds me of the Howard Schultz story. He had a lot of noes before Starbucks got a yes.

Ben:

Exactly. To the layman it’s a no brainer. That’s just because they didn’t see it at the very beginning.

John:

What kind of advice do you give startups to make sure they do have the grit to keep going? Is it figuring out why they want to do it in the first place, is that one of the key things that helps you get over them?

Ben:

Yeah, the why, the why you’re doing it is so important. I mean, I can’t talk about that enough. At the Founder Institute, we work with a lot of early stage entrepreneurs and aspiring entrepreneurs. Some people call them wantrepreneurs and our program, like you said, is four months long and as one would suspect, we provide a lot of structure, a curriculum, mentorship, all that kind of stuff, but one of the greatest takeaways from the program is the behavioral change mechanism that it is. It’s, you know, we are turning people into those entrepreneurs that can show grit and speed and action and all of that and that’s, you know, it’s just what it takes to compete these days.

John:

Right. I mean, the statistics are only 1% of pitches ever get funded and so you really have to be at the top of your game to do that and certainty going through the founder institute. Tell us how that all came about and how you got involved with it.

Ben:

Right, right. So, it started about six years ago by Adeo Ressi. He’s a serial entrepreneur here in the valley. He’s been here for about 20 years, just grinding it out and he’s been through the highs and the lows and have seen it all, seen pretty much every angle of the startup world and his mission when he first started the Founder Institute was to make the process of becoming a startup entrepreneur easier. To make, you know, the leap a little bit less drastic, because we’ve been there before and that’s kind of what lead me to the Founder Institute. I made that leap about five years ago now and it was drastic. It was like jumping off a cliff and I didn’t have the program and I wished I had.

So, I learned those lessons that many of us entrepreneur learn in the first year that, you know, no amount of YouTube watching or article reading will really get your there. It’s just you kind of learning. So, what we try to do is accelerate that process. Allow a little bit of a safety net to allow people to keep their jobs while they’re going through it and give them a little bit of traction and comfort before they make that complete leap.

John:

Do you have a favorite success story of someone you worked with that you want to share?

Ben:

Oh, god. Yeah, I actually do. It’s one of my most recent grads out of the program that I was personally running here in Silicon Valley. It’s just an amazing story. In fact, I’m trying to loop her in to be part of our recruiting effort for the next class, but her name is Purva Gupta as the name might indicate, she’s from India, so she’s an immigrant in the tech world. She’s a she. No tech background. First time entrepreneur. She was on a visa. I think it’s an F2 visa, which means that her husband was here as a student.

So, needless to say, I could go on, but needless to say, the deck was a little bit stacked against her. She came in with an idea in the fashion industry, again, no experience in the industry, and it was a pretty bad idea, just to be blunt, but she has the hustle and the willingness to learn and listen and she works her butt off and frankly throughout the four month program, she made more progress than any of our other founders in the program and by the end, she was building her team, raising money, building traction, and four months from the time we met her, she had raised her first round of funding and built a team of four people. Now, she’s hiring people away from Netflix, Facebook, and all that. It’s just amazing. Like, it’s an amazing story. Now she’s sponsoring her own visa and doing just amazing. I love it. It’s why we do this.

John:

Sure. One of my big takeaways from what you just said is, she’s coachable and I think investors look for that as well and if you start off with someone, as you said, who was willing to both listen and learn and keep that mindset no matter how successful you get, especially when you’re asking for large amounts of money, that’s really attractive to investors, don’t you think?

Ben:

Oh, definitely. It’s invaluable and it goes back to that intelligence part, what I was talking about before. To be intelligent, yes, there’s the IQ side, but that’s only half the battle. The other half is learning how to think intelligently and to know when people are giving you advice and they know more than you and to know what you don’t know, you know, you can’t put a price on that.

John:

Know what you don’t know. I love that, because that’s really all the stages we go through when we’re trying anything whether it’s learning how to ride a bike or drive a stick shift car, we don’t even know what we don’t know and you have to be willing to be in that uncomfortable zone and a lot of startups as you described, you know, when you make that leap, it feels, I don’t even know what I don’t know yet about running a business, but you’re willingness to stay in that uncomfortableness and know that it will eventually pass is what I think really distinguishes someone who just gets excited about a new idea versus someone who has the grit, as you say, to stay with it.

Ben:

Exactly.

John:

I love that. Would you talk to our listeners about your wonderful post on LinkedIn about smart story telling and what that SMART acronym stands for?

Ben:

Sure, sure. So, smart story telling is more about the approach to pitching versus the structure, like there’s plenty of very smart people. Guy Kawasaki being one of them with the Art of the Start and the Art of the Start 2 now, that can tell you how to structure your pitch, so that you have all the right pieces. What I try to get at with the smart story telling frame work is how to go through that pitch, how to make it sellable and how to make it convincing and how to not lose your audience while you’re going to the sides. What a lot of our new founders fail to realize is that, you know, when you’re telling the story, it needs to make sense.

I don’t know how else to put it, so the smart story telling frame work is based on an acronym, so the word SMART. So, the S is set the stage, the M is managing expectations, the A is answering all the questions, R stands for repeat, and the T is the take it away. Now, when you’re setting the stage, you’re getting the audience into the right mood, right? You can’t just jump into it. We have this joke amongst the directors and myself and it’s, you know, have you ever been pitched assaulted?

John:

Yes!

Ben:

Sometimes you turn around and, you know, especially if you’re an investor. This is has happened to you a million times. You turn around and someone is in your face and all of a sudden there’s spewing out ideas at you and it’s like, say, you don’t even know where to begin, you don’t even know what to think, and where you’re standing. So, by setting the stage, you’re putting in the perspective and allowing them to anticipate what you’re going to go with next. That anticipation is what kind of leads to the next part of the acronym is managing the expectations.

You should literally be leading your audience from once slide to the next. They should be able to guess what your next slide should be.

John:

Oh, I like that, they should be able to guess. Any suggestions on how to make your slides have a logical transition. Is there any tips that you can share with us on how to do that?

Ben:

Well, there’s the, well, okay, the very simplest way to do it and this is like, you know, I guess, SMART 101 so to speak, but it’s simply ask the question at the end of your slides. So, you pose a problem. It’s like okay, how do we solve this? Well, obviously the next slide is going to be the solution, right?

John:

Yes.

Ben:

It’s such an easy, you know, an easy way to make that transition that I’m surprised more people don’t do it.

John:

You know, all the pitches that I see from the clients I work with, I would say more than half don’t have that in there and they don’t have the structure in there and that’s such an important part of making somebody A) understand what you are talking about and B) stay interested, because you have to keep people, as you said, anticipating and involved. You can’t just be speaking even in an elevator pitch or a presentation pitch in a way that is information. We want to get the concept of transformation across, right?

Ben:

Right, right.

John:

Great stuff. Alright, so now we go on to answer the question that you posed while you were managing the expectation, right?

Ben:

Yeah, exactly and like I said just said, if you literally asked the question, then you answer it, but let’s dig a little bit deeper into this, because so many times on slides, people will present, you know, erroneous information that they never really get around to addressing. I’m like, why did you put that information in there if you’re not going to talk about it in the next slide?

John:

Can you give us an example? Are you talking about evaluation, are you talking about traction?

Ben:

The place that I see this the most is in the addressable market slide, kind of a novice entrepreneur, a lot of times they’ll want to make their markets seem as big as possible and so for instance, I was working with a founder the other day and they were working on a, let’s call it Uber for your personal stylist.

John:

Great, okay.

Ben:

It’s a great idea if they can get it to work, obviously, but when they got to their addressable market slide, they put up two market statistics and one of them, which made sense, was the personal stylist market is a, I don’t know, 300 million dollar a year market. I’m like, okay, that’s a little small, and they were like, but the ecommerce fashion industry is a 117 billion dollar a year industry. I’m like, oh, okay, so you’re going to combine these two, right? The next slide, he just goes on to talk about his personal stylist, you know, application.

And then we got to the end of the slide and I’m like wait, you never talked about how you were going to incorporate ecommerce and not saying that he even should at this point, because, again, he’s just starting with an idea and I’m all about keeping it simple, but if you’re going to present that information, you should as hell answer it.

John:

Ben, you bring up such a good point that is such a valuable takeaway for all of our listeners today, which is the minute you don’t explain something clearly and you have a lingering question in the investor’s, or whoever you’re pitching, mind and you continue you talk, they really stop listening or they’re listening for the answer to the question they want and they’re not listening to what you’re talking about. So, it’s really imperative to bring them along and don’t, the confused mind always says no is what I tell my clients and..

Ben:

Yes.

John:

And we wonder why they get noes and it’s because you lost them on slide about the market size and the minute you lose them there, nothing else you say even goes in, because they’re still waiting that answer and until they’ve got that answer, they’ve lost all the traction with them. So, thank you for that detailed example, because it’s so helpful for people to understand the nuance of keeping people through this whole smart story telling process. So then we go to the repeat. Obviously, it’s like washing your hair, right?

Ben:

Exactly, rinse and repeat.

John:

So, keep that whole structure, question, answer; question, answer. Is that the jist of the repeat part of it?

Ben:

Yeah, pretty much. It’s, you know, when you’re going through it and you’re structuring everything and we do this a lot over and over again when we are reviewing people’s pitch decks. It’s like, you need to repeat this process to get to that end game. Like, you have the ability to lead the conversation. You know what the beginning point is and you know where you want to go, now you gotta take people there and if you’re not doing that, you’re failing.

John:

Yes. I talked to people about it being a flight plan and that you have to be a co-pilot with your audience and you’re responsible for putting the flight plan, like you said, and the take off kind of stuff is your last acronym there with the T, which I love that.

Ben:

Yeah, and then, you know, not only taking there, but also taking advantage of the situation and being able to takeaway what you want from the pitch. If you successfully told a story and you’ve answered all the question, now you’re in a power position to be able to ask for whatever it is that you want.

John:

Right and sometimes that’s the next meeting and sometimes that’s money, right?

Ben:

Exactly, exactly. You might as well to default to the next meeting, but yes, asking for money sometimes leads to the next meeting, because they are going to want to know more information.

John:

Right, let me ask you this, Ben, because a lot of clients I work with say, when I ask them how much money are you looking for investors to invest with you, they’ll say between a million and three million or 500,000 and 750,000. I’m like, we gotta get that to a one number, not a range like that, right?

Ben:

Exactly. Yeah, it just looks like you don’t have it well thought out and it sounds like you’re asking for an arbitrary amount of money, just because it’s, you know, what’s hip and what’s standard, but if you are actually intelligent about it and go do some rough calculations, you know exactly how much money it should take for you to live for the next 18 months.

John:

Talk to us about traveling Europe, because you must have gotten such an interesting perspective in addition to all your expertise in Silicon Valley. How does Europe and start ups differ versus what’s going on in Silicon Valley.

Ben:

You know, I learned a great lesson through my travels and what I’ve learned is that it’s best to assume there are no unique ideas.

John:

Love it.

Ben:

Only unique ways to approach those ides. So, there’s two things that there are no unique ideas, because whether you’re here or in Lisbon or you’re in Athens or Berlin, everyone is thinking about the same type of ideas. The thing about these different areas around the world is that the ecosystems are different, so there’s different challenges that are faced by the different founders and those challenges are what are going to lead it to be, you know, a unique offering, but you know, unfortunately in some regions, those challenges also slow the rate of progress and the ability to grow that idea.

John:

Got is, so no unique ideas, only unique way to execute them, which really goes to the whole concept of what you were telling us either about one your favorites of success stories is it’s about the person and not necessarily the idea. The ability to pivot is really key, but really it’s about does that person have, you know, the passion, intelligence, and grit to – is why you want to invest. So many people get so in love with their idea and they think that’s what they have to talk about and how something works as oppose to getting people to sell themselves first.

Ben:

The reason I focus so much on smart story telling and all this is because you want to enchant people and you want people not to think about the details that you aren’t talking about. You want them to see you for you. They want, you want them to think about you as the entrepreneur and not get lost in all the details that you’re not talking about or that you’re not stringing together beautifully.

The other assumption I always talk about and this gets back to kind of, answering the questions, it’s – I tell people to assume that everyone they’re talking to has ADD, because I kind of do. If you lose me on slide two, I don’t hear a damn thing you’re saying anywhere after that. So, I know most of these seeds and most successful entrepreneurs that you’re going to be talking do have, at least at some level, some ADD.

John:

It’s true! We all have, you know, everyone’s attention span, that’s why there’s seven second videos and all that.

Ben:

Exactly.

John:

I want to have you expand, because I really, really, we’re going to tweet this out about see you for you, that’s the way to get an investor, enchant the investor. It’s such a great word. I’ve never heard anybody used that before. I’ve talked about making yourself a resistible to investors, but I love the concept of enchanting them. So, that’s almost like putting them under a spell, because the story is so engrossing whether the story is about your own personal story of how you got this idea or how you see this change in the world, right?

Ben:

Yeah, I mean, enchanting. I mean, God, it could be used in so many ways. The way I like to think about enchanting is, you know, you can look at it under the microscopic level and as you tell your story, you’re trying to lead them on from one slide to the next, but you also have to think about it on the bigger picture. You know, think of your 30 second elevator pitch as the first slide to your next pitch, which might be a three minute pitch, that’s your next slide, and then your three minute pitch leads to a 15 minute interview. Who knows.

The whole time you’re always trying to lead to that next step and if you’re doing that and you’re doing it successfully, you’re enchanting your audience and that’s what makes it a successful product. So, this kind of flows over into the other thing, what are you pitching? If you’re thinking about the customer journey while you’re developing your product, you can lead that customer along, so they’re getting more and more engrossed in your product.

John:

Which leads to your other great blog post that you have up on LinkedIn is about knowing your customers. Such great details. So, you’re not only enchanting the investor with your pitch, you want to be able to show them examples of how the customer’s are enchanted with your product or service, right?

Ben:

Exactly, exactly.

John:

Can you give us a story of a pitch you heard where you hear somebody talking about their customer being enchanted with it and, you know, coming back and wanting to use over and over again and make it part of their daily life whether it’s the person you were just telling us the story of how she had a bad idea and it turned into a good one or anybody else that you can think of?

Ben:

So, I don’t know if I can point to any particular example, but I would say is the people that have the most enchanting products are the people that know their customer the best and to really understand that, you need to know what a customer is. A customer is not a school. A customer is not a small to medium size business. You know, a customer is not an inanimate object. A customer is a person and so if you know that person, if you know that person’s pains. You know what that person eats for breakfast on a normal morning. If you know what that person’s major struggles are throughout the day, you’re going to create a product that is more enchanting. So, it’s just thinking about that, being very customer centric.

John:

Do you recommend start ups mini focus groups or do you have any suggestions on how to get that kind of customer knowledge?

Ben:

Sure, sure. I mean, there’s tons of ways to do it. Yes, focus groups is one tool, but what most founders fail to do in the early stages is to get out of the office and actually go talk to people.

John:

There we go. Imagine!

Ben:

There’s really no secret to it. It’s just getting out of your comfort zone and going and talking to people.

John:

And asking them some question and having some questions prepared in advance so that you can have a consistency, almost like a science experiment, right? The people who like this, oh, what other things do they like, right? What kind of cars do they drive? Where do they shop online or do they go to brick and mortar and try to paint a picture and get a sense of what your avatar is, basically from your ideal customer so that you can describe that to your investor, right?

Ben:

Yeah and the other pitfall that founders always fall into is that they’re trying to sell their product when in actuality they should be trying to kill their product and should be learning how their customer thinks.

John:

Oh, that’s brilliant. Right there. You should be trying to kill your product, not force it down somebody’s throat. So, you need not only pivot with the idea with investors, but pivot with listen to what your customers are saying and if they don’t like something, change it, don’t be so in love with it, if I heard you correctly.

Ben:

Exactly, yeah. I mean, one of the biggest ways to get an investor excited is to show that you have this innate ability to target your assumptions and prove those assumptions wrong or right

John:

Love it.

Ben:

And if you’re doing that, you’re reducing risk and that’s what investors want to do. Investors want to reduce risk when they invest, right.

John:

Right, great, great. So, one of the key takeaways everybody that Ben just gave us is investors look to reduce their risk by finding someone who has an innate ability to target whether their assumptions they’ve made about the market or the customer is right or not. That is huge. I love that. So, that’s a great place for us to finish up. A great tip about showing that you can figure out whether your assumptions are right or wrong so that the investor’s risk is minimized. Do you have any other books that you could recommend to our listeners besides the one that you already referenced earlier? It could be around investing or it could be about anything.

Ben:

Oh man. Essentialism is a great book. I can’t remember the author off the top of my head.

John:

That’s okay, we’ll put it in the show notes. Yeah, Essentialism. What’s it about?

Ben:

One of my favorite quotes and this kind of leads to the book is, you know, Einstein’s famous quote, “If you can’t explain it simply, you don’t understand it well enough.” In this book really gets to that. You know, what can you pull away and make that product as simple as possible to make it wonderful to use.

John:

What’s the essence. Got it.

Ben:

Exactly.

John:

And then tell is, you know, if somebody wanted to be applying to the Founder Institute, how would they go about that and what any insider tips on, you know, what you guys look for before you accept someone into that?

Ben:

So, yeah, to apply for the Founder Institute and this is actually great timing. We’re launching our new semester in San Francisco in the beginning of June and to apply, all you have to do is go to FI.co, so FounderInstitute.com or Fi.co/Join and it’s a really simple application process. There’s a few question and then we have a psychometric and IQ test. It’s called our predictive analysis test and essentially, we use this to really focus on the entrepreneur themselves, because it’s so early stage and, again, we don’t really assume any ideas are brilliant or unique, so we really focus on the entrepreneur and their potential to become a strong startup founder.

John:

Which goes back to the passion, intelligence, and grit, I’m guessing, right?

Ben:

Exactly.

John:

Yes, got it. That’s so helpful and Ben, is there anything else that you want to have people follow you on Twitter, what’s the best way for people to, you know, what your posts on LinkedIn, etc, anything else for our listeners to stay in touch with you and keep aware of your insights?

Ben:

So, yeah. You can find me at blarson.com and I’m on Twitter @Blars0n

John:

That’s a little tricky. I love it. Okay. Ben, it’s been a pleasure having you on the show. You’ve given us such great takeaways. I can’t wait for the show notes to be able to give everybody all these insights, but my favorite one is figure out a way to be enchanting to both your investors and your customers.

Ben:

Thank you so much John. It’s really a pleasure and I just love what you’re doing with the podcast.

John:

I appreciate that, Ben. Thanks again.