How To Be More Charismatic! with Hilari Weinstein
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Hilari Weinstein, who is a charismatic expert. She said you need to approach being charismatic from the inside out, not the other way, and the ability to draw others in, which is really what charisma is totally based on how authentic you are. She gives examples of people who are authentic and who are not. Most importantly, she said confident people are really better listeners because they don’t need to prove anything to other people. She goes into a deep dive in all the kinds of confidence that don’t support you and the way to get true confidence. Finally, she said if you don’t trust yourself, it’s probably because you’re not taking care of yourself. Enjoy her secrets on charisma and confidence, so when you get up to pitch, you’ll be at your best. Enjoy the episode.
Listen To The Episode Here
How To Be More Charismatic! with Hilari Weinstein
Hello and welcome to The Successful Pitch. I’m very excited today because my guest is also a friend and full of information. Her name is Hilari Weinstein and she’s the president of High Impact Communication. She helps bring out authentic charisma in others, and who doesn’t need that? She helps communicators and presenters, which we all are when we pitch, become more compelling, confident, and authentically charismatic while helping the message become more effective and engaging. She does a lot of work in the design and construction industry, and she works with a lot of high profile individuals about being your high packed inside you.
Hilari, welcome to the show.
Thank you so much, John, I appreciate it. I’ve been following your show for so long and I’m so excited that our schedules finally worked out and we’re finally able to visit.
Yes, yes. Tell us, how did you decide to specialize in helping people find their charisma? I’m sure there’s a story there. How did become the charisma expert?
Well, I’ve been studying charisma for about 20 years. I started teaching a class that I called The Charisma Clinic about 14 years ago. Did a lot of research, a lot of reading, and working in the design and construction industry with a lot of engineers and architects and construction folks who aren’t known to be the most charismatic individuals on the planet, it provided a very fertile classroom in which to explore not just how to take somebody who was a natural extroverct and help them become more charismatic, but also look at some of those folks that are natural introverts and really break it down to okay, what is it truly that makes someone charismatic?
Initially, and in doing a lot of the research, I find that a lot of folks approach charisma from the outside in, where it’s, “Okay, how do I stand, how do I gesture, what do I do with my voice to come across as more charismatic?” The challenge I find is that when folks have a checklist in their mind about what it takes to do anything, they have a tendency to come across as somewhat robotic and inauthentic, which is really the antithesis of charisma. So what I started exploring was, okay, what could I do in terms of shifting their mindset, shifting how they’re feeling in a given moment to help someone display charisma without having to think of the mechanics of it.
[Tweet “Approach charisma from the inside not the outside.”]
As a result of that, I discovered a number of things. Number one is there is no single formula that works for every human being on the planet. What triggers someone’s authentic charisma is unique for each person. For example, I was working with a fellow who he had a very gruff appearance and intensity about him. When he walked into a meeting or a presentation, he had a tendency to push people away. I asked him, I said, “When you walk into these meetings, what are you thinking about?” He said, “Well, I have this song that I play at the gym, and it really pumps me up.” I told him, I said, “So don’t ever think about that song again when you go into a meeting because you’re scaring people. Your intensity is so big that it’s actually having the opposite effect of what you want.”
When I think of what is charisma, it’s the ability to draw others in. Authenticity is the source of that charisma, which stems from the inside as opposed to something on the outside. That’s really where the two meet and what’s unique about how I approach it.
[Tweet “Authenticity is the source of charisma.”]
So authenticity is the source of charisma, is that correct?
Correct. But there’s a lot of charisma out there that people teach and talk about that I would not identify as authentic because it comes … the source is outside of the individual as opposed to within the individual.
Yes, I get it. So it’s to the inside work out to be authentic and then therefore charismatic as opposed to, coming up with, as you said, the checklist of things to do. Shine my shoes, smile, pretend I’m happy if I’m not, all that good stuff.
Just to give people a frame of reference, let’s start in the business world. Are there any of the people you see — Mark Zuckerbergs of the world, Bill Gates, anybody, women, of course, that you think, “Oh, that’s a charismatic person because they’re authentic and they draw me in.”
Well, I find Arianna Huffington to be incredibly authentically charismatic. It really does come from within. I think in terms of people that would be highly visible, somebody else who’s also a woman is Oprah Winfrey. Yes, she understands the technical part of it, but when you look at her, there’s truth in what she’s saying, and it comes out in a beautifully authentic way. I don’t find personally Zuckerberg especially charismatic. I find Mark Cuban to be someone who is charismatic but not authentically so. I feel like he forces his charisma and forces his energy on others.
Somebody else that I think as very unique in terms of having authentic charisma is Steve Jobs because what’s interesting about him is he’s very … or, you know, when he was alive, he was very contemplative. Very aware of his own internal world. That’s probably one of the greatest sources of his creativity and innovation is his ability to go within and find some of those answers that he’s seeking.
Let’s talk about Arianna Huffington, for example. One of the things I think that makes her so authentic is her willingness to be vulnerable, and I see that across a lot of people, right? She will admit that she burned out and didn’t get enough sleep, so now that’s one of her messages to people. It’s a personal pain and it’s a personal experience of that.
Well, one of the things that’s you’re also quite astute in is the concept of confidence and I’m always talking about that to clients when they go in a pitch to get funded. You need to be confident but not arrogant. You’ve identified five different types of confidence. If you don’t mind, let’s go through some of those so that people can get a real sense of what the kind of confidence they need to have when they’re going in to pitch.
Absolutely. I actually think there’s a really strong link between authentic charisma and true confidence, as I like to call it. People that are authentically charismatic have that true confidence.
Nice. Let’s talk about the things that are not true confidence, is the contrast. The first one is inflated confidence. Tell us what that is.
Well, inflated confidence is when someone’s self-perception really exceeds their actual capabilities, and as a result, there’s a distortion happening and they have a tendency to really soak in praise like a sponge and have difficulty accepting constructive feedback.
It’s interesting, I’ve heard the difference sometimes between men and women with a job description, for example. There’ll be 10 things on there and the guy will say, “Hey, I can do one of those 10 things, I’m applying.” Then the woman will say, “Oh I can only do 9 out of the 10, I’m not applying.” Would the guy be an example of only has one of the 10 things, of inflated confidence?
Well in that scenario, there could be a number of other factors which would influence their willingness to just go for it anyways. It could be, you know, economics. They could be thinking to themselves, okay, you know what, I got to take care of my family so you know what, I believe that if they met me, that they would see that I could learn some of these other things. I think there’s a lot more going on that could contribute to the reason why men and women would respond differently in that scenario. Part of it may be confidence, but I think there may be some other things. Something else is some people really feel confident in certain contexts, where it could be, okay, people that they know or they’re great one-on-one, but you throw them into a large room with a number of strangers and their confidence completely erodes.
Yes, so that happens a lot when people are pitching investors because they don’t really know the investors and there’s a lot at stake. How do you help people that have trouble or freeze in front of a room of strangers?
Well, one of the first things that I tell them is the only difference between a stranger and someone you know is what you’re telling yourself in your mind. Because that’s the difference. Let’s say somebody’s significant other says, “Hey, we’re going to this party and there’s somebody there that you’re going to have to meet. He has a lot of the same interests as you, you both came from the same state, you both love the New England Patriots, you guys are going to have a blast talking.”
Now you don’t even know that person, but when you go and you meet that person, what’s the experience? Well, it’s almost like a warm introduction because you have this … you’ve told yourself something in your mind that says okay, I’m going to enjoy having a conversation with this person. By making the shift internally for you, it completely alters that experience.
Nice, that’s great. Well you can certainly do that by doing some due diligence on the investors in the room before you get there and know oh, we have something in common.
Absolutely.
How about the subject matter confidence, where they’re only confident when they talk about one thing? Let’s say … not to pick on doctors, but let’s just say a doctor can only, he’s a heart surgeon and that’s all he’s confident in. Ask him about anything else, and it goes away. What’s that a cause of, is it a lack of exposure to other things or is it …
It’s there’s a fundamental belief of not good enough when it comes to people that are subject … that lack subject matter … that are only subject matter confident. What I mean by that is … so let’s say you’ve got somebody that you’re working with on a pitch who’s incredibly technically savvy, is more of a scientist. But they’re also being asked for some questions related to maybe their business acumen, or how would they manage, or whether some of the things that they’re going to be doing outside of just the science of it to help make the business thrive and make it viable. There may be some people who because of their subject matter confidence feel less than when it comes to things that they may not feel as confident in. It doesn’t mean they’re incompetent. It means that their standard for excellence is so high in one area that if they don’t have that same excellence in another, it deflates their confidence.
It’s almost telling yourself you don’t have to be perfect in something to have an opinion about it, right? Some people say, “Well, if I’m not good at this, I’m never going to do it at all, because unless I’m the best, I don’t want to do it because my confidence, my self-esteem is so fragile that I can’t do something or try something new because unless I’m the best, I feel bad.”
Right. Then the other piece of it is accepting that certain things are a work in progress because things have to evolve. You didn’t become a subject matter expert overnight, and so learning these other things may take a little while. Sometimes it’s okay to say, “You know what, I need to do some more homework in this area.”
What about this concept of borrowed confidence, which I just love. I’ve never heard this before, where it’s someone has confidence but were borrowing it. Now, maybe when co-founders are pitching investors, one of the co-founders is sort of borrowing the other person’s confidence in the room, but it doesn’t last very long and of course, it fades. What can we do to avoid borrowing confidence that won’t last?
Well, and sometimes we actually need to borrow the confidence, and that’s okay. I mean, I don’t know about you, but I remember when I was a young girl and the first time I did a school play. My drama teacher would build and instill in me some confidence. I would go home and I would work on my lines and I would get frustrated, and then I would think about what she said to me, and I’d say, “You know what, maybe she sees something in me I can’t see in myself yet, but it’s there, I just can’t see it yet.”
Sometimes borrowing that is the first step in developing that real confidence because if we value someone’s opinion that much and we admire them, we trust them. When we lack self-esteem or lack confidence, somebody’s perception of our capabilities can actually assist us in eventually not relying on that confidence or the borrowed confidence to the same degree.
I like that a lot because let’s say you get funded and then you go, “Oh my gosh,” the imposter syndrome kicks in. “They made a mistake giving me that money.” Then you have to be, “Wait a minute, they’ve done their due diligence on me, they’ve made other smart investments. If they believe in me at the moment, they must have seen something in me that at this particular day I’m having a rough spot, I may not see. I have to trust their confidence in me to get my own back.” Is that a good example?
Right. Absolutely. Then the other piece of it too is sometimes we compare ourselves to other people, where you know what? It’s not about playing a mimic game. You bring something to the table but it’s completely unlike anybody else. Being able to look in the mirror and recognize the value that you have and the contribution that you can make to the world is one of the most important things in developing that real confidence. It’s saying, “You know what? Other people, they may have a different style than me and that’s great. They may have a different way of approaching things. That’s great, but you know what, the world also has room for me too.”
Nice. I think letting go of comparing yourself to others is a great tip because I know from myself when I just focus on my own progress, that’s when I win. There’s always going to be somebody younger, thinner, richer, more successful, and you drive yourself crazy feeling not good enough all the time if all you do is compare yourself.
There was a wonderful book that I read. I’m trying to remember … it’s called “May I Be Happy?” One of the things that the author writes is it’s not even just comparing ourselves to others. It’s comparing ourselves to ourselves when we were 15 years ago. How many people go and kill themselves in the gym and are continuously frustrated when they don’t look like they did 15 years ago? The body’s not supposed to do that. That recognition for me is to go, “Wow.”
Sometimes it’s not even the real me, it’s the perception that I have of what this ideal looks like. I said, “You know what, I’m not going to focus on the ideal. I want to really just like me now.”
Nice. Yes, it’s so true, and of course, then you could be the best me. Now the other one you talk about is this whole social media confidence. People talk about, “Oh, get so many followers and you have social proof,” and all that good stuff. Or you get so attached to whether somebody liked your picture or, “Nobody commented on it, I feel bad.” That’s a very controversial topic. I’d love to hear your thoughts on it.
You know, I know so many people that get upset if they don’t get a certain number of likes or comments for whatever they post. I had a conversation with a friend of mine, I say well, then tell me why are you posting? Are you posting to get the likes, or are you posting because you want to put something out there that’s meaningful to you? It seems like … it’s kind of like dating. When we go out there and we come across as desperate, people are less likely to respond in the way that we desire.
I think there has to be a balance. I think ultimately, it’s not about the likes. Ultimately, it has to be that you want to contribute to the world. Sure, maybe some posts or some pictures are going to get more likes than others, but it’s really, it’s about the big picture and it’s about contributing to the world in a positive way.
Well that leads right into what you say, is that truly confident people relate to themselves regardless of what’s happening outside of them, whether they get so many likes or not. In other words, you’re not needing that fix of, “Oh, you look cute today,” or “You look hot today,” or “I like that you …” to feel good about yourself. You already feel good about yourself, you’re not attached to what other people think. Right?
Right.
How would you say that truly confident people relate to others? What’s their secret there?
Well, truly confident people tend to be better listeners than those that are less confident.
[Tweet “Confident people are better listeners.”]
I love that, we’re going to tweet that out. Confident people are better listeners.
Yup, because they don’t need to be the center of attention. Truly confident people actually do a lot of self-reflection and they tend to process a lot of things internally. They actually have a relationship with themselves that is as solid as that they might have with their best friend.
And, you can be your own best friend.
Exactly, yes. BYO … actually, I was … one of the books that I’m writing right now. I’m working with the title, and I was going to call it BYOBFF. Be Your Own BFF.
Nice. You also talk about high-impact you. Can you tell us about that?
Yes. High impact you is really a combination of three different elements, the first of which is focused on vitality and well-being. Because when we don’t feel good, and when we don’t take care of ourselves, it’s very difficult to be the person in the world that we want to be. Our culture is so focused on doing, doing, doing that many people compromise that relationship with themselves and compromise self-care. I can’t tell you how many people I talk to that tell me that they’re constantly exhausted, constantly overworked, that they just feel like they’re this working machine. It’s impossible to be an innovator, it’s impossible to be creative, it’s impossible to have others experience you, the real you in this world when you don’t feel good.
So true.
Like you don’t feel like you have vitality. Once that is taken care of, it’s almost like kind of Maslow’s hierarchy. It’s like the basic needs have to be taken care of. Now, when those basic needs are taken care of, we have a greater capacity to develop true confidence. True confidence really comes from learning to take care of ourselves. It’s about learning to trust ourselves. Many people don’t trust themselves because they don’t take care of themselves.
[Tweet “If you don’t trust yourself, it is because you don’t take care of yourself.”]
That’s good. You don’t trust yourself because you don’t take care of yourself. That’s almost like integrity. How can you have integrity with other people if you don’t have integrity with yourself, right?
Right, if I make bad choices for me, why would I trust my own advice?
Wow. That’s deep.
The next piece after developing that true confidence is being able to actualize authentic charisma which is the effect that we have on others. It has to happen in these layers. What’s interesting is this was revealed to me backwards. That initially, I started doing the work on charisma, I discovered, wait a second, the way that people are teaching it is not the most effective way. It really has to come from the inside out.
Then, it was revealed to me the confidence piece and then the well-being piece, I was like, why did that happen backwards? I don’t know why it did, it just did, but I see how they all have to work together. Somebody cannot have authentic charisma if they don’t have inner vitality and if they don’t have true confidence.
Nice. Nice. Now Hilari, how can people work with you? Who is your ideal client that needs your help getting this charisma so that they can make an impact in the world?
Well, it’s really anybody who wants to have the effect that they have on others be in greater alignment with how they want to come across. Because oftentimes, people believe they come across one way, and how others receive them is very, very different. Making sure those are in alignment is really one of the things that I’m most passionate about.
I don’t start with how I want somebody to come across, one of the first questions I ask is, “How do you want others to experience you?” You tell me, and then based upon that, then we start working together because if what I see is not in alignment or what I experience through what I see, hear, and feel is not in alignment with your desires, we need to find a way to get them into alignment.
But also, my goal is to make people not reliant on me. It’s to help them start tuning into themselves and understanding the effect that certain things will have on others with whom they interact. I do that through one on one consulting, I do it through training, and I’m in the process of developing some online learning resources that will help people as well in all three of those areas.
Nice, because once you have charisma and confidence, you get more customers, you get more people to join your startup, and ultimately you convince investors to fund your vision.
And the relationships that you have, you feel better about because you know that they come from an authentic place.
Nice, fantastic.
So you have to work less hard at trying to convince people.
Nice. Well, I know you have a blog and a website, so tell us the best way to follow you and reach out to you.
Yes. My website is www.highimpactcommunication.com. You can also follow me on Twitter and you can also connect with me on LinkedIn and Facebook.
Fantastic. We’ll put all that in the show notes. Hilari, thank you so much for showing us all how to have a little more charisma in our life because we all want to be charming to people so that we can be charming to ourselves.
Yes. Thank you so much, John.
Links Mentioned
- High Impact Communications
- @HilariW
- Hilary Weinstein on LinkedIn
- Hilary Weinstein on Facebook
- “May I Be Happy: A Memoir of Love, Yoga, and Changing My Mind”
- John Livesay Funding Strategist
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Winning The Story Wars with Jonah Sachs
Posted by John Livesay in podcast | 0 comments
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Episode Summary
Today’s guest is Jonah Sachs, the author of Winning The Story Wars: Why Those Who Tell (And Live) The Best Stories Will Rule The Future. Jonah talks about the difference between inadequacy marketing and empowerment marketing and how to story to get people engage with your vision. He goes into great detail on whether or not we can use myths to our advantages or not; the myths that we’ve had around for years in our story telling. The more digital we become, he says, the more important storytelling becomes. He said, “If you want to get people to trust you, tell them a story of why you’re so passionate about what you’re doing.” Most importantly, he said if you want to be interesting, he has some real secrets on how to tell an interesting story that makes people want to learn.
Listen To The Episode Here
Winning The Story Wars with Jonah Sachs
Today’s guest is none other than Jonah Sachs, who is the cofounder and Chief Storytelling Officer of Free Range Studios in the San Francisco Bay Area. Jonah is internationally recognized as a storyteller, an author, a marketer, a designer, an entrepreneur himself. He’s got a column coming out in Fast Company. He’s written a wonderful book called Winning the Story Wars and has a new one coming out later this year that he’s going to give us a sneak peak on. He literally has helped hundreds of brands and social causes break through with this empowerment marketing approach that fuses storytelling techniques with digital media. That is really the secret to what he’s doing.
For the past sixteen years, Free Range Studios has brought key social issues to the attention of millions with really funny viral videos like The Meatrix and The Story of Stuff. He’s worked with big brands like Microsoft and Green Peace and American Civil Liberties Union. His book, Winning the Story Wars, has won all kinds of awards. He literally talks about drawing case studies from his own body of work. Jonah, welcome to the show.
Thanks for having me, John. I’m glad to be here.
When I first heard about you and first started reading the book, you instantly pulled me in with your story of how you got to play a version of Darth Vader. Would you mind sharing that story? It just made me instantly like you, remember you, and make me want to read the whole book.
Winning the Story Wars: Why Those Who Tell (and Live) the Best Stories Will Rule the Future
I was seven years old. I had just met a new friend at school who had a video camera at the time back in the early 1980s. I’ve never seen a video camera before. He told me that if I wanted to, I could be in his shot-for-shot remake of Return of the Jedi. Nothing could have been more thrilling than doing that. We joined on. We looked at masks. We scouted locations. We dreamed up of how we’re going to shoot every scene. Then, lo and behold, one day, I was cast as Darth Vader, which is, of course, the dream part. Then, when we got to shooting, he pulled me aside and said that while I was doing a great job on the set, he was going to have to dub my voice because I was too squeaky to be Darth Vader, a very crushing piece of information.
At that time, I thought about ending my relationship with this new friend. But strangely enough, we wound up forming a business together fifteen years later. That became Free Range Studios. We’ve been working together on and off ever since. That was a first experience actually with the power of storytelling, because what kid didn’t want to live in Star Wars? I would later come to find out that Star Wars is based on these ancient myth templates that still move people today, in terms of stories that make us care.
The fact that this was going on when you were a young lad, and now you’re certainly not old but a lot of time has passed and it’s still more relevant than ever. That really shows the timelessness of it, doesn’t it?
Yeah. Nobody could have obviously predicted from the 1980s to today what would have happened to our media landscape. It is so different. In some ways, because people have this ability to communicate with each other directly, with brands directly, and decide what media they take in and what they share and what they comment on, in some ways we’re returning to a much more oral tradition-type society; the way we used to communicate. We’re back to everyone owns ideas. Everyone passes them along. They change along the way. That’s how human beings have always communicated. When you go back to our roots of communication, you actually move back towards storytelling and away from some of those broadcast mentality that grew up over the last hundred years, which is really a perversion of the way that people love to communicate. The more digital we become, I believe the more stories become important.
[Tweet “Story Wars: The more digital we become, the more important it is to tell stories.”]
It’s great because you intuitively might think the opposite, but to really be connected to people digitally, the storytelling doesn’t. In fact, in your book, The Story Wars , you talk about Winning the Story Wars, that all wars are story wars, which is such a clever play on words with Star Wars, Story Wars. What is going on in Story Wars? You talk about people have this belief that they want to be part of something, that we’re all in a quest. Is that really the essence of a story war?
The idea is that while we may fight over policies or land or ideology, really what draws people together to give us a sense of us are the stories that we share and the stories that we tell. The stories are these amazing tools for transmitting values, for teaching our children, what do people like us do, what do people like us think? Anthropologists across time have been able to say that the key stories are really what define of tribes or a group sense of us. Without an “us,” there can be no “us versus them.” Then we come up against other groups who have other sets of values, and other stories that they live by. When those stories come into conflict, that’s when we can both feel righteous. We can both feel like we’re on God’s side and yet get into conflict with each other.
Story Wars: Marketers should realize that there’s a battle out there for ideas.
I mean that literally. People have gone to war over these core stories of what our great nation means, who our enemies are. I mean it a little but more figuratively. We fight it out at the ballot box. We fight it out in our brand choices based on, what kind of person am I? What stories do I want to live by? How then can I take actions that make me feel like I’m living that story every day? I think that without a story, it’s pretty hard to get people to go to war. I’m certainly not advocating that we start more wars with stories, but I am advocating that marketers realize that there’s a battle out there for ideas. If you want to win that battle, you have to understand the story that you’re telling.
That battle continues, if you want to get hired, if you want to get your customers to pick you versus all the other choices, or if you want to get investors to pick you to fund your startup. This concept of storytelling and pitching is intricately tied together. We’ve established the need for being a good storyteller a little bit. Can you break down? You talk about peeling away the layers of things to avoid, you call them “story-killing sins,” that you need to really be tangible, relatable, immersive, memorable, and most importantly to me, emotional. Anything you can talk about as it relates to those things, I think would really help people start to understand how they can craft their own story when they pitch.
I think that we have gotten it into our heads, because we have all grown up in this broadcast tradition, or most of us have grown up at least in this broadcast tradition mentality, that if you had the money to be a professional communicator, if you have the money to get on the radio or get on the TV, then you had some authority over the audience. You’re above them. You could spout a bunch of facts at them. You could tell them what to think. You could make claims about what was so great about your product. They figured, “If that guy’s on the radio, he must have some credibility.” That type of communication gets us to talk about the facts and the features and big proclamations. Nobody really gets drawn in to believe that.
Storytellers have always known that if you just get up and yell the moral of the story at people, that’s not going to make it stick. You actually have to put it into a scenario. Show what it’s really like on the human scale. It’s harder work for sure, but really bring it down to that human scale. What emotion is involved here? If you want to rely on your own sense of puffed up authority or just using a little bit of humor to get a cheap laugh, that’s a real 30-second spot broadcast mentality.
If you want to hook people in and make them feel like, “I know this person. I trust this person. This person is someone that I want to do business with.” Telling your personal story, telling the story of how your product came to be, telling stories of how your users will actually come to ultimately engage with the product is all incredibly powerful. For my new book, I’ve been studying. Actually investor intuition is one of the topics I’ve been studying. There are some amazing studies that are pretty new now that are coming out about how much investors make decisions based not on financial data, market data, industry trends, but just on this one question of, “Do I trust the entrepreneur? Is the entrepreneur someone I want to do business with?”
[Tweet “Story Wars: If you want people to trust you, tell your personal story.”]
There’s a lot of data that shows that. That trumps even when the market data goes the other direction. How do you make someone think that you’re someone you want to do business with? Of course, you dress nice, you smile, all that kind of stuff. You show them your resume. Tell them a story that they can relate to, that they can put themselves into. That’s going to create a huge bond. I think that information really backs up this idea if you want someone to invest in your business. You certainly need to tell a story.
What’s the title of your new book?
Story Wars: How do we actually change the way that we behave to adapt to a changing world?
It’s called Unsafe Thinking. It’s about how in changing environments, old ways of operating no longer work. How do we actually change the way that we think, change the way that we behave to adapt to a changing world? So, no particular methodology. I invested in this storytelling methodology quite a bit. I traveled around the world talking about storytelling. One of the things I learned is that becoming an expert in something is awesome. It’s fun. It gives you something to talk about. You meet a lot of people. But it actually slows your learning down. It gives you this idea that if you got a giant hammer, suddenly everything looks like a nail. Storytelling is a great tool, but in some ways, I actually got stupider by becoming an expert about storytelling.
At some point, I had to realize I’m less curious. I’m less interested. I’m growing less because I’m only thinking about one thing. That led me to this idea of, “How do we simultaneously invest in our brands and who we are in the world and our footprint and our expertise, and still remain beginners and learners?” That’s caused me to investigate all kinds of stuff, like the fallacy of expertise, the failures of experts, like intuition and counter intuition, like ideas about values, who are we willing to communicate and collaborate with? Who do we call outsiders and how does better products come from working with people that we find somewhat repugnant? All those things. How do we get out of safety and into that unsafe zone so that we can really succeed?
Expanding our comfort zone is what keeps us growing, yet maintaining our expertise. It sounds like what you’re really saying you can do both simultaneously, not one or the other.
That’s definitely a part of it. There’s this myth that the beginner comes in and changes the field. That actually is a myth. You need to build up. You need hard work. You need deliberate practice. You need to get those 10,000 hours in what you’re doing to really change a field that you’re in. At the same time, there’s this huge trap that you face. That the better you become at something, the less able you are to adapt when the landscape changes. Of course, the landscape is changing. If you’re just playing chess, where the rules never change, you just keep practicing. But life is not like chess. Certainly, the technology market is not like chess. That’s what I’m working on now.
This intuition of investors, making a decision with their gut emotionally and then backing it up with the left brain logic, I love. One of the key ways to get anybody, whether it’s an investor or potential customer, to trust you is to be able to tell a story of why you’re doing something or why you’re so passionate about something. That is where the emotional component comes in that most people don’t know how to do. Is there any tip you have on how to generate a story? You have this really great chapter in your current book, where you’re talking about, “For God’s sake, be interesting.” What are some key tips we can do to at least be interesting when we tell a story?
Story Wars: Put characters in situations on the surface that played that story out in real life.
Let me answer a couple of ways. First of all, a story is really constructed by taking some truth. Something that you know is going to teach your audience something; that your audience is going to say, “That’s what I believe too. But I never thought to say it that way.” It’s some kind of core truth or moral of the story, but illustrate it not just by saying it, but by having characters on the stage that are playing out a drama. At the end, you’ll realize, “That character succeeded because cheaters never win. That character failed because greed always leads to failure. We believe in the power of hard work. That’s what this story is about.” Know what your story is about. Put characters in situations on the surface that played that story out in real life.
If somebody is saying, “That story really comports with my values and my world view,” you’re going to make that hard connection. You’re going to make that emotional connection. How do you make that story interesting? The problem with so much professional branded corporate storytelling is that we don’t want to take chances. We want to go from “the world is bad” to “I use this product and the world is good.” That’s so boring. If you went to a Hollywood movie that was just climbed up on a gentle curve to betterness all the way, you think it’s a horrible movie.
If you want a story to be interesting, how do you set it up so it’s not obvious? You expose mistakes you’ve made along the way. You show some amount of fallibility. You don’t make it so that the solution is obvious. You need some level of surprise, some level of twists and turns, the non-obvious to make it stay interesting. That’s one thing I always coach people on: No one’s going to listen to your story if they know where it’s going from the beginning. Sometimes, that means starting your story in the middle. Don’t just start at point A and go point Z. You’ll start at point M and then flash back, talk about the real trials that you’ve been through, get a little bit vulnerable. Those are some tools along the way. I think definitely, keeping people guessing is what keeps them tuned in.
[Tweet “Story Wars: No one will listen to your story if they think they know where it is going.”]
No one’s going to pay attention to your story if they think they already know the ending. The element of surprise is what keeps a story interesting. Let’s give some examples. You have so many great ones in your book of different campaigns that people have probably heard about. You’re talking about Listerine, the moral of that story is bad breath makes you undesirable, but there’s a core need that’s being celebrated there by being desirable and having good breath.
I use that Listerine story because it’s one of the first examples of where marketers learned to stop just talking about their products and start telling compelling stories around them. In the 1920s, the story behind it is there was this pharmacy antiseptic that was Listerine. They didn’t know what to do with it. They called Madison Avenue and said, “What could we do with this product? We want to sell a lot of it.” They said, “This is good for halitosis.” They’re like, “What’s halitosis?” No one even knew what that meant. They’re like, “Halitosis is bad breath.” They’re like, “Is that even a problem?” “Yeah, we can make it a problem.”
They ran these ads. They’re called the Sad Edna ads where you have this spinster. She’s old and unmarried. At the time, that’s 27 years old or something like that. She’s never going to be married, why? Because she has a problem that she could never know she has. No one’s going to tell her she has. It’s bad breath. Always a bridesmaid, never a bride. There she is looking lonely and sad. This was an enormously successful advertising campaign. Women all over the country reading Ladies’ Home Journal started wondering if maybe they had bad breath. Suddenly, a multi-billion dollar beauty industry was launched on this campaign. I point out in the book that an approach like that is very traditional though. It’s a story. There’s a hero. There’s a damsel in distress. The hero is, of course, the product. The damsel in distress is the consumer. That works when you are flipping through by yourself at home, a magazine, and feeling who do you talk to about how you feel about this?
Imagine sharing on Facebook, a message to all of your friends, “I think you guys all have bad breath.” No one would go for that. This idea of, “You suck, you consumers suck. This product can make you acceptable,” was what I call inadequacy marketing. It’s just the basic underlying premise of most marketing for most of the broadcast era. What I call empowerment marketing is really flipping that script. Instead of saying, “You suck, this brand can make you better,” you say, “You, customer, can do great things. You have a great potential. It may be hard. You might have to fight to get there. It might not be convenient and easy, but you have a great destiny. We can help you get there.”
Story Wars: Don’t make people feel bad. Make them feel good.
That is the change. Don’t make people feel bad. Make them feel good. Don’t tell them how much they lack. Tell them how to reach for those higher values, not just fitting in or making money, or gaining convenience, but having a meaningful life, transcending values on Maslow’s Hierarchy of Needs. That’s the kind of work that I did to tie in patterns of ancient myth that really do that with the new marketing landscape. Perhaps a little bit theoretical, if you’re just sitting down to write your next tweet. I find it very inspiring to think about the difference.
We can absolutely take away how to use that right off of that, because if you’re pitching an investor, let’s say, to fund your startup and you’re painting a picture with your story of what your vision is, that not only is that investor going to make money, but there ideally might be some social impact, making the world safer or better or somehow, that there’s a reason as opposed to just focusing at all the problems you’re solving. Once we get this, for example, if we can prevent drunk driving or if we can keep the schools safe or whatever the problem is that you’re solving with your startup, then the investor’s saying, “I’m making money but I’m also making the world better.” That’s a much more emotional connection that we talked about earlier that good stories have.
You can do that for sure; make the investor feel that they’re a potential hero. You can show how your product makes your everyday users heroes. That means not that just they’re able to get their laundry detergent 25% cheaper but that they’re actually able to better care for their kids and live their higher values. I often liken it to this: imagine you’re at a party and you’re standing next to somebody who basically the subtext of everything they’re saying is how great they are. How long would you stay in that conversation? Imagine you’re standing next to someone, and after five minutes of talking to them, you start to feel really good about yourself. How do you feel about that person? Very different.
You talk about this concept of the myth gap, do we have not anymore myths? I really want to do a little dive into that because there are four elements to a good myth. You talk about there’s an explanation, there’s a meaning, and a story, and most importantly, the ritual of how do we take that into our life. Can you tell us about the myth gap and is there a gap in today’s society? Do you feel that there is still a way to use digital connections with keeping the myth alive?
The basic idea of a myth is not to think of it in terms of fact versus myth. It’s not a lie or a misconception as we often think of it. The first idea is that myths are meaningful stories that all societies have always lived by. Without myths, we don’t really know what we value and who we are. That’s what anthropologists, including Joseph Campbell and many others have said, if you look at a society, you want to understand it, you look at its myths.
Now, these myths combine four things, as you said: explanation, this is how the world works. God created the world in six days and rested on the seventh. That’s how the world came to be. Meaning; it doesn’t just tell you something, but it makes you understand your place in the cosmos, your place in the tribe, your place in society. God made the world, so it’s his world. I should obey him. Story; it doesn’t take place yesterday or in your neighbor’s backyard. It takes place in some mythological other symbolic, creative realm, where anything’s possible. Ritual; The Garden of Eden story, of course, takes place in this forgotten time that you can never go back to, in this lost Garden of Eden. This ritual; how do I live this story out in my life? These stories are not useful if we can’t enact them ourselves. That’s what a myth is.
Story Wars: In our hyper-rational, scientific, technological society, we don’t share those myths like we used to.
In our hyper-rational, scientific, technological society, we don’t share those myths anymore like we used to. We don’t all believe the same thing. We don’t all share these same meaning stories. Carl Jung in the 1920s and 30s started to really worry that we would be the first society without myths and that world war and violence, and all these things that were happening around him were the result of man losing that meaning based on myth. There’s been a clear belief that we are this first society not to have shared myths. I wrestled with that in writing the book. What does that mean? I came to believe actually that we do have myths. But hose myths are now being created by marketers.
Example that I use is the Marlboro man. The Marlboro man came along in the 1950s. Classic storytelling marketing campaign. Philip Morris wanted to introduce a filtered cigarette for men. That’s an entirely new product. Filtered cigarettes used to be only for women. What do they do? They talk about that it’s more healthy. Did they talk about it tastes better? Did they talk about, it’s cheaper? No. They picked a symbol of basically a broken myth. They picked a symbol of this cowboy. At the time, Americans were really wrestling with American identity. Are the cowboys the good guys? Maybe America isn’t good. We’re in the middle of all these conflicts. The way that we’ve treated Native Americans, how do we see ourselves? This is broken myth of the American West. Marlboro comes along and shows us this cowboy smoking a Marlboro cigarette, reinvigorates that exciting myth of the American Frontier.
What does he do? Give us an explanation. There’s a new way to smoke filter cigarettes for men. Meaning; you don’t have to be a cowboy to take on this identity. When someone pulls out a pack of Marlboro Reds, we know what that means about them. That they’re rugged and rebels and all that stuff. Story; nobody walked by those billboards and said, “That guy is not real. He’s just an actor.” We know he’s not real. It’s okay. We still buy it. Rituals are some way to live this story out. Of course, we just go to the store and we buy a different kind of cigarette. These kinds of stories really fill that myth gap in a lot of ways for people. It really said maybe we don’t have legends anymore like we used to, but we can express our identities and ourselves through the products that we buy.
I made the video series, The Story of Stuff, which really talks about how problematic that is to just spend money and consume things as a way of deciding who we are. It is an enormously powerful tool if you can create new myths to get people to do anything from take more pro-social actions to buying your product and using it in a way that makes their lives better, to identifying with an online community. If you could help create new myths, and right now, a lot of our myths are broken. We saw in the last election how the death of the myth of the American dream really opened up a lot of space for new stories to come through. Donald Trump spectacularly capitalized on people’s feeling that that myth is falling apart and offered to bring a new story in its place. You see how powerful it remains to this day.
That, again, may seem overwhelming. But if you break it down into four pieces, am I offering people a real explanation of how life can be better lived or how the world works? Am I giving them an identity, a community to be part of by engaging with this story? Am I using story? Am I not just talking about the rational here and now, but setting it in a fantastic, exciting world, where more is possible? Ritual; is it clear for them how they can get involved and do something that makes it part of their lives? Any marketing effort or pitch can be better if you think along those lines.
You have, at the very end of your book, a whole graphic, you give people a story strategy map. Can you walk us through that very quickly so that people can start to figure out? Obviously they need to buy your book, but if they can start to say, “I understand I need to tell a story when I pitch. It’s going to build up trust and credibility with the people I’m pitching. I know that my story has to have some myth and emotional involvement in it. Now, the basics of storytelling, you’ve given me, but how do I start?” Your three things at the top there would be really helpful from who’s the brand hero etc.
Story Wars: The core insight is your brand is a story.
I build the five-part model essentially that helps people start to figure this out and how do they build their brand as a story. The core insight is your brand is a story. It’s not being told at a single YouTube video. It’s a story; every chapter is being written every day by your audience, by you, by what you say, what you do. You don’t get to control that story but you get to create the coherence for it, the ideas for it, and then let it play out in the world. What I ask people to do is think, at the heart of all stories are core values, what are the values that your company stands for and lives out and that you want to communicate and share with your audience that will matter to them? Don’t just pick the most basic values like the need for convenience or safety or security, but values that can help people live their best lives.
What’s that moral of the story? If your brand is a story, what’s the moral? What’s that core truth that you’re standing for in everything you say and do? Figure that out and you’ve got some real good consistency in your messaging. The other three pieces are, one, don’t think of yourself as the hero in this grand story that you’re telling. Really think about how are we making heroes out of our customers? Two, if we’re not the hero, who are we? When you think of yourself as the mentor, we haven’t really spoken too much about the hero’s journey today, but I use that model. You’re not Luke Skywalker, you’re Obi-Wan Kenobi, inviting someone on an adventure. Obi-Wan Kenobi doesn’t just tell people what to do. He speaks. He creates connection. If we’re a mentor, what’s our human voice? We use brand archetyping, like many people do, to figure out. If we were a person, what kind of person would we be? Whose voice do we speak in?
Finally, the thing that the mentor always gives the hero to bring him on this adventure is some magical gift. What is that gift that you’re giving to your audience, that innovation, that differentiation, that new thing, that makes this interesting, exciting journey actually seem possible? You think of those five things. What are your values? What’s your moral of the story? What’s your brand gift? Who are your heroes and who are you as a mentor? You could maybe not read the book and just go right at it. The book obviously gives lots of tips and tricks for not only how to build that strategy for what your brand is but also then to tell stories to implement it.
You’ve certainly given us a magical gift on how to become great storytellers and the importance of it. I can’t thank you enough. You’re going to be writing a column for Fast Company soon. People can also follow you on Twitter. Would you mind giving us your Twitter handle?
Obviously, if people want to engage you professionally, let’s let them know about your agency and who your ideal clients are that you like to work with at Free Range Studios.
You can find us at FreeRange.com. Anyone who’s got a world-changing vision and wants to do purpose-driven communications or innovation, we’d love to connect. Let us know if you want to help figure out your new story or how to live that story in the real world.
Thank you so much, Jonah.
Thanks, John.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Jonah Sachs
- Winning the Story Wars
- FreeRange.com
- @JonahSachs
- Fast Company
- The Story of Stuff
- Unsafe Thinking
- The Meatrix
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Find Who Else Cares About Your Startup with Laura Wagner
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Laura Wagner, who is the CEO and founder of Digitzs, which is changing the way we are going to pay for things. She assembled an amazing team of people from Apple and PayPal and even Kevin Harrington who was one of the original Shark Tank judges. She said, “Everybody wants to be needed and wanted. If you trust and like and admire these people to get them on your team first, then you show investors who else cares about your idea.” She was able to raise millions of dollars on equity crowdfunding platform, Crowdfunder, by having this amazing team of people who believed in her vision to raise money to get it built and now they’re on their second round of funding and have their first revenue coming in.
Listen To The Episode Here
Find Who Else Cares About Your Startup with Laura Wagner
Today’s guest is Laura Wagner, the founder and CEO of Digitzs, which is all about changing the way we pay for things. Laura has an incredible background in this expertise, she’s assembled a team of people from Visa, PayPal and Apple. Laura, welcome to the show.
Thank you, John. Happy to be here.
One of the things that make you so interesting is that you’ve won so many awards in equity crowdfunding. You have the first female founder to reach number one on the CNBC Crowdfunding 50 Index, and number one for the largest capital raised by a female founded company. Clearly, you know what you’re doing. How did you become such an expert in this?
It’s super new, crowdfunding. It’s odd to be called an expert in something that I’ve got about a year and a half in. That’s the opportunity for other people too. I challenge you to beat us on the number one spot. We started in 2015 around April. I’m so non-technical. I’m a non-technical founder. The story will make you chuckle a little bit. I remember the day we launched with Crowdfunder. We put out a press release and had the video ready. About three or four hours went by and I was totally bumped because there was no activity. I was on my Crowdfunder page. I’m like, “Nothing’s happening.” I called my Crowdfunder person, Katie, who I adore and she’s like, “Laura, hit the other tab. You guys have already raised $500,000 of interest in the first two hours.” I screamed. I was like, “Wow.” I was on the wrong damn tab. It’s funny that you call me an expert. It’s been a long road from there.
We’re always talking about how do you figure out a problem to solve that is big enough to start your own business. Can you share a story of how you had a frustration at McDonald’s in the paying business without having cash?
Who Else Cares: We just interviewed a people who owned McDonald’s to figure out their paying points and packaged it up in a very simple product.
That’s how I actually got in the payment space. I fell into it. I’m from Texas. My first day in LA, I tried to go to McDonald’s while I was moving and they only took cash. They wouldn’t take my Visa Check Card. I had to leave hungry, which totally got my attention. My next stop was ARCO ampm gas station. They had this weird thing I’ve never seen before where you pay with your debit card. You put in your pin number and they added a $0.50 fee. I’ve never seen that before. I called the phone number on the top of the pump and probably it’s just beginner’s luck. I asked the guy who answered the phone at ARCO, “Why don’t you guys do this at McDonald’s?” He said, “You’ll never get McDonald’s.” I’m like, “What if I did? Is there money in it?” He’s like, “There’s tons of money, but you’ll never get McDonald’s.”
I went down there to meet him the next day. I started learning a little bit about what was involved with payments. The money caught my interest, of course. It took about a year to get the exclusive marketing rights from ARCO to bring this into McDonald’s. We went after McDonald’s and we won out over 200 companies. We pitched free equipment, free everything. We pay you $0.50. We charge the customer an extra $0.50. We give you a dime of that. Everybody else, all other $1.99 were pitching equipment cost X, transactions cost Y. We just interviewed a bunch of people who owned McDonald’s to figure out their paying points and packaged it up in a very simple product or service and had tons of success.
We hear how important it is to be persistent. You have a very clever way of doing it, about leaving creative and fun voicemails, for example, as a way to stay in front of someone. Can you share that?
[Tweet “Who Else Cares: Leave creative and fun messages when you follow up.”]
That was how we got into McDonald’s. Once I had the marketing rights from ARCO, I started going after McDonald’s. It was important for that particular business at that time to walk that up first. I had to do that first. Once we had that in the bag, I started calling the West Coast division of McDonald’s. There was a wonderful woman, Rose Nash, who was Head of Technology. Rose was inundated with everybody and their dog trying to sell them credit card processing. I called her 29 times and I would leave crazy voicemails. One time I put my radio to the phone and it’s, “One way or another, I’m going to find you, I’m going to get you, get you, get you, get you.” By the time she answered the phone one day, she knew exactly who I was. I said, “A-ha.” She just started laughing. I said, “Don’t move.”
Actually, I went down there to Irvine, to her office, and we stayed in her office until 10:00 that night. I remember distinctly because they were vacuuming the floor, and we did not speak about business until the last fifteen minutes. We talked about relationships, losing weight, everything.
Swim with the Sharks Without Being Eaten Alive
If people haven’t ever read or listened to Harvey Mackay, Swim With The Sharks Without Being Eaten Alive, I was raised on that book. It talks about getting to know 69 things of the person that you’re pitching; the name of their wife or husband, the names of their kids, are their kids into soccer. It may sound manipulative, but it actually gets you on the opposite end of transaction. So many people these days are so transactional. Rose and I, we’re two human beings and we’re just talking about life. We felt good and secure with each other. That was enough for her to let me in at the ninth hour to pitch McDonald’s, when most people had been in line for a year.
If you want to have a successful pitch, get that relationship connection first because people buy ultimately from people they trust, like and know. If you don’t start the trust factor and the likability factor first, you’re never going to win. Now, speaking of winning, when you’ve launched Digitzs, you had to get amazing people on your team before you could even go on an equity crowdfunding platform like Crowdfunder. You have this great phrase about proving who else cares enough to be on your team. Can you share with us how you started your team at Digitzs?
David Jaques was the first CFO of PayPal. He’s the Chairman of our Board. Linda Perry, she ran Visa seventeen years. Edward Katzin sold his company to American Express and filed numerous patents for Visa. I always tell startup founders, you just have to absolutely get people who are way more important than you are and way more accomplished than you are. Surround yourself with those people. Because, at the first glance, if you have a household name, for instance, Kevin Harrington with Shark Tank was one of our investors. The way you go after those people is the same way, relationships.
I just let those people know how much I wanted and needed them to be part of my company. I think everybody likes to feel needed and wanted. That’s a basic human need. Everybody actually likes to be part of something new that they can be in the wanting with. It’s not that difficult. You just have to seek the right people out with the right expertise. Of course, you have to like them and you have to trust them. You have to admire them. If you have that formula, don’t be shy because you would be surprised. Don’t ask, don’t get.
[Tweet “Find out who else cares about your startup.”]
When you were putting this team together for Digitzs, did you look for people who didn’t have the same expertise that you did? I hear that’s a really important thing, that you can’t have three people that all know marketing.
One thing that’s really, really key is that I’m not a technical founder. The key when you’re not technical is to have a technical cofounder. Stacy Moore is my technical cofounder. She has built our platform from the ground up. I’ve known her 25 years. She’s also from Texas. She happens to live here in LA. She’s definitely a unicorn. She’s a strategist. She’s been a partner in every business I’ve had. She also is hands-on. Finding a technical cofounder is imperative to a non-technical founder.
Also, what’s really important here is investors, whether they’re in equity crowdfunding or Angel or VCs, they love it when the team has worked together before because it shows that you guys get along and that you have experience in the shorthand of communicating.
I have no idea why David Jaques still talks to me. He was involved in Pay Wherever which was a prior company that didn’t work out. He was involved and invested in, by the way. I actually think that’s quite key. Most of the folks on the team are people that I’ve had a relationship with and respect highly.
Would your advice be for someone before they go onto an equity crowdfunding platform, to have your team assembled first before you start asking people to invest in the money? As you said, they need to know who else cares.
Who Else Cares: It’s got to have some cache, because you’ve got to stand out.
Absolutely. It really needs to be somebody with some impact. Like with Kevin Harrington with Shark Tank or David Jaques, the first CFO of PayPal, or Linda Perry, who ran Visa for seventeen years. It’s got to have some cache, because you’ve got to stand out. If you threw a bunch of names out that nobody’s ever heard of and they haven’t done anything significant in their life, that is the instant decision somebody’s going to make about your company, which is unfortunate. Most of the time, people are judged that way.
Can you go back to the first $2 million you raised? Was that your seed round obviously, and you had your pre-revenue?
Pre-product. We were just literally an idea.
You have an idea, but you’ve got this amazing team with amazing backgrounds of big brands. If you raise the $2 million, the product will get built. Then will you get revenue from that seed round or is that just getting the product built?
Just getting the product built and getting a pipeline in place.
Obviously, you achieved those results to be able to have the second round, correct?
We achieved it enough to, yes, be able to move into the second round. We just literally processed our first dollar last week. We started this raise in May. It’s going on nine months ago, this $3 million, series A. The whole time we were doing that, we were pre-revenue but post-product.
Do you have a waiting list of people who want to be in? Because I’m very curious, you have certain reservations? Can you explain to us the reservations versus the round? That would really be interesting for the people.
That’s always really confusing to people. On the CNBC Crowdfinance Index, all they can pool in is reservations which are “interest.” If you stumbled upon our profile and you thought it looked interesting, in order to reach out to us, you’re required to either select a dollar amount that you might be interested in investing or not do that at all and just ask for docs. We have a back-end portal with Crowdfunder that we get a text if somebody makes a “reservation.” It goes into our CRM, which we love. It’s called Close.io which is the best CRM ever on the face of the earth.
Why is that?
It’s so simple. It’s ridiculously simple. Every CRM I’ve ever used in my life is just like, you want to buy a Maserati and they lift up the lid and say, “Look at this carburetor in here.” Who truly gives a shit? Nobody. The other thing that Close does is it integrates your email and it just becomes your inbox. It becomes a second inbox which, I don’t know about you, but everything I do is email-related. I can see who I own email to that stands out outside of my entire Outlook inbox. It just makes things super efficient. I highly recommend that.
Anyway, we then connect with the investor and set up a time for me to chat with them one-on-one, which I do. I’d say one out of four times, somebody’s not accredited, which right now, they have to be an accredited investor, which for those who don’t know, you have to have an income of over $200,000 a year or a net worth of a million dollars excluding your home. We do get a lot of outside of the US investors, which they don’t have to be accredited. I would say that a third of the folks who’ve invested are non-US citizens, which is awesome.
Is that because you’re in series A? Did the people have to be accredited investors to invest in your seed round?
Who Else Cares: The difference is when you start to publicly offer something, we have to get third party accreditation.
Yes, they did, because both are public, so they are 506(c) not B. We did a note round of 100k initially. Then we did a note round of 275k before we got onto Crowdfunder. Those were private 506(b). You still had to be accredited, but you can do a self-assessment. The difference is when you start to publicly offer something, we have to get third party accreditation. A CPA or an attorney has to vet that investor or sign a form, or the investor has to send us their tax returns. We have an obligation if we publicly solicit to make sure that we don’t harm them.
That’s not the case for everybody on other equity crowdfunding platforms or even within Crowdfunder. That’s the whole reason for the new law, is that people don’t have to be accredited investors to invest in some of these companies.
It’s still a pretty small percentage where you don’t have to be accredited. It’s getting better, but in order to do a Reg A raise, there’s Title III. I’m not an expert at this, by the way. There’s Title III and you can only raise up to a million dollars. There’s Reg A and you can go up to $50 million. It’s expensive to prep for either one of those raises. What I find when I’m talking to investors is they’ve assumed all crowdfunding is for everybody because of the JOBS Act. One out of four end up not being accredited, but they thought they could invest when we got on the phone. Two out of four hear the pitch and it’s just not right for them. One out of four ends up putting their money out.
The biggest challenge, if you’re not using equity crowdfunding is getting in the right room. You typically have to talk to a lot more people than one out of four to get a yes.
It’s a heck of a lot nicer experience to have somebody come to you than you going out to somebody. They’re actually interested. They are interested to the degree that they set up a call and hear a pitch. I’ve had a blast. It’s the only way for pre-product, pre-revenue companies to get any money these days candidly, outside of family and friends.
Thank you for explaining all this. $11 million out of $3 million that you’re raising. That’s just letting people know that there’s that much interest, but it hasn’t completed yet. You still have some money available to finish that round.
Whatever people show on these websites as the dollar amount, it’s pretty normal that about 20% or 25% of that gets in the bank.
Let’s hear about what it sounds like when somebody says, “I’m accredited. I’m interested. This is a fit for me. I’d like to hear a pitch.” How do you pitch them? With slides? How long is the pitch?
Never ever with slides. We send them an email with a deck and an FAQ and a very long email with as much as detail as we can. When I get on the phone with them, I’m just talking just like I’m talking to you.
I hear that time and again, Laura. Be a human, have a conversation, as opposed to memorizing a script that you can’t go off of. If somebody asks a question, you get lost because you aren’t able to have a conversation. The pitch deck, if you use them, is supposed to just be a frame of reference.
I had screwed up so many times on having a deck in front of me. Back in the day, I always joke that decks are so 2015, because it’s just a barrier between you and the other person.
You still need one. Obviously, you’re going to send them the deck. Sometimes, they probably have questions from looking at the deck, “I see on your competitions slide XYZ, or how did you come up with this valuation?”
A deck needs to be no more than ten slides and very large font, lots of pictures. These days, we are almost never asked for any other due diligence documentation, which is pretty outstanding when you think about it. It’s just the deck, it’s an FAQ, and me.
Have your financial projections changed dramatically from your seed round to the series A?
Who Else Cares: I think just being completely candid with investors is perfectly okay.
The seed round, we really were pretty clueless about what those projections really could be. But we were always very candid about that. I think just being completely candid with investors is perfectly okay. It’s okay to say you don’t know but you think. It’s like, we think there’s gold under the hills, but we don’t know until we get the money to buy the shovels and get our feet dirty. That was our pitch in the seed round. In this round, our projections, of course, projections always change. In tech, everything takes much longer than you think it will. But we also tell them that. I tell every single person, whether they’re accredited or not, that this is a huge risk and it’s a little step above going to Vegas.
Are you trying to get people to use Digitzs instead of PayPal? Is it like Uber versus Lyft? Can you give us a sense of what the pitch is?
We do not sell to individual merchants. If you drew three circles, left or right, on a piece of paper, on the left is where cards are swiped; liquor store, grocery store. On the far right is the experience you might have checking out of an Amazon shopping cart online. In the middle is everything else. In the middle is about five years old. In the middle are three buckets, since I’m from Texas. The first one is mobile apps like Uber. The second one is market places like Etsy. Third one are what we call platforms.
If you drew ten more circles at the very bottom, those would be the ten largest payment processors in the US. This whole page is about $5 trillion a year. In the US, $5 trillion a year is processed at just three card types: Visa, Mastercard and AmEx. It’s growing at 15% per year. It’s a massive, massive market. The middle is a trillion, the right side is a trillion, and the far left where cards are swiped is $3 trillion. We are sitting squarely in a middle market that’s less than five years old, that very few companies can compete in, just due to all kinds of legacy.
Our competitors are companies like Stripe, Vantiv and WePay. They’ve aligned with one of those ten. We’ve used up half of the ten that could even play in this market on the back-end. That’s one of the reasons why it’s so difficult. That’s my pitch. That’s literally the first minute or two of my pitch, to set the stage.
You painted a picture, which is what I tell people all the time.
I’m very visual.
Having people draw those three circles and they can instantly understand, “I know where I am.”
You’re also getting them kinetically. There’s an old saying, “Tell me and I hear you. Show me and I see you. Involve me and I understand you.” Involving them is drawing the circles. Get a piece of paper out, draw the circles. It’s a small thing but it works.
[Tweet “Who Else Cares: Involve them in your pitch so they understand at a deeper level.”]
Do you get questions or is one of your questions, what’s the exit strategy? Or is that too soon?
Always. They don’t invest unless they feel like there is a viable exit. Our exit strategy is actually to sell back to our processor or one of those ten processors at some point. 47% of the M&A transactions last year in the US were niche FinTech companies being swallowed up. Because companies like Digitzs have created new technology, are serving brand-new niches that are hard to serve based on legacy technology underneath them, it’s almost like we’re the electric cars and everybody else is the old gas model cars. But the gas model car factories have a lot of money and they’re going to want to buy the electric car companies.
Can you talk about your marketing strategy, the business model? People sometimes, “If we only get 1%, we’re going to be rich.” Clearly, that’s not what investors want to hear. They want to hear a bottom up strategy. What is your model? You have your first dollar. Are you targeting certain industries? Are you going after the middle circle Uber?
Platforms are what we target. Are you based in LA?
Yes.
Who Else Cares: We make the platform look like a payment processor. We eliminate the noise of the customer having to go get a merchant account.
If you get a parking ticket today in the City of LA, you’re going to go to CityOfLA.com. You’re going to hit a button that says “Pay Your Ticket Now.” It’s going to take you to another page inside the website. The company that hosts that page is what we call a third party platform. It’s no longer the City of LA. It’s a third-party that the City of LA has contracted with to take a payment on their behalf. It’s those platform that Accenture says are a top five trend for 2016. What happens is the platform guy goes to the City of LA guy, and he says, “Hey, City of LA guy, don’t build an elaborate website where you could take parking ticket payments. We’ve got all that software in the Cloud and we can make it look just like your website by tomorrow morning. By the way, we also charge the person using it $2, so it’s free to the City of LA.” The City of LA guy says, “That’s too good to be true. Where do I sign?” The platform guy says, “I just need you, City of LA, to go get a Visa, Mastercard and Amex account so we can connect all the dots for you, so when somebody pays the parking ticket, they see your name in their bank statement.” Unfortunately, half the time, the platform guy loses that sale.
With our API, when it gets to the point in that sale and the guy says it sounds too good to be true, he says, “Just come to our site, the platform site, enter a few piece of information and you’re ready to go in a second.” We make the platform look like a payment processor, so we eliminate the noise of the customer or the merchant having to go get a merchant account, which it’s never one place you have to go. It’s three places you have to go. Three different contracts they have to sign, a week or two of work. It’s a pretty big problem.
You’re solving a big time problem which also causes sales to be lost. By saving not only time, you’re increasing revenue for the platform, is that right?
We increase revenue a couple of ways. That $2 fee for instance. When the City of LA guys, before Digitzs, they would go and get a merchant account and come back to the platform. The platform would connect all the dots. Somebody pays their ticket for $100 and agrees to a $2 fee. $102 goes on that cardholder’s card and all $102 goes to the City of LA. The platform has to send the City of LA an invoice every month that says, “You did a thousand transactions. You owe us $2,000.” With our API, that $2 gets split off and paid directly to the platform next day. The $100 goes to the City of LA. We’ve eliminated their invoicing, which saves them money, clearly. The other thing is we also pay them a commission on the $2.93 that we charge the City of LA to process cards.
As part of your use of funds that you’re raising, is it all going to tech or are you going to be hiring a sales force?
No sales force. We have a brilliant cofounder on board, Ben Way. Ben has helped to launch 200 different companies. He’s advised the White House when he was a kid from the UK. He’s brilliant. Ben is an artificial intelligence internet marketing expert. We have an in-house expert that generates tremendous leads directly for me to have conversations with CEOs of these platforms.
That’s fantastic because a lot of people need sales people, and you’re doing a B2B play so you don’t.
Who Else Cares: Today, not at all worth it to hire a salesperson. It’s much more important to have leads coming into you.
Ultimately, we may have one person super seasoned out having very high level conversations. At this stage, we’re just still in the middle of product market fit. Hiring a sales person, what a waste of money. I’ve managed and hired sales people my whole life. I can tell you, usually in today’s day and age, not at all worth it. It’s much more important to have leads coming into you. Just like we have Kraft and their leads coming into us for investors. If you don’t have somebody replying to an email, showing there’s a need for what you’ve got, it’s a long road.
What’s your biggest surprise so far? I know we all have obstacles in our startups. What would you say is one of your biggest surprises that you didn’t anticipate that you could share with us that people could be like, “Maybe I should think about that?”
We pitched 50 CEOs of these platforms. They all said, “Sounds fantastic.” 27 of them said, “We’re going to do this. It’s amazing. How did you put this together?” When push came to shove, we found out 26 of them were not PCI-compliant, which is a security level that you need when you’re processing Visa, Mastercard and Amex on behalf of other merchants. We had to quickly regroup and build some tools to help non-compliant platforms use Digitzs. That was not something we expected. It was a big kick in the stomach, if you will. You just get over it and do what you got to do.
Let’s talk a little bit about you’re on the Board of a non-profit, A Sense of Home. How did you pick that charity? How does that relate to what you’re doing, if at all, with Digitzs?
It picked me. About a year ago, I was trying to get rid of a couch in my office, and just literally could not find a place for it. Stacey, my technical cofounder, said, “Why don’t you give it to A Sense of Home?” I had no idea who it was. I called them. They picked up my couch. The next day, I get an email with a family and about twenty people sitting around my couch in a house with a celebration. I was so impressed, I just called them back and I said, “What do you do?” They said, “We make first homes for aged out foster kids in Los Angeles.”
Who Else Cares: Our goal, by the time we leave, is to give them a sense of home.
I didn’t know anything about the foster care system at that time, but families get paid to take in foster kids. When they turn eighteen, they usually kick them to a curb because they’re no longer compensated for keeping them in their house. A good majority of these kids end up on the street or about a third of them end up getting what they call Section 8 Housing. A lot of them live on a mattress in an apartment for a year, until A Sense of Home comes along. What we do every Sunday here in LA is we literally, we did one yesterday, we go in with a truck and usually twenty volunteers and put in all donated furniture; everything from flowers to pictures on the wall, to everything in the bathroom and kitchen. Our goal, by the time we leave, is to give them a sense of home.
A lot of people will say, “How do you find the time to do that and launch this huge startup?” Most people will go, “I can either do one or the other. Or I will do that after my company’s sold.” You’re doing it concurrently, so it’s obviously inspirational. I think that’s the big question people have is, how do you find the time?
It doesn’t take a lot of time. It’s actually what I do for fun. You have to have some break from your work. These days, we’re all so cooped up in our homes or our offices with our computers. We don’t connect with people face-to-face. For me, it’s become a really nice way to hug a bunch of people all at one time on the weekend. It takes a couple of hours. I don’t do it every weekend. They asked me to join the Board, which I was so honored, because, Georgie, who founded A Sense of Home, just was honored to be a top ten CNN Hero just a few months ago. It’s a massive honor. They had a big gala that CNN does and she was on there. Richard Gere actually introduced her. Now, they’re getting tremendous traction. The idea is to duplicate it in multiple markets. It’s really been super amazing to watch.
How can someone follow Digitzs and you on social media? What’s the best way for them to keep track of what you’re doing?
It’s @LauraDigitzs on Twitter. We have a Facebook page. It’s Digitzs.com.
Do you have any books or book that you would like to recommend to a founder or someone who’s thinking about getting into equity crowdfunding?
Certainly, your book. I am going to write a book on our experience in equity crowdfunding just to help founders, because there’s a real formula to success. It’s not a complex formula. I think it’s one that people need to be aware of before they go down this road. It’s not for the faint-hearted.
Laura, thank you so much for sharing your expertise and time. We look forward to watching Digitzs change the way we pay for things.
You rock, John. Thanks a bunch.
Thank you.
Have a good one.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Digitzs
- Crowdfunder
- Swim With The Sharks Without Being Eaten Alive
- Close.io
- A Sense of Home
- @LauraDigitzs
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