Pitching Yourself And Your Product – Interview with the Beekman Boys
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Episode Summary
Josh Kilmer-Purcell and Brent Ridge are famously known as the Beekman Boys and the winners of The Amazing Race. When both Josh and Brent were laid off from their jobs and were facing a million dollar mortgage, they focused their full attention on turning their farm into a profitable business. They first started selling goat milk and goat milk soap products, but now they currently work with over 50 artisans and have their products featured in Target, Disney Resort, Anthropologie, and more. The guys talk to John on how they got started, important life lessons learned from their goats, utilizing their social media following to promote products, and so much more on today’s episode.
Pitching Yourself And Your Product – Interview with the Beekman Boys
Hi and welcome to The Successful Pitch podcast. Today’s guest are the fabulous Beekman Boys. You might know them as the winners of The Amazing Race. Josh Kilmer-Purcell, who was a former advertising executive, and Brent Ridge, who was Martha Stewart’s health and wellness expert, got laid off from their jobs and turned that around. They bought a goat farm in upstate New York and started selling soap from the goats. They have an incredible story of taking an idea and growing it and making it hugely successful.
There are over 50 different artisan products that they now sell on their website. Their products are carried in major department stores like Anthropologie and Target. They have great insights on how to get people to work together well, how to get people to say yes to what you’re offering, and how to work with your neighbors in a way that allows you to win every time. I think you are really going to enjoy this authentic, fun interview. Guys, welcome to the show.
Thanks so much for having us.
The fabulous Beekman Boys, Josh Kilmer-Purcell and Brent Ridge, were winners of The Amazing Race.
One of the things that really impressed me is that the strategies that you have for living your life is the strategy that allowed you to win the Amazing Race as well as the strategy that how you run your business. I’d love to have you guys just talk about those three things right off the get go.
I appreciate you calling it a strategy, because they weren’t very strategic, they just happened. In fact, they became a strategy. As you alluded to, when we lost our jobs and we had to find a way to save our farm, we learned a lot of things in that process and we learned that life actually can be pretty simple and that there are three rules that can get you through just about anything. Those three rules are: Work hard, never quit, and help your neighbor.
They seem really basic and they are really basic, but we guarantee you, if you apply them to any challenge in your life, you’ll come out better than where you started. I think the story we told about the Amazing Race was the most surprising application of those rules. Because when you’re competing for a million dollars, racing for a million dollars, the last thing you’d think you will do is help your neighbor. You’re competing against them.
But we had learned those strategies and they’d worked for us in life. So even on the race, we helped our competitors finish puzzles, we waited for them to finish their challenges, we helped them find clues. At the end of the day, I don’t know why that kept us in the game, but it kept us in the game until the very end and then we won. So it works.
[Tweet “3 rules that can get you through anything: Work hard, never quit, help your neighbor.”]
That really is, as Josh said, it wasn’t something that we sat down beforehand and wrote down on paper and a business plan, here’s our strategy for growth as a company. Just to give your listeners who may not be familiar with our story a little bit of context, we’re two city guys. We had these great careers in the city.
As you said, I was working at Martha Stewart and Josh was an advertising executive. We bought this, at the time, it was an empty farm in this tiny little village, Sharon Springs, New York, about three and a half hours outside of New York, thinking it was just going to be our weekend getaway. We were going to do a little gardening and grow some food.
Shortly after we brought the property, a farmer who was losing the place where he had his goats wrote a note and put it in our mailbox and said, “I’m losing the place where I have my goats. Can I bring the herd to your farm to graze?” At that time, we just thought it’d be great to have a petting zoo. We said, “Sure, bring them.” The property had a caretaker’s house on it, so he moved in there. It was that openness and that willingness to bring him on that really ultimately was our saving grace.
That was in 2007. In 2008, we both lost our jobs during the recession and literally had a million dollar mortgage on the farm and no income coming in. For people who were working in media in New York City at that time, you could not see when the jobs were coming back.
Ever having a job again.
We became very close to losing the farm until we literally pulled ourselves up by our bootstraps and said, “What are we going to do here to make this happen?” Sat out and said, “What do we have?” We have some marketing background, we’re relatively intelligent people, and we have goats. What can we do with that? We started making products using goat milk.
Started with goat milk soap and goat milk cheese and then started working with our neighbors who are also great artisans and craftspeople. Blacksmiths, weavers, potters. They were wonderful crafts people, but they didn’t know how to sell their wares to a wider audience.
We folded them under the Beekman 1802 umbrella and now we work with over 52 different artisans and selling to natural chains like Williams-Sonoma, Anthropologie, Bloomingdale’s, Target. It’s been an adventure. Three things: work hard, never quit, help your neighbor.
The Beekman Boys started with goat milk soap and goat milk cheese and then started working with our neighbors who are also great artisans and craftspeople.
That’s so valuable for our listeners, mostly people who have a dream of starting up their own business or are in the process of it. We’ve all heard, work hard and don’t give up, especially as a startup, that’s so easy to do. You have to keep going back to the why did I start this in the first place. But really what resonates with me and makes it so unique is, you guys don’t just walk, you walk your talk, you just don’t come up with the talk.
Time and time again, this helping your neighbor from literally letting the neighbor’s goats graze on your farm for free, which then allowed you to start selling goat soap and milk, then helping people on The Amazing Race. Now you’re doing something that’s even more revolutionary. I want to sort of jump ahead.
We’ll come back to other topics, but can you tell us what you’re doing with … You were able to pay off your million dollar mortgage from winning The Amazing Race. I teased the audience a little bit. What are you doing now with something called Mortgage Lifter to, again, help your neighbors?
Before we ran The Amazing Race, our big challenge, as you said, was paying off this mortgage. We, tongue and cheek, decided we were going to sell a pasta sauce made out of an old heirloom tomato. The name of that tomato was called the Mortgage Lifter tomato. It was named that in the Great Depression by a farmer who sold so many that he paid off his mortgage. We said, we’re going to plant these tomatoes, these heirloom tomatoes, and we’re going to make a pasta sauce and that will help us pay off our mortgage.
Pitching yourself and your product: The Mortgage Lifter tomato was named in the Great Depression by a farmer who sold so many that he paid off his mortgage.
That was in April 2012. In May, we ran The Amazing Race and we won. We had enough money to pay off our mortgage. When we returned, we had all these tomatoes out in the field and we said, you know what, we’re going to continue with our plan, call it the Mortgage Lifter, but we’re going to pay it forward. We’re going to pay our winnings forward and the profits, 25% of the profits from this product, we give back to other small farms.
The first year, we were able to give away $15,000. We recently gave away another $18,000. We really believe that we had that good fortune of getting cast on The Amazing Race and winning, and not all small farmers are going to be able to do that. We decided to pay it forward. It has now become sort of a virtuous circle, because people love that message so much that they start buying so much of the product, we weren’t able to supply the tomatoes anymore.
Now we’re able to contract with other small farms to supply the ingredients. It’s a virtuous circle. Not only are small farm ingredients going into the product, but then the profits are going back to other small farms to help them scale up.
It’s such a great story of living your brand. You have this great expression that you’re not just storytellers, which you are compelling storytellers and that’s the key obviously to pitching anything, either pitching yourself to get on the Amazing Race, pitching your products to be sold in all these stores, but you don’t just tell a story, you live the story. This is a classic example.
When you said that, “We’re not just storytellers, we’re story livers,” that resonated with me so much. I want to encourage all the listeners to think about, if you’re telling your story to a potential investor, someone who is going to carry your product, someone to join your team, are you in fact living the story that you’re telling like the Beekman men are doing? It’s just so great.
[Tweet “Story Living vs Story Telling is key to success.”]
Yeah and I think that the consumer these days is so well versed in branding and …
Marketing.
Marketing. It’s really hard to just be a storyteller anymore, because people can see through that. They can see through a made up story or something fabricated just for the purpose of selling a product. I think a story of living is going to be much more important going forward for people who are looking for more authentic products.
Not only that, but when business people have some success based on their story, it’s often very easy to lose track of how you started. You don’t want to be the Mrs. Fields sitting at the head of a corporate table. You have to remember where you started. To that end, Brent and I, we always take every Sunday to be on the farm and working on the farm and doing all of the chores. We still do all the chores we ever did.
On Sundays, we’re not flying around the world, we’re not being business people. We’re actually living the story that we started out with. Because I think if you just stop doing that, you lose sight of what made you successful in the first place.
We always take every Sunday to be on the farm and working on the farm and doing all of the chores.
It’s such a great example. We hear major corporations saying how important it is for the top executives to get their hands dirty, if you will. If you’re running a hotel chain, work behind the front desk and take reservations, really get in touch. You literally are getting your hands dirty. I love that you call them chores, doing the chores around the farm to keep the farm going so that you live the brand so well.
One of the things that really impressed me on your website are all the reasons you give consumers to buy from a wide variety of your products. The fact that you have 50 artisans, so it’s everyone in the neighbor that you’re living in is benefiting from your marketing savvy, obviously, and you’re selling something unique.
That is so important when you’re pitching yourself or anything to anybody, is what makes this so unique? In a world where no matter where you go, you go to a certain place, it’s like that same product is available. Would you tell our listeners the story of how you turned a challenge with the cost of the soap into a positive? It’s such a great story and an example of unique products.
When we first started making goat milk soap, we’re struggling, we’re a new business. Then we got a call from Anthropologie and they said, “We want to buy 43,000 bars of your soap.” We thought it was the best thing to ever happen to us. We thought we were going to be rich that day. Then they said, “We only want to pay 23 cents a bar.” At the time, our cost was north of a dollar a bar.
You find a liability or an expense and you figure out how to turn that into an asset.
We went to the soap maker, Deb who lives down the street from us, and we said, “How can we reduce the cost?” She said, “I just don’t know if I can do it.” We said, “What are the fix costs in this?” She said, “It’s not the ingredients. But when you make real home made, natural goat milk soap, as it cures, there’s a fine layer of ash that forms on the surface.” She said, “That’s what costs so much money. I have to go through and shave each of that layer of ash off by hand,” so there’s a labor cost, the expense.
We thought about it and we couldn’t figure out a way to get the price down. Then we realized, we said, “Deb, is it only natural soap that has that layer of ash on it?” And she said, “Yes. If you make it with chemicals, it’s super clean. You don’t have to worry about it.” Now, even today, when you buy our soap, there’s a little card inside that says, “You know this is all natural, 100% real goat milk soap because there’s a fine layer of ash on the top of it.” We turned that negative into a selling point.
I think that’s how any business is successful, is that you find a liability or an expense and you figure out how to turn that into an asset. Just like when we were first starting out and literally, we thought the only thing that we had was a million dollar mortgage. We sat down and said, “No, here are the assets that we have.” That’s what a lot of people don’t do when they get mired down in the liabilities, in the expenses, is think, is take a step back and say, “Yes, I might have those liabilities and expenses, but let me do an inventory of my assets and how can I use those to solve a problem in a creative way.”
[Tweet “How can I use my assets to solve a problem in a creative way?”]
We’re going to tweet that out. How can I use my assets to solve a problem in a creative way? It’s so useful in this example of, “We have goats, we’re going to make goat soap. Oh, but wait, there’s a problem.” That’s the number one issue that investors ask startups when they’re asking for investment, is what’s the cost of acquiring a new customer, what’s the cost of your product versus what you’re selling it for?
You had what seemed to be an insurmountable distance between your cost to make the soap and what the store was willing to pay for it, and yet you figured out a way to get the cost down and turn that, the reason why we’re so expensive into a positive that then it makes it unique and makes people connect to your brand.
[Tweet “Look at your assets to pivot.”]
The story just goes on and on and there’s so many lessons there. It’s absolutely fantastic. The other thing that you have on your site that is … When I talk to investors and I say, “What’s your criteria for funding a startup?” They’ll say, “We invest in the jockey, not the horse.” It’s all about the team. You guys certainty, as a team together, have been through all kinds of challenges of your relationship and being laid off and working together and pulling together.
What you created and that you are so open with on your website, Beekman1802, is what kind of culture are we having and how do we pay our people? It reminds me a lot of Howard Schultz giving benefits to his part time employees way before benefits were a common thing. Can you share with us your philosophy of compensation and your team and what you look for in your team?
Our company is headquartered in a very small village in rural upstate New York. One of the most conservative and impoverished counties in all of New York state. Attracting job candidates is pretty difficult. Not only do we seek to offer people something that’s relatively competitive from a salary and benefits package, but offer people a chance to be a part of something with a bigger mission.
I think that’s what’s resonating with so many of the young people who are joining team Beekman. We’re still a relatively small company. I think eleven full time employees. I think everyone who works here sees a much bigger picture and being a part of that.
There’s not a lot of opportunities in rural areas to grow, so we have a growing business and it’s a place that you can actually grow your career. A lot of very talented and intelligent people don’t want to rush head long into the cities anymore. How can we create a company that could offer you a career, but still be in a rural area?
We opened up our flagship store here in Sharon Springs, New York. There was a lot of deliberation about whether we should invest in creating a flagship retail location in this little village.
Population 547.
We opened up our flagship store here in Sharon Springs, New York.
When we sat down and, again, it was being the jockey and trying to think about where this is going to go. We looked at companies like L.L. Bean in Maine or Orvus or Vermont Country Store, which are similarly located in very rural environments but have become destinations. Now, what we’ve seen, by putting so much effort into the flagship store and investments into the flagship store …
Because our model for the flagship retail store was the old grand department stores in New York City where they paid attention to every single fixture and every single detail. It’s not about how much product can we cram on the shelf and discount it and what not.
We really did want to create this old school retail experience. Now we do have people who come from all over the world just to see this retail store in this little tiny town, Sharon Springs, New York. It really worked for us to do that. Likewise, it gives a reason for the brain drain in this area to stop. For decades, there were no opportunities for kids. When we graduate our 25 kids from the high school each year, there was no opportunity for them. By doing, by creating this brand, we create reasons for people to stay around.
It goes back to, once again, you’re helping your neighbors, which is just amazing. You have so many products that are so unique and specific to your brand. I want to talk about your cook book and being invited to ring the bell at NASDAQ. What a huge honor. Can you take us back that day? What did it feel like? Tell us some of the reasons. This is your chance to brag a little bit, or I’m happy to do it for you, on how you think they selected you. People write books all the time and launch a book, but very few authors get invited to ring the NASDAQ bell.
Again, I think that NASDAQ is an exchange for discoveries and innovation. They were looking for new business, I think they were looking for small businesses who represented something different and a new way of thinking. Obviously for them, they’re trying to highlight businesses that they think at one point will be listed on the NASDAQ exchange.
They really approached us because they were interested in our story and the type of business that we’re growing and the type of fundamentals we were sitting so that we could be the representation of what they stand for. For us, it was just a huge marketing opportunity because you’re not only ringing the bell and getting the experience of doing that. But for five minutes, they’re putting your brand on the billboard at Time Square and for all the world to see.
It’s just a really once in a life time opportunity for us and we were so happy to be selected. Again, I think it goes back to beginning authentic and not only telling the story, but living the story.
Great. Let’s talk a little bit, just because I want the listeners to really remember this tomato sauce for the Mortgage Lifter. How can people support that? It’s only sold at Target and you have something really clever about pictures that I think would be fun to hear.
It’s not only sold at Target. You can buy it on our website. You can also find it at Disney Resorts, actually.
Congrats.
They choose a handful of small American companies to feature in the resorts and Beekman and Mortgage Lifter was one of them.
One of our challenges, of course, now we were on the shelves of a major national retailer and we’re sitting next to Prego and Ragu and they have giant marketing budgets and couponing and you’re in every newspaper every week. We didn’t know how we could counter that.
And cheaper product.
And cheaper product. We decided we needed to get the story out. We turned to social media, we have a wonderful social media following. We call all of our followers Beekman neighbors. We called upon all of our Beekman neighbors to help us get the word out in lieu of a big ad campaign. We said, “It’s you guys, you have to get the word out.” We invented something called the Shelfie instead of a selfie. The week it launched, we said go to Target … We knew they all wanted to buy the sauce. They’ve been part of the project. They were as excited as we were. It was in Target.
[Tweet “Shelfie vs Selfie.”]
We said, “Go to Target, clear out the shelf, take a picture of you with this empty shelf holding a jar of sauce and call it a Shelfie, and post it on your Facebook page.” We had tens of thousands of people posting a Shelfie of them and the sauce, and then all of their friends were saying, “What is that? I’ve never heard of that. Why are you doing this?” We really, again, we turned to our Beekman neighbors to help us.
Leveraging your social media following to become brand ambassadors so that word spreads virally and people are feeling good about paying more for a product that’s worth more because it’s from farmers. It’s actually why we pay more for organic food, even though it’s in a can. Not only are you doing something good for yourself by buying products that are healthier, but you’re making a difference in the world and then having fun with social media all at the same time.
It’s just such a great example of creativity, overcoming how do you compete with the big guys, which leads me to, I want to have you just chat with our listeners about some of the things you’ve learned from having goats. I remember you talk about don’t fight with a big goat or something along those lines.
You have to know who the goat is with the big horns. Anybody who’s watched goats at play or in a pasture will know that they’re always butting heads.
The goat with the bigger horn always wins. It just does.
The lesson that we learned about that is that regardless of what business you’re going into or what community you’re working in, you always need to identify who the goat is with the biggest horns.
Don’t go up against that person, don’t go fight against your competition that’s bigger than you are. Either work with them or go your own way.
[Tweet “Identify which goat has the biggest horns. Don’t go up against that person.”]
If going your own way, understand that knowing the goat who has the biggest horns, you’re going to ave to strategize around how to get around those bigger horns. Whether you’re going to use them to your benefit or you’re going to to run the other way, you still have to identify who that goat is with the biggest horns.
One of the examples that we use for that is Martha Stewart. Brent worked for Martha Stewart for many years and then in the recession, when Martha had to close his division, of course Martha laid off Brent as part of the downsizing. When we launched our company, a lot of reporters wanted to use that fact in our favor and say, “You guys are the new Martha Stewarts. How do you feel, you were laid off from Martha Stewart, now you’re building this big brand? Isn’t this sort of pay back or are you the anti-Marthas?”
In reality, Martha has been a fantastic supported and a wonderful partner. She has bigger horns than we do, so we knew it was futile to try and take that position of being the anti-Martha or we’re going to be bigger than Martha or better than Martha. Instead say, “No, she’s the master, she’s the Goddess and she’s always been supportive of us and continues to be supportive of us.”
Yes, she even came to your wedding, for God sakes. That really shows how wonderful it can be when you align with other people doing similar things, not direct competitors or even direct competitors. Just when you have that mindset, it’s so useful. Is there anything else that you’ve learned from your goats that you can share as a metaphor for our listeners in the startup world?
We should maybe give one more. What’s our other favorite one?
What about the first goat down?
I love that.
Goats, there’s no place more comfortable than someone else’s tummy. That’s what we learned from them. What you see with our goats, when they all come in at the end of the day, they come in and they stand around, stand around. Because they live in a barn and the barn floor is hard and it’s not the most pleasant.
One of them lays down, and then that first goat lays down, the next goat lays down and puts his head on their stomach and then it continues down. Every goat puts their head on someone else’s stomach because it’s more comfortable. We always say, sometimes you have to be that first goat down and go ahead and take the sacrifice and be the one that lays down on the cold hard floor.
If you’re working in a team or a community and …
You find everyone complaining.
Everyone’s complaining, maybe you’re complaining that things aren’t getting done. That’s because someone has not agreed to be the first goat to lay down. Someone has to be that first goat so that someone else has the tummy to lay on.
I love it.
A lot of people don’t learn that lesson.
Someone has to be that first goat so that someone else has the tummy to lay on.
If you are, then things get down and things move forward. Do you have any last minute tips you can give our listeners? Obviously, you’ve had to pitch your whole career to get stores to carry your products. When you’re pitching yourself to a new store, whether it’s Target or Disney Resorts, is there something you do or say that makes it useful? Do you tell stories? How do you get people to understand and want to buy your product?
Every product that we design is directly inspired by the farm. We don’t start out designing a product with a niche already in mind. We don’t look at the market and say, “There’s not this, let’s create that to fill this void.” We are creating things that we need on the farm and are inspired by what we’re directly doing on the farm. When we go in to talk about a product, we tell the entire creation story about how this product was formed and why it’s different than the next thing sitting on the shelf.
[Tweet “When pitching yourself or a product, tell the entire creation story.”]
As I said, all these people who work in retail, they understand that today’s consumer can read through any brand building BS. By being able to tell that creation story, they understand that what we’re creating is different than what someone else might be pitching them.
We also find ourselves, when we walk into a room, just having conversations. I think when you fall into the mode of, “We’re pitching you something and we’re going to see if you bite,” we see it more as it’s going to be a partnership and we’re going to present our story, our wares, our ideas.
The person on the other side, they’re either going to accept and become a partner or not. It’s not a game to try to get them to be a partner. It’s they’re either the right person on the other side of the table or they’re not. If they’re not, nobody goes home upset. It’s just not meant to be.
Pitching yourself and your product is always in terms of how you’re going to help that other person’s business.
I can think of no good outcome than having to convince someone to work with you.
[Tweet “Pitching yourself and your product: help that other person’s business.”]
Right. That’s incredibly valuable information. It really is a partnership and you’re interviewing them as much as they’re interviewing you. Therefore, you’re not begging or pushing. You’re just saying, “Here’s who we are. Let’s see if this is a fit. If it’s not, no hard feelings.” That reduces the stress and the pressure on you and the person that you’re pitching yourself to, would you agree?
Exactly.
Absolutely.
My other tip is sit on the same side of the table. In my years of advertising, there was always the agency on one side and the client on the other side. I learned that if I sat down right next to the client instead of the other side of the table …
[Tweet “When pitching yourself, sit on the same side of the table as the investors.”]
That’s a great tip, Josh. Thank you. You literally turn your neck to the left or right when you’re talking to them as oppose to … Wow, body language, everything, you can never get enough of those tips. That’s fantastic. How can people follow you guys on social media, go to your website and sign up for your newsletter? Tell us all the goodies.
Our website is Beekman1802.com. If you send an email through the website, Josh and I read every single email still. We manage all of our social media accounts. We’re on Facebook, Instagram, Pinterest and Twitter and YouTube. We’re Beekman1802Boys. Again, if you send us a question on any social media or respond to something we posted, it’s the two of us. We’re the only two with access to our social media. You’re getting an authentic response when we respond.
Just like the soap.
Just like the soap.
Fantastic. What’s next for you? Do you do a one year plan or a big plan? Do you have, we want to be at a 100 artisans a year from now? Or how does that all come together?
We try to launch about 20 new products a month.
A month.
We try to keep it very interesting and refreshing. Most of our products are still very artisanal and small runs. We know that there’s not going to be a single product that’s going to be a billion dollar product. We try to meet our customer expectations by always offering something new and something unique and in small runs, so that when you get something from Beekman, it’s going to be special. We always want to maintain that specialness.
If people are looking for anything specific coming up, we have our style book coming out in September. We have our magazine, new magazine launch coming out in October called Beekman Almanac. Towards the end of the year, we’re hoping to have a bigger relationship with Target to announce.
[Tweet “The Farm is Bigger Than Its Fences”]
Oh, how exciting. We’ll be working for that. Your tag line is, The Farm is Bigger Than Its Fences. I just love, and I think that’s a great way to end the show. No matter whether it’s your own farm, like you literally have a farm, or your farm metaphorically is your business. Just remember, it’s bigger than whatever boundaries you initially physically put up and you’ll be successful, like these guys.
Thank you.
Thanks for joining us today.
Links Mentioned
Beekman 1802 Website
Beekman 1802 Boys Facebook
Beekman 1802 Boys Twitter
Beekman 1802 Boys Instagram
Beekman 1802 Boys Pinterest
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TSP021 | Alan Jones – The Present Always Colors How We View The Past
Posted by John Livesay in podcast | 0 comments
Listen To The Podcast Here
Episode Summary
Alan Jones is a Startup Evangelist and Chief Growth Hacker for Blue Chilli Technology. Alan was also the Product Director for the Australia, New Zealand, and South Asian market for Yahoo. After leaving his job at Yahoo, Alan started several businesses, and failed, in a variety of industries he was personally interested in and now he uses his expertise to help teach other founders how to raise capital. In this episode, Alan talks on the importance of being clear on what your company culture is, using hand gestures in a pitch to reduce nervousness, and much more.
Key Takeaways
- 02:55 – Alan recommends founders to wear their brand and make sure it’s memorable.
- 03:35 – Be clear on what your company culture is. Are you a t-shirt and jeans company?
- 04:25 – You can even adopt a certain hairstyle that helps you stand out. Own it and be proud of it.
- 04:50 – How did Alan go from Yahoo to Blue Chilli?
- 08:50 – Blue Chilli is an accelerator and a VC
- 09:50 – Blue Chilli has a curriculum for startup founders that takes 3-6 months to complete.
- 11:40 – How many people apply to Blue Chilli’s program?
- 14:30 – Alan talks about his involvement with ScriptRock and Bugcrowd.
- 16:35 – Silicon Valley literally breathes startups. Everyone including your taxi driver has a startup.
- 17:45 – Some entrepreneurs believe if they just worked on an excellent product, they wouldn’t have to raise capital and that is false.
- 20:30 – People invest in people no matter how great your idea is.
- 22:00 – How does Alan train people on how to make good pitches?
- 23:30 – It’s about how you tell the story. What genre does your story fall under?
- 26:00 – Utilize the power of silence in your pitch.
- 27:00 – Using hand gestures can make you appear more confident in your pitch.
- 30:30 – What’s the single most important trick to be a successful angel investor?
- 31:15 – The most common mistake a startup founder makes is they think once they’ve raised the first set of funds, life will get easier.
- 34:15 – Raising capital is just like raising money for charity.
- 37:00 – Alan believes it’s important to work on your work/life balance and develop healthy habits.
- 38:50 – Alan recommends founders should read up on behavioral economics.
- 41:00 – You can find Alan all over the web as BigYahu.
Tweetables
[Tweet “People should wear their brand and make sure that it’s clear and memorable.”]
[Tweet “Grab people by the heart strings and pull hard!”]
[Tweet “Use gestures to reduce your nervousness and increase your confidence.”]
Links Mentioned
Blue Chilli
ScriptRock
Bug Crowd
The single most important trick to being a successful angel investor
Dan Ariely
Predictably Irrational by Dan Ariely
Alan Jones Twitter
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TSP021 | Alan Jones – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Hi and welcome to The Successful Pitch podcast. Today’s guest is Alan Jones who lives in Sydney, Australia. He is the Chief Growth Hacker at Blue Chilli Tech, which is an incubator and an investor. He tell us all the secrets to making your pitch powerful. He said, “You should grab people by the heart strings and pull hard.”
And one of the best ways to do that is to figure out what kind of genre is your story in. Are you telling a horror film? Are you telling a romance? Or are you telling a story that has all kinds of risks and payoffs that make people want to pay attention, that’s the way to stand out when you give a pitch. He also talks about the importance of silence when you’re pitching, even if you only have two minutes, take advantage of silence to make people sit up and listen to what you’re saying. Enjoy the interview.
Hi and welcome to The Successful Pitch podcast. Today’s guest is calling in all the way from Sydney, Australia, Alan Jones. Alan has a great title as Chief Growth Hacker at Blue Chilli Technology. He has all kinds of knowledge and insights on everything from how to create a brand, an elevator pitch, advising people on lean startup methodologies, picking you up when you’re feeling down and the thing that impressed me the most, reaching things on the top shelf. We’ll find out if he means that literally or figuratively. Alan, welcome to the show.
Alan Jones:
Hi John, thank you very much for having me on.
John:
So, of course, the first question I have to ask you is, what does that mean, helping you reach things on the top shelf? Are you extremely tall or is that a metaphor for what you do for startups?
Alan:
Yeah, I’m about 6’5” and I was lucky enough to be an early employee of Yahoo back in the day and my ID for most hings online these days is BigYahu, because when there were 200 employees at Yahoo, I was the tallest Yahoo.
John:
That’s something to stand out, right? That’s what it is all about, isn’t it, Alan? It’s coming up with some hook that makes you memorable or as they said in the musical Gypsy, you gotta have a gimmick of some sort, right? What is it that makes you memorable?
Alan:
Yeah, yeah. You know, that can be a real asset in a crowded room where people are networking say in the social setting after you’re seeing 5 or 10 startups pitch. Everybody can see the big guy at the back of the room, but also people can see people wearing a brightly colored t-shirt with their startup’s brand on it, for instance. So, that would be advice I’ve given again and again. People should wear their brand and make sure that it’s clear and memorable.
John:
I love that. I mean, that makes for the first tweet in the first five minutes. I think that’s a record. Wear your brand. I heard it said, walk your talk, but I love coming from the fashion background that I have, wear your brand. Literally be so passionate about it that you want to wear it, right?
Alan:
Right, right. So, I think it’s really important for potential employees, potential investors, potential partners to be clear on what your – something about what your company culture is and the best way to start conveying that subtly and cleverly is to dress consistently and to include your brand in your dress. So, are you a jeans and t-shirt company? Are you an open-neck business shirt and Chinos company? Be pretty clear about that up front and be consistent with that.
So, Blue Chilli where I work now, we’re very much a jeans and t-shirt company and we work at all levels of state and federal government in Australia. We spend a lot of time with big venture capital funds and large corporate institutions. Often times, we’ll be a boardroom table with nine/ten other people and I’ll be the only guy with jeans and t-shirt, but they know who the guy is from Blue Chilli, right?
John:
Right. Well, it’s authentic to your culture and so that’s what makes it consistent and so as long as you’re authentic to your culture, people are fine with that. It can even be a certain hairstyle. I know certain people here are known for their certain haircuts and that’s what makes them memorable in the Hollywood industry. So, whatever that is, own it and be proud of it and its what makes you stand out. I love that. So, can you take us back to how did you go from being the tallest guy at Yahoo, to being the Chief Growth Hacker at Blue Chilli?
Alan:
Yeah, so my background, part of working at Yahoo was in communications, was in journalism and PR and advertising, copy writing, and I drifted into online roles just because producing marketing online was quicker and faster and more fun than doing it in print or TV or radio at the time. I wanted to be known for doing something well and nobody else knew how to do that stuff well. Working at Yahoo in the early days gave me tremendous opportunity.
A whole bunch of people fairly early in the company were very well compensated in stock options and a few of us worked away were able to get – exercise some of those stock options prior to the first big internet crash. The dot com crash. So, that gave me the opportunity to exercise my entrepreneurial dreams once again and I did everything, I did everything wrong for a good 5-10 years.
I started a record label, I bought and sold an advertising agency, I started selling physical products that I’ve designed myself online and a lot of it was me fleshing out my skills as an entrepreneur and learning how different industries worked, right. I thought I understood advertising. I thought I understood online retailing, obviously search engines, you know, but I had no idea how the music industry worked and I wanted to learn how that worked and I started a record label.
So, I chewed through a fair amount of capital in that period, but the other thing I started doing at that time was starting to explore how to invest in startups. In Australia at that time, we had a very small community and we had an even smaller pool of people who were interested in investing in startups at a pretty institutional level.
So, I got started. I guess, one of the things we didn’t have in Australia at that time was an accelerated program. We had nothing like a Y Combinator or a Techstars or 500 Startups and a few of us would complain about that lack about how you can only go so far on your credit card and most of the time that wasn’t going to get you to series A.
So, we would complain about, you know, Aussies have a, you know, something of a drinking culture and we’d get together at the pub, kids go to the pub and that would be a frequent topic of complaint and everybody was waiting for somebody to put their hand up and say, I’ll take the lead on this, because nobody wanted to be the first person to say, okay, I’ll start Australia’s Y Combinator, because we knew there would be a lot of work involved and it would be largely uncompensated. We all wanted it to happen and a great guy, Nicky (?), an Australian entrepreneur who had build a pretty successful online real estate business in the US and then almost completed his exited from that, put his hand up and said, okay, I will be that guy.
So, that program was called Start Late and that going in 2010 and for me, that was really the beginning of viable style of community in Australia. Since then we’ve seen the growth of a variety of different accelerator programs in Australia, early stage venture funds, proper VC funds, and the organization I know work at, Blue Chilli, which has a very interesting hybrid model where we actually build the technology as well as help startups with working through their business strategy and marketing strategy. They got a marketing strategy and we help them raise capital and so now in Australia there are at least ten accelerator programs that I know of that are affiliated with universities or large corporate institutions or traditional venture capital.
John:
So, let me ask you about what you mentioned about Blue Chilli. What I can see from the website, your company acts as an accelerator and then if somebody graduates through that program, you then could possible be a venture capitalist for them and sort of one stop shopping, because you already know them. Is that accurate?
Alan:
Yeah, that’s right. So, if you’re fortunate enough to be in a Y Combinator intake, for instance, you’re pretty certain you’d get along to demo day at the end of that accelerator program and there will be a room full of hundreds of angel investors with checkbooks and you need to kind of bootstrap that experience for other startup accelerator programs, because they don’t automatically draw a crowd of investors like Y Combinator does.
So, at Blue Chilli, we figured, so we teach a very detailed, meticulous curriculum to our accelerator intake. It’s not so much about inviting experiencing people in to talk to our startups and then hoping some of them form advisory relationships. We teach a curriculum, it takes about six months to go through and we call that curriculum the 1-5-6. We sat down and we decided, if we’re going to create investment-able startups, what are all the things we need to make sure they remember to do.
We came up with a list of about 156 things and we sorted them in order, right, so this is the day that you need to make sure you have your business registration in and this is the day you need to make sure you got your company share structure organization. So, everything from rent stream to domain names, choosing a brand name, right away through the company structure.
So, we have a team of full time advisers that work day by day with each of our startup founders and every week, you’ve got work to do. Every week you’ve got home work and then every Monday morning, we look back on what you achieved and didn’t achieve last week and we give you a further nudge. So, we have a pretty big – are you familiar with the carrot and the stick?
John;
Yes.
Alan:
So, we have a pretty big stick, you know, you have a “teacher” and an advisor in that program, so we needed a carrot as well. We needed you to feel like all of this hard work is going to be worth while and so we decided to create our own venture fund as well. So, in Australia, we have a mouthful of a government support program called The Early Stage Venture Capital Lifetime Partnership or ESVCLP and there are only eight or ten of these ESVCLP funds in Australia, but we’re one of the first ones out of the door.
John:
Congrats.
Alan:
It allows us to give very attractive tax incentives to our investors in return for allowing us to invest some of the money in very early stage startups, so pre-series A.
John:
Can you give you an example of some of the numbers. So, how many people apply to get into the six month program and out of that, how many get in? And after the people who actually graduate, how many people typically get the VC money? And how much is it?
Alan:
Yeah, so Blue Chilli is three years old and so our growth rate has been pretty dramatic. Currently we see about 200 applications per month and our goal is to on board two new startups each month, so we set ourselves an ambitious goal of doing 100 startups by 2016 and we’re on track actually. Smashed that goal.
We have 54 startups in the portfolio now. We’re in commission negotiations with another four or five, so your odds about one in a hundred of getting us interested in entering commission negotiations with you to walk you in as one of our startups and then coming out of the program. We’re doing much better than market average.
So, in Australia at the moment, the average rule of thumb is that most startups have about a 1 and 20 chance of getting to break even to portability or to their next funding round and we think at the moment fairly early on in our portfolio and this is not something that we brag about yet, because we want to see a few more years under our belt before we really saw that this is how we’re tracking, but we think at the moment we’re about one and three, one and four of our startups are succeeding, getting to the next level.
John:
Do you think that’s because you have such in-depth accelerator program? I mean, six months is much longer than Y Combinator from what I understand, correct?
Alan:
Yeah, that’s right. So, it is a self-pace program, so we don’t go, we don’t have a calender-based intake like other accelerator programs too. So, we take startups every month. If you are in a city where we have one of our incubator spaces, then you come and work on a residential basis with our advisers, so we have a co-working space for you to work and so some of our founders are still exiting from what they were doing before, so maybe they can’t work full time on their new startup vision just yet, so that will slow their progress. They’re going to complete it more like six month time, but other people get advance credit, because they are entering our program with a startup where a lot of the thinking is already done and they might be able to complete it in perhaps three months.
John:
Oh, I see. Can you tell us one story of a startup that you were involved with? I saw that you did something called ScriptRock or Bugcrowd. I love the name Bugcrowd. I had to look that up. It’s a security flaw thing, right? So, tell us a story about one of those two or any startup that you’ve been involved with. How did you get involved with that? What’s the story of that little venture and what did you learn from that? I’m sure there’s tons of things to tell us.
Alan:
Well ScriptRock and Bugcrowd are startups I got to know through another accelerator program, that Start Late program that I mentioned before and I spend some of my time each year, so Start Late is a program that runs from beginning of January to about mid year and we have a three month program in Sydney in an incubator space and then we take our startups over to the US and they’re there for at least two weeks, they are welcome to stay for a couple of months and many of our startups don’t go back except to take care of visa paper work, so the Start Late program is very much about taking the best Australian ideas, but have a global mission and have a big potential customer base in the United States and taking them across to the US.
So, we set them up from the beginning with an Australian company structure and a (#15:35?) as well, so that we can make sure, you know, most of our companies hiring Australians are a lot cheaper than hiring people in Silicon Valley, so a lot of them will start with the majority of their development team, say, in Australia and setup sales and marketing and capital writing in Silicon Valley where each of those things is easier to do.
So, both Bugcrowd and ScriptRock followed that path and both companies are in the process, well, actually for ScriptRock, they’ve completed it there and the whole team have marketed across to the US now. Most interesting thing I guess about both of those companies that attracted me, so I got to work with them in the three month program in Australia and I went over with them to Silicon Valley.
For Australians and I think for most international startups, you know, you’ve read a lot about Silicon Valley, you’ve listened to podcasts, you’ve heard stories about people who have been over there to work, but it’s not until you really land on the ground that you full appreciate just how much Silicon Valley lives startups 24 by 7.
You sit down in a cafe, every other conversation you can hear is about a startup in some aspect, the person serving you has got a startup. All of the conversations on public transport, your Uber driver, they all want to tell you about their startup idea and that’s just not the case in other markets. Even in the East Coast of the US, that’s not the case.
At Blue Chilli, we have a couple of startups now in New York and the reason why they work with us, with Blue Chilli, with an accelerator program based on the other side of the world, is that they really wanted to be based in New York and it’s challenging to be based outside of Silicon Valley, because it just has this kind of black hole, critical mass, that just sucks in people and capital. So, for ScriptRock and Bugcrowd, it’s always an interesting experience to see these Aussies startups land in Silicon Valley for the first time and see how they react to that challenge.
So, a bunch of people particularly when they’re from a product background, if they’re developers, their instinctive reaction is going to be, I’m going to hide in my room and work on my product, because this is all very intimidating to me and I hope that if I can build a biggest possible product, then people are going to love it and I’m not going to have to really compete at pitch competitions, you know, in pitching to VCs who have seen 19 other companies before me that day. I’m just going to build a super awesome product and it will grow by itself. The reality is that happens maybe one in a thousand times. You just can’t, you can’t afford to do that.
So, for me, it’s interesting to see startup founders from a technical background who aren’t naturally gregarious, outgoing, pitching people, land in an environment like that and think, right, I really got to learn how to do this super well. I need to be the kind of startup CEO that everybody’s going to love and be inspired by and want to get in on that mission.
So, for me, Alan Sharp-Paul and Mike Baukes, the two co-founders of ScriptRock were fascinating, because they both came from that dev background that were entering into that enterprise software market and they are very true to who they really were, so these are guys that like to play in rock bands. They’re pretty causal guys and so they weren’t tempted to do the enterprise sales thing and start wearing a suit and tie and have a very conservative corporate presence like the other enterprise software vendors. They just went in and said bleep that, we are ScriptRock.
John:
Got it. Now, what does ScriptRock? What is their 30 second elevator pitch?
Alan:
Yeah, so you know when sometimes on a Sunday night, your bank will try and install some new software on their corporate network and it doesn’t go well and Saturday morning, the automatic teller machines don’t work across the country, that’s the kind of thing that gets CIOs sacked or at least they lose their bonus for the year.
So, it’s a very valuable problem to solve and the simplest way to explain ScriptRock it is monitoring software that sits on top of thousands upon thousands of servers in a corporate network and understands what’s running on those machines and can tell the people apply things like patches to servers that when you take one of those machines offline, apply a patch to it, it’s technology that makes sure that service running properly before you take it back in to production. You think that would be a pretty simple thing, but it’s something that people not running ScriptRock, they run into that all the time, so when your airline booking system goes down, when your insurance online system goes down, that’s what it is.
John:
Lost money, lost everything. What I loved about what you said is, imagine how difficult it is for someone who tends to be an introvert to not hide themselves and just work on their product and in order to get investors to know who you are, be inspired by who you are, you have to get out of your comfort zone, but it’s even more so when you’re from a foreign country and you’ve moved from Australia to Silicon Valley.
You have two things to counter to get yourself out of that comfort zone, because people invest in people no matter how great your idea is and that’s really the huge takeaway I think for today from what I’m hearing you say is, you know, no matter where you’re coming from, no matter what country, what personality type, is you have got to figure out some things. So, if you’re into someone who is into rock bands, I wondered if the rock in ScriptRock was connected to that love of rock bands.
Alan:
That’s exactly it.
John:
Yeah, make that memorable and figure out a way to channel your inner rock star and be somebody you’re not normally when you get in front of those pitches.
Alan:
I encourage them to celebrate that, like when the ScriptRock guys closed their C-round, I sent them as a gift some customize day glow guitar picks as business cards. So, it had their names and email addresses and phone numbers. Everybody is going to remember that when you give them your business card.
John:
Be memorable. One of the things that you are such an expert in and since this is The Successful Pitch podcast, I want to get your big takeaways on what is it that you look for when someone pitches you as an investor and how do you train the people in the incubator to give good pitches?
Alan:
So, John, you talk about this all the time on our podcast. I’m a big believer about your essential messages.
John:
Thanks.
Alan:
When people go into pitch, they think, okay, I’m going to Google how to do this and they’ll find a template, right, so a seven or eight slide template that says this is the problem and this is how that problem is solved today and this is how we solve that problem and here is our rockstar team and we’re raising this much and this is how much traction we have so far, you know, the end result of that is that your optimizing your pitch for VCs to compare you against hundreds of startup opportunity investments every week, right, and the problem with that is when you’re optimizing for the VC, you’re allowing them to build a big spreadsheet that lets them be dispassionate and cold and rational or logical about the startup investments that they make. What you wanna do is you want to do the reverse, you gotta grab people by the heart strings and pull hard, you know.
John:
Oh, can we tweet that please? Grab people by the heart strings and pull hard! That’s brilliant, the pull hard part at the end is my favorite.
Alan:
Cool, thank you. So, talk about this all the time. It’s about the narrative. It’s about the narrative arch, the story that you tell someone and encourage founders to spend some time thinking about, you know, if the story that they’re going to tell was a movie or a book, what genre would it sit in, you know?
So, is this a genre where there is an evil empire that you’re taking on, you know. Are you trying to knock down IBM or American Express, right. So, that could be a horror film where you think, you know, you’ve succeeded, then the monster gets back up again and attacks again, right?
Or it could be, you know, maybe your genre is a romance where you’re connecting two different kinds of customers in an online market place and they’ve always had trouble match making in the past and your technologies are going to make them find each other and fall in love, right. So, any kind of two-sided marketplace pitch is a romance, if you think about it.
So, thinking about your genres is a good way to get yourself into a habit of telling a story that has a beginning, a middle, and an end, has an advisory, has a hero or a heroine, has two lovers to meet, has risks and obviously pay offs, big rewards if it all goes well. Another thing I try and get my startup founders to work on is obviously their presentation style. Great story tellers, if you watch a great TED talk, you’ll see those presenters who, for the most part, weren’t great presenters when they were invited to do a TED talk, they have been rehearsed on where to put the variations and tone and pitch in their story telling and most importantly how to use silence.
So, we see people, you know, you give a startup founder, okay, you’ve got two minutes, okay, you’ve got five minutes or the bell is going to ring at five minutes and then you’ve got another minute, you know. The clock is ticking and they race. So, some of the success, I just need to get to the finish line. I work with them to rehearse into their pitch. You know, where is another way you want people to stop and think about what you’ve just told them. 15-20 seconds of silence and everybody is leaning forward. Everybody is waiting. If people are checking their smartphones or emails, because there’s just like a constant drone of pitching going on, then they’ve decided to start checking their emails. When you pause for effect, everybody puts down their phone and goes, oh, why did he stop talking?
John:
Exactly, the power of silence even when you only have a short time frame to communicate your message is really the big takeaway for me with what you just said. For example, if one of the genres is comedy, everybody knows comedy is based on timing and the timing of when do you deliver that punchline if you say it too fast or too slow or not enough of a pause, people don’t get a joke, it’s the same thing when you’re pitching. So, I love that you brought up that power of silence during a pitch. It’s such an important thing and very few people talk about it or think about it, so thank you for that. That’s fantastic.
Alan:
And then the final thing we work on with our startups at Blue Chilli is we cause them to remember that, okay, there’s two legs are going to hold you up while you’re on stage, but there are two other major limbs in story telling that for most of us are engaged only in holding the clicker or grasping the lectern and (#27:00?).
So, I like to work with our startups at Blue Chilli on their gestures. The hands and the arms, and the body posture can be such a powerful part of story telling and you’ve got the opportunity to pitch to people in person, you should absolutely be using that opportunity, so there are some gestures that great speakers use instinctively at important points in their story and they don’t overuse them and they use the right ones to convey particular messages and so if you watch a Clinton, if you watch a major, if you watch any really polished TED talks, you’ll see people using their hands to do things like pick out an atom from the air of them.
A little pitching gesture or maybe to cut with the chopping board, their two hands, okay. This is the point where everything changes and here we go forwards, you know, making a slicing gesture from here. You can weigh up things, you can balance, on the one hand and whenever you want to go down this path on the other hand, maybe you want to go this way. So, there’s maybe eight or ten gestures that can really leave them and open up and again, discourage people from looking down at their notes or from their smartphone and look up and engage with you as a speaker.
John:
What I hear you saying there is, gestures help you paint a visual picture for someone so whether it’s pulling an atom in the air or chopping something or giving something more weight than something else, that really creates not only a tension, but you’re painting a picture almost like a pantomime, even though you’re not pantomiming, but you’re using your gestures effectively and judiciously, not overdoing it.
Alan:
Yeah. Well, initially you are pantomiming, because it doesn’t come naturally to most of us, so what we’ll do is we’ll script a pitch and I’ll insert the places where I want you to mechanically introduce a gesture that I’m teaching you and with repetition overtime, some of those gestures become second nature for you and I’ll notice, I’ll observe, you’re using in meetings with your team members, say. In situations where you aren’t pitch, they become part of your vocabulary. When I ask founders, you know, if there was one thing that you could change about pitching, what would it be?
John:
Yes.
Alan:
Almost all of them will say, I want to appear less nervous. So, the biggest visual cue that we have that we’re nervous is I’m grabbing the lectern with a death grip or I’m nervously stuffing my hands in my pockets or, you know, I’ve got my hands behind me and I’m rocking up and down on the balls of my feet. When we get people to use their hands for bigger gestures than that, it just naturally makes them seem less nervous, more in control of what they’re doing. A person who has their arms right out is controlling this space is saying I’m a confident speaking and the message I’m giving is something you can believe.
John:
I love that. We’re going to tweet, use gestures to reduce your nervousness and increase your confidence, because the opposite of nervousness is confidence and that’s what you just shared with us as a key way to do that, especially if that’s the number one thing that people want to do.
What, I have to just ask you before I let you go. The half hour goes so fast with someone like you. This great blog you wrote about the single most important trick to being a successful angel investor. I think that’s very important to hear from your words as oppose to what you wrote, just reading what you wrote in the blog, which is a great blog, but because if I know the single most important thing to being a good angel investor, then I know what to do when I’m pitching you, because I’m going to customize what I’m saying to make what you see as the most important thing.
So, would you mind just taking us through, you know, I don’t want to quote you on this, because there’s so much good stuff in here, but the jist of what your message is in this blog and of course, we’re going to refer people an link it up in the show notes where they can actually read it.
Alan:
Sure. So, John, yeah, I touched on a few things on that post, but I think the big takeaway for a founder is that, I invest my own money and Blue Chilli pre-series A and sometimes a series A, right, so we’re always involved in the first funding round that a startup makes and for many startup founders, they see that, they hope that maybe that’s the last funding round they ever need to take or at least, they’re looking at it, I’m not quite sure what’s going to happen when I make that, when I got that seed round closed, but life is going to get a whole lot easier, you know, that’s the only peak I can see in the distance and once I make it over that, you know, it’s going to be awesome, and of course, that’s not the case at all.
When somebody invests in your business, they are lending you money and they need to see a return on that money and the clock starts ticking the moment you walk away with that check, right, the moment that time share is signed, the clock is ticking. So, you need to return to your investors a pretty healthy return on that investment, you need to lose all the money or trying your best to do that or you need to get a next round at a higher evaluation from the next series of investors.
And so, for founders, it’s important to recognize that the game doesn’t necessarily get easier, it actually gets faster and harder past that round and then as an angel investor, it’s really important to understand that the single most important thing an angel investor needs to be doing when they join a seed round is to be helping that founder close that next round. So, reality is most startups aren’t going to make it to portability on that seed round, they’re really going to need a series A and probably a follow on after that. If there are embarking upon building a billion dollar business. So, the work of an angel investor, a good angel investor really begins once your money has hit that start of the bank account.
John:
I love that, because what you’re saying is, don’t think that just because you get an angel investor, your problems are over, this is the beginning of multiple rounds and multiple challenges and that’s just the first hurdle and just being aware of that, makes you so much more savvy when you’re pitching as oppose to coming across so native. You think, well, once I get this, it’s happy days, but if you have a much more bigger picture perspective of the road ahead, I would assume, it would make you feel more confident in that particular startup.
Alan:
Totally. You know one really easy way to tell if somebody’s a startup founder for the first time or second time is the startup founder will have in their pitch, you know, we’re raising this much now and then in 8 months time, we’ll think we’ll be raising this much as a series A.
John:
Right. Got it.
Alan:
Where as the first time founder will go, oh, we’re raising this much and you ask them the question in time, you know, what’s your plans after that and they say, oh, we’ll expect we’ll hit cash flow profitability. You just know, one in a thousand will get there.
John:
Yes, unrealistic. Great.
Alan:
The other thing is raising capital is like raising money for charity. Everybody has charities that they think are very worthy causes that deserve to be supported, every year I do adventure and obstacle course races and most of them have a charity fund raising component and I probably raise a few thousand dollars every year doing that.
When I reach out to my friends, you know, I say, can I get $25 dollars from you or $50 dollars. I know it’s something they can afford and they will say to me initially, oh, you know, that would be a really good thing, I’d be happy to do that, but it really takes five, six, seven, eight, nine nagging reminders from me to get them to spare that $50. It’s not because they are a bad person, it’s not because they don’t believe in the cause, it’s just that when you’ve got 20 things to do that day, you know, it’s easy to let that one slip.
The same thing is true with investing, right, so if you’re an angel investor trying to help a startup get ready for a series A, you need to nag a little bit harder than you probably expect you’re going to have to do, you know, trying to get a meeting with a VC fund is harder than it really should be. Trying to get them whether or not they’re going to be in on this round is generally harder than it should be.
You need to work much, much harder. It’s not that they don’t think this is an exciting opportunity. It’s not that they don’t think the founders are great or that this is a billion dollar market opportunity. It’s just that there have got a lot of billion dollar market opportunities to review and once you commit to these things, you can’t uncommit.
John:
Uncommit, right. I read your blog about that and all the charity work you do and the running and the number one thing that you said is fund raising is like charity fund raising, so fund raising whether it’s fund raising for your startup or fund raising for a charity, the number one thing you tell people is, in both situations you have to ask and be persistent because people have a lot of distractions in both. It’s the big takeaway.
Alan:
Absolutely. In Australian business culture, we’re a little shy compared to Americans, so when we don’t hear back, we tend to assume, ah well, that’s it. That pitch didn’t work and that person isn’t interested. So, it’s a challenge for us culturally to go back and say, hey, I didn’t hear back from you, what happened there?
John:
Yes. Well, because of that fear of rejection is so huge, if we can help people overcome that in this podcast, I’d be thrilled, because if you let go of that fear of rejection and taking things personally then you can continue to move forward because you’re so passionate about what you’re doing.
Alan:
Right, right. Be polite, but be persistent.
John:
Persistent without being a pest, as I like to say. If you had a book that you like to have your startups read either while they’re in the incubator or afterwards or just about life in general, what’s one of your favorite books to tell people that they could read to make them a better person, a better startup?
Alan:
I think it’s really important to try to achieve a work/life balance as a startup founder. The startup industry is geared towards encouraging founders to abandon work life balance for a period of time in order to maximize return to investors in the shortest possible time and I don’t think that’s a healthy practice in the long term.
So, I like to practice work/life balance and I’m fortunate enough to be in a position to be able to do that, but I think every startup founder – I see startup founders and starts blow up all the time, because they buy into that culture. I’m going to work seven days, 12 hours a day, and for most of us that’s just not possible.
For most of us, that’s a really unhealthy thing to do. So, I don’t know if there’s a particular book or movie or a school that you should go to to try to achieve a work/life balance, so what I’d do instead is I’d say, go somewhere where you have no choice but to be unplugged.
So, every couple of years I go to the Himalayas where there is no internet access, there’s no access to magazine and newspaper. The first time I did that was right on the cusp of the big global financial crisis that took down some of the big banks in the United States and Europe and I was going into the mountains of the Himalayas and I had no idea what was going to happen to my net worth while I was walking, so it was a scary thing, but it was a very good practice for me.
The other thing I’d recommend people do is that they start reading up on the field of behavioral economics, so classic economics is the way we say, okay, you know, rationally people should go into the casino with a $1,000 and gamble this percentage of it and then go home, because they need the rest of that money to pay the rent and buy groceries. Behavioral economics is the field of study, studying how people actually behave when you send them into a casino with $1,000 and that has a lot to do with what we do as startups founders.
John:
Oh right.
Alan:
So, a lot of people coming to my landing page and signing with their email address, but they never converting from their free trial into their pay plan. Why are people not clicking on the right buttons on the pricing page? So, a lot of that online behavior can be understood better through the field of payroll economics and a good primer, a good starting point is an author Dan Ariely. If you got to DanAriely.com, you’ll find all of his texts, but the best place to start is a book called Predictably Irrational.
John:
Predictably Irrational, I love the title. Okay, I’m definitely going to get that. Thank you, that’s hugely helpful. Obviously, behavioral economics is, like you said, so important, because if you confuse people, they don’t take action and you have to figure out how to uncofuse them. What is the best way for someone to follow your blogs, learn about applying to Blue Chilli, your websites, your Twitter, all that good stuff, if you’d share that with us.
Alan:
So, I love anybody who thinks they might have an idea for a startup and they have trouble finding a technical co-founder, because Blue Chili is an awesome technical co-founder for startup founders, so on BlueChilli.com you’ll fund, if you hover there for more than five seconds, you’ll see a button pop up and invite you to pitch to us.
So, we receive about 200 applications online every month. It’s maybe ten question form and we have startups all around the world now. As I mentioned, we have a few in Silicon Valley now and a few in New York working with us. The simplest way to follow me is to start with my Twitter ID, which is BigYahu. It’s not spelled Yah double o though, because the technical team at Yahoo wisely wouldn’t allow anybody to infringe the trademark and their user ID, so my user ID for everything, if you just Google BigYahu and if you want to follow me there on Twitter, that’s the way to go, but if you just Google, you’ll see every single service I’ve signed up for on the internet in the past, you know, since 2001.
John:
Great. Well, BigYahu, it’s been a pleasure having you on the show. I loved all your incredible takeaways about pull on the heart strings and pull hard and figure out a genre that you’re going to pitch people to. Those are such valuable takeaways. Thanks again.
Alan:
Thanks for having me, John.