TSP047 | Jude Robinson – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John:

Welcome to The Successful Pitch podcast. Today’s guest is Jude Robinson. Jude is all about how to master your business story. She said good ideas never come with an agenda. She has an amazing story to share about how her back was up against the wall, and how she figured out a way to turn something that was going down into a huge success. She said, “You know, when you’re networking, don’t be a brain picker or a tire kicker.” I love that. She really talks about don’t let other people’s lack of integrity change who you are. You stay in integrity and who you are, regardless of how other people treat you. When it comes to rejection, she also has some great advice. She said, “Don’t give rejection the attention it seeks. If you have the focus and the passion, you realize that rejection’s just part of the game.” She shows us how to deal with it, how to keep going, and more. Enjoy the episode.

Are you a founder struggling with your investor pitch? Do you need warm introductions to the right investors to get your startup funded? Do you need a funding roadmap to get you there fast? All of this and more can be found in Crack the Funding Code. Judy Robinett, bestselling author of How to Be a Power Connector and on the board of Illuminate Ventures, and I invite you to our free Crack the Funding Code webinar. Simply go to judyrobinett, J-U-D-Y-R-O-B-I-N-E-T-T.com and click on the webinar tab to see how to tap into our network of investors around the world. There’s a link in the show notes as well. You’re only 1 click away from getting funded fast.

Hi and welcome to The Successful Pitch podcast. Today’s guest is Jude Robinson who is a business development, sales and marketing expert. She has such expertise in getting products to market and knowing what startups are going through when it comes to being overwhelmed. I’m going to let her tell us all about herself, her background, and her program, Master Your Business Story. Jude, welcome to the show.

Jude:

Thank you, John. I appreciate being a guest today. I hope that I can provide something valuable and bring possibly a little bit of relief for those who are endeavoring in their business. Keep going. Have some courage.

John:

We love that. What I always like to ask the guests is to take us back to, how did you become interested in this whole concept of getting products to market and helping people who invent things, and all that good stuff? As a young child, were you interested in new inventions, or how did your passion get in this way?

Jude:

I would say as a young child, I was interested in many things, probably shiny objects before they were shiny objects, which is certainly the mark of an entrepreneurial person.

John:

Yes.

Jude:

I was born and raised in Alaska, and had many opportunities to come up with ways to invent things, I guess.

John:

Yes, I…

Jude:

Use my imagination.

John:

I was just in Alaska earlier and went on a glacier helicopter ride and took a dogsled. It’s beautiful, but I imagine you have to really be creative to keep yourself entertained there during the winter months.

Jude:

I’m sure for someone who is new to Alaska in the winter months, they might need to try to be creative to entertain themselves, but because I was born and raised there, it was really a necessity. It’s what I always knew. Being creative, strategizing, figuring things out is truly in my nature. It could have been partly because I was taught that or it might have just been out of the way I was developed environmentally.

John:

Wow. I’m always so fascinated in someone’s story because investors love to know who they’re investing in. You know that great line that we invest in the jockey, not the horse, and we really want to know who the person is that we’re investing in. Someone like you who has such an expertise in encouraging other people and getting products to market, I was guessing there was a really interesting story. Just the fact that you grew up in Alaska as an environment automatically says so many things in my mind about somebody who’s resourceful and hardcore. It’s not like you grew up at the beach and …

Jude:

No.

John:

… had it easy.

Jude:

The thing about the people in Alaska, it is very remote. One of the true life lessons that I have gleaned and been able to distinguish as something that’s very different, when you rely on what somebody says as being what is true, you truly depend on that oftentimes for your very life.

John:

Wow.

Jude:

In the lower 48, that was a lesson that I had an opportunity to learn that many people don’t … They’re not honorable with their word.

John:

Ah, yes.

Jude:

That is an incredibly important piece of my life. I’ll tell you, even though there have been many opportunities to learn that people are not necessarily honorable, it has not made me less honorable.

John:

Aw, how great is that? You have to stay true to your own character, and not be at the whim of other people’s lack of characters influencing yours, right?

Jude:

Absolutely.

John:

I love that so much because a lot of founders will get a yes from investors, and then sometimes investors back out when it’s time to write the check. That founder’s counting on that money for their survival of their company, so what you said about …

Jude:

For their survival of their families.

John:

Yes. That’s so great. All right. That’s a fantastic background. Take us from leaving Alaska and venturing into the lower 48.

Jude:

All right. I went to college at the University of Utah. The reason I chose the University of Utah is because I was traveling through the area in the fall. The year before I went to college, I went with some friends on a trip. We’d driven to California and had a wonderful time. I saw the fall leaves. I’d never seen fall leaves.

John:

Beautiful.

Jude:

The colors, it was stunning. I honestly never thought I’d go further than Seattle. It was so beautiful. I couldn’t believe it. Then there was a lightning storm. Where I was born and raised, I’d never seen lightning. It was so spectacular and scary. The outdoor life in the Rocky Mountains is absolutely beautiful. I was hooked , so I went to the University of Utah. Out of college, I had gotten a job at the phone company, which was what you needed to do at that point. You went and got a job for one of the utilities. Then your retirement would grow and it was the smart and logical thing to do.

I got hired to do this new project launch that they had called mobile phone. There were just a few of us in the United States, I was on the West Coast, and I started working with … I didn’t know who to work with honestly. My father had built roads and bridges in Alaska. They were homesteaders. I was talking to them on the phone one night, and I said, “I don’t know who to talk to. They said I should go to talk to doctors, and I don’t know any doctors.” My dad said, “Who’s their association? Do they have any builders associations?”

I thought of one of the biggest builders that I knew of, and I thought, “Well, where are they getting their information from?” I was afraid to go talk to the association, but I knew the type of people that I had been around as I was growing up and they were really easy to talk to. They were nice people. I went to the association and they said, “Yeah, we’ll just put it in our newsletter that you have this phone. That would be great, because if you’re out on a job, it would be really nice to know, to be able to connect with somebody and say, ‘Hey, we need this.'”

John:

Isn’t it amazing when you go back and you remember a time when all that wasn’t just assumed? I love that …

Jude:

Yes.

John:

… part of your story about you went to work for a big company, a phone company, but you really were an intrepreneur, right? You were starting something new within a big structure, but it’s still very similar to starting your own business. Then this whole thing of getting comfortable with networking and reaching out to people, I love all those kinds of insights. Can you expand on that a little bit, Jude, about any tips you have for people who might be a little uncomfortable going to a Startup Grind meeting or going to some kind of angel conference?

Jude:

Always look up the chain. Don’t look down. When you meet someone, find out how they learned what they know. See if they’ll be generous with their knowledge, and sometimes … Let me see how I can say this, because I definitely don’t want to ever discourage anyone from asking questions, but don’t be a brain picker and do not be a tire kicker.

John:

You know what, we’re going to tweet that out. Don’t be a brain …

Jude:

Picker.

John:

Picker.

Jude:

Or a tire kicker.

John:

That’s great. Love it.

Jude:

Figure out, if you don’t know the intelligent question to ask, say, “I don’t know the intelligent question to ask.” That’s it.

John:

That’s it.

Jude:

“I don’t know what to ask you, and I would love to know your story, but I don’t want to take your time because I know it’s valuable and so is mine.”

John:

Mm-hmm. Great.

Jude:

Always out yourself with exactly where you are. When you go to a conference, think of it like being at a school social for your children or just think of these people as human. If they don’t treat you kindly, you don’t want to be in business with them.

John:

There you go. Nice. That’s such great information. It’s all about our mindset when we walk into a room, and not being intimidated, that who you are is enough and what you have to offer is just as valuable as anybody else, and treating others with respect, and that’s what you get back. That’s my philosophy anyway.

Jude:

It’s a great philosophy. It’s easier said than done when you’re in a space of needing funding and needing money. When you are at a conference, you’re not necessarily receiving income for that. You’re doing it on your own dime. You’ve got bills that need to be paid and dinner that needs to be made and things that need to happen, and you’re there with your … Your outlook is bright, and you’re doing the very best that you can, but there’s a runway that you’re trying to get down. You got to do it quickly.

John:

That goes right into what your whole expertise is, is about mastering your business story. That’s like mastering your pitch, and certainly mastering your business story so that someone … Let’s say you meet someone who is nice and generous, and they say, “Oh, I’m happy to tell you my story and it’s this, this, and this. How can I help you?” Ideally you want to have something ready to say, right?

Jude:

Yes, and the way that I got into working with inventors … When I left the cellular business, I was in my early 30s. I left because of a bad relationship, personal relationship. When I am telling my story of my life, I’m human. I’ve made some really great mistakes, really great decisions. I’ve made a lot of really ridiculous decisions, because I’m 100% human.

The next move that I made in hindsight now was a really great move. The reason that this is important that I say in hindsight when I say this portion, I do not want anybody to have the interpretation that I had a clear plan and I just went after it. I took a major chance, and I began a startup with a contractor connection that I had made and someone that he knew. We started a manufacturing plant. I was sales and marketing. The person that I knew that I met in the contracting industry had lost everything. At the time, he was bankrupt. He’s currently a billionaire, multi-billionaire.

John:

Wow.

Jude:

The other gentleman, he did the operations. I knew nothing about manufacturing. The business partner who was my connection, he knew 1 person that needed this product, lids for his vitamins. The company happened to be Nu Skin that we were going to make lids for their … I had never heard of Nu Skin at the time.

John:

They’re huge. I know I’ve heard of them. Yeah.

Jude:

Yeah, so this was at the beginning.

John:

Right, you never know what the opportunity’s going to be.

Jude:

They weren’t.

John:

Right. Sure.

Jude:

We didn’t know that they were going to be anybody. We didn’t know that we were going to be anybody. I did this startup, and invested all of the money that I had at that time.

John:

Wow, you were committed. You were all in.

Jude:

I was very committed, but I believed it was going to work. I just thought, “Okay, it will work.” Belief is not enough, but I didn’t have children. I was just believing, which can take you … Just that naïve can take you a very long way. When the first order of the lids came off the press and I was like, “Wow, look at this thing go,” and I took it out to my person at Nu Skin, Mr. Tillotson, who is the main owner of Nu Skin, and I said, “Here are the lids.” He said, “Oh, we’ve been buying those for 2 months out of China. We don’t need them.” I suddenly had a $600,000 debt and no income.

John:

Wow.

Jude:

When that happens, our best ideas come when we are absolutely in the worst place. Good ideas and new innovation never occurs with fluorescent lights and an agenda. I was driving back to my manufacturing plant and I had my cellular phone. I said, “What’s plastic? What do we make? Oh my gosh,” and I was holding a Bic pen. I thought, “Well, this is plastic. What’s on this that can be made?” I got the Yellow Pages and started calling everybody I could think of. I just opened it, and I just started calling, and within 3 years, had built a $10 million business.

John:

Wow. I love that so much, because you took what would be a record scraping, you think you’re on this path, you’re making these lids, and then they go, “Oh, we’ve outsourced that. We don’t need them.” We’re going to tweet that line out too. Good ideas never happen with an agenda. That’s…

Jude:

They don’t. They happen when your back is against the wall, and it’s so bad that you simply must …

John:

Figure out a way.

Jude:

… find a way to be creative.

John:

Yup, and that’s the ultimate pivot that’s so important and happens almost in every startup. Investors know this, and that’s why the team is so important so that belief and that strength of I’m not giving up that you have is what you’re able to model for people who engage you to help them with their branding and their strategies. It’s fantastic that you have that real life experience and then have such a huge success. All right.

Jude:

$10 million, again, that is the size of the company. I took the next 3 years and figured out how to be profitable. It doesn’t happen instantly, but what did happen is because I was in such a flat-out holy crap kind of a place, and it was much more than that I assure you but out of respect for the audience, I had an opportunity to practice my story constantly. “Hello, my name is Jude Robinson. I have a huge press. I think you have something plastic. Can we talk? I don’t know if you need what I have. I don’t know if we can do what you have, but I would like to meet you.” I did.

John:

Nice. Direct, authentic.

Jude:

I just did that constantly.

John:

Yup, and I’m sure you might even have a tip or 2 about how to handle rejection, because you, I’m sure, got a lot.

Jude:

I’ll tell you something about rejection. Get used to it, and please don’t give it the attention that it’s trying to gain from you. If you’re not being rejected or you’re pretending like you’re not, then you don’t even know who you really are.

John:

Love it. Don’t give rejection the attention it seeks.

Jude:

No, and …

John:

Because you have to stay focused on what you want, and not get focused on all the nos you’ve gotten, right?

Jude:

Exactly. Just keep your eye, keep that vision, out there, and keep going. Just keep going, because there is no stopping ever. There’s just no stopping. When you think you cannot work any harder, get ready.

John:

Yes. That’s great. That goes back, I think, to why are you doing it in the first place, right? Whether your mission is to make a difference in the world, make the world a better place, make a life for your family, whatever it is, there has to be a why that keeps you going, don’t you think?

Jude:

Yes, but my why at the point that I’d started the manufacturing plant was not a cleansed and corporate or perfect plan. There are so many theories that you can easily become buried. One thing I absolutely love is working hard. It is just in my nature, and I really understand not everybody is like that. I happen to really love working.

John:

I have a hunch that part of that might be from Alaska, because you need to work hard to survive there and thrive. It’s not a place that probably rewards lackadaisical behavior.

Jude:

There’s really no resting, but there’s a result from your hard work.

John:

Yes, and that feels great. That’s your why. Yeah, I totally get it. This is really interesting. Take us up to what you’re doing now with Master Your Business Story, and how do people work with you. Do you have a case study you could share with us?

Jude:

I do. Let me think. The reason that I’m really focusing on this story and what has occurred, when I had my manufacturing plant, what I really needed was for my presses to run. I wanted my presses to run because I wanted to keep my employees. I didn’t want to lay anybody off. I felt that that was something that I was aligned with my clients, my customers, about. If I could help them grow their business, then they would need to order more parts… said, “I want my presses to run. What are you doing in your sales, because I would like to run more of your parts?” I was able to develop something intuitively in understanding how to provide the value but also knowing that I was creating a value, that it was a pass-through. It wasn’t me. It’s pass-through.

John:

Mm-hmm… I like what you’re saying here, Jude. It’s really the big picture. It’s not, “Buy my plastic because I need sales.” It was literally zooming out and seeing the big picture of, “If I make you successful, then you’ll need more of my products, and I’ll be successful,” but you’re seeing it through the lens of the customer. Investors tell me all the time that the people they like to fund are the ones that have empathy for their customers. You are certainly showing us a great example of that.

Jude:

I also really wanted my employees to be employed and to have a life that was satisfying. The where I was is I was really just part of that chain. When I say look up the chain, I’ve been very committed to how I hold my particular link, so that a process can occur and I don’t let either side of the chain down.

John:

Oh, I love that, because a lot of startups, part of their goal and their job is to get the best talent to join their team. If you get someone who has got multiple offers to join your team and believe in your vision, you can’t let them down, just like you can’t let your customers down. That’s such a great image of the chain, and where are you in the chain, and where’s your link, and don’t let that chain drop. I love it. So great.

Jude:

Don’t try to be bigger than a chain. That is all you are.

John:

Yes. Right.

Jude:

Do it. You’re not better. I went to a parent-teacher or an event for my daughter. She’s 15. The teacher was telling the parents … She’s in an AP world history class. The teacher was trying to explain to the parents how amazing all the children are simply for being in that class, that they’re so special. I thought, “These kids aren’t special because they’re taking an AP class. They’re not. They’re going to fail. They’re going to be okay. This is called character.” Build it.

John:

Yes, just because you go to Harvard or Stanford or wherever you go to school, doesn’t guarantee success, right? Yeah.

Jude:

It doesn’t guarantee a human, and we have far too many people who really believe that they’re so very special. They’re just not. My children aren’t special to anybody but me.

John:

That’s great. Then they’re going to be prepared to go out in the world and handle rejection and not take it personally, right?

Jude:

Right.

John:

Exactly.

Jude:

When it comes to a story, the part that feels the most honest, when somebody really understands the story of what they’re doing, it’s because they practiced, because their back is against the wall. When it comes to their pitch, their pitch deck, the portion that you provide, they are going to be funded because it’s more than data. It’s more than possibility. They’ve actually been working with their product. Their patent aside, their first run, their second run, whatever they’ve got as far as their amazing back pocket thing that they think really is going to protect them, is not what’s going to feed their families dinner until they get funded. When they have a story, they’ve been able to go talk to enough people that need to have relief before they receive the widget. Show them how they can receive relief.

One of the products that an inventor came to me, she had an idea for wrapping up Christmas light bulbs. She thought, “It’s going to be so cool. I was trying to wrap up my Christmas light bulbs and things were everywhere. The next year was a mess,” and blah blah blah. When she wanted to create her mold so that she could have this run, she’d spent so much money and so many years getting this patent and doing all of this stuff that was not delivering an easier experience for anybody with Christmas lights. She needed money. She wanted funding so that she could have somebody who would fund this idea, and it’s truly not that interesting. She didn’t have a story. Her story is about organizing. Her market, she can just say, “Who has issues with lights?” Friends, neighbors, whomever she’s talking to, if she can start giving away that, let me help you with your organization, look what I found, this is what I’m trying. Before she goes and makes the thing, she can just give a little tip. She has an opportunity to talk to 100 people.

John:

Mm-hmm… Fantastic. That’s such a great example of make sure that the market needs it. As it relates to helping somebody with 1 specific holiday, obviously investors are going to go, “Well, there’s a limited need for that,” but once you broaden it out to, “I help people get organized,” that’s a yearlong need and that crosses many topics. That’s great. Thank you, Jude, for that. Jude, before I let you go, I just want to ask you, is there a book that you recommend founders to read, either to get inspiration in their personal life about not giving up or something that you think is really great business-wise?

Jude:

The best book for anybody who’s going into business is a book about emotions. Get a synonyms finder. I refer to my synonyms finder all the time. Do something that takes you away from feeling like you’re doing it wrong. Instead, learn how to communicate how you truly could serve someone else.

John:

Nice.

Jude:

Just stay focused on, how can I make someone else’s life better, not how I can do it more right than somebody else says. Our economy shows us that all of the theories are not all that helpful. Entrepreneurs are failing at 90% at this point.

John:

A lot of it has to do with self-focus instead of serving focus, is what you’re saying.

Jude:

Yes. It’s fear. It’s very fear-based. There’s enormous stress, and we definitely need our entrepreneurs to be more successful.

John:

Yes. Yes. You mentioned something earlier about dealing with fear and coming up with an idea. I think you used the word contagious. Can you tell us a little bit about that?

Jude:

Yes. When I speak with someone who’s frustrated or they’re trying to get their message out, and they talk to me and they say, “I just need to figure out how to get this marketed or manufactured,” or, “I just need to do this,” I like to tease out their idea, because when I can tease out, when I can really hear what they’re saying, and then respond back to them in 2 or 3 little nuggets that they say, “Oh my gosh, that is what I’m doing,” they catch their own virus, so to speak. They reinfect themselves with their mission. They change the way they see things.

When I’m working with someone, it’s not my saying, “You have to do these points, and you have to follow these things.” My job is to tease out what they’re really doing, and allow them to truly see it, and then run. My entire goal is to create more successful entrepreneurship and allow them to feed their families and to really check out their market, so that they can be funded more quickly. I want them to create the jobs that they’re meant to create.

John:

I love it. You and I are certainly on the same page and the same passion and the same mission to help entrepreneurs become more successful and make the world a better place for that. I can’t thank you enough. Jude, how can people follow you on social media and get in touch with you?

Jude:

You can go to my LinkedIn page, Jude Robinson. I’m relaunching my entire online platform at this point, so I would say just hit me on LinkedIn.

John:

Hit you on LinkedIn it is. Thanks again, Jude. You’ve been a great guest with wonderful tips and inspiration. We’re going to always remember all about a good idea never happens with an agenda. Thanks again.

Jude:

Thanks John.

John:

Thanks for listening for listening to The Successful Pitch podcast. If you like the show, please go to iTunes and write a review, and encourage your friends to write reviews too. It really helps get the word out. People say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest, but when it comes time to write the check, they don’t do it. How do you get people to say yes and then follow through? Visualize yourself on the left side of a river bank, and you have to cross the river. On the other side of the river is where the funding happens.

First, you make up your idea. Then you make it real. Then you make it reoccur. Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own with a lot less frustration than you will get when you hear a bunch of nos and you don’t know why. If you want some help getting funded faster with less frustration, go to my free funding webinar, sellingsecretsforfunding.com/webinar. Sign up and get in-depth information on how you can get funded fast. Thanks.

TSP046 | Katherine Hill Ritchie – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John:

Hi, welcome to The Successful Pitch podcast. Today’s guest is Katherine Hill Ritchie. She’s the CEO of Pex Global. She’s also part of an organization called 100 Women in Hedge Funds. She works and specializes in family offices, which provides a different source of investors for start-ups. It’s different than Angels, it’s different than VCs. One thing is family offices, the rich billionaire families will often times be willing to sign an NDA where Angels and venture capitalists are not. They’re also, families are more flexible in the kinds of companies they invest, as well as they don’t have any limits, for the most part, as to how much money they’ll do. I think you’ll really get a lot out of listening to Katherine describe all the benefits of getting investors from family offices.

Are you a founder, struggling with your investor pitch? Do you need warm introductions to the right investors to get your start-up funded? Do you need a funding road map to get you there fast? All of this and more can be found in Crack The Funding Code. Judy Robinett, best selling author, of How to be a Power Connector, and on the board of illuminate ventures and I, invite you to our free Crack The Funding Code webinar. Simply go to Judy Robinett, J-U-D-Y-R-O-B-I-N-E-T-T.com, and click on the webinar tab to see how to tap into our network of investors around the world. There’s a link in the show notes as well. You’re only one click away from getting funded fast.

John:

Hi, and welcome to The Successful Pitch podcast. Today’s guest is Katherine Hill Ritchie. Katherine is the CEO of Pex Global, P-E-X Global. She has over 20 years of business operational experience and 13 years of investment experience with family offices, private equity hedge funds, due diligence, and all kinds of great stuff that the listeners of The Successful Pitch will love to know. Katherine, welcome to the show.

Katherine:

Thank you! I’m glad to be here.

John:

You know, one of the things that’s in your bio among many is that you were listed in 100 Women in Hedge Funds. So, we definitely want to talk about that. But, if you wouldn’t mind, would you take us back to how did you get interested in hedge funds and all that, family offices, in the first place? How that took you to Switzerland?

Katherine:

Absolutely. So, when I graduated from University of Maryland, my undergraduate degree, I wasn’t quite sure what I wanted to do. I knew graduate school was in my horizon, but not sure exactly how. I was interested in health and fitness actually, and real estate. So, I started my own businesses. I was totally naïve, and when you’re young, you know, “business plan, what’s that?”

John:

Right.

Katherine:

Statement, what are you talking about?” I just started out totally confident in myself. Luckily, I succeeded and I actually made some money, and I started investing also in the stock market. I thought, “whoa! Not only can I work hard and make money at businesses, but money can make money for itself.” Meaning, while I’m at work all day working, my money can be investing. Luckily, at that point, this was the late 90s, and so I invested in a lot of tech stocks and I thought I was a genius.

John:

Yeah.

Katherine:

Because, I did well, and I thought, “boy, you know what? There’s something to this! Why don’t I go get an MBA?” So, I sold some of my positions at a very great time as well, at the top.

John:

Nice.

Katherine:

I was able to pay for some of my graduate school that way.

John:

How wonderful.

Katherine:

I moved up to New York City, and I went to Fordham, and that’s where I really learned about portfolio management, entrepreneurship, and it scared the heck out of me, starting a business. I thought, “oh my gosh, look at all these things I didn’t even think about!”

John:

Right.

Katherine:

So, you know education is very important, but at the same time, it really cautioned me and I thought, “I better think about this before I start another business.” So, I ended up interning at a private wealth management firm and that’s where I learned about what a family office is. “What’s a hedge fund? Private equity funds, what is all that?” Because, I knew public market, stocks, bonds.

John:

Right.

Katherine:

Things that a normal retail investor could invest in. So, when I understood more about alternative investments, then I got really excited and interested. “What’s a family office?” That was a new term for me, and so, what is a family office? So that’s usually a wealthy family that … there’s not a cut-and-dry cut-off of how much money they have to become a family office. But, usually when they’re large enough to hire their own internal people, investment professionals, to help them allocate capital, keep track of investments, look for new ones. So I thought, “oh, that’s pretty cool. I’m interested in that.” Hedge funds and private equity funds were interesting to a lot of families because in some families, are a little more passive investors and would like someone else to manage the money for them.

John:

Right.

Katherine:

While some others are more interested in direct deals, direct start-ups. So, that helps bring me to what I’m doing today as well. But, over the course of time, I was hired and now I’ve been fortunate to work for 3 billionaire families, and in that time, I was recruited to move to Switzerland. I lived in Geneva for 7 years. What’s great about that network is you kind of meet other families-

John:

Of course.

Katherine:

-and get invited to very interesting events. You’re able to network with other families. Now, sometimes these aren’t the family members. It could be other employees like me.

John:

Sure.

Katherine:

We’re considered gate keepers.

John:

Right.

Katherine:

So, we might be sent out into the world to go to conferences and source deals for these families. Over time, what I learned is that there are families interested in funds. There are families interested in maybe just industry, oil and gas, for example. Or, there’s families that are interested in start-ups. So, they’re a unique investor base because a lot of times, the capital can be flexible. If you go to a VC fund for example, or sometimes Angel, they’re quite strict in what they invest in. They have a limit in the amount of money, or the industry, or the type. It could be, “I only do software.”

John:

Right.

Katherine:

Or, “I only do,” yeah. So, a family, each one is unique; but, they can be very flexible. So, it could be a great source of capital for people who are looking for funding for their companies.

John:

Wow, that’s so great. I love the comparison, because yes, many of the investors I’ve had on the show, whether they’re Angel investors or VCs, like very specific sometimes. They’re like, “we invest between 250 and 500, and we need to be at the beginning, and we only want sass companies.” Or, “we only want high tech.”

Then, VCs, will be like, “well, until you’ve gotten this much from seeds, we’re not interested until we get to series A or series B, and we start at 3 million,” or what have you. “We specialize in mobile,” or whatever it is, and “if you’re not in that specific niche, then don’t even bother coming to talk to us.”

Whereas a family is, as you said, much more flexible in both the industry and the amount. If they really love you, and love the idea, and think it has a lot of potential, I’m sure they don’t have those rules to follow, which is great.

Katherine:

Exactly. Now, I would say this. It’s about relationships.

John:

Of course.

Katherine:

You need to get to know them and you might end up spending time having a tea with them, a coffee with them, dinner with them. But then, they’re more likely to be flexible in their investment size, terms, and it could be a great person on your advisory board to introduce you to other families because the minute I say “family office,” people really perk up.

“Oh! I’m interested!” Family offices want to meet other family offices, and know what they’re doing. So, it can be a great … you know, you break in and you meet one.

You can say, “it would be great to be a part of your network.”

John:

Right.

Katherine:

Also, there are conferences and events geared towards families. So, those can be very exclusive. But, if you’re able to get an invitation, or a lot of times, they look for sponsors, it would be great for someone to pitch at those events. Again, they can be pretty strict. You know, they vet who’s coming in.

John:

Of course.

Katherine:

But, if you get those kind of invitations, that can be very useful. Or, work with someone who has a background with family offices who can kind of really help with introductions and craft your pitch to a family. Families like to hear a story. You know, sometimes people pitching their company are so used to VCs or The Shark Tank-like, “what’s your valuation? How much are you looking for?”

When a family want to might say, “tell me the story. How did you get this idea?”

John:

Right.

Katherine:

So, I think you want to craft your message a little bit differently for that crowd, and also your presentation materials. They need to be really institutional quality, top shelf. Families will invest in start-ups and seed, but they want a presentation.

John:

Of course.

Katherine:

They want institutional quality looking materials.

John:

Right, because they live a life of luxury. They’re used to certain standards, and they want everything to match that standard.

Katherine:

Exactly. So, even if people do get funding off writing an idea on a napkin, but I wouldn’t recommend that. I would say, “be prepared, be professional, look sharp.” You know, don’t go in jeans and a hoodie.

John:

Right.

Katherine:

But, you may have a real life-long friend if you get to know some of these families. Also, which is very good point, a lot of private equity, VC Angels, they’re banking on an exit from you. There are families who think, “oh! You don’t need to sell. You don’t need to go public. If you’re generating revenue and I’m getting a revenue share, that’s great! Keep it that way!”

John:

Right.

Katherine:

They don’t have shareholders to answer to. They may have other family members to answer to.

John:

Right.

Katherine:

But, it’s not the same time horizon.

John:

Got it.

Katherine:

So, that can be very useful for entrepreneurs who are trying to raise capital is that you don’t necessarily have that same pressure.

John:

I love it. Also, you can still get money from Angels and VCs and say that part of your exit strategy is to get a billionaire or family office family to buy you out; because you’ve already got traction and proof of concept, and all that good stuff.

Katherine:

Yes, yes. I think it does help though if you have Angel or VC money when you’re going to a family because they do like if somebody else has been there first.

John:

Yeah, adventured a little bit.

Katherine:

They do like that as well.

John:

Yes, yes.

Katherine:

That always helps.

John:

Do you look at any graduates of accelerators? Like, Y Combinator, or there’s one in upstate New York called StartFast. Is that also a nice credential for families?

Katherine:

You know, it’s interesting you say that because I was just talking to a family and they specifically said that they really focus on anyone who’s been through an incubator, because they feel that then they’re prepared. Someone’s really guided them. So, there’s some people that actually just will focus on those kind of companies, those graduates.

John:

Nice. Now you mention being a gate keeper.

Katherine:

Yeah.

John:

I guess that if I was listening to this and I didn’t have access to these exclusive events to meet the families themselves, what would be the best way to connect with people like you? And, how would I get to know someone that is a gate keeper to a family office? What are the best practices? Is it reading your blog, or reaching out to you on social media? What would you recommend?

Katherine:

That’s a great question. We all use social media today, and I’ll give you an example of LinkedIn. I use LinkedIn, and I use it both ways. I use it for sourcing, but I also use it for business because I need to reach out to other people all the time. I reach out to VCs, family offices, private equity people all the time in my business because I have deals that I want to work on with them. So, I am in the same position as well, and I think social media is very useful.

What I like about LinkedIn is that you can see somebody’s past. Why would you want to connect with them? But also, I think that I get hundreds of people trying to connect with me on LinkedIn. There’s no message, and they have … it appears they have absolutely nothing in common with me. So, I would say always write a note. I would say, “Hi, I’m Katherine. I would really be interested in talking to you about blah, blah, blah.”

John:

Yes, right.

Katherine:

Whatever, right? Or say, “oh, we have a friend in common.” Or, “oh, I saw you spoke at this conference,” or something.

John:

Right.

Katherine:

I have people who just randomly try to connect to me. I don’t connect back because what do they want?

John:

Exactly.

Katherine:

Or, I cold call. I still do this to the day, but I prep. I find out where they went to school. I find out what they do, if they … anything, any kind of connection. Now, some families don’t have websites and are not on LinkedIn, for example.

John:

Right.

Katherine:

But, their employees might be. If you scan for family offices, that does pop up.

John:

Right.

Katherine:

Sometimes, they even say, “we only invest in private equity funds.”

You say, “oh, okay. Great, now I know.”

Or, you can find out that they’re on the board of certain companies. So, you’ll know “oh, I see you’re on the board of this technology company. I’m actually raising money for a technology company. Would this be something you’re interested in?”

I think you need to be prepared that way, but it’s not always easy because VCs, private equity, they usually have websites that describe exactly what they do. It’s not that difficult to figure out, but sometimes families, you have no idea. So, it’s got to be a relationship.

John:

Right.

Katherine:

Now, people come to me for introductions, so that’s part of what I do as a business. There are other people out there, but I would give a little caution. There are people who sell lists. You know, everybody knows this, there are lists for every industry. There are lists for family offices. Well, the first thing I do when someone pitches me that is I say, “okay, I want to see a sample,” and I look for myself. Because, I’ve worked for some of these families and they’ll have information that’s dated.

John:

Right.

Katherine:

It’s like from my contact information from 7 years ago. So, people buy those lists for thousands of dollars, and they’re worthless. Or, you may get someone, but you have no relationship with them.

John:

Yes.

Katherine:

It’s very difficult. You’ve got to have … know your stuff. So, cold calling, it’s worth doing. It’s tough, but if you can find some other way. If someone introduced you, that’s much better.

John:

Yeah, the are great. Right. So, I love that email etiquette you just said about make sure that you personalize it and do your homework before you reach out to somebody. Also, you had mentioned the importance to me earlier of follow-up. That’s one of my big, big things that I coach my clients on, too, is … and that’s a key to my success is follow-up. If I say I’m going to do something, I do it. It’s amazing to me people who don’t.

Katherine:

You’re totally right, and I have to tell you, I have done it myself where I’m so glad someone was persistent and called me, because we all get involved in our day-to-day and you get overwhelmed, and you forget to do something. So, it’s happened for, “I’m so glad you called again, because actually I am interested.” But, we all know fundraising is difficult … You have to have tough skin. You do have to be persistent, but also I also give people an out because if it’s a “no,” it’s better for you to know right away.

John:

Oh gosh, yes.

Katherine:

You know, give me some feedback, good or bad. I’d love to hear from you either way.

John:

Right.

Katherine:

Because, I would rather … and actually, a lot of times when I start the relationship, I say, “listen, I’ve been in your shoes before.” I used to allocate billions of dollars, and my inbox filled up, and my voice mail filled up, but I wanted to be fair to people because that’s just the way I was raised.

John:

Right.

Katherine:

I don’t want to lead people on, so I’d say, “you know what? I think your idea’s great. It’s not for us, so I’m just telling you now. Don’t waste your time on me.”

John:

Right.

Katherine:

“Maybe I can introduce you to somebody else.” Also, I think that as people who allocate money, they could be more fair, and they could do a better job of letting you know.

John:

Yeah. It’s like Hollywood. They always sort of string you along. They don’t give you a definite “no” on your screenplay or whatever.

Katherine:

Yes! Now, sometimes the answer isn’t clear, I’ll say that. It’s an investment committee, the investment committee hasn’t decided. But, sometimes you know it’s just not a fit, and I think people could be more fair. Fine.

John:

Right, yeah.

Katherine:

But anyway, getting back to what we were saying. I think you really need … Also, this is another thing. Pet peeve: do not send an email that could be a novel.

John:

Right.

Katherine:

No one reads it! No one is reading it!

John:

Keep it short, yup.

Katherine:

5 bullet points.

John:

Yup.

Katherine:

Why? What is unique or special?

John:

Yes. Well, that dovetails into my next question for you, which is the presentation dos and don’ts. I mean, obviously don’t have a lot of stuff on your slides, don’t have too many slides. But, I’m sure you have a lot of other tips besides those.

Katherine:

Yes. Constantly just rip apart presentations. When I say institutional quality, you want it to look super sharp.

John:

Right.

Katherine:

Now, that doesn’t mean you need crazy graphics.

John:

Right.

Katherine:

But, you want to have it bound, have it look nice, not use PowerPoint’s basic … you know, they have backgrounds that you can choose.

John:

Yeah.

Katherine:

It doesn’t have to be that you hire someone to do that unless you want to, which can help. But, I would say really make your message clear. Use bullet points. People don’t want long, long, long explanations.

John:

Right.

Katherine:

I would really emphasize short emails, to the point, and then they’ll look at your materials. I also really recommend, especially if you’ve got IP that you’re sensitive about, maybe there’s some things about your whole business model you don’t want to reveal. Then, I do a teaser, 1 or 2 pages. I just send that. If they’re interested, they will come back to you.

John:

Right. Well, there’s that great technique called the open loop. It’s part of story telling, where you don’t complete the story and everyone … you just tell enough to get people’s curiosity peaked, and they want to know how it’s going to turn out, right? Or, what the next thing is. “Tell me more.” That’s a great suggestion there. I love that.

Katherine:

Absolutely, because a lot of times, they just read that, and it could be that actually they just read that and say, “oh, you know what? I’m going to send that to my boss because actually that’s enough information for me.” Or, “I’ll send this on to the right person who actually takes care of those investments within the family.” So, sometimes that’s just enough information and then, if you want them to sign an NDA. By the way, families, I mean, 1 in 13 years has said “no” to an NDA.

John:

Wow.

Katherine:

I know VCs won’t sign them, but they sign them because I think a lot of them understand. “Oh, okay. Well, I really want to know this information. Happy to sign an NDA.”

John:

Wow.

Katherine:

So, 1 in 13 years has said “no” to an NDA.

John:

That’s great. That’s a huge difference on top of the other differences you talked about, which is the flexibility of niches and amounts. This NDA issue, if you ask an Angel or a VC, that’s accredited, to sign an NDA, they automatically think “ugh, you don’t know what you’re doing.” So, that’s fantastic information. I love that. Do you typically work for one family at the moment, or do you have multiple families that you’re helping find the right investments?

Katherine:

Well, that’s a great question. So actually, it’s an interesting place I am now. I work directly for a family, but I at the business PEX that I run, works with families all over the world. So, we may have a deal that’s not actually for the family I work for. But luckily, so in the US, there’s regulations about fundraising, especially when you are not an employee of the company.

 

I’m a placement agent, and I’m actually licensed. Not only can I wear a hat being that I was an analyst for families and I can analyze and do due diligence on investments, but I’m also licensed, so I can raise money for security. So, I can raise money for companies, funds, co-investments. I can work on all those transactions. So, in that sense, I can work for any family. I work all of them.

John:

I love it.

Katherine:

I have a huge network that I’ve built up over the years of families that I know, and I just have kept track of what they invest in, how they invest in, the geography, where in the capital structure? So that information, when a deal comes to me, I can look in my database and say, “I know some great people that would be interested in this.” I target it, so I don’t do any mass mailing. I don’t do mass marketing. It’s very targeted.

John:

So do founders, whether they’re recent graduates from an incubator, or someone looking for series A, they’ve already gotten some seed and possibly a little VC money, hire you to get these kind of introductions to these families around the world? Is that how it works?

Katherine:

Yes. I’ve already done that. I’ve already raised some money for the early stage companies, also late stage companies. I’ve also worked on secondaries, which are people who are exiting a liquid shares or liquid funds shares. There’s a lot of activity around that as well. When maybe an employee of a private company would like some liquidity, they’d like some cash. So, I’ve worked on those deals, too. I’ve done primaries, secondaries, raised money for co-investments, and that co-investment basically where someone has already identified the project or company, put in some of their own cash, and then says “hey, hop along with me in this co-investment to help this company or project.” I’ve raised for all of those things.

John:

When families invest through either the family you’re working with directly or through your company, are they looking for similar kinds of equity? Eventually you probably do get down to the point where, if I’m going to give you a million dollars, I want X percent of your company in exchange. Or, do they want equity? They want stock? Is there any specific general guidelines that you can talk about?

Katherine:

I would say it really varies.

John:

Yeah.

Katherine:

Some are looking for equity investments. Some actually love debt.

John:

Oh, okay.

Katherine:

So, there’s some that that’s really what they focus on. So, each one is unique.

John:

Yup.

Katherine:

But, it could depend on the particular deal.

John:

What do you look for in the team? I always like to ask that question because I know over, and over again. I don’t care who it is, Angel, VC, family, private hedge fund, all about relationships as you said. Are there certain characteristics that you think that families look for besides professionalism, obviously, and the quality, appearance, and quality presentation skills. Is there … and telling a story, as you said. But, I’m looking for things like, is it passion? Is it integrity? Is it trustworthiness? Is there anything that you go, “you must be this,” or coachable, whatever it is?

Katherine:

Yeah, that’s a great question. I think they, unlike institutional investors, which I know I’m kind of all generalizing. You know, these people, it’s a little more personal.

John:

Yes.

Katherine:

So, really integrity is important. This is a family’s money. This is what their kids, grandkids … Their grandpa may have sold the company and this is his money, and so it’s a little bit a different field because they really want to get to know you, and it’s more personal. So, integrity and trust is really, really important, and just dedication. If there, it’s for the long run.

John:

Yes.

Katherine:

I think those things are … I mean, of course you need professional team, and quality, and also some kind of track record. I mean, yes, there are people with start-ups who have no experience whatsoever who extremely successful.

John:

Right.

Katherine:

We all know that. But, I think that’s something that they see. They like to see people … you know, a pattern.

John:

Great. Well, I promised at the beginning, speaking of open loop, we were talk about you being 100 Women in Hedge Funds. Would you talk to us a little bit about that before I let you go?

Katherine:

Sure. Absolutely. So, I ended up joining in New York when it was still pretty new group. What happened is, some ladies got together in the hedge fund industry, and they said, “do you even know a 100 women in the hedge fund industry?” Because, over 10 years ago, there were very few.

John:

Right.

Katherine:

It’s a male dominated industry, and what’s amazing is just how it’s grown today. So, it was started here in New York City, and I happened to move to Geneva, Switzerland. I was so thrilled because the month I land there, I didn’t know anybody in Geneva, but the job was at, so I moved there and I thought, “okay. I need to make some friends,” and they had started 1 in Geneva as well. So now it’s all over the world.

John:

I love it.

Katherine:

From San Francisco to Austin, to Boston, Miami, Milan, Zurich, Paris, Hong Kong, Caymen. So, it’s women, originally it was in the hedge fund industry and we used it for trying to tackle the old boys club. It’s for networking, it’s for job searching, it’s for education, and we also raise money for philanthropic local charities. So, when I was in Geneva, for example, every year there’s a theme, it could be education, it could be for women, it could be for children, it could be health, and we raise money. We target a charity. We do due diligence on it just like an investment.

John:

Right.

Katherine:

I was on the due diligence committee. We vet it just like an investment.

John:

I love it.

Katherine:

We support and we raise money for it, and we’ve had just so much fun. We’ve been lucky to have royal patrons like Prince William and Kate are actually royal patrons, so they come to our gala in London, which was absolutely fantastic.

John:

Oh my gosh.

Katherine:

We’ve had Bon Jovi play at our galas. I mean, it’s fun. It’s a great networking.

John:

I’m so glad I asked you, that’s some great stories! My goodness, Bon Jovi and royalty at a gala, that says everything you need to know. Wow, what a great story. Do you have any quick stories before we sign off about one of the best pitches you’ve ever heard? Since you said families really love stories even more than most investors. Is there an example of a story that you said, “boy, when we all heard that story, we said, ‘that’s for us.'”

Katherine:

Yes. So I was in Utah and I was invited to this … there was no registration, it was this uber-exclusive family office event in Utah. I’d never even been there, and I was so excited to go. There was no registration. I was told by trusted parties. “We’re going to have this event, here’s the agenda.” So we go there and we hear this scientist-engineer who just starts presenting us something about carbon nanotubes, which I never heard of my whole life.

John:

I don’t know what that is, either.

Katherine:

It’s going to be … it’s like the next plastics. It’s basically a new material.

John:

Oh! Great.

Katherine:

It was so compelling, because he said, “you know, I have a lot of family in the military. The bulletproof gear is okay, but it’s not great, and I wanted to help them. I wanted to protect my family. I created this new material. It literally … an elephant can stand on it, but it floats in water.”

John:

Holy cow.

Katherine:

And you know, everyone in the room-

John:

Yes.

Katherine:

-every family said, “where do I send my check?”

John:

Wow. Well, I love that story. Thank you so much for telling us because look at the elements of that. Is okay, and when you tell a story to potential investors, I’m always telling clients, make sure you say “what are people doing now, and how this is so much better. If you just pretend that no one’s doing anything, then there’s no frame of reference.”

So, ‘bulletproof gear is okay, but this is even better,’ and then you start this visualization of an elephant standing on it. Then, you tap into people’s patriotism that ‘I’m not only have a good return on my investment, but I’m actually possibly helping save lives of our fighting military?’ Oh my god, it’s just talk about pulling on the heart strings. That’s a fantastic story, Katherine. Thank you so much. Is there any book that you recommend people read, either about business or life?

Katherine:

Oh my gosh, that’s a great question. Well, you know I am a strong believer in the power of positive thinking.

John:

Me, too.

Katherine:

That’s been something that’s happened throughout my whole life. Now, whether you get that spiritually or whatever, the secret, or you’ve got … all of those books, I think, you have to take away what works for you.

John:

Right.

Katherine:

But for me personally, I know that you have to stay positive, and believe in yourself, and tell yourself every day when you get out of bed, “today’s going to be a great day. I’m going to make a great day,” you know? You can’t wait for life to make things great for you. So I think that … and go in with a smile. Have a positive attitude, because people like that. People want to believe in you. People want to invest in you.

John:

Right.

Katherine:

They want you to be good.

John:

Yup.

Katherine:

So, fulfill that for them. When you carry a positive attitude, it just makes it … people want to be a part of that.

John:

Right. I love it. Any particular book that you think of that inspired you to stay positive or keep that attitude?

Katherine:

You know what, I was just going to my bookshelf right now.

John:

I love it!

Katherine:

To look, hold on one second.

John:

This just in.

Katherine:

Okay, couple things. One is actually a old book, Napoleon Hill, Think and Grow Rich.

John:

Classic, love it.

Katherine:

Yeah, just because positive … Then, interesting things like Blink.

John:

Yes, Malcolm Gladwell. Fantastic.

Katherine:

Yes, because a lot of it is, like I said, you walk in a room and you’re positive, and people go, “oh! I want to know what that’s about. What have you got?”

John:

“I want some of that.”

Katherine:

I think … make quick decisions.

John:

Yes. That’s a great book. We’ll put both of those books in the show notes, and the transcription notes. So you’re on LinkedIn, obviously. What is your Twitter in case somebody wants to follow you on Twitter?

Katherine:

I have to tell you a funny story about Twitter.

John:

Okay.

Katherine:

I’ll quickly tell you my story. So I’ve been … I was originally a licensed securities professional starting back in 2003. When I was marketing private placements, which is hedge funds private equity, it was beaten into us, because back then the rules, and before crowd funding, were so strict, you were not allowed to advertise. You were not allowed to promote anything.

John:

Right.

Katherine:

So what’s funny is, people in my industry now slowly are using Twitter, but believe it or not, I haven’t been able to use Twitter because our legal in compliance said “no, no, no.”

John:

Okay.

Katherine:

So, it’s interesting, because I think it’s an incredible tool.

John:

Right.

Katherine:

But, I think our industry will come around, but we do have to be very careful about regulations.

John:

Well for now you’re on LinkedIn and I’m thrilled because that’s how I found you, so that’s more than enough. Thank you so much for being on the show. It’s been a pleasure and an honor to have you.

Katherine:

Thank you, and I’m flattered that you went and invited me, and happy to share with anyone my thoughts, and here to help.

John:

Fantastic, thanks again.

Katherine:

Thank you.

John:

Thanks for listening to The Successful Pitch podcast. If you like the show, please go to iTunes and write a review, and encourage your friends to write reviews, too. It really helps get the word out. You know, people say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest, but when it comes time to write the check, they don’t do it.

So, how do you get people to say yes and then follow through? Visualize yourself on the left side of a riverbank and you have to cross the river, and on the other side of the river is where the funding happens. So first you make up your idea, then you make it real, then you make it re-occur.

Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own, with a lot less frustration than you will get when you hear a bunch of no’s, and you don’t know why. So, if you want some help getting funded faster, with less frustration, go to my free funding webinar, SellingSecretsforFunding.com/webinar, sign up, and get in-depth information on how you can get funded fast. Thanks.

 

TSP045 | Annette Lavoie – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John:

Hi and welcome to The Successful Pitch podcast. Today’s guest is Annette Lavoie. Annette has a great story of starting a medical device company, working with Judy Robinett to get in the right room so she could get the right investor to invest in something that required millions of dollars before it got to market, and her exit strategy was so successful that it actually worked that she got her company bought before it even got to market and was able to make millions from doing it.

She shares the insights that she learned on the importance of a team working together, not only being experienced, but the ability to work together is really what investors are looking for. She talks about the crazy confidence that an entrepreneur needs to have and really understanding, are you investable? What are the kinds of things that investors look for that are basic things that you have to know about your numbers before you go into a pitch meeting? Finally, she talks about all the ways that people can value their company so that you get the maximum investment and maximize your potential to get funded. Enjoy the episode.

Are you a founder struggling with your investor pitch? Do you need warm introductions to the right investors to get your startup funded? Do you need a funding roadmap to get you there fast? All of this and more can be found in Crack The Funding Code. Judy Robinett, bestselling author of How to be a Power Connector, and on the board of Illuminate Ventures invite you to our free Crack the Funding Code webinar. Simply go to JudyRobinett.com and click on the webinar tab to see how to tap into our network of investors around the world. There’s a link in the show notes as well. You’re only one click away from getting funded fast!

Hi and welcome to The Successful Pitch podcast. Today’s guest is Annette Lavoie. Annette has an incredible story about being a medical device entrepreneur, and she now mentors startup companies. At her first startup, Annette was responsible for the funding, device development, and ultimately the acquisition of the Daisyclip contraceptive device by Hologic. Now she applies her experience to develop business, financing, and product strategy with startup companies in the critical early funding stages. Annette, welcome to the show.

Annette:

Thank you, John. Thank you for inviting me.

John:

Sure. I want to find out about how you’re helping entrepreneurs with their early round of funding, but before we get into that, I always like to know what someone’s background is. Obviously you have 2 patents and you have a degree, a PhD, in neuroscience. From an early age, it seems like you’ve been very interested in that area.

Annette:

I actually was interested in academics from an early age. I was surprised to find out that I had alternative interests in the entrepreneurship. I was quite happy doing my academic research at the University of Utah until I was exposed to a series of entrepreneurs who looked like they were having a lot more fun than I was and having a bigger impact in the world.

John:

Ah, yes, impact and fun. Those are 2 attractive things, aren’t they?

Annette:

Makes the world go round.

John:

It does. Tell us about how you made that first leap, because so many people sometimes… Some of our listeners still haven’t made that leap but they really want to, or they’re a little nervous. What was your first dipping your toe in the water from leaving your comfortable job in research to go become an entrepreneur?

Annette:

It was different. My transition from academics to the startup world coincided with my transition from being a wife to being a mother. The opportunity that I saw was to fully explore both aspects of my life. I was able to start a company around a medical device product that I was passionate about, and had some preliminary funding and some crazy confidence that I could transfer my ability to learn in the academic environment to my ability to learn about business. It was not something that I … It’s probably not something

I prepared for appropriately, but if I had prepared for it and known all that was ahead, I probably wouldn’t have had the courage to leave.

John:

So helpful. I love how you said crazy confidence. I love that. What does crazy confidence look like? I know what confidence looks like, but crazy confidence is you’re going to do this no matter what?

Annette:

Yes.

John:

Mm-hmm (affirmative).

Annette:

Unfounded confidence I think might also be appropriate. I was confident in my abilities, and so I thought that I could apply them in any area that I chose.

John:

That’s right. The skills are transferable. Tell us about when you worked at this company that you were involved with, that you were the founder and CEO for 8 years, and tell us that whole journey, if you would, about starting it, getting funding, and then selling it in 2012. What a great story.

Annette:

It’s a saga.

John:

Yes.

Annette:

Like any startup, it has … It’s a roller coaster throughout the entire process. My enthusiasm for the device was because of the simplicity. I was excited about the ability to take something that was a really simple idea, and that was to close off the Fallopian tube, and develop that. As a non-engineer, that was exciting for me to be able to have that ability to develop something that was simple but had a huge opportunity and would have a huge impact in the world. The device development piece of it was actually quite simple. The business model piece was the bigger challenge. Like I said, I came from science. I had the confidence that I knew how to develop this.

What I didn’t realize was how important the business model was to getting the funding. I really thought that when I had a device that was so obviously needed and obviously effective that the VCs would take one look at it and roll up their sleeves and say, “How can we help? We’ll provide the business acumen. You provide the science. Together we’re going to win and take this to market.” That was obviously completely naïve. I had no idea what I was up against and what the expectations were. Taking this product, this … really a science project that I had on my desk, and figuring out how I was going to learn what I needed to learn and prove what I needed to prove in terms of the business viability, was a lot bigger hurdle than I anticipated.

It’s a product that requires FDA approval, and not only that but requires a large number of clinical trials, which makes it expensive. When you’re raising an early round of funding and it’s apparent from the very beginning that you’ve got $10-30 million ahead of you before you can get this to market, raising the first million is incredibly difficult. They see that the path and the dilution that’s going to be upstream is daunting.

John:

How did you do it?

Annette:

Sorry?

John:

How did you do that? How did you convince someone like, “I need a million dollars but I’m eventually going to need 10, before I can even get this to market to prove that it’s going to sell”?

Annette:

Right. That was being in the right room.

John:

Ah.

Annette:

I did many, many, many, too many VC meetings. I went up and down Sand Hill Road. I talked to a lot of groups that were encouraging and enthusiastic. They liked what I was doing. They said, “We like your market. Come back to us for your Series B.” I didn’t realize that that was code for good luck, because I … I suppose they didn’t want to say no and I didn’t realize that. I was encouraged. All I had to do was get the Series A and my Series B is covered, because all of these groups are so excited about it. All the resources that I spent, all the time that I spent flying back and forth, and putting time into a business model that really wasn’t viable was discouraging and took a long time. I was finally introduced to Judy Robinett, and she understood that I had a great product, I had a compelling story, but I was in the wrong room. She was an incredible mentor. She joined my board and spent a lot with me teaching the business side and the business speak and helping me understand what was going on below the surface that I was not privy to and unaware of.

She took me to the right groups, and it wasn’t very long before I was talking to the right investor that was willing to make the right sized investment in this really early stage. It was a good fit in terms of market segment. We launched with that first early boutique venture capital round and got to the next point in terms of credibility for the product and the market, the business strategy, and we were acquired before we got to do any of the clinical testing from a large company that is … It was a great fit for them, so it added to their platform of women’s health care technologies.

John:

What a great story. How wonderful for the early investors that you got bought even before you got to market. That’s quite an exit strategy there.

Annette:

It is. It’s always a toss-up because when you’re talking to your board of directors and you’ve got a strategy, if you can stay in longer and you can take the product farther down the road, it has a greater value. If you can do that without dilution, then that’s a win, but there’s that trade-off about, how far can I take it and what is the return on the investment? The more money I put in, the more it’s worth, but are the ratios beneficial to hold on to it longer or to get an early exit? In this case, for a lot of reasons, we had political, a lot of political turmoil in the women’s health and contraception arena. It was when Planned Parenthood was on the chopping block and not funded. They were obviously a strategic that were talking to and interested in working with because the product we were developing was ideal for low resource environments. It was a good fit for Planned Parenthood but they were politically in survival mode. There’s a lot of things that go into your investability that have nothing to do with you or your product.

John:

Yes. There’s things outside of your control obviously and things change. Let’s talk about what you have learned from that, and how you’re able to consult and help other people with this now, which is this whole concept that you said of understanding your investability, are you investable, and what the key things that are needed. You mentioned earlier business model and structure and an exit strategy. Can you talk about some of the key things that founders should really know, the language they need to know, and what strategies they need to have before they even meet with VCs or angels?

Annette:

Absolutely. When you’re going out for your first round of funding, that’s the key is understanding your investability. Your investability is based on your opportunity, not just your product. It’s the idea that understanding that the investor’s putting in money, going to stay with you for a period of time, and then needs an exit, needs to get that money back. Otherwise, there’s no reason to get involved if there’s not a way to get out. What I find with some of the greatest technologists that I’m looking at and working with, they have a widget that they are so excited about. It’s the coolest thing ever invented, and it’s going to change gaming, or it’s going to change medical device. It’s going to change the world in some way or another. What they don’t understand is that they’re the only one right now that’s in love with that baby. They show up to a pitch. I’m sure you’ve seen this with really new, enthusiastic entrepreneurs. They have 57 slides and 54 of them are pictures of their baby and all the things their baby can do. That’s not relevant.

What’s really, I find, investors struggle with the most is separating the baby from the opportunity.

John:

I love that. We’re going to tweet that out. Separate your baby from the opportunity. Great.

Annette:

If you can take the idea of your widget, whatever it is that you’ve just invented, and summarize it, you need to summarize it in 1 or 2 slides. The rest of your slides need to be talking about the opportunity, because that’s what they’re excited about. That’s what the investor cares about. The product, you can insert widget, you can insert the next pitch device they’re going to put in there, and that’s not going to matter to them as much as, do I want to work with this team and what am I going to make from this opportunity? When you’re again talking with a technologist in particular, the way that your product works, the specs, all of the things about it, are less relevant than, how can I sell it? How am I going to get this into the market? How much are people going to pay? Are they going to buy it? How do I know they’re going to buy it? All of those aspects that have to do with the business model itself. How am I going to generate revenues? Then how am I going to use those revenues to generate or churn for the investor? Does that look like, is it an IPO, which is really … It sounds like it happens a lot in the media, but it really is a rare occurrence for your IPO to be your exit. Is it going to be an acquisition? In the medical device space that I’ve lived in, a strategic acquisition for an early medical device technology is much more common, and that’s something that the investors can anticipate within a certain period of time based on the milestones.

John:

If I’m hearing you correctly, Annette, it’s really important when you’re putting your pitch together to investors, that you not only have an exit strategy of, “Oh, someone’s going to buy us,” but do some homework and come up with, I don’t know, 3 to 5 potential people that could buy you down the road, because you’ve done the research to know this would fit into their platform and how it would help their company.

Annette:

Absolutely. It’s like selling a house. You do comps when you’re selling your house. It’s the same thing. You would look at other companies in this space, in the similar space to you that have been acquired, who they’ve been acquired by, what their phase was at acquisition, and how much they were acquired for, so that you can compare. If you plot that out, you could see where you compare to these other technologies and anticipate who might be interested and how much they might be willing to pay.

John:

I love that.

Annette:

That’s going to be really key to having the investor interested, having them comfortable with the credibility you bring to the table, that you know what you’re talking about. It’ll tie directly into your valuation.

John:

Great. Oh, there’s 2 things you brought up I want to talk about. One is the investor’s question in their head is, do I want to work with this team? Then we definitely want to dive right into what you just said about selling the investor. Founders have questions about, how do I value my company? Do I ask for 20% for a million dollars or 30 or 10 or 5? Let’s dive first into, do I want to work with this team? What do you think people can do to be perceived as coachable and likable when they’re talking to potential investors so that they do want to work with them?

Annette:

That’s a great question, because at the end of the day, the team is much more important than the product. I’ve heard over and over again from different investors in different segments, angel investors, VCs, that they would rather invest in an A team and a C opportunity, I’m sorry, an A team and a C product, than an A product with a C team.

John:

That’s great.

Annette:

The execution of that, taking that product to market, is key to the team. What we found is that it’s not just the experience of the team, because you can have very experienced entrepreneurs that have taken products to market. More often, there are … The team revolves around brand new entrepreneurs, but even if you have a fully experienced, serial entrepreneurial team, if they haven’t worked together, they’re going to have challenges. Those challenges can be … They can be fatal. It’s important to understand the coachability, because if you’re looking at that aspect of a team, it’s how coachable are they from the investor’s perspective. The investor wants to get involved because they know the space.

Typically it’s an industry sector or it’s a product type that they have worked with before, and they feel like they can add expertise. They can add more than just capital to create value in this company. That’s a good rule of thumb. If that’s the case, then they are going to be involved with the running of the company and the execution of the product to some degree. Now most of them won’t be at the office every day, but they want to be there. They want to be a valued resource, and they want to know that you can have a communication, open lines of communication, transparency, that they trust you, that they can work with you, and if there’s a problem, that they can roll up their sleeves and show up at the office, and you can work together to overcome whatever hurdle’s in the way. There are always hurdles in startup companies.

John:

Of course. I want to just summarize what you said for the listeners. To me, the ideal investor is someone who has capital but also expertise in your field. The ideal founder has a strong team that not only ideally has experience, but also has a track record of working well together that shows they can overcome problems.

Annette:

I think that’s exactly right. I think that I would qualify this as particularly true when you’re looking at early stage and angel investment. Sometimes when you get into the larger venture capital investments, your companies get larger. It’s easier to overcome some of the aspects of team because it’s possible to replace your team. When you’re looking at these early stage, that’s absolutely true that you’re going to be working together, and that collaborative effort is going to go a long way in making the success of this company.

John:

Let’s dive into your expertise around valuation. When it is pre-revenue in a lot of cases, and they’ve made up some numbers that they think they can make a product for X and sell it for Y, and they anticipate with the funding they’ll be having marketing, how do you recommend people decide what’s a reasonable percentage to ask for in early stage?

Annette:

That’s a really great question. What I wanted to clarify right off the bat was I’m not sure I’d call anyone an expert in …

John:

Fair enough.

Annette:

… pre-revenue valuation, because it really is more of an art. It really is it’s worth what they’ll pay for it. Some of that, there are a lot of algorithms and estimations that can be made around a revenue company, but in a pre-revenue company, there are indications that tie into valuation. It’s more of an art. What I like to start with as a rule of thumb is to know what I need to raise to make the first real value inflection point. What’s that first milestone that’s going to increase the valuation of my company, in just general terms, increase that valuation to a certain extent? If I know what it’s going to take to get there in terms of time and money, that should be my first raise. If you’re going to anticipate that I need $5 million upfront to get this to market, then the valuation that you’re going to be able to get on something that’s that early on is going to be so dilutive that that money is harmful rather than helpful. Does that make sense?

John:

It does.

Annette:

If I find out what’s the smallest increment of capital that I can make or that I can take, I should say, that’ll help me make that first value inflection point, and then I use that as my marker, put a contingency in there because something always happens, but if, say, that first … If it’s $250,000 that I need to get to the point where I have a prototype that I can prove it works, it’s a great milestone. If I can prove my prototype with $250,000, then what I want to raise should be about a third of the company. Ideally what you would say is the pre-money value on that company is $500,000 so that the post-money value is $750k and the incoming money is worth 33% of the company. Those are good targets to hit.

John:

That’s so helpful, Annette. I can’t tell you how clear and specific that is. I’ve never heard anybody say it quite like that. It’s really great information. Thank you so much. That’s going to be a huge takeaway for our listeners.

Annette:

Good. To me, it works. It’s practical. It allows for a win-win situation. The investor, I think there’s a stereotype or a misconception that the investor always wants the smallest valuation they can get, a largest piece of the puzzle, or a largest piece of the pie, excuse me. At the end of the day, they want that investor … The investor wants that entrepreneur to be motivated. If they don’t have much equity in it, they’re not going to be motivated enough to take the risks and make the sacrifices it’s going to take to take that company all the way.

John:

That’s so great. This whole concept of knowing your numbers, I’d love for you to speak to the importance of that. Once you’ve got the coachability and you’re someone that people want to work with, and you’ve got the experience and the camaraderie and the collaboration coming across, and you’ve got the good product, you can really stumble, and people will lose faith in your ability to run the company, if you don’t know your numbers, right?

Annette:

Absolutely. I’ve seen more than once where you’re talking to an entrepreneur, and they punt the numbers to the CFO. If the CFO isn’t in the room, that’s an excuse for them to not know the numbers or come back with them at a later date. Now I would always advocate to be upfront, if you don’t know the answer, to admit that. The worst thing you could do is make it up, because then invariably you lose long-term credibility with that investor. They want to know, and they’re going to find a lot out about you and your integrity in that short pitch. If you don’t know the numbers, and you are going to make them up in order to create an appearance of success or an appearance of credibility or an appearance of expertise, then they can anticipate that when they’re working with you, if they made an investment in your company, downstream something happens that’s not necessarily positive, that you would be expected at that point to put on a face and have the appearance of success and maybe cover up what’s not going well or what you don’t know. That’s always a bad combination for an investment. If you don’t know, be upfront.

John:

Be upfront. I love it.

Annette:

That said, you need to know the numbers in broad strokes. It doesn’t help anyone if you know it to the dollar amount. As you have these 5 year, they’re going to change. What I like to use as a rule of thumb for pitching and for numbers is keep in mind that the investor that you’re pitching now has to turn around and pitch to their partners. They have to take your pitch and explain to their partners, whether it’s a wife or a business partner, that they like this deal and this is why they want to invest in it. Your numbers need to make sense. What I like to, particularly in that first early pitch, is to be able to give them multipliers. Give them numbers that they can remember.

Start off with a metaphor if you can so that they can understand the framework for your technology. For example, I was working with a company called Latch. It was a great product, but I couldn’t understand exactly what the technology was designed to … what problem it was designed to solve. The entrepreneur said to me, he said, “It’s like Carfax for houses.” Suddenly I understood it. Everything from then on out fit into a framework that made perfect sense, and it shortcut that discussion. Then when I went back to my partners, I could say, “It’s Carfax for houses,” and we could summarize the pitch very simply. Then the opportunity is this. They need this for an investment. It’s going to take this long to hit this milestone. Sell to this company, and this is the exit. It’s something that they can remember and articulate very easily and not get confused.

John:

I love it. It’s such a great framework. We need this amount of money to hit this milestone and get this kind of return, and then the exit strategy is this. How do we get in? What happens in between, as you said, and then what’s the exit? Structuring it like a story, beginning, middle, and end, with a metaphor is a great line. Are there a short checklist that you recommend that founders have or CEOs at a minimum that you should know? How much does it cost to get a customer? What’s your markup? What your competitor is charging versus you? Is there any kind of .. like be sure you at least know these 5 things, because these are the kinds of questions that you’re going to get asked?

Annette:

I think it’s very industry-specific. For example, customer acquisition is not a conversation we have in medical devices. If you know your industry and you’re in software, that’s certainly something that comes up, so you should be aware of that. I would say in broad strokes the minimum numbers you need to know are how much money I need to meet my first value inflection point, how much money I need to take this product to market, what’s the total amount of investment that I anticipate, and what are the basic industry metrics in terms of the average selling price or the anticipated selling price for that product, what the overall market is for that, and then what the anticipated exit numbers would be, and so that you can look at a return on investment.

John:

My last question for you is, are there any suggestions you have for founders to make sure that they stay the founder? That, as they grow, that the VCs don’t want to replace them?

Annette:

That’s a great question, because it’s a concern I hear a lot. I know that at one point, and I’ve heard venture capital investors say that their job is to replace the founder as soon as possible. I don’t think that that’s necessarily across the board, but I have heard that. What I think is that we know that there are different skill sets that are required to grow a company from nothing to a prototype and a first product, and then growing to the first million is a skill set that is very unique to startup companies. Growing the company from the first million to scalability at 5 million or 10 million is another skill set, and then growing it beyond there is another skill set all together.

I understand the concern of entrepreneurs not to be replaced. What I’ve always found is that if you are a team player and you add value, then there’s no reason to replace you. You may be replaced in that position as CEO, but that’s often for the betterment of the whole company. If you are adding value, and you’re easy to work with, and you’re making contributions to the technology, then having your history and your expertise within the company stay within the company is a benefit to all. You may find yourself in a chief technical officer position or you may end up as VP of R&D as the business grows. Your role will change, but if you continue to add value and be a great team player, then I think that the concern that you’ll be booted out is less. That said, there could be performance clauses or protections that lawyers put in place when you bring in the capital, so that they’re not motivated to eliminate your large equity stake for other reasons if you can be replaced technically.

John:

Got it. Nice. Is there any book that you recommend founders read about life or business?

Annette:

Life or business? My startup companies, I typically recommend 3 books to start with. One is Dead on Arrival, because I think that has some great vision into some partnership issues that enthusiastic friends and entrepreneurs are often not aware of. I think it’s a really short book, but it gives you some ways to anticipate potential problems down the road legally which may not be what you’re anticipating or good at. That’s Dead on Arrival. Pitch Anything is a great book.

John:

Mm-hmm (affirmative). Yes.

Annette:

Even though it is focused on venture capital and some of the power positions and the power struggles that he talks about are not necessarily as relevant to angel investing, I still think that there’s great information in there about the emotional aspect of pitching. Then of course How to Be a Power Connector is critical to understanding how to meet the right investors and be in the right room so that you’re not wasting time and resources pitching to someone that is never going to be a viable investor for you.

John: Fantastic.

Yes. That’s Judy Robinett’s book. You’re working with her on her new program, Crack the Funding Code, right?

Annette:

I am. It’s very exciting to see the mentoring that I received put into play in a webinar and a format that can be shared across the board. It changed my life to be able to work with her and to get in the right room and really see the product that I believed in go where it needed to go. It’s great that she’s able to share that across the board.

John:

Yes. It’s a fantastic program. I highly recommend it, because I’m going to be working with her on that as well. It’s exciting that I get to work with both of you. Annette, how can people follow you on social media? What is your Twitter and all that good stuff?

Annette:

My website, annettelavoie.com, and my Twitter is Annette.Lavoie.US, or Annette.Lavoie.US if you’re French Canadian.

John:

Lavoie. I love it. All right. Thank you so much. It’s been great having you on the show., You’ve given us so much valuable information from the importance of how to structure your valuation to the importance of being coachable and the team and that crazy confidence that you had, and getting in the right room of course is paramount to being successful and what investors are looking for. I can’t thank you enough, that it’s really all about the opportunity, not just your product.

Annette:

Thank you very much for having me. I enjoyed speaking with you.

John:

Great. Thanks for listening to The Successful Pitch podcast. If you like the show, please go to iTunes and write a review, and encourage your friends to write reviews too. It really helps get the word out. People say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest, but when it comes time to write the check, they don’t do it. How do you get people to say yes and then follow through? Visualize yourself on the left side of a river bank, and you have to cross the river. On the other side of the river is where the funding happens.

First, you make up your idea. Then you make it real. Then you make it reoccur. Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own with a lot less frustration than you will get when you hear a bunch of nos and you don’t know why. If you want some help getting funded faster with less frustration, go to my free funding webinar, sellingsecretsforfunding.com/webinar. Sign up and get in-depth information on how you can get funded fast. Thanks.