TSP023 | Lex Deak – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John Livesay:
Hi and welcome to The Successful Pitch podcast. Today’s guest is Lex Deak, who is the CEO and Co-Founder of QVentures, a network of investors as well the CEO and Founder of TENDR, which is very similar to Tinder, the dating service, except instead of swiping through people you want to date, you swipe through deals you might be interested in. It’s deal flow at your finger tips is the way he described it.

He goes on to describe one of the startups that his company QVentures founded and why they really responded to not only the technology, but the founder’s focus, likability, and leadership qualities. You’re going to learn a lot about what it takes to be a successful entrepreneur who gets funded from listening to Lex speak about these areas. He says you should listen five times as much as you talk when you’re around other people. You want to be in a room where you’re not the smartest person in the room. Welcome to the podcast.

Lex, welcome to the show.

Lex Deak:
Hey John, thanks for having me.

John:
Lex is calling in from the UK and as listeners know, I’m based here in Los Angeles, so I love the global world of investing. Lex, before we get into how you’re possibly running and starting two companies simultaneously, I’d love to have you talk to our listeners about your whole entrepreneurial spirit. I know you’ve been doing it for a long time and you’ve had many other successful companies. What is it that you think makes an entrepreneur successful, especially in the eyes of an investor?

Lex:
Well, that’s a great question, John. I mean, if you try and distill what entrepreneurial spirit is, I think you’ll fail. It means something different to everybody and it means something different across cultures as well. If you look at, you look at the world itself, entrepreneur, it’s of French origin. If you break it down, it really just means to undertake a task or to begin something and I think that’s probably, for me, where the essence of being an entrepreneur lies. It’s in getting up off of the sofa, off of the couch, and actually beginning something, okay.

There’s no, when you say you’re an entrepreneur, it’s a bit of an awkward word sometimes, because you don’t know, is this guy a billionaire living on a boat or is this guy living on handouts and dreaming? There’s no, there’s connotation as to the level of success when you say you’re an entrepreneur, but the commonality is generally that person has gone out and created something, right, so an artist in the sphere of business and commerce perhaps.

Successful entrepreneurs, in my experience, tend to, tend to have a balance of skills. They will be polymath with strong social skills, a self-awareness, importantly, an awareness around their own failings and people that they need on side to help them to create successful ventures where to fill in the gaps. Some classic lines about not wanting to be the smartest person in the room, you need to be, you need to be self-aware enough to realize where you may not be as strong as you possibly could be. You need to be determined, you need to be confident enough, but not cocky, and that’s quite a fine line to skirt. You need to believe that this person is going to knock down doors, but they’ll say, sorry and thank you in the process.

John:
I love that.

Lex:
So, aside from that, the successful ones have a commercial awareness where they’ll look towards ideas and businesses that are scalable that will generate revenues. It may not be early on, but at some point they will create value or revenues and, you know, I guess that’s probably a good starting point. There’s all different flavors in an entrepreneur, right.

John:
That’s a great starting point. In fact, we’re going to tweet out what you said as the definition of an entrepreneur is an artist in business who creates something. I love that. If you start to think of yourself as an artist and your canvas is the business world as oppose to painting something, it totally re-frames how you approach yourself self-definition goes right into what you were describing, which is the importance of self-awareness and how do you see yourself and how do you attract the right people to join your team.

The other thing I really want to tap into from what you just said is social skills, because the traditional stereotype of a tech CEO in particular is someone who may not have great social skills and you’ve addressed that in the UK with The Supper Club, which is this wonderful event and networking opportunity. Can you tell us a little bit about that and how that might help someone who is a little weak in the social skill area develop that?

Lex:
Yeah, I mean, The Supper Club is arguably the country’s preeminent entrepreneur group. You also got YPO, you’ve got EO here, but The Supper Club is an invitation-only club, which comprises around 300 members. The average turn-over per member is around 15 million dollars and in order to become a member you have to be the owner/operator of the business. You have to be the one. You can’t be in professional services, you can’t be in consultancy, and there are a few other criteria as well.

Generally all of that is in place to seek out people who are employing north of 50 or 100 people and looking to grow their businesses and so form there is generally in terms of a dinner. So, The Supper Club hosts between half a dozen to a dozen events per month. They are all intimate affairs, roundtable discussions that are shared around a specific topic and you know what, John, it’s like, I can only liken it to entrepreneurs anonymous, you know?

John:
What a great image.

Lex:
You stand up and often in business, you know, if you’re a co-founder, it’s very difficult to talk to your co-founder about certain issues. Friends and family they’ll be, you know, they’ll show you insight, but generally on the personal side of things, rather than the specifics of your sector and, you know, paid advisers are in the business of getting paid more, so their advise will probably be a little bland and in the interest of self-preservation, so a club like The Supper Club allows people to speak freely and to seek advice from their peers in this pool of strictly vetted people and some people go there and they listen more.

Some people go there and they talk more, but everybody leaves with something and I think if you are, if you’re somebody who’s at the earlier stage in their entrepreneurial career and you want to soak things up, you should seek out these sorts of groups, because you never stop learning and you should, especially as a younger entrepreneur or an inexperienced entrepreneur, you should be listening not just twice as much as you talk, but five times as much as you talk, because you have to soak so much up. It’s difficult, but you can help yourself by listening, right.

John:
Right. I mean, that’s another great tweet. Listen five times as much as you talk.

Lex:
Yeah, at least, right.

John:
So, let’s talk about QVentures, you’re the founder and managing partner, which is another fascinating highly vetted and curated network of global investors. You have, I believe, over 60 offices around the world. How did you come up with this idea?

Lex:
So, this was really in response to all that was happening with alternative freelance, the evolution of online platforms, disruption of VC. It felt like there was a good opportunity to do something in this space and actually referring back to The Supper Club and this entrepreneurs’ group, you know, the learnings from that group was so strong, I thought we could apply the same ethos to an investment network, an angel network.

So, that was the mission we set out with and we needed to partner in order fast track the growth of the network and so I approach the Quintessentially Group, which has been going for around 15 years and it’s arguably the world’s largest network of high networth with over 150,000 members and offices in over 60 countries and they, you know, they comprise family offices, ultra high networth, entrepreneur investors.

The whole smorgasbord of investors and members and I thought, well, you know, this is probably the best partnership that we could do, so we went into a joint venture and created QVentures, which is a hybrid, really of an online platform, a membership club, again, strictly vetted, and an angel network. We launched that around 12 months ago, since then we’ve done around $16 million dollars in fund raising into 14 companies, we’ve had about a dozen individuals placed on to the boards of companies so that’s the membership and the interaction aspect and we’re only just getting started so we’re now expanding our offices into the US, we’re expanding into the middle east and into Asia. We’re expanding the team, so we should be up to around 30-40 people by the end of the year. It’s going really, really well.

John:
It sounds fantastic. I mean, the growth potential and the fact is, correct me if I’m wrong, but from what I read on your website on QVentures, it seems like there’s such a need for this hybrid model, because there’s a big gap between what venture capitalists start at and what most angel investors are comfortable of giving, but the startups need money in between that amount and that’s what QVentures is solving, is that accurate?

Lex:
Yeah, that’s exactly it. We’re filling in the series A gap or I’ve heard it called the mega seed round. It is that gap between where angels will stop and VCs will come in. Super angels ultimately as well, who often are the LP in VC funds, actually, but they are seeking direct access to deals and so it’s a difficult space to fill and most attention has fallen either side of this gap, but I think there’s an increasing demand for it and it’s driven by the entrepreneurs in the business owners. Those are the ones who are building our future and we drive these sorts of demands.

John:
Right. Can you give us an example of one of the 14 companies that QVentures has funded? How did, did they come in on a pitch day or how did they pitch to QVentures to see if they’re worth of being one of the fortune 14 that get funded?

Lex:
It’s through personal introductions generally speaking. We wouldn’t discount a cold approach, but given we engage so meaningfully with our members, that personal introduction of a network, it just adds more weight and increases the chances, so one deal in particular, which is a company called Stratajet, which is, it’s essentially Uber for private jets and it’s a great business.

There’s a lot of very deep tech underneath it. They are the only ones in the space who have actually built the technology platform to enable penny perfect real-time quotes and you know, for those guys, we were just firstly blown away by the level of technology that they had built. I mean, it’s a year and a half worth of having some very clever people build some very clever stuff.

The founder had this – he was ex-military and he had this approach, you could imagine being in the trenches with this guy, everything was planned out, he knew exactly what he wanted to do. All of his business strategies had a code name as if he were, you know, as if he were still in military.

John:
Wow. I love it.

Lex:
Along with that bullishness in the organization, he’s also a lovely chap. Easy to go for a beer with and someone you’d believe in. The valuation what fairly reasonable. It’s operating in a market where there’s some huge winds and because of our association, our partnership with Quintessentially, which is a lifestyle and luxury brand, private jets fits quite well with that, so it was an easy one for us.

John:
That’s such a great example, Lex. Thank you. The big takeaways for me are that personal introduction, those warm intros, however you want to phrase it are so important, which goes back to The Supper Club and the need to network and develop your social skills and be self-aware and get this team and despite how exciting the idea is, it also sounds like you were equally impressed with the founder’s personality of being likeable, a leader, an organizer, and taking his essence, what made him unique of his military background and applying that to naming his different strategies, which then, of course, makes him memorable and I really think that’s one of the key things when you’re a startup pitching investors is you have to, you know, you hear, I’m sure, many pitches within a week, a month, and for them to really grab your attention, it has to do all those things. You have to be impressed with the product, but you have to be equally impressed with the founder, would you agree?

Lex:
Totally. Yeah, I mean, it’s the marriage of those two things. If you have an impressive founder or founding team, an impressive business, you know, as long as the metrics stack up and the timing is right and it’s in a scalable market place, yeah, it’s hard to find, you know, it also relies upon, you know, some of the things you can’t necessarily control. Your mood on the day, their mood on the day. We’ve all been at parties where you’ve been introduced to somebody who you’ve been told you’re going to get on with like a house on fire and then you’ve had a bad day at work and you turn up there and the other guy is not feeling very friendly and you think, ah, this is no good.

You catch somebody when the sun’s out on a barbecue and you’ve had a couple of beers and suddenly this guy is your best friend and you love everything about him. So, you know, there are these planets aligning aspect to things which I think people need to recognize and, you know, it is a small part of it, but it does play a part.

John:
Well, timing is everything. It’s from, you know, whether a joke works or not in comedy to whether you click with somebody in a dating situation or whether you click with someone in a business professional relationship. You can increase your chances of clicking by making sure that even if the person you’re meeting is in a bad mood, that you’re not, right?

Lex:
Yeah, absolutely. That you can control, you’re right.

John:
So, let’s talk about TENDR. I mean, my goodness, you’re getting all kinds of press and excitement around that, congratulations. I’m wondering if Supper Club sort of lead you to QVentures and I’m wondering if QVentures is what allowed you to say, you know what, there’s yet another need that I see here in QVentures, This sort of one stop shopping for crowd funding, seems fantastic. I’d love to hear where it came from and what you’re doing with it.

Lex:
Yeah, great, well, you’ve already hit on a personal point on it is a logical progression and I think just a word of advice to any founders who have multiple interests and like to explore things, if you can keep those things fairly aligned to one another, then you’ll sleep a bit better at night, because there’s synergies in what you’re doing, you know, if you want to have a bagel stand and you want to have a tech company and you want to have a travel company, you might struggle to control them, but anyway, yeah. TENDR is this great aggregation play in what is becoming quite a fragmented market place. We’re lucky in the UK in that our – the legislation here is allowed for crowd funding and it’s a favorable environment for doing it and London is such a hot place for fin-tech.

I know Title 4 and the Jobs Act is now allowing and opening the doors to crowd funding for equity in the US, but it has been incredible evolution over the past two years here to watch these platforms spring up and do deals. Do serious volume, increase employment, empower entrepreneurs, create all these new businesses, but as an investor, its, you know, there’s noise out there, right. I mean, we all get inbox fatigue. You know, getting something landing your inbox from 15 different platform, there’s a good chance you’re not going to get around to it and it’s becoming more difficult.

So, in my mind, there’s a need for an aggregator and it was important that aggregator was frictionless and really simple and ultimately and this applies in so many deals, the essence of the deal can be boiled down into a five or ten second sound byte, so if I had an idea that this deal might be, I’d call you up and say, John, we’ve got this deal. It’s Facebook for dogs, Warren Buffett is investing, it’s 90% funded.

Now, if you’ve got a lean towards that kind of a deal, then that’s enough information to get you to the point of saying, hold on, actually, yeah, maybe I’ll grab a coffee with this guy and find out a bit more about it or I’ll get so more information. If I sent you all the information in one go, you’d think, well, I’m going to wait until the weekend until I’ve got some time and then I’ll get on to then.

So, I had the idea for this actually about two years ago. I initially wanted to build an app for QVentures, but my stake holders pushed back and said I might be over engineering solutions for a problem that wasn’t there. I slightly disagree still, but I’m happy, you know, I can console myself that we now have TENDR and so it took awhile to kind of come from being an idea into realizing that and we started work on it the beginning of this year, maybe around Easter time.

I had the support of the platform, so that was key, so a lot of – you know, when you build an aggregator, there’s an element of cheek around it, like you’re trying to shortcut or you’re trying to leverage the work of other people and you’re just trying to sit on top and I think that can be true, however having built my own platform and having great relationships with all of the other platform owners, I was in a good position to say, guys, look, let’s build something here as a tool for the ecosystem, as a tool to drive new investors and to increase transparency and I got them on board and that was great, because it said no to all the other approaches that they had had from people trying to build aggregators, so we set off about doing that.

We’ve got the two main platforms in the UK, the biggest platform in Europe, half a dozen other sort of secondary and then half a dozen sort of tertiary platforms below that. We launched just over two weeks ago. So far we’ve had around 150,000 actions taken from the app, so that’s a like or a dislike or a share. So, great numbers. We’ve got users in around 30 countries now.

John:
Oh my gosh.

Lex:
Yeah, we’ve got inbound interest from the primary platform owners in, gosh, in Israel, in Singapore, in India, in Australia, in Spain, in France, in Hong Kong, and a number in the US who are now looking at getting involved, so we’re going to move very, very quickly and we’ll be international within the next couple of months and then we’ll also start to add on other opportunities, so equity is really interesting, because there’s content around it, but investors may want to also see debt opportunities, loan opportunities, invoice factoring, and so it’s really easy for us with the API we’ve built to work with the platform owners in presenting those, so yeah, it’s really, really exciting. I’m over the moon with the progress that we’re making, but we want to build this into a serious billion dollar business and I believe that we can.

John:
I believe you can too with your track record and what you just described. For the listeners, just so they know, it’s TENDR, which is a play on words. It’s spelled slightly different than Tinder, the dating app, but TENDR, without the E at the end works like Tinder, the dating app as you swipe through the deals, correct?

Lex:
Yeah. It’s basically tinder for deal flow. Really, really simple. You swipe right if you like it, you swipe left if you don’t. You can have push notifications once you’ve liked deals reach a certain percentage of their funding target. You can change which platforms you want to see. It’s all really nice and lightweight and attractive. I should say at this point that actually there is another business in the states called TENDR, which is spelled the same way and I would just like to take the opportunity to make sure people understand the difference. TENDR.com, you can go to and create wedding lists or rather, you create cash gifts for couples that are getting married. It’s really elegant, it’s really nicely designed. I wouldn’t want to take any traffic away from those guys, but we are TENDRDeals.com and hopefully people won’t get too confused.

John:
Great, we’ll be sure to put that in the show notes with the exact correct link for TENDRDeals.com. What you said earlier, I just want to recap, because there’s so many valuable things when you’re describing Tendr deals. Inbox fatigue being the big problem solve, getting a no from the QVentures people did not stop you, and finally, this whole concept of if you can’t give me a five or ten second sound byte to intrigue me enough to want to know more, then I have to put that off into when I have time to really do a deep dive to understand something and what TENDR deals is solving, it seems to me, is this quick sound byte concept with something that people are used to doing, which is swiping through and saying yes or no. So, you’re not asking people to do a deep dive just whether they’re initially interested or not and then they can come back to it, right?

Lex:
Exactly that. It’s a bookmarking tool. It’s not intended to be the basis upon which people make decisions. Of course, early stage investing is a fairly risky business and it’s important that people are aware of the risks, but as a tool for bookmarking to revisit later, probably on desktop and do a fully interrogation, it’s a great tool and not just for investors, it’s also for entrepreneurs who want to stay abreast of what deals are out there and what’s getting funding for journalists who want to stay on top trends, even for service provides for recruiters and marketers who will be looking at these companies listed as targets and potential customers in the future.

John:
One of the things that’s impressive to me is the fact that it updates people on how far a deal is being funded without you having to physically go back every time. If you said you like something then you get an update as a continues to get closer to the funding amount, is that accurate?

Lex:
Yeah, that’s it, exactly.

John:
So, that gives a huge value too, because let’s face it, people like to be apart of something successful and don’t want to miss out, right?

Lex:
Yeah, yeah.

John:
So, the more they see something trending, they’re like, ooh, I better get on that, right? So, that’s a huge time saver for people.

Lex:
Yeah, it is. I mean, there’s the, you know, it’s basic psychology and investors are no different, right. We hurt. We follow the leader and that’s not a bad thing. It’s an important evolutionary principle that you need to follow somebody and the assumption is if a enough people follow then that leader must be going in the right direction. I know there’s plenty of political debate against that being a good thing, but that’s probably not for now.

John:
Right, so for startups to – it’s a great source to see what people are obviously interested in investing and if they want to be part of what people are looking at on Tendr deals, they should be part of other crowd funding elements, because you’re aggregating that. There’s no way for someone who’s not part of something that you’re aggregating to get involved, correct?

Lex:
That’s correct, yeah. We only want to promote deals that come from reputable platforms that have the relevant compliance and regulations. Yeah, you would not be able to list directly on Tendr, it’s only via our partner platforms.

John:
Great. Lex, this has been so incredibly interesting. The last five minutes or so that we have left, I want to ask you some quick takeaways. One of my favorite questions to ask people like you is, what kind of books are you reading either to keep yourself inspired as a person, like the self-awareness you talked about earlier or what books do you recommend for startups who are looking for funding?

Lex:
Oh, well, I’ve read a lot of biographies, autobiographies of business leaders. One of my recent favorites would be Warren Buffett, Snowball, which is a great read. It’s a thick book, but it’s well worth it. I’ll read a number of self-help kind of self-improvement books or books to raise your mindfulness and awareness. The Chimp Paradox is fairly interesting. I will read books around my area if it’s something relatively new to me, so at the moment I’m reading a, it’s actually a Big Data For Dummies book.

John:
You’re hardly dummy, Lex, but okay.

Lex:
It’s just, you know, it’s a nice way to get a broad feel for a new space that you might be entering and then anyone who has been successful in that space, I recently read Peter Thiel’s Zero to One startup book. I think, it’s important when you read these things to remind yourself of your own perspective on what it is you believe. You can’t take all these tidbits and bits of these anecdotes as given. You know, I disagree with a lot of what I read, but I think you just need to soak it up, diversity is the key, right.

John:
Ah yes, well there’s a great quote right there. When you’re reading something, the whole perceptive is diversity, you don’t have to agree with everything, but it gives you a perspective broader than your own and you still filter everything through what works for you. The other thing I really love that you said is, if you’re going to be someone like you who runs multiple businesses concurrently, make sure they are in the same genre, so that you can maximize your contacts and expertise. That’s such a great one. So, how can someone follow you on social media, what’s your twitter account, what, you know, if investors are interested in being part of your Supper Club or QVentures or how do we, you know, how do people find Tendr Deals.

Lex:
The social bits, if you want to follow me, it’s @LexDeak. If you’re interested in our super angel investment club, that’s @QVenturesCo and if you’re interested in Tendr Deals, that’s @TendrDeals and there are all fairly active accounts. My own one is mostly about those two businesses, but often musing about various unrelated things, which you may or may not find interesting, I’ll leave it up to you.

John:
I’m sure we will. Anything that enters your mind would be of interest to anyone who is in this world. It’s been fantastic having you on the show. I’m looking forward to watching the success of Tendr go stratospheric, I’m sure it will globally. Congratulations on such a clever and unique app.

Lex:
Thanks, John. That’s all very kind and thanks for taking the time and it’s been great talking.

John:
Wonderful.

TSP022 | Beekman Boys – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John Livesay:
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 when they brought 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’s 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.

Brent Ridge:
Thanks so much for having us.

John:
One of the things that really impressed me is the strategies 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 and I’d love to have you guys just talk about those three things right off the get go.

Josh Kilmer-Purcell:
Well, sure. Well, I appreciate you calling it a strategy, because they weren’t very strategic, they just happened, but the fact that they became a strategy, but when, 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 can actually be pretty simple and that there are three rules that can get you through just about anything and those three rules are: Work hard, never quit, and help your neighbor.

And, 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 and I think the story we told about the amazing race was the most 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 in the race we helped our competitors finish puzzles, you know, we waited for them to finish their challenges, we helped them find clues, and at the end of the day, I don’t know why that kept us in the game, but it kept us in the game till the very end and then we won, so it worked.

Brent:
And that really is, as Josh said, wasn’t something that we sat down before hand and wrote down on paper and a business plan here’s our strategy for growth as a company, but it, you know, just to give your listeners who may not be familiar with our story a little bit of content, we’re two city guys. We had these great careers in the city.

As you said, I was working at Martha Steward and Josh was an advertising executive and we bought this, at the time, 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, you know, we were going to do a little gardening and grow some food.

And then 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, hey, I’m, you know, losing the place where I have my goats, can I bring the herd to your farm to graze and at that time we just thought it’d be great to have a petting zoo and so we, you know, said, for sure, bring them. The property had like a caretaker’s house on it, so he moved in there and it was that openness and that willingness to bring him on that really ultimately was our saving grace, because 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 and for people who were working in media in New York City at that time, you could not see when the jobs were coming back.

Josh:
Ever having a job again.

Brent:
So, we became very close to losing the farm until we kind of literally pulled ourselves up by our bootstraps and said, okay, what are we going to do here to make this happen and you know, sat out and said, okay, what do we have? You know, we have some marketing background, we’re relatively intelligent people, and we have goats, so what can we do with that? We started making products using goat milk.

Josh:
Started with goat milk soap and goat milk cheese and then started working with our neighbors who are great artisans and crafts people. Blacksmiths, weavers, potters, and started, they were wonderful crafts people, but they didn’t know how to sell their wears to a wider audience, so we folded them under the Beekman 1802 umbrella and we sort of, now we work with over 52 artisans and selling to natural chains in Williams-Sonoma, Anthropologie, Bloomingdale’s, Target, so it’s been an adventure, but three things, work hard, never quit, help your neighbor.

John:
You know, that’s so valuable for our listeners, mostly the 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 it. 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.

So, you time and time again, this helping your neighbor from literally letting the neighbor’s goat graze on your farm for free, which then allowed you to start selling goat soap and milk, then helping people on The Amazing Race and 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 know, you were able to pay off your million dollar mortgage from winning The Amazing Race, but I sort of teased the audience a little bit. What are you doing now with something called Mortgage Lifter to, again, help your neighbors?

Josh:
Well, before we ran The Amazing Race, our big challenge, as you said, was paying off this mortgage and we sort of tongue and cheek decided we’re going to sell a pasta sauce made out of an old heirloom tomato and 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, so 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.

Now, that was in April 2012. In May, we ran The Amazing Race and we won and we had enough money to pay off our mortgage and 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, but we really believe 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, so we decided to pay it forward and it has now become sort of a virtuous circle, because love that message so much that they started buying so much of the product we weren’t able to supply the tomatoes anymore.

So, now we’re able to contract with other small farms to supply the ingredients, so 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.

John:
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 pitching anything either pitching yourself to get on the Amazing Race, pitching your products to be sold in all these stores, but you know, you don’t just tell a story, you live the story and this is a classic example. When you said that, you know, you’re not just storytellers, we’re story livers, that resonated with me so much and I want to encourage all the listeners to think about, if you’re telling your story to 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 are doing? It’s just so great.

Brent:
Yeah and I think that, you know, the consumer these days is so well versed in branding and..

Josh:
Marketing.

Brent:
Marketing, it’s really hard to just be a storyteller anymore, because people can see through that, they can see a made up story or something fabricated just for the purpose of selling a product, so I think a story of living is going to be a much more important, you know, going forward for people who are looking for more authentic products.

Josh:
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 know, you don’t want to be the Mrs. Fields sitting at the head of a corporate table. You have to remember where you started and to that end, Brent and I, we always take every Sunday to be on the farm and working on the farm and doing all the chores. We still do all the chores we ever did, but that, 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.

John:
It’s such a great example. I mean, 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 and 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.

I mean, 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, and that is so important when you’re pitching 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.

Josh:
When we first started making the goat milk soap, we’re struggling, we’re a new business and then we got a call from Anthropologie and they said we want to buy 43,000 bars of your soap and we thought, you know, it was the best thing to ever happen to us, we thought we were going to be rich that day and then they said, we only want to pay 23 cents a bar and at the time our cost was north of a dollar a bar.

And so we went to the soap maker and we said, you know, Deb who lives down the street from us and we said, how can we reduce the cost and she said, well, I just don’t know if I can do it and we said, what are the fix costs in this and she said, well, 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 and 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, you know, the expense.

And we thought about it and we couldn’t figure out a way to get the price down and 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, and so 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, because there’s a fine layer of ash on the top of it. So, we turned that negative into a selling point.

Brent:
I think that’s how, you know, any business is successful is that you find a liability or an expense and you figure out how to turn that into an asset and just like when we were first starting out and we literally thought the only thing we had was a million dollar mortgage and we sat down and said, you know what, no, here are the assets that we have and that’s what a lot of people don’t do when they get mired down in the liabilities and the expenses is think, is take a step back and say, okay, 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.

John:
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, you know, we have goats, we’re going to make goat soap, oh, but wait, there’s a problem and 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 and you had this 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 reason why it was so expensive into a positive that then it makes it unique and makes people connect to your brand.

I mean, 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, you know, when I talk to investors and I say, what’s your criteria for funding a startup and they’ll say, we invest in the jockey, not the horse and so it’s all about the team and 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, but what you created and 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?

Brent:
Yeah, well, we’re located, 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 and so attracting job candidates is pretty difficult, so 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 apart of something with a bigger mission and 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 11 full-time employees. So, I think everyone who works here sees a much bigger picture and being apart of that.

Josh:
And there’s not a lot of opportunities in rural areas to grow, so we have a growing business and it’s a place where 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. So, how can we create a company that can offer you a career, but still be in a rural area.

Brent:
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.

Josh:
Population 547.

Brent:
You know, 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 similar located in very rural environments, but have become destinations and so now what we’ve seen by putting so much effort into the flagship store and investments in the flagship store, because our model for the flagship retail store was the old, you know, grand department stores in New York City where they pay 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.

So, we really did want to create this old-school retail experience and now we do have people who come from all over the world just to see this retail store in this little tiny town, you know, Sharon Springs, New York and so it really worked for us to do that and likewise, it gives a reason for the brain drain to stop. For decades, there were no opportunities for kids when – you know, when we graduate our 25 kids from the highschool each year, there was no opportunity for them, so by doing, by creating this brand, we create reasons for people to stay around.

John:
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, you know, brag a little bit or I’m happy to do it for you on how you think they selected you and what was it – I mean, people write books all the time and launch a book, but very few authors get invited to ring the NASDAQ bell.

Brent:
Well, again, I think that NASDAQ is, you know, an exchange for discoveries and innovation and they were looking for new business, I think they were looking for small businesses who represented something different and a new way of thinking and obviously for them, they’re trying to highlight businesses that they think at one point will be listed on the NASDAQ exchange, so 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 that we were sitting so that we could be the representation of what they stand for, but for us it was just a huge marketing opportunity, because, you know, 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, so 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.

John:
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.

Josh:
Oh yeah, well we.

Brent:
Well, it’s not only sold at Target. You can buy it on our website.

Josh:
Right.

Brent:
You can also find it at Disney Resorts, actually.

John:
Oh, congrats!

Brent:
Yeah, they choose a handful of small American companies to feature in the resorts and Beekman was one of them.

Josh:
But 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 coupons in every newspaper every week and we didn’t know how we could counter that.

Brent:
And cheaper product.

Josh:
And cheaper products, so we decided we needed to get the story out and we turned to social media, we have a wonderful social media following, we call all of our followers Beekman neighbors, so we called upon all of our Beekman neighbors to help us get the world out and in lieu of a big ad campaign, we said, it’s you guys, you have to get the word out, so we invented something called the Shelfie and instead of a selfie and the week it launched, we said go to Target – we knew they all wanted to buy the sauce, they had been part of the product, they were as excited as we were it was in target.

We said, go to Target, clear out the shelf, take a picture of you with this empty shelf holding an empty jar of sauce, go ahead and call it a Shelfie, and post it on your Facebook page. So, we had tens of thousands of people posting a Shelfie of them, you know, 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? So, we really, again, we turned to our Beekman neighbors to help us.

John:
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 wroth more because it’s from farmer, it’s actually why we pay more for organic food, but even though it’s in a can, so 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 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.

Brent:
Oh yeah, you have to know who the goat is with the big horns.

John:
Yes.

Brent:
And anybody who has watched goats at play or in a pasture will know that they are always butting heads.

Josh:
And the goat with the bigger horn always wins. It just does.

Brent:
Yep and so, you know, the listen 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.

Josh:
And then 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.

Brent:
And if going your own way, understand that knowing the goat who has the biggest horns, you’re going to ave to strategize how you’re going to get around those bigger horns. So, 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.

Josh:
One of the examples that we use for that is Martha Stewart. You know, 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 and then when we launched our company, a lot of reporters sort of 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 and, you know, isn’t this sort of pay back or aren’t you – you know, are you the anti-Marthas’ and in reality, Martha has been a fantastic supported and a wonderful partner and 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.

John:
Yes, she came to your wedding, for God sakes, so that really shows how wonderful it can be when you’re aligned 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?

Brent:
Oh, we should maybe give one more. What’s our other favorite one?

Josh:
Oh, let’s see.. What about the first goat down?

John:
Oh, I love that.

Josh:
So, goats, goats, there’s no place more comfortable than someone else’s tummy, that’s sort of what we’ve learned from them. What you see with our goats when they all come in at the end of the day, they come in and stand around, stand around, because they live in a barn and the barn floor is hard and it’s not the most pleasant and then one of them lays down and then that first goat lays down, the next goat lays down and puts his head on this stomach and then it continues down. Every goat puts their head on someone else’s stomach, because it’s more comfortable, but 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.

Brent:
So, if you’re working in a team or a community and..

Josh:
You find everyone complaining.

Brent:
Everyone’s complaining, maybe you’re complaining that things aren’t getting done. Well, that’s because someone has not agreed to be the first goat to lay down. Someone has to be that first goat that someone else has the tummy to lay on.

John:
I love it.

Brent:
Yeah, a lot of people don’t learn that lesson.

John:
And if you are, then things get down and things move forward. Do you have any last minute tips you can give our listeners? I mean, obviously you had to pitch your whole career to get stores to carry your products. When you’re pitching 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?

Brent:
Well, you know, every product that we design is directly inspired by the farm, so we can tell, we don’t start out designing a product with a niche already in mind, like we don’t look at the market and say, oh, well 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, so when we go in to talk about that 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 and as I said, all these people who work in retail, they understand that today’s consumer can read through any brand-building BS and so 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.

Josh:
We also find ourselves when we walk into a room, just having conversations. I think when you fall into the mode of, you know, 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 wears, our ideas, and the person on the other side, they’re either going to accept and become a partner or not and it’s not a game to try and 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 and if they’re not, nobody goes home upset.

Brent:
Yeah, and you always pitch your product in terms of how you’re going to help that other person’s business.

Josh:
I can think of no positive outcome than having to convince someone to work with you.

John:
Right. That’s incredibly valuable information. It really is a partnership and you’re interviewing them as much as they’re interviewing you and 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 and that reduces the stress and the pressure on you and the person you’re pitching, would you agree?

Josh:
Exactly.

Brent:
Absolutely.

Josh:
My other tip is sit on the same side of the table.

John:
Oh.

Josh:
At the years of advertising, there was always the agency on one side and the client on the other side and I learned that if I sat down right next to the client instead of the other side of the table…

John:
Yes, that’s a great tip, Josh. Thank you. So, 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. So, how can people follow you guys on social media, go to your website, go to your newsletter, tell us all the goodies.

Brent:
Well, our website is http://beekman1802.com/ and if you send an email through the website, Josh and I read every single emails still and we manage all of our social media accounts and we’re on Facebook, Instagram, Pinterest, and Twitter, and YouTube. We’re Beekman 1802 Boys and 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, so you know, you’re getting an authentic response when we respond.

John:
Just like the soap.

Brent:
Just like the soap.

John:
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?

Josh:
We try to launch about 20 new products a month.

John:
A month!

Josh:
We try to keep it very interesting and refreshing knowing that almost, because 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, so we try to meet our customer expectations, but always offering something new and something unique and is small runs, so that when you get something from Beekman, it’s going to be special. We always want to maintain that specialness.

Brent:
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 Almanak and then towards the end of the year, we’re hoping to have a bigger relationship with Target to announce.

John:
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.

Josh/Brent:
Thank you.

John:
Thanks for joining us today.

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.