TSP007 | Ben Larson – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Today’s guest on The Successful Pitch is Ben Larson who is the director of the Founder Institute from Silicon Valley. Ben has an amazing background where he just got back from Europe and he works with startups across 70 cities in a four month program. He has an incredible smart story telling acronym to share with us on today’s show. Let’s start with welcoming you to the show and tell us how you went from a professional photographer and even before that a civil engineering into being an expert in the start up world.
Ben Larson:
Thanks John. Yeah, so my background is quite varied, not very often do you hear the combination of civil engineer and photographer.
John:
Right.
Ben:
But what it paints in a, I think what makes it most unique is the fact that it’s a combination of and desire to kind of really express myself per both my left brain and right brain. If people still divide it like that.
John:
Yes, they do. I talk about that all the time about trying to translate left brain into right brain emotional story telling, because, I’d love your opinion on this, but my take is that’s where all the selling happens. People buy emotionally and then back it up with the left brain logic.
Ben:
Exactly, exactly. Yeah, you know, it’s interesting, another, well, it’s not the best acronym, but one I kind of developed over the last few months was one included the words passion and intelligent and grit and so it’s an unfortunate acronym, so that spells PIG, but passion is something that really comes out of your right brain, I feel like, and it’s that ability to be so enthusiastic about something and it’s kind of brings out the artist in you, you wanna be creative and do all of that, but the intelligence side and being able to structure your thoughts and really think intelligently about everything is the other half of the brain and, you know, being more analytical and putting together all the pieces and painting the right picture.
You know, it’s really a combination of everything. So, that diverse background that I have has really lend me into this kind of generalist position, which is very important kind of when you are first launching the company, because you are wearing so many different hats.
John:
Tell us about the grit part of the PIG acronym.
Ben:
Right, right. So, the grit part is essentially what I look for when I’m [cuts out] founders. It’s just the ability to keep going. It’s really easy to get excited about a new idea, put together a lot of stuff in a short amount of time, but once that honey moon phase is over, you know, what’s going to keep you going. What’s going to keep you going through all the noes and the naysayers and it’s grit. I think it was the, one of my favorite stories in the tech industry around here is, you know, the founder and CEO of Pandora. Right now it’s a household name. It’s like, oh, internet radio, of course. It seems obvious, what most people don’t know is that he went through 300 investor interviews before someone said yes.
John:
Wow.
Ben:
That’s an incredible level of grit, right?
John:
Yes, reminds me of the Howard Schultz story. He had a lot of noes before Starbucks got a yes.
Ben:
Exactly. To the layman it’s a no brainer. That’s just because they didn’t see it at the very beginning.
John:
What kind of advice do you give startups to make sure they do have the grit to keep going? Is it figuring out why they want to do it in the first place, is that one of the key things that helps you get over them?
Ben:
Yeah, the why, the why you’re doing it is so important. I mean, I can’t talk about that enough. At the Founder Institute, we work with a lot of early stage entrepreneurs and aspiring entrepreneurs. Some people call them wantrepreneurs and our program, like you said, is four months long and as one would suspect, we provide a lot of structure, a curriculum, mentorship, all that kind of stuff, but one of the greatest takeaways from the program is the behavioral change mechanism that it is. It’s, you know, we are turning people into those entrepreneurs that can show grit and speed and action and all of that and that’s, you know, it’s just what it takes to compete these days.
John:
Right. I mean, the statistics are only 1% of pitches ever get funded and so you really have to be at the top of your game to do that and certainty going through the founder institute. Tell us how that all came about and how you got involved with it.
Ben:
Right, right. So, it started about six years ago by Adeo Ressi. He’s a serial entrepreneur here in the valley. He’s been here for about 20 years, just grinding it out and he’s been through the highs and the lows and have seen it all, seen pretty much every angle of the startup world and his mission when he first started the Founder Institute was to make the process of becoming a startup entrepreneur easier. To make, you know, the leap a little bit less drastic, because we’ve been there before and that’s kind of what lead me to the Founder Institute. I made that leap about five years ago now and it was drastic. It was like jumping off a cliff and I didn’t have the program and I wished I had.
So, I learned those lessons that many of us entrepreneur learn in the first year that, you know, no amount of YouTube watching or article reading will really get your there. It’s just you kind of learning. So, what we try to do is accelerate that process. Allow a little bit of a safety net to allow people to keep their jobs while they’re going through it and give them a little bit of traction and comfort before they make that complete leap.
John:
Do you have a favorite success story of someone you worked with that you want to share?
Ben:
Oh, god. Yeah, I actually do. It’s one of my most recent grads out of the program that I was personally running here in Silicon Valley. It’s just an amazing story. In fact, I’m trying to loop her in to be part of our recruiting effort for the next class, but her name is Purva Gupta as the name might indicate, she’s from India, so she’s an immigrant in the tech world. She’s a she. No tech background. First time entrepreneur. She was on a visa. I think it’s an F2 visa, which means that her husband was here as a student.
So, needless to say, I could go on, but needless to say, the deck was a little bit stacked against her. She came in with an idea in the fashion industry, again, no experience in the industry, and it was a pretty bad idea, just to be blunt, but she has the hustle and the willingness to learn and listen and she works her butt off and frankly throughout the four month program, she made more progress than any of our other founders in the program and by the end, she was building her team, raising money, building traction, and four months from the time we met her, she had raised her first round of funding and built a team of four people. Now, she’s hiring people away from Netflix, Facebook, and all that. It’s just amazing. Like, it’s an amazing story. Now she’s sponsoring her own visa and doing just amazing. I love it. It’s why we do this.
John:
Sure. One of my big takeaways from what you just said is, she’s coachable and I think investors look for that as well and if you start off with someone, as you said, who was willing to both listen and learn and keep that mindset no matter how successful you get, especially when you’re asking for large amounts of money, that’s really attractive to investors, don’t you think?
Ben:
Oh, definitely. It’s invaluable and it goes back to that intelligence part, what I was talking about before. To be intelligent, yes, there’s the IQ side, but that’s only half the battle. The other half is learning how to think intelligently and to know when people are giving you advice and they know more than you and to know what you don’t know, you know, you can’t put a price on that.
John:
Know what you don’t know. I love that, because that’s really all the stages we go through when we’re trying anything whether it’s learning how to ride a bike or drive a stick shift car, we don’t even know what we don’t know and you have to be willing to be in that uncomfortable zone and a lot of startups as you described, you know, when you make that leap, it feels, I don’t even know what I don’t know yet about running a business, but you’re willingness to stay in that uncomfortableness and know that it will eventually pass is what I think really distinguishes someone who just gets excited about a new idea versus someone who has the grit, as you say, to stay with it.
Ben:
Exactly.
John:
I love that. Would you talk to our listeners about your wonderful post on LinkedIn about smart story telling and what that SMART acronym stands for?
Ben:
Sure, sure. So, smart story telling is more about the approach to pitching versus the structure, like there’s plenty of very smart people. Guy Kawasaki being one of them with the Art of the Start and the Art of the Start 2 now, that can tell you how to structure your pitch, so that you have all the right pieces. What I try to get at with the smart story telling frame work is how to go through that pitch, how to make it sellable and how to make it convincing and how to not lose your audience while you’re going to the sides. What a lot of our new founders fail to realize is that, you know, when you’re telling the story, it needs to make sense.
I don’t know how else to put it, so the smart story telling frame work is based on an acronym, so the word SMART. So, the S is set the stage, the M is managing expectations, the A is answering all the questions, R stands for repeat, and the T is the take it away. Now, when you’re setting the stage, you’re getting the audience into the right mood, right? You can’t just jump into it. We have this joke amongst the directors and myself and it’s, you know, have you ever been pitched assaulted?
John:
Yes!
Ben:
Sometimes you turn around and, you know, especially if you’re an investor. This is has happened to you a million times. You turn around and someone is in your face and all of a sudden there’s spewing out ideas at you and it’s like, say, you don’t even know where to begin, you don’t even know what to think, and where you’re standing. So, by setting the stage, you’re putting in the perspective and allowing them to anticipate what you’re going to go with next. That anticipation is what kind of leads to the next part of the acronym is managing the expectations.
You should literally be leading your audience from once slide to the next. They should be able to guess what your next slide should be.
John:
Oh, I like that, they should be able to guess. Any suggestions on how to make your slides have a logical transition. Is there any tips that you can share with us on how to do that?
Ben:
Well, there’s the, well, okay, the very simplest way to do it and this is like, you know, I guess, SMART 101 so to speak, but it’s simply ask the question at the end of your slides. So, you pose a problem. It’s like okay, how do we solve this? Well, obviously the next slide is going to be the solution, right?
John:
Yes.
Ben:
It’s such an easy, you know, an easy way to make that transition that I’m surprised more people don’t do it.
John:
You know, all the pitches that I see from the clients I work with, I would say more than half don’t have that in there and they don’t have the structure in there and that’s such an important part of making somebody A) understand what you are talking about and B) stay interested, because you have to keep people, as you said, anticipating and involved. You can’t just be speaking even in an elevator pitch or a presentation pitch in a way that is information. We want to get the concept of transformation across, right?
Ben:
Right, right.
John:
Great stuff. Alright, so now we go on to answer the question that you posed while you were managing the expectation, right?
Ben:
Yeah, exactly and like I said just said, if you literally asked the question, then you answer it, but let’s dig a little bit deeper into this, because so many times on slides, people will present, you know, erroneous information that they never really get around to addressing. I’m like, why did you put that information in there if you’re not going to talk about it in the next slide?
John:
Can you give us an example? Are you talking about evaluation, are you talking about traction?
Ben:
The place that I see this the most is in the addressable market slide, kind of a novice entrepreneur, a lot of times they’ll want to make their markets seem as big as possible and so for instance, I was working with a founder the other day and they were working on a, let’s call it Uber for your personal stylist.
John:
Great, okay.
Ben:
It’s a great idea if they can get it to work, obviously, but when they got to their addressable market slide, they put up two market statistics and one of them, which made sense, was the personal stylist market is a, I don’t know, 300 million dollar a year market. I’m like, okay, that’s a little small, and they were like, but the ecommerce fashion industry is a 117 billion dollar a year industry. I’m like, oh, okay, so you’re going to combine these two, right? The next slide, he just goes on to talk about his personal stylist, you know, application.
And then we got to the end of the slide and I’m like wait, you never talked about how you were going to incorporate ecommerce and not saying that he even should at this point, because, again, he’s just starting with an idea and I’m all about keeping it simple, but if you’re going to present that information, you should as hell answer it.
John:
Ben, you bring up such a good point that is such a valuable takeaway for all of our listeners today, which is the minute you don’t explain something clearly and you have a lingering question in the investor’s, or whoever you’re pitching, mind and you continue you talk, they really stop listening or they’re listening for the answer to the question they want and they’re not listening to what you’re talking about. So, it’s really imperative to bring them along and don’t, the confused mind always says no is what I tell my clients and..
Ben:
Yes.
John:
And we wonder why they get noes and it’s because you lost them on slide about the market size and the minute you lose them there, nothing else you say even goes in, because they’re still waiting that answer and until they’ve got that answer, they’ve lost all the traction with them. So, thank you for that detailed example, because it’s so helpful for people to understand the nuance of keeping people through this whole smart story telling process. So then we go to the repeat. Obviously, it’s like washing your hair, right?
Ben:
Exactly, rinse and repeat.
John:
So, keep that whole structure, question, answer; question, answer. Is that the jist of the repeat part of it?
Ben:
Yeah, pretty much. It’s, you know, when you’re going through it and you’re structuring everything and we do this a lot over and over again when we are reviewing people’s pitch decks. It’s like, you need to repeat this process to get to that end game. Like, you have the ability to lead the conversation. You know what the beginning point is and you know where you want to go, now you gotta take people there and if you’re not doing that, you’re failing.
John:
Yes. I talked to people about it being a flight plan and that you have to be a co-pilot with your audience and you’re responsible for putting the flight plan, like you said, and the take off kind of stuff is your last acronym there with the T, which I love that.
Ben:
Yeah, and then, you know, not only taking there, but also taking advantage of the situation and being able to takeaway what you want from the pitch. If you successfully told a story and you’ve answered all the question, now you’re in a power position to be able to ask for whatever it is that you want.
John:
Right and sometimes that’s the next meeting and sometimes that’s money, right?
Ben:
Exactly, exactly. You might as well to default to the next meeting, but yes, asking for money sometimes leads to the next meeting, because they are going to want to know more information.
John:
Right, let me ask you this, Ben, because a lot of clients I work with say, when I ask them how much money are you looking for investors to invest with you, they’ll say between a million and three million or 500,000 and 750,000. I’m like, we gotta get that to a one number, not a range like that, right?
Ben:
Exactly. Yeah, it just looks like you don’t have it well thought out and it sounds like you’re asking for an arbitrary amount of money, just because it’s, you know, what’s hip and what’s standard, but if you are actually intelligent about it and go do some rough calculations, you know exactly how much money it should take for you to live for the next 18 months.
John:
Talk to us about traveling Europe, because you must have gotten such an interesting perspective in addition to all your expertise in Silicon Valley. How does Europe and start ups differ versus what’s going on in Silicon Valley.
Ben:
You know, I learned a great lesson through my travels and what I’ve learned is that it’s best to assume there are no unique ideas.
John:
Love it.
Ben:
Only unique ways to approach those ides. So, there’s two things that there are no unique ideas, because whether you’re here or in Lisbon or you’re in Athens or Berlin, everyone is thinking about the same type of ideas. The thing about these different areas around the world is that the ecosystems are different, so there’s different challenges that are faced by the different founders and those challenges are what are going to lead it to be, you know, a unique offering, but you know, unfortunately in some regions, those challenges also slow the rate of progress and the ability to grow that idea.
John:
Got is, so no unique ideas, only unique way to execute them, which really goes to the whole concept of what you were telling us either about one your favorites of success stories is it’s about the person and not necessarily the idea. The ability to pivot is really key, but really it’s about does that person have, you know, the passion, intelligence, and grit to – is why you want to invest. So many people get so in love with their idea and they think that’s what they have to talk about and how something works as oppose to getting people to sell themselves first.
Ben:
The reason I focus so much on smart story telling and all this is because you want to enchant people and you want people not to think about the details that you aren’t talking about. You want them to see you for you. They want, you want them to think about you as the entrepreneur and not get lost in all the details that you’re not talking about or that you’re not stringing together beautifully.
The other assumption I always talk about and this gets back to kind of, answering the questions, it’s – I tell people to assume that everyone they’re talking to has ADD, because I kind of do. If you lose me on slide two, I don’t hear a damn thing you’re saying anywhere after that. So, I know most of these seeds and most successful entrepreneurs that you’re going to be talking do have, at least at some level, some ADD.
John:
It’s true! We all have, you know, everyone’s attention span, that’s why there’s seven second videos and all that.
Ben:
Exactly.
John:
I want to have you expand, because I really, really, we’re going to tweet this out about see you for you, that’s the way to get an investor, enchant the investor. It’s such a great word. I’ve never heard anybody used that before. I’ve talked about making yourself a resistible to investors, but I love the concept of enchanting them. So, that’s almost like putting them under a spell, because the story is so engrossing whether the story is about your own personal story of how you got this idea or how you see this change in the world, right?
Ben:
Yeah, I mean, enchanting. I mean, God, it could be used in so many ways. The way I like to think about enchanting is, you know, you can look at it under the microscopic level and as you tell your story, you’re trying to lead them on from one slide to the next, but you also have to think about it on the bigger picture. You know, think of your 30 second elevator pitch as the first slide to your next pitch, which might be a three minute pitch, that’s your next slide, and then your three minute pitch leads to a 15 minute interview. Who knows.
The whole time you’re always trying to lead to that next step and if you’re doing that and you’re doing it successfully, you’re enchanting your audience and that’s what makes it a successful product. So, this kind of flows over into the other thing, what are you pitching? If you’re thinking about the customer journey while you’re developing your product, you can lead that customer along, so they’re getting more and more engrossed in your product.
John:
Which leads to your other great blog post that you have up on LinkedIn is about knowing your customers. Such great details. So, you’re not only enchanting the investor with your pitch, you want to be able to show them examples of how the customer’s are enchanted with your product or service, right?
Ben:
Exactly, exactly.
John:
Can you give us a story of a pitch you heard where you hear somebody talking about their customer being enchanted with it and, you know, coming back and wanting to use over and over again and make it part of their daily life whether it’s the person you were just telling us the story of how she had a bad idea and it turned into a good one or anybody else that you can think of?
Ben:
So, I don’t know if I can point to any particular example, but I would say is the people that have the most enchanting products are the people that know their customer the best and to really understand that, you need to know what a customer is. A customer is not a school. A customer is not a small to medium size business. You know, a customer is not an inanimate object. A customer is a person and so if you know that person, if you know that person’s pains. You know what that person eats for breakfast on a normal morning. If you know what that person’s major struggles are throughout the day, you’re going to create a product that is more enchanting. So, it’s just thinking about that, being very customer centric.
John:
Do you recommend start ups mini focus groups or do you have any suggestions on how to get that kind of customer knowledge?
Ben:
Sure, sure. I mean, there’s tons of ways to do it. Yes, focus groups is one tool, but what most founders fail to do in the early stages is to get out of the office and actually go talk to people.
John:
There we go. Imagine!
Ben:
There’s really no secret to it. It’s just getting out of your comfort zone and going and talking to people.
John:
And asking them some question and having some questions prepared in advance so that you can have a consistency, almost like a science experiment, right? The people who like this, oh, what other things do they like, right? What kind of cars do they drive? Where do they shop online or do they go to brick and mortar and try to paint a picture and get a sense of what your avatar is, basically from your ideal customer so that you can describe that to your investor, right?
Ben:
Yeah and the other pitfall that founders always fall into is that they’re trying to sell their product when in actuality they should be trying to kill their product and should be learning how their customer thinks.
John:
Oh, that’s brilliant. Right there. You should be trying to kill your product, not force it down somebody’s throat. So, you need not only pivot with the idea with investors, but pivot with listen to what your customers are saying and if they don’t like something, change it, don’t be so in love with it, if I heard you correctly.
Ben:
Exactly, yeah. I mean, one of the biggest ways to get an investor excited is to show that you have this innate ability to target your assumptions and prove those assumptions wrong or right
John:
Love it.
Ben:
And if you’re doing that, you’re reducing risk and that’s what investors want to do. Investors want to reduce risk when they invest, right.
John:
Right, great, great. So, one of the key takeaways everybody that Ben just gave us is investors look to reduce their risk by finding someone who has an innate ability to target whether their assumptions they’ve made about the market or the customer is right or not. That is huge. I love that. So, that’s a great place for us to finish up. A great tip about showing that you can figure out whether your assumptions are right or wrong so that the investor’s risk is minimized. Do you have any other books that you could recommend to our listeners besides the one that you already referenced earlier? It could be around investing or it could be about anything.
Ben:
Oh man. Essentialism is a great book. I can’t remember the author off the top of my head.
John:
That’s okay, we’ll put it in the show notes. Yeah, Essentialism. What’s it about?
Ben:
One of my favorite quotes and this kind of leads to the book is, you know, Einstein’s famous quote, “If you can’t explain it simply, you don’t understand it well enough.” In this book really gets to that. You know, what can you pull away and make that product as simple as possible to make it wonderful to use.
John:
What’s the essence. Got it.
Ben:
Exactly.
John:
And then tell is, you know, if somebody wanted to be applying to the Founder Institute, how would they go about that and what any insider tips on, you know, what you guys look for before you accept someone into that?
Ben:
So, yeah, to apply for the Founder Institute and this is actually great timing. We’re launching our new semester in San Francisco in the beginning of June and to apply, all you have to do is go to FI.co, so FounderInstitute.com or Fi.co/Join and it’s a really simple application process. There’s a few question and then we have a psychometric and IQ test. It’s called our predictive analysis test and essentially, we use this to really focus on the entrepreneur themselves, because it’s so early stage and, again, we don’t really assume any ideas are brilliant or unique, so we really focus on the entrepreneur and their potential to become a strong startup founder.
John:
Which goes back to the passion, intelligence, and grit, I’m guessing, right?
Ben:
Exactly.
John:
Yes, got it. That’s so helpful and Ben, is there anything else that you want to have people follow you on Twitter, what’s the best way for people to, you know, what your posts on LinkedIn, etc, anything else for our listeners to stay in touch with you and keep aware of your insights?
Ben:
So, yeah. You can find me at blarson.com and I’m on Twitter @Blars0n
John:
That’s a little tricky. I love it. Okay. Ben, it’s been a pleasure having you on the show. You’ve given us such great takeaways. I can’t wait for the show notes to be able to give everybody all these insights, but my favorite one is figure out a way to be enchanting to both your investors and your customers.
Ben:
Thank you so much John. It’s really a pleasure and I just love what you’re doing with the podcast.
John:
I appreciate that, Ben. Thanks again.
TSP006 | Jim Beach – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Today’s guest on The Successful Pitch is Jim Beach who is the host of the radio show School for Startups Radio as well as the author of Hack Google Maps. Jim has quite a background including being invited to pitch at the White House and being invited to go back to the White House holiday party. That was a ringing endorsement. Jim really talks about the keys to being successful is having an enticing opening to your pitch that begs people to want to know more and he gives us a specific example that will blow your mind. Jim has something called rock stars in an elevator.
So, your elevator pitch set to music. Everything from Johnny Cash telling a story with a song A Boy Named Sue to Lady Gaga. Why is that so appealing that the song she sings and the things that she does, is because it’s shocking and our brains like new information. You’re going to like this new information that Jim has to share in today’s interview.
Hi everybody, welcome to The Successful Pitch podcast. Today’s guest is Jim Beach, who is known around the world as one of the top keynote speakers. He’s got a great book called Hack Google Maps. We’re going to ask him about that, but mostly we’re excited to hear about his rock stars in an elevator concept that he has. He has talked about this on his School for Startups Radio, which has incredible guests and airs on over 11 FM stations as well as the internet, so please welcome to the show with me. Jim, welcome.
Jim Beach:
Thank you so much for having me. It’s my honor.
John:
Jim, you started your career at such a young age. I was reading you started at 25 with an incredible startup that grew. Would you take us on that little bit of a journey, because people are always fascinated about how somebody gets to be as successful as you are.
Jim:
Well, thank you for that. I was working at Coca Cola and they decide they didn’t want me to work there anymore, so I got shown the door and I was distraught, I thought my entire career would spent at Coca Cola and I had a mid life crisis at the age of 23 or 24, decided what I really wanted to do was become architect and so I applied for architecture school to go and get a masters of architecture and started that and needed to pay for it. I also wanted to get married. I thought I would start a summer time business that would allow me to work three months a year and go to school nine months a year and support myself.
So, I started a summer computer camp company. It doesn’t sound so cool now, but back in the early 90s it was pretty innovative and exciting and it was a huge success. We eventually grew to 89 locations in the United States at placed like Stanford, MIT, Georgetown, UCLA, every big name school in a big city. We were also at Sorbonne, Oxford, Cambridge, internationally, and we did a lot of other projects as well. We write K through 12, math, science, technology curriculum for entire school systems. Things like that that eventually grew to 700 employees before I sold it about six years in.
John:
What a great story. You know what’s interesting is while you had plans to be an architect, you basically became the architect of your own life and your own business from this idea of doing a computer camp.
Jim:
That is true and unfortunately I had to stop architecture school just short of graduation because, you know, I think at that point the business had something like a 100 employees and it’s hard to do an 18 hour day masters program when you have 100 employees sitting around waiting for you.
John:
Depending on you. Well, what I find also really fascinating about that story you told is no matter how young or old we are, when we have an unexpected bump in the road whether it’s being laid off by a major corporation, that’s a big time to analyze what do I want to do with my life and sometimes it’s something that can be so devastating or shocking and not what we expected. If we can reinvent ourselves like you did, it’s so inspiring for everybody at any age, because even as an entrepreneur there’s many times where you have to pivot in your own life as well as your own business.
Jim:
That’s very true. I never planned on being an entrepreneur. It was the last thing in my mind and I’m not even sure what the word was when one of my friends asked me what does it feel like to be an entrepreneur and I never thought about it. To me, it was not what I wanted to do, but it turned out to be the perfect lifestyle for me. Interestingly when I found out from Coco Cola why I was invited to leave, they said, you don’t play well with others, maybe you should start our own business. It was very interesting that the astute people at Coca Cola had figured me out before I had figured me out.
John:
Ah. Well, I find that really fascinating feedback because, as a radio show host for School for Startups, you clearly have to play well with all of the different guests and all of the different next works. So, play well with others, running your own show is I guess different than playing well with others in a corporate environment.
Jim:
Yes, very true. It’s even more amazing. In the short time I was with Coca Cola, I saved them about a billion dollars over ten years and saving a company a 100 million dollars a year is apparently still not enough for them to keep you around.
John:
Isn’t that fascinating? Yeah, business today is not about taking any rejection or seemed rejection or, as you said, invitation to move on, you can’t take any of that stuff personally or you’ll drive yourself crazy.
Jim:
Especially as an entrepreneur where you’re going to get a rejection nine out of ten times, perhaps.
John:
That’s right. Well, I’m really excited to hear you talk about this whole concept of rock stars in an elevator, because we’re all talking abut pitching for funding a lot on this podcast and the whole concept of taking the word pitch and interpreting it not just pitching your idea, but also pitch in terms of music and being on key, so tell us how you came up with the whole concept of taking music into an elevator pitch?
Jim:
Well, it was not my idea, I must say. My co-author from my first book, which is called School for Startups, the McGraw-Hill book. The co-author was Chris Hanks and he’s the head of the entrepreneurship program at the university of Georgia and he and I have been friends for a long time. So, we’ve heard each other’s lectures. We know everything that each other does and he had two of these rock star songs that he was using. I will tell you at the end which two they were because I don’t want to give them away quite yet.
When the first book came out and did very well, we were sitting around drinking around one night and I was like, well, we need to write another book, we need to have a follow up, which still hasn’t happened yet and we sat down and created a whole paradigm of 14 of these rock star pitches and so Chris started it and I kind of took the ball after it and together we’ve come up with all of these, but I have, I’m more active with it than he is right now. He is pretty busy running his entrepreneurship program and one of the pitches that we will use to date, today, is one of the pitches that he actually won and, you probably didn’t see this, ESPN didn’t cover it very well, but he won the collegiate elevator pitch competition using one of the models that we will go over. So, this is the work of both of us, let’s say it was 50/50, I’m just the one talking about it today.
John:
Everybody requires a marketing voice and you certainly have the voice of America and the voice of startups, listening to you on your amazing radio show and it sounds like a great partnership and I want to talk about that too with you. Obviously, for you to decide to go into business with somebody, the relationship of having a right partner is a key to being successful in any startup.
Jim:
That’s very true.
John:
But, you know, that’s a key factor. So, sharing the credit, respecting everybody’s talent. Would you say that finding the right person to either be on your team or be a co-CEO or co-partner in something like you just did with rock stars in elevator is probably you want to look for somebody who has other skills that you don’t have that compliments you so that the two of your are stronger. If you were both really great at hosting a radio show, for example, or being the voice of something, then you may not need each other, right? So I think it’s always good to look for somebody who has something that brings to the table that you don’t really like doing, maybe.
Jim:
You know, there’s a fascinating book about this written by one of my friends named Joe Abraham from the Chicago area called Entrepreneurial DNA and he has the belief that there’s four times of entrepreneurs. There’s builders, opportunists, specialists, and innovators, and look for example Bill Gates versus Richard Branson. Incredibly different models of entrepreneurship. Branson has done 400 different business and is really not involved in any of them and Bill Gates spent 30 years at one business compared to Tomas Edison who’s really not even an entrepreneur. He comes up with new businesses like GE, but he rather be involved in the lab and just giving stuff away.
And so, I believe after reading this book by Joe Abraham that it’s more important to find someone who has a different entrepreneurial DNA than to find someone who has a different skill set. Two marketers, a marketer and a finance guy, if they’re both opportunists will run the business into the ditch. So, I would wholeheartedly recommend this entrepreneurial DNA philosophy and you can go and take a test at BosiDNA.org, I believe. It’s either .org or .com and it will tell you what type of entrepreneur you are in terms of builder, opportunist, specialist, innovator. It’s a fascinating way to look at your own personality and learn about yourself. I would use that metric before I would put a marketer with a finance. I don’t have a problem having two marketers together if one is a builder and one is a specialist or something like that.
John:
That’s a wonderful, unique perspective. I love that. I’m definitely going to get the book as well as going to put that link where people can take the test in the transcripts. So that obviously begs the question, Jim, which of these four entrepreneurs are you? A builder, opportunist, innovator, or specialist?
Jim:
I’m a builder. I like to build it and soon as it’s up and running, I lose interest in it pretty quickly. I’m the five year in and out type guy. I would rather build it, get it running, and then turn it over to a professional management team. I’m not a great manager, I’m a better builder along the way, I believe.
John:
It’s so important to know what you like to do and how to best to suit that. One of the things that really stands out for me in your fascinating bio is the fact that you’ve been to the white house more than once. Can you tell our listeners how did that happen and what’s that like to be there?
Jim:
I’ve been there several times, most interestingly to pitch. I was actually pitching a business there, so that’s very relevant to tonight’s discussion, but also I was invited to the White House Christmas party this same year and that was an amazing experience as well. They have several Christmas parties every year, they just don’t have one, but it was still an amazing experience just to see the beauty of the White House at Christmas. You go through and look at every different tree. There’s a different tree in every room and to experience it at a social level. The times I had been before,
I was there to pitch different White House officials for business that I was raising money for and so it relates exactly to what we were talking about and this business, I believe, it’s one of the coolest, sexiest businesses I ever run across. It had a pre-revenue valuation in the 15 million dollar range, which is one of the highest pre-revenue valuations I ever heard of.
So, I was hired to go and help raise money for this business at what I think we would all agree was an asinine pre-revenue valuation and the White House is one of the places that we pitched. It’s a health care business and so it relates directly to health and human services and the Obamacare law and so we were there to pitch to the White House officials I think the thing that was absolutely the most shocking and a little bit discouraging was that the room that we were invited into had absolutely no technology in it and…
John:
Oh, you’re kidding.
Jim:
So, we were literally, you know, here they have, what 1.9 trillion dollars of tax revenue of money to spend and myself, the founder of the company, three or four White House officials were literally crowded around a laptop computer in the White House, because there was no way to, you know, present normal, you know, no screen, no projector, nothing like that.
John:
I’d love to have a picture of that to show people. Pitching for most people is very nerve wreaking and I work with a lot of clients on confidence building and making sure that they’re prepared so I say don’t get rid of the butterflies in your stomach, get them to fly in formation, but I can’t imagine upping the anti so much that not only do you have to pitch, but you have to pitch at the White House and in a situation where you don’t even have technology, so you really have to prepare. Can you take us back to that day of, did you have butterflies in your stomach, more so because you were at the White House? The whole intimating, yet beautiful place. Did that make it more difficult or were you just excited?
Jim:
It was more of the excited type response. You know, just walking through the hallways and you would see the plaques on the office doors where it would say, White House Chief of Staff you would go past and the next office would be White House Counsel and you would know that used to be Hilary Clinton’s office and, you know, just the pure aura of the history, the excitement, it was not that nerve wreaking. It was not. I have presented in other situations where, for example, if I didn’t get the money, I was going to lose my house and end up taking up my two young children and living in a car or something like that. That was much more nerve wreaking.
I have been in that experience where the outcome of the fund raising would determine bankruptcy or not and I have gotten to the point where one day I got a letter from the bank saying you have 28 days to move out of the house, because we are repossessing it. That was much more nerve wreaking because there was a wife at home who was trying to find out of – you know, needed to start packing her clothes and personal items and stuff.
So, pitching can be both exhilarating and frightening. I think that once you’ve done it a bunch of times and I’ve done it a bunch of times at this point that hopefully it should be fun for you. I get to the point where I enjoy it because it’s an opportunity for you not only to shine, but it’s an opportunity for you to learn what other people think about your business. When you’re pitching, you think, you know, I’m here to get money, I’m here to get money. That’s a really bad attitude. I think you should go into it with the attitude, I’m here to learn more about my business from other really smart people and who may happen to decide that they think it’s sexy enough to want to invest in.
John:
Well, I want to go back to what you said a minute ago, because you know, pitching for money versus pitching to learn is such an important distinction for people. It’s all about the energy you put out and the mindset. If you have any insights, because much like, dating for example. No body wants to date someone who is desperate and if you, even when you have that financial thing hanging over your head, right, foreclosure or if I don’t get this money this business goes out of business, all that work and effort.
How did you take a breathe, compartmentalize that maybe and say, even though I’m under pressure, I don’t want to come across as desperate just like I don’t want to come across as desperate on a first day. Do you have any tips and suggestions for the listeners on even if, no matter how much pressure you’re under, how to deal with that and not come across desperate.
Jim:
Well, it’s so easy to come across desperate and you also have to be very honest with them. If you hide the fact that you’re desperate and they learn about that later, so they start the due diligence and they wake up and go, wow, this is really ten million dollars in debt. You’re going to seem dishonest and very deceptive. You told me how great the business is, but you’re hiding the biggest fact of all of the business. So, what we ended up doing and what I ended up learning was let’s take the dirty laundry out absolutely in sentence one and start off like this. I would like to tell you about the only business that’s ten million dollars in debt, 27 days away from bankruptcy that you’re still want to invest in!
John:
Wow, that’s a powerful opener.
Jim:
It really is. It totally – they’re like, okay, I got to hear more about that thing, because there’s a never business I’m going to invest in that’s ten million in debt, the venture capitalist or the angel would think, but if you can then give them one or two sentences that sort of their, you know, well, you’re right, maybe I do want to invest in this. We have 95% market share. We are 60% profit margins. We’re still growing at 300% a year and we’ve only got about 2% market share.
Well, okay, maybe I do want to hear about that. How are you stupid enough to get ten million dollars in debt would be the follow up question that you would expect to hear, but what you’ve done then is you’ve done all the pitch stuff that you want to do which is get them enticed to make them want to hear more, make them beg to have a follow up question, but also you’ve proven how incredibly honest you are and you’ve established a wonderful foundation for just an honest relationship.
I believe very sincerely in pitching and dating, you know, I was divorced and had to go out into the dating world with two kids and an ex-wife. That’s the first thing you tell someone. You meet a good looking girl, the first thing you should say is, you know, I know you never wanted to date a divorce guy with two tiny kids, but I’m the one you’re going to want to date, you know.
So, I think that whenever you have a bad thing to share or you are incredibly nervous. I think that’s probably where you should start. This is the first time I ever given a pitch in front of a real VC and so I just want you to know that and so I may come across as a little bit nervous because I am. However, I still believe in this business very, very much. I always lead with, you know, your weakest thing. I am here to sell you a $400,000 car. If you can’t afford a $400,000 car, you want to stop the negotiation really fast and not waste your time. So, if you walk into a Rolls Royce dealership, the first thing they’re going to say is, here’s a beautiful $400,000 car. Are you still interested and you know, if you go, well, that doesn’t scare me. What color is this come in? They know they have a hot customer or a hot lead.
John:
I love what you said so much because people are judging us whether they want to invest in particular on so much more than just the idea. It’s all about character. Do you have integrity? Are you someone I like? Do you, are you going to be honest with me? And what you just shared Jim is so incredibly helpful because you showed how to give a statement in three different examples where it’s enticing, but incredibly open and airing the dirty laundry up front so that there’s no secrets and yet people are still intrigued when they would think they would not be because you’ve got that element of surprise in there. So that’s really great structure and so amazing. Well, I really want to get back to the rock stars and elevator, because it’s just a great concept. If there’s anything more you can talk about or share with us, an example of a song or how you’ve tied that in.
Jim:
Sure. Well, there are actually 14 songs that we’ve selected. Each one leading to a unique and sexy value proposition and so let’s start off with Lady Gaga. You could also replace it with Madonna or that girl who keeps taking naked pictures of herself, Miley Cyrus, right. Why did these actresses, rock stars, try to shock and provoke us? It’s because shocking and provoking things attract our attention. Anything that’s new. The concept of just newness is going to attract our attention.
For example with Lady Gaga, I don’t think I had ever heard any of her songs, but I already knew she appeared at the Oscars wearing a meat uniform. Remember she showed up with a meat costume and then like a week later she went to the Emmys inside of a big egg and had four guys carrying the egg and why does Madonna like to go on stage and kiss other girls on stage? It’s to shock us. To make us think, wow, that’s a new idea and when you hear something new, you intrinsically want to find out more about it.
So, the elevator pitch for the very first year of our summer camp business was we run computer summer camps and people would go, computer summer camps? I’ve never heard of that. That’s more interesting. Tell me more about, because instead of saying we run outdoors rock climbing, horse back riding summer camps, you throw in that new word, it’s the unexpected, exactly. So, any time you can shock people with the newness of what you’re doing, that’s a pretty good elevator pitch. I’m not going to say it’s the best. I think this is one of the weakest, but it’s still something that allows the listener to go, oh really? That’s interesting. I want to hear more about it because people love hearing new things that they’ve never been exposed to.
John:
So, 14 songs or examples, is there one that you think is one of your favorites besides the Lady Gaga example?
Jim:
Sure, we could go with another really important one would be Johnny Cash and the song for Johnny Cash would be A Boy Named Sue. You know, Johnny Cash is a story teller. If you listen to his songs, there’s almost always a story there. Why did this dad name a boy named Sue, so that the boy would be toughed up and so, we need to learn from that that when we make a pitch, we should try wrap it in a story so that people remember it.
People remember stories better than they remember anything else. So, in year four, the elevator pitch for our summer camp was, I take kids that have never been happy before and make them happy. Last week I had a letter from a girl named Alison and she said to me that she’s now smiling for the first time in two years. So, I’ll remember that. You’ll remember that because it’s got details. Two years. A girl named Alison. Smiling.
Now, instead of saying, we had a camper who had a really great experience. You don’t remember that! Instead I tell you a true tangible story that reenforces the general theme that we’re talking about and the reason the business was so successful was because we really did take unhappy kids and make them happy. We thought we were teaching them computers.
In year two or three what we found out was we’re taking unhappy kids and making them happy and a parent will pay anything for that, you know, pay anything for that. So, the Johnny Cash theme or the point from Johnny Cash is, always try to tell a story, because people remember stories better than anything else.
John:
We’re going to tweet that out, for sure. People remember stories better than anything else and what I really like about what you said is, the way to make your story incredibly memorable is to give specific details. Not just any story of any child, but how did this one particular person because happy through this experience and then everybody can broaden it out to well, I want my kid to be like that, so I want that and if someone is pitching something. If you can tell a story of one customer whose problem you solved and how much that changed their life then suddenly that’s a memorable story. It’s the detail. It’s so great. Well, Jim, in the last few minutes, you know, people obviously should buy your book, Hack Google Maps. Do you want to tell us real quickly what the big takeaways is, I mean, the title along is intriguing. You’ve got my lizard brain curious about how do I hack a Google map.
Jim:
Well, we’re going to give you screen shot by screen shot for hacking anything on Google maps. The story started, my co-author Bryan Seely was at a McDonald’s play land and was bored and from a McDonald’s play land was able to go on Google Maps and reprogram the CIA and the FBI contact information so that if you called the CIA, you actually his cellphone instead.
The end of the story is that it’s a 200 billion dollar a year problem in the United States affecting mostly consumers and small businesses and there have been entire industry devastating, destroyed, because Google has let this flaw in Google maps persist for the last ten years. They’ve done nothing to solve it.
They know that the problem is there and now the chances are if you call a lock smith in the United States, the chances are about 95% that you’re actually communicating with the Russia rob and it’s a really sad story and it’s start off with just changing the FBI and the CIA contact information, which you can do under 30 minutes from a Mcdonald’s play land wifi. So, the book tells that entire story, but most importantly it tells you as a small business owner how to prepare your business so that you’re not a victim of this.
John:
That’s so important. Well, how to prepare yourself so you’re not a victim of that. Hack Google Maps is a book that you’re definitely going to want to get as well as the one you recommended, Entrepreneurial DNA. We want to definitely subscribe to or listen to School for Startups Radio and how else could someone reach you Jim? How else could people find out more about your rock stars in an elevator or book you for a talk?
Jim:
I’m at @EntrepreneurJim on Twitter and SchoolforStartupsRadio.com is the radio show and if you wanna see about the different speeches that I give, you can go JimBeach.com and all of the presentations that I give are there including a really great presentations on how to hack LinkedIn. We’ve done that as well. So, you can get anyone’s email address off of LinkedIn. Rock stars in an elevator is also one of the presentations there as well.
John:
How to hack LinkedIn or the CIA. You might be getting another invitation from the White House for a whole other reason, right?
Jim:
Or jail somewhere. Yes. I’m always looking out for five black SUVs to show up and mysteriously make me disappear. So, we’re looking for that as well.
John:
You have way too much value and insights to offer the world. You’re not going anywhere. I know we’re so grateful for you being on The Successful Pitch. Look forward to hearing you interview other people who can tell us about how to be successful and you certainty model that for everybody, Jim. Thank you again.
Jim:
Thank you so much for having me.
TSP005 | Andrew Ackerman – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Hi, welcome to the Successful Pitch. Today’s guest is Andrew Ackerman who works at DreamIt Ventures. They have one of their companies that you might have heard of called Meerkat, which has taken incredibly with Twitter. He said that Meerkat is an overnight sensation two years in the making. So, be sure to listen to this episode to find out about Meerkat. Andrew himself has an incredible background as an entrepreneur where he was part of a team that started a website for parents who wanted to keep track of their children in summer camp. Back in the late 90’s they literally were getting customers through trade shows and having a five second pitch as somebody walked by a booth.
Today he has many more detail insights as to how to pitch him as well as any other investors, which includes tell me the one thing that makes you special, whether it’s you have the youngest employee ever on your team from Apple or you have 70,000 users already, so you have a lot of traction that no body else has. Don’t make him dig around your pitch deck to find that one thing to make you special to get him engaged. He also gives incredible insights on virality. There’s such a thing as negative virality or weak virality or something that’s inherently viral or, ideally, something that’s necessarily viral such as Evite. He talks about the differences between LinkedIn and Facebook and so much more. You’re going to have a great time listening to Andrew Ackerman, thanks.
Welcome back to the Successful Pitch. Today’s guest is Andrew Ackerman who is the managing director of DreamIt in New York. He has an incredible background. They describe him as a recovering consultant turned serial entrepreneur. He has a fascinating story about how he lend Bunk1.com from scratch to the lending provider to web services and DreamIt Ventures has an incredible array of startups. They have helped over 178 companies that now have over $500 million dollars in value, so we’re are very happy and excited to hear Andrew’s insights on what it takes to be a successful startup and how to get funded. Andrew, welcome to the show.
Andrew Ackerman:
I’m happy to be here.
John:
Andrew, I would love to have you tell our listeners a little bit about your background before we hear what you’re doing now starting with Bunk1.com. How did you come up with that great idea and tell us a little bit about what that was and that journey if you will.
Andrew:
So, I love to take full credit for it, but I can’t.
John:
That’s okay.
Andrew:
I could probably get away with it, I’ll tell you why. The founding team were three people. One of them, his name was Ari Ackerman, we’re not related. So, everyone would come up to us and say, oh it’s really great two brothers starting a company together and the irony is we haven’t even met until – we met through the third founder, David Gomberg, who I went to business school with his brother and had known him for many years. So, ironically the other guy with the same last name as me, I hadn’t met until we got together.
So, I was chief operating offices and the head of product. I was the third person that Dave and Ari had the idea. Eric was actually, Eric is David’s brother, Eric and I used to go out to dinner every couple of weeks and we would talk about all the really, really dumb dot com ideas that were coming across our plate. You have to understand that this was 1999 and selling ice on the internet seemed vaguely reasonable for people back then. We would play games and he would tell me about one ideas and I would turn around and bust him for him and vice verse. So, he started telling me about the idea SAAS, software as a service, startup for the summer camp industry. It’s a suite of services aimed at the camp director, everything from photo gallery, which think back in 1999, this was revolutionary one-way window into the summer camp experience. That was our marketing verb-age.
John:
Right, I love that. It’s like pre-Instagram.
Andrew:
We’re talking pre-smartphone here. There were these things that we called camera that people used. So, there was that and we had communication tools that would let you communicate with your camper while they were at camp without them being anywhere near a computer. It’s printed out and handed to them and we even had a fax back service with bar codes on the top of the stationary. Pretty revolutionary stuff for the time.
John:
How did you find out there was a problem that parents needed to have that window into their children. I find that – because parents obviously miss their kids and the kids miss their parents and get homesick. Was that the driving problem you were trying to solve or was it more a spy..
Andrew:
It’s actually very interesting. It was – no, no it wasn’t spy. This was a time where everything was being re-imagined. I mean, now we think everything is being re-imagined. Now we already have a little bit of a guideline, somethings work, somethings don’t, back then it was totally like selling ice on the internet might have been reasonable back then, right, so everything was being tried. The things that attracted us to the summer camp market were, it was one of those kind of sleepy little niches that are much bigger than you think. They are relatively easy to get in touch of the decision makers. This is what I call B to B to C play.
John:
B to B to C. I love that.
Andrew:
So, we pitched to the camp directors by enlarge, we explained the value of the idea, which pain points it met for them, and then if we solved these problems for them, they were thrilled and we could then, you know, help service their parents and market to them relevant services only.
So, for instance, the biggest thing the camp directors were getting in the 1999-2000 eras was, “Why can’t I see what’s going on at camp?” Parents actually missed their kids, until then, it was just something they sucked up and lived with because that’s the way it was, but both the a-trends people were expecting to be able to see these things, because the internet was showing them they could and on the flip side, you know, parents were just more nervous than they used to be. They want to be reassured that their kids having fun all the time. So, yeah, it’s a little sick.
So, what we did at – sorry the other pain point was for the directors, they were painfully afraid of anything bad that might happen if they put a photo up. Some pervert somewhere would get a hand off and I don’t know, do something with it. So, the security element was something that was very important to them, they knew they couldn’t do on their own and they were just extremely concerned about the overall load, because back then even uploading a photo, anywhere, was a little technically challenging. So that was the initial pain point.
In fact, it took us a while to get the pitch right on that to the customers. We would go to trade shows, which were a fairly effective way to get customers in a B to B to C environment and we would start talking about, you know, does your company have a website, and they’ll go, “We got that already.” You can imagine what it looked like in 1999. It’s like three pages with a telephone number at the bottom. That was about it. They would keep walking.
So, we needed to come up with literally a five second sentence that would get them to stop in their tracks and turnaround. That’s, you know, as an entrepreneur when you’re pitching customers in this kind of time starved environment, being able to hook them with something quickly is critical. So, ultimately what we ended up coming up with is, you know, they’d say, “But do you have a password-protected photo gallery?” and immediately that stopped them in their tracks, because none of them had photo galleries to begin with. They certainty didn’t have password-protection. So, that immediately cut through with both a need and address their chief objection to it.
John:
Got it. That’s so helpful for the listeners. Let me just recap that for everybody. That five second pitch to people walking by your booth at a trade show is such a great example of the kind of urgency that you have to have when you’re pitching someone like you know that’s an investor, wouldn’t you agree?
Andrew;
Yeah, so the flip side when you’re talking to an investor, you need your elevator pitch obviously for that phrase before, you want to give them something, you have maybe a little more than five seconds. You got 30 seconds or so, but the key and it’s brutally hard for some people is come across in those 30 seconds giving some idea what you do and enough of a reason for them to say, damn, I want to spend another two minutes and learn more. I want to ask a question.
The mistake people make is they think they need to say everything. You don’t need to say everything. You need to say just enough so the guy you’re talking to leans forward and goes, “Oh, that’s interesting, but how do you X?” And the moment they ask how you do something or are you worried about something, are you in competition with so and so, you’ve bought yourself another minute.
John:
I think that could be a really tweetable moment right there. Don’t pitch everything, just enough to get them to lean forward.
Andrew:
Works for me.
John:
And want to know more. Yeah, great. Thank you. Really helpful. Alright so back to your story where you’re at the trade show, you’ve got some people who understand the pain points, you addressed both the need and the objection they had to not using and you start to get some traction with consumers, actual parents in the camps, how do you then raise money for that?
Andrew:
So, quite interesting, we actually didn’t. We were bootstrap. We gotten some interest. It’s a little bit of a tragic story, so no, no, not just for us, tragedy was not on our end. We had some, you know, good angel money to come in, friends and family money, and then we went to the rounds. We took it in front of (#10:06?) prior fund, he passed on us. Nice guy but he passed on us. We had talked to a couple of different VCs and we actually had a term sheet from one of them. A VC called Great Auk, which was actually the venture arm of Cantor Fitzgerald and we had that in our hand in the summer of 2001, so you probably know where this story is going. Cantor Fitzgerald’s offices were on one of the high floors in the twin towers.
John:
Wow.
Andrew:
So, we had decided that we wanted to wait until the end of the summer, because at the end of the summer we had metrics. It’s a very seasonal business obviously. So, we wanted to wait until the end of the summer and maybe revisit the terms and then obviously tragedy strikes, right. No other way to put it. The people we were talking to were still around, but clearly they had more important things to do than to talk about investing in a startup at that point.
So, we ultimately didn’t raise and a bunch of us went without money for a long time, without salary for the better part of the year plus and then we turned it around and we were crash flow positive within year two. Very, very narrow cash flow positive, but we were in the black and then by year three we were able to start taking a little bit of salary and we kept growing from there. So, that was great in terms of our own shares in the company.
The downside that only became obvious in retrospect is that having a professional investor there I think would have focused us a little better, would have pushed us a little harder. They were some things that we did that we didn’t do fast enough. They were other things that we did that maybe we shouldn’t have wasted time on and having somebody on the outside who has kind of seen people make these mistakes before could have sat us down and say, why are you doing this, right? What really does this do for you?
John:
Well, clearly this experience was invaluable to you getting to where you are today at DreamIt Ventures where you really know what it takes and the dedication and the willingness to overcome tragedies on a large scale, persevere through no salary, breaking even and then making profitable. So, how did you, what was your big next step from that startup to getting into the other side of the table as it were?
Andrew:
So, that was, just to give you kind of the timeline there, so we started DreamIt in 2000, 1999-2000, it’s still going strong. I had gotten bought out in 2008, so pretty much the very end of 2008, I got my last payment, shake hands with Ari, he’s still in charge of the company. It’s still alive and kicking.
At that point, an opportunity fell in my lap to manage a family office. So, for the, you know your viewers who are not quite familiar with that term, a family office is basically the in-house investment arm for a high net worth individual. We’re a family of high net worth individuals. In my case, it was just one man, an older European gentlemen.
So, it was kind of a mixed bag. I did everything from really boring hedge funds and private equity funds all the way to really interesting direct angel investments. We were one of the first investors in Artsy, for instance, which is a great art tech startup. They just raised,I think the b around this past month. We also bought shares in the secondary market. So, we bought shares of Facebook in early 2009, which was before all these trading platforms like SharesPost were doing anything like that and did a number of investments like that and that was far more interesting to me. I had been approached for that position, because the idea was I got to do all that stuff and incubate a couple of startups that he wanted to build on his own. Unfortunately that second piece, so first of all, what else happened in 2008-2009? The financial world basically collapsed.
John:
Well, there’s that, yes.
Andrew:
That little thing. So, I spent the better part of the first year and a half fixing up the portfolio, you know, we were gated a lot of redemptions when it comes to hedge funds, which basically means they freeze your money, you can’t have it, that was fun. The private equity funds we were like, great, everything is selling for 0.37 cents on the dollar, so that mean they were calling money, which meant we had to write checks we couldn’t free up other money. So, it was a little bit, there was a good reason we weren’t doing a lot of incubation for the first year or two, but ultimately though we started turning towards it, but that part of job never really turned out to be what it was going to be.
So, while it was very, very interesting on the investment side, what really attracted to me was the other half, the ability to be a mini incubator or a mini accelerator. So, when that didn’t pan out, I took another shot of the startup world. A company called LayerCake, which I was bought out of as well, but that one isn’t around anymore. So, I can’t put in a good world for them the same way I can for Bunk1 and then I was ready to start a third startup. There was a third startup I almost did and I decided not to pull the trigger on for a variety of reasons and it was probably one of the harder decisions I ever made, because I gotten very emotionally invested in it, but when I took a cold hard look at it, the odds were stacked against it.
John:
Let’s take a moment and talk about that, because that’s so important for the listeners to really understand that you can emotionally fall in love with an idea and a potential startup, but you need to be that passionate, obviously, to make it work, but you also you need to step back from what I call the right-brain world, the emotional is to the left brain and most tech people tend to be more left brain oriented and I’m trying to get them to right brain story telling, but in this particular case, it’s all about you are passionate and committed to something and emotionally invested, as you described it, but you also have to make some rational business decisions, so it’s a constant back and forth between the left brain/right brain, analytical story telling, emotional engagement, it’s so important for people to realize that just because you’re in love with something doesn’t necessarily mean it’s the right thing to pursue.
Andrew:
So, I had an advantage, right. I made a boat load of mistakes at Bunk1. None of them were fatal, but we did make a lot of mistakes. It helps a lot to help done it wrong, once, and survived, so when I started looking at other companies, you know, I had a little bit of distance from them and I was able to step back and also my potential co-founder on that one also, you know, he had been in a couple of startups also so we’re able to dispassionately. So, the key thing is to be able to see it through the eyes of a potential customer and a potential investors. If there’s one skill that’s absolutely critical for an entrepreneur, believe it or not, it’s empathy.
John:
I love that. One skill critical for an entrepreneur it’s empathy. Being able to put yourself in the investor’s shoes and the customer’s shoes, right?
Andrew:
Exactly. So, sympathy is like I feel bad for you, empathy is I feel what you feel. So, your ability to put on the persona of your customer or customers and see what you’re building through their eyes and ditto for an investors, that’s critical. It’s tough because you have to forget a lot of things that you know. So, for instance and I’ll make this concrete, the startup that we were looking at was in the book discovery space, which a couple of years ago was quite hot. We were looking at still a novel idea that I don’t think anyone has ever done, but it had three issues with it.
So, number one, the space was getting crowded. So, difficult to stand out. Number two, it was a little complicated to explain, which is not horrible if it’s not a crowded space, but it’s a lot harder in a crowded space. There was no five second, stop, turn around, come back to your booth type pitch for it, and the last piece of it is it didn’t have an inherent virality to it.
So, there’s certain businesses where, I kind of think of a scale of virality. On the one extreme there’s negatively viral companies. I mean, they could be good companies, like take Ashley Madison, right, there are some very happy customers there, but they’re not going to tweet about it because they just cheated on their wife or husband. So, you get no virality out of that, you have to find a different way to make that a good business. You’ve got stuff like Microsoft Word, which is, you know, no one tweets about Word, it’s not like that.
John:
I got it. It’s really helpful. So, negative virality, I love that. That’s a great definition.
Andrew:
Word is neutrally viral and then you’ve got stuff that are weekly viral, which could be like a game. Oh, it’s a really great game, I’m going to tell my friends, but okay, maybe I won’t, maybe I forget. If I’m the only person on earth playing this game, it’s good to me. Where it starts to get interesting is when you start to get into companies that are inherently viral or necessarily viral. So, inherently viral are the ones where my experience gets better if you use it, like Facebook, network effects. If I’m the only one on Facebook, it’s pretty bloody useless, but if a couple of my friend’s are on it, it starts getting interesting and if lots of people are on it, it gets more interesting. LinkedIn especially, it gets more interesting the more people I don’t know who end up using it.
John:
That’s great. It gets more interesting the more people I don’t know. That’s fascinating.
Andrew:
Because it’s discovery. If everyone I know is using it, you know, okay, on LinkedIn there’s no value, because I already know them. Facebook is the other way around, they are actually people I want to keep track, but too bloody lazy or busy to actually call them.
John:
That’s a fascinating distinction between Facebook and LinkedIn and I think it’s worth taking a second to use that, because it’s such a valuable example of what you just described as something inherently viral, but different. So, Facebook is inherently viral because you’re keeping in touch with people you know and want to stay in touch with or have lost touch with where as LinkedIn, it’s inherently viral, but for the people you don’t know as oppose to Facebook for the people you do know. I really like that. That’s so valuable, Andrew, thank you for that incredible insight.
Andrew:
My pleasure. Now, there are other examples as well and there are ones where it’s not so immediately obvious, but let’s take Netflix for instance, right, so Netflix we don’t think of as social network, but the value of Netflix increases and Amazon as well, because the more people use it because the recommendations get better. So, there’s kind of a data scope issue that makes it better, but there’s even a better, more viral element, which is when it’s necessarily viral. So, if you remember the original evite or the more modern incarnations like Paperless Post.
John:
Yes.
Andrew:
I can’t use that service without telling someone. I can use it to like invite people in my party, but if I don’t put their email addresses in and hit send, it’s useless. I haven’t used it. So, there are certain tools which by their very nature you have to tell people.
John:
Would you say that’s one of they key areas that you’re looking at now at DreamIt and the other people on your team there is looking for things to invest in that are either inherently or necessarily viral?
Andrew:
So, yes, but not exclusively. So, you know, I’m going to broaden it a little bit. This is a typical consultant answer. I’m going to answer the question I want to answer, not the one you asked. So, what we’re looking for actually are companies that have the potential to be big scalable businesses and we can help them gt there. So, that includes B to B and B to C companies. B to B companies very rarely have the same kind of viral loops.
So, the kind of more general thing we look for there is with companies that kind of cracked the sale cycle or close to cracking the sale cycle. They understand how their user is, not just, oh, we’re going to sell to more mid-size businesses, not just we’re going to sell to, you know, accounting firms, but the purchasing manager in an accounting firm has the budgetary authority to buy our product and can make a decision within two weeks.
John:
Really specific, really narrow.
Andrew:
Really understand exactly who’s going to write them a check and understand, you know, what’s the lean forward phrase that gets their attention, it keeps them on the phone, and how they’re going to reach them.
John:
That lean forward phrase goes all the way back to that five second pitch when you’re at the trade show. I love it. The lean forward phrase of who is going to write the check and we know how long it takes them to make the decision to write the check at the purchase order level. That’s brilliant. Let’s talk a little about, since we’re getting close, this has gone by so fast, your experience at DreamIt. Can you expand upon, you know, one of the big companies now that are on your company’s website is Meerkat that everyone is so excited about. Can you tell us about, you gave me a phrase earlier that I’d love you to use about overnight hit. Tell us a little bit about Meerkat.
Andrew:
Sure. So, I think the phrase you’re referring to is they were an overnight sensation, it was two years in the making.
John:
Yes, exactly. We’re going to tweet that out for sure.
Andrew:
So, first thing, they went through DreamIt Austin, so let me just roll it back. We have accelerator cycles in multiple cities. We started in Philly in 2008, which makes officially now the second oldest accelerator in the world. We used to be mumber three, but now Y Combinator is not an accelerator anymore. They’ve actually just admitted it. So, Techstars is now the oldest followed by DreamIt. So, since 2008, we’ve run programs in Philadelphia, in New York, in Austin, we also have programs in Baltimore, which is specifically for DreamIt Health, health tech focused companies.
Net we’ve done 178 companies so far and Meerkat has been very much in the news, so the background on Meerkat, which I promised you, they went through DreamIt Austin in 2013, they’re an Israeli company, the core part of the team came over, they spent three months in Austin and at the time they were working on a company that was Yevvo and it was a social network for sharing videos. Still live video, but it was a closed social network. They re-branded as Live On Air and they were doing reasonably well, ironically with the Latin American teen set.
That was where they got some initial traction, they raised an a round and they were doing okay to very good. Somewhere in that range and then the founder as a side project decides to work on, you know, I wonder if I open it up and I integrate it with Twitter, that’ll be kind of cool, and then it just takes off. So, okay, Air is on hold, everything is Meerkat now.
John:
Wow.
Andrew:
There’s even a funnier story. So, because it’s our job to be on top of these things, we were familiar with Meerkat, but at first we didn’t know that back story, so there was a period of time where Meerkat was starting to trend and we didn’t know it was one of ours.
John:
Oh funny.
Andrew:
Until a VC named Charlie O’Donnell in the New York area, he tweeted out, very nice tweet, he said, hey startups, you know, Y Combinator is not the only game in town, Meerkat is an DreamIt alumni. So then it took us like a couple of hours to figure out the back story and confirm that they actually were. That’s good, right.
John:
What I love about that story is the ability to have the right team in place who has the savvy to try something and possibly pivot and that’s really where you get the scalability. So, you gave us some great insights as to what you and your team are looking for at DreamIt. It’s the big idea that can scale, really cracking the sales cycle, digging deep as to who the customer is on such a grandeur level..
Andrew:
Or if you’re B to C, say, if you’re a B to C the equivalent to cracking the sales cycle is really understanding the viral loops.
John:
The viral loops, yes, got it.
Andrew:
Either way, we want to know that you’ll have customer/user acquisition, you got a good plan for that. Sorry, I didn’t mean to cut you off.
John:
No, I’m glad. So, that’s just summarizing some key takeaways for the listeners. If someone wants to be considered for DreamIt, those are some key areas they need to have. A couple of quick questions for you towards the end. If you had one bit of advance for a startup pitching DreamIt, what would it be?
Andrew:
It’s hard to pick just one. I’m going to back to, if I had to pick the number one, it goes back to the comment I made about empathy, understand where we’re coming from. So, number one, we love working with early stages startups. We love meeting with you even if you’re too early, we love meeting with you. We probably spend too much time doing that from a purely, you know, blood and numbers perspective, but we enjoy it, that’s why we’re in the business. We’re all exit entrepreneurs. On the flip side, we see a lot of companies, so you need to really help us by getting very quickly to what makes you special.
So, we don’t need to know every feature or what the UX is for your company. We want to understand what’s that one thing that you do that other people can’t do and it can be different. There’s one company that came to me with a, it was a fashion text article, it was a shop-the-look site, I’ve seen literally dozen of shop-the-look sites.
I was looking at their deck as a favor, I was really like, I’ll be honest, half checked out by page one and then I get to page eight and they’re like, oh, we have 70,000 active users. I was like there’s something I haven’t seen everyday for a company like this. I said, well, how many of these are monthly active and they go, we don’t know, we know that 30,000 come in every two weeks. So, probably about 40,000 a month and I said, that has to be page one.
John:
Yes, don’t bury the lead as they say in journalism, right.
Andrew:
Exactly. For a company like that where they were trying something that a lot of people have tried and not yet succeeded at the thing that made me lean forward and say, oh, that’s special, is like they’re the first company to have any real traction at it.
John:
Got it, that’s really key.
Andrew:
A different company it might be the team. Like one of them, one of the youngest employees ever hired by Apple, right, and worked on their maps program and now he’s working on, at the time, he was working on a location based startup. So, it all kind of really made a lot of sense. So, you might lead with the team if that’s what makes sense. You might lead with what the product is that no one else does and why they haven’t been able to do it, but do me the favor and they don’t bury the lead.
John:
Great, thank you. So valuable whether it’s your team or your traction, figure out what that one thing is that makes you special and don’t make Andrew have to hunt through a deck to find it.
Andrew:
Don’t make me think, bad things happen when you make an investor think.
John:
If you had a book to suggest or a book that you really found useful, would you have anything off the top of your head that you could suggest to people?
Andrew:
Yeah, there’s one, this is for people who want to understand the mind of a VC.
John:
Oh my god, especially since empathy is key, that’s a key title, yep.
Andrew:
So, these guys are by enlarge they’re one or two stages ahead, further down the path, than DreamIt is, so it’s not exactly the same thing that we think of, but understanding the VC game is critical. So, it’s actually called Mastering the VC Game, it’s written by Jeff Bussgang. It’s really great because it tells you the right way to reach out to a VC, what they’re thinking, it tells you good questions for you to ask, I mean, you’re suppose to be diligencing them as much as they’re diligencing you. Things like, you know, pay attention to when they raise their last fund, because they raise their last fund over five years ago, they might not have any dry powder to invest in your company, so don’t, I mean, be nice about it, but don’t waste too much on them because they’re not writing a check. Things like that were extremely insightful and unlike so many business books, which are basically a 20 page power point, I have no patience for those. The signal to noise ratio on Jeff’s book is really high. It’s a good read and the quantity of information there is well worth the read.
John:
That’s great. The signal to noise ratio, I love that phrase. You really get a lot out of it, basically, and that’s what your pitch deck should do is have a really good signal to noise ratio. Well, thank you so much, Andrew. If our listeners want to connect with you, reach out to you, what’s the best way for people to follow you, your tweets, whatever, if somebody really wants to know more about you.
Andrew:
Very simple. Best way to reach out to me is just email me at [email protected]. Short emails are better than long emails. Long emails kind of go to, I will get to you later, which is unfortunately. Clear subject lines, I really like clear subject lines. Hello is not a clear subject line. Something like heard you on the Successful Pitch, want to talk to you about my company, right, or something like that. Don’t reach out to me blindly on LinkedIn, because I only, I don’t want to sound like a snob here, I only link people who I know well enough to either recommend or be recommended by, like how I use LinkedIn. So, if I have people I don’t know, it’s just not effective for me.
John:
Fair enough. Well, you were certainty generous to give us a great tip on how to email you with a great subject line, I heard you on the Successful Pitch. Any kind of warm introduction like that where just showing you’ve done some homework about who you are. That’s so valuable.
Andrew:
Absolutely. Warm intros are the best. I should have said that first.
John:
Yes, got it. Andrew, it’s been a pleasure having you on the show. Thank you so much.
Andrew:
Entirely my pleasure, thank you for having me.