TSP004 | Andrew Medal – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Hi and welcome back to The Successful Pitch. Today’s guest is Andrew Medal. What a story he has. From being in prison ten years ago to becoming a writer for Entrepreneur magazine and working for an angel investment company. You’re going to be riveted to hear how he did it and what lessons he’s learned and what he shares with us today on the show. He talks about how being in prison there is a hunger to survive and that same kind of hunger is what you need when you’re a startup entrepreneur.
He shares 5 secrets that he used to become a writer for Entrepreneur magazine that you can use to reach out to the right investors. He also has a great story about how he picked the wrong business partner and how to avoid making those same mistakes for you as well as avoid making the same mistakes with an investor. Just because you’ve made a mistake, doesn’t mean you should stop dreaming, he said. You need to paint a picture for an investor to understand your pitch. We came up with a concept of being the Picasso of pitches, so you’re going to enjoy the show. He’s got incredible insights and value, I can’t wait for you to hear it.
Hi everybody and welcome back to The Successful Pitch podcast. We’re thrilled to have today’s guest, Andrew Medal who has not only worked for an angel investment company, is pitching currently right now and can give us tips on that, but is also an incredible writer for Entrepreneur magazine that gives really valuable tips and insights on what it takes to be a successful startup and get funded. Welcome to the show, Andrew.
Andrew Medal:
Thank you so much, John. I’m excited to be here and excited to have a discussion.
John:
Great. What I’d love to do is, because you have been one of the few guests that have been on both sides of the table, as it were, I think people would love to hear how you got your job working for an angel investment firm.
Andrew:
Sure. So, I actually, that was, basically the beginning of my career, what I actually was doing, I was working at a hedge fund. During college I thought I wanted to be a stock broker, so I, we had something called the Bloomberg Terminals, which is the Bloomberg is, you know, is a one of the biggest and most known instruments in the financial world, so we had access to those terminals.
So, what I would do is spend my entire time on those terminals actually networking with different fund managers and people on the space, which eventually landed me an internship at a hedge fund, so I started off at a hedge fund actually trading and learning the market, eventually worked my way up to an analyst.
For a very brief time I was a trader, but that all happened around 2008 and our fund went upside down. So, my last paycheck actually bounced and I was stuck trying to figure out what I was going to do next. During that time, I had been, you know, just looking around and trying to figure out my next move and so I was talking to a lot of different entrepreneurs and a lot of different people that I knew that had started companies and these people all needed funding and so, what I did was I started looking for potential investors just out there that people that I have found that were making investments, so what I did was I brought pre-qualified potential investments with these different startup companies and people that I was meeting through this actual different angel investor groups and that actually helped me to get a position with a team, so that was my way into the angel investment world.
John:
You were doing two things that are really important for our listeners to learn from. One, you were networking, which is how you got your job as an intern and two, you were then able to start acting as if you’re already working for an investment firm. You take your broker experience and started brokering deals together and when you started doing that people said, well, we should have you as someone that’s working on a team at an angel investment, right?
Andrew:
Right, right, yeah.
John:
So that power of acting as if, so what was it like being on the hearing pitches. How many pitches would you hear on a week as an angel investor.
Andrew:
I was probably hearing – okay so, we were a unique team. We had different tools that we’re providing entrepreneurs, so they were paid tools that entrepreneurs can use and then we are also looking to place capital, so our business model was somewhat unique. So, based on that fact, I was interacting with a lot of entrepreneurs just in terms of talking to them about our different tools, you know, just interacting with them, I’ll get pitched all day. More formal pitches I would say probably, you know, 10-20 per week.
John:
Wow. Is there any one thing, Andrew, that stood out when you would hear 10-20 pitches a week of that’s a really great pitch or that’s a really bad pitch? One extreme or the other that would be helpful for the listeners to know if I wanna be memorable, here’s what I should do and if I really don’t wanna be at the bottom of barrel, here’s what I should not do.
Andrew:
Right, right. Great question, John. You know, I think for our team what we really focused on, I mean, this is like a match for everybody, you know, and says all the time and I’ve heard, you know, your other interviewees says this, but we would bet on the jockey, not the horse, right.
John:
Yep. You can never hear that enough.
Andrew:
So I think a lot of the times when we would find that jockey, that for us, that experience, that proven track record, you know, for us at least that role, that was what we’d look for. So, that always, you know, you know made our ears perk when we heard someone talking about proven track record or success or, you know, that’s not to say that they have to have experience, you know, because there’s a lot of first time entrepreneurs that don’t have experience, but if you don’t have that experience, explain to us or explain to your investors why you’re the right team, why it’s the right time or why are you the right team to actually execute the vision that you have.
John:
I love that. We’re going to make that a tweetable moment from you, it’ll be why you and why now.
Andrew:
Right. I love that.
John:
Make sure you have answers to those two questions, correct?
Andrew:
Right, right.
John:
Andrew, you have so much insight, what would you say is the importance of being able to tell a good story?
Andrew:
That’s extremely valuable. You know, I think that actually, really, when it comes down to it at a fundamental level, I think the difference between someone who will get the funding that they’re looking for and someone who will not, comes down to their ability to paint the right picture, you know, funding and raising capital and pitching, you know, same with projections and putting together the pro forma. I mean, it’s an art, not a skill. You really have to be able to know how to paint that picture, because there’s so much that goes into, you know, what you’re opportunity is, but then you have such a small window to really captivate whatever audience it is that you’re looking to captivate.
John:
Andrew, you’re just full of incredible soundbites for the listeners today. Your ability to paint the picture determines whether you get funded or not, so I’m going to say that Andrew Medal says, if you wanna be the Picasso of pitches, paint a picture.
Andrew:
I love that.
John:
You like that?
Andrew:
Yeah, that’s awesome.
John:
Great. So that’s it, listeners. Become the Picasso of pitches by painting a picture that investors can easily understand and remember, if you need to learn how to tell a story, that’s when you need to reach out to people who an teach you that skill, because it is a skill and an art and it’s not something you can just go in and wing it, right? Not if you wanna get funded. There’s too much competition.
Andrew:
Absolutely.
John:
Would you agree?
Andrew:
Totally agree.
John:
Now, let me ask you, if I may, about the recent story in the charity you’re involved with called Last Mile. Can you tell our listeners your experience of what you learned from talking with inmates and how that relates to being a startup entrepreneur?
Andrew:
Absolutely. I’m involved with a charity called Last Mile Project and early on what we were doing as a charity, we were going in to different institutions and actually teaching a course on entrepreneurship. The charity has pivoted a little bit as of recently to where they’re actually teaching inmates how to code now up in San Quentin prison, but I’ve learned a great deal going back into the prison system and teaching entrepreneurs about being entrepreneurs, I’m sorry, teaching inmates about being entrepreneurs.
You know, there are a lot of parallels in the prison system as they are in the startup world, as you mentioned, I’ve written about this on Entrepreneur, you know, for one, there’s this hunger in the prison system that is reminiscent of the startup world, except, you know, I’d say the hunger goes in a little deeper and further in the prison system.
I feel like you’re not, you know, until you realize the things that you take for granted on a daily basis and the things that we all, you know, the things that we take for granted on a daily basis until those things are taken from you, you don’t truly understand what you have. So, when you’re in prison, you have no internet connection, you have no access to, you know, a free phone, you have ability to watch the things you want on TV, you have, you know, very limited resources, your most technologically advanced instrument is your number two golf pencil.
If you want to go – you just have ample time to just sit and reflect and, you know, a lot of people have big dreams and they may have made mistakes, but that doesn’t mean that they don’t dream big and have big visions for their life. It just means that some of the decisions they made in the past don’t reflect, you know, those decisions that they’ve made that caused them to be there.
John:
I love that. Just because you’ve made a mistake, doesn’t mean you should stop dreaming.
Andrew:
Right.
John:
That is such a great takeaway for the audience and to not give up, right, and to, it’s almost like being in prison and being an entrepreneur, I would say, is almost like survivor in the business world where you have limited resources and you’re literally hungry, you have to be hungry for the deal and you have to be persistent and not give up when all the odds are against you and still hold on to your dream. That’s such great work. I would love to know how did you get your job at Entrepreneur magazine, because again, that’s an extremely competitive place to land, to establish yourself as an authority. Obviously for investors that you’re pitching now for your own startup, tell us how did you come to decide, oh, I wanna write for entrepreneur and how did that all happen.
Andrew:
Sure, so ever since I was younger I knew I wanted to be a business man and I knew I wanted to have a bunch of startups and multiple companies and within that same vein, I knew I enjoyed writing and I knew that I wanted to, you know, be able to write for, you know, publications of that caliber, you know, we spoke offline and I spoken a little bit about my past, you know, I made a mistake ten years ago and it ended up causing me to eventually do two years in prison. So, actually while I was in prison, I used to hand write articles to entrepreneur and mail them via USPS.
John:
Wow. Talk about an old school..
Andrew:
Because I wanted to get my stuff published and I thought, well, this might be a unique strategy and creative way to get my name out there at least with Entrepreneur. Entrepreneur for me was kind of, you know, it was a magazine I felt would be my first stepping stone, so I didn’t give up on that dream when I got out, so what I continued to do was reach out to people.
So, here’s some good tips for entrepreneurs and your listeners that may want to explore writing for a publication. Number one, go LinkedIn and search for people who work at the publication that they’re hoping to write for. Number two, you connect with those people and start building a relationship. Number three, find out who the person that you need to speak to to be able to pitch as a contributor.
Number four, do your research. Go somewhere like Buzzsumo. Go to Buzzsumo and learn what the most shared articles are, so you have a good understanding of what their audience likes. Number five, create a list of pitches that you think align with their brand and with what people have shared. So you have data backing your reasons why these pitches that you think would be good that you could write on and with that formula, I was able to get into Entrepreneur as a contributor.
John:
Wow. Andrew, that is such a – you could write your own book just on that. What I love about these five steps, you know, the five steps to getting published, the five steps to breaking through, I think that you also could do a book on the five steps to getting funded the way – it’s the same thing to getting to the right investors, would you agree? You have to research, have data to back it up. I mean, what you just gave our listeners is absolute gold.
These five steps that are proven, because that’s what got you from prison to being a writer on Entrepreneur to know, you know, to making your life a huge success working for an angel investment company, having multiple companies that you are starting up and getting funding for, so that is, I can’t thank you enough for that generous, generous strategy that you’ve just shared because it’s the same kind of strategy that startups need to use to get to the right investor, wouldn’t you think?
Andrew:
Absolutely.
John:
Let me ask you about another one of your wonderful articles in Entrepreneur when you talk about jumping in too soon in a story you had about Craigslist. So many times people talk about, oh, I don’t want to jump in too soon with the right investor, but you even back it up a little bit further and say don’t jump in too soon with a business partner. Can you tell us the importance of both of those?
Andrew:
Sure. Yeah, so I recently had an experience where I met this guy, he was kind of hard pressed on his luck, kind of down, and we decided to go into business together because he brought value, complimentary value to the things I had been doing. We’ve been building additional marketing company and I was doing web design and development back then and front-end design stuff and he brought internet marketing, resources and knowledge and experience.
I wrote an article that said and explained three lessons I learned about that failure because we ended up, you know, not being able to succeed together in business. I think the big takeaway for me though was although, you know, I jumped in, the takeaway was not to, you know, give up on taking chances and risks, because even though the business did not succeed and did not, you know, grow into the vision that we had, you know, I don’t regret the experience, because it made me smarter as an entrepreneur and I think that no matter what we’re doing as entrepreneurs if we’re learning in the process, we’re growing and we should never stop learning and growing.
John:
That’s such a tweetable moment again. Never stop learning and growing. We’re going to tweet that out, because you know what it ties full circle back into what you were talking about being in prison, just because you make a mistake, doesn’t mean you stop dreaming and just because you make a mistake with who you choose to go into business with, doesn’t mean you give up, right, you learn, listen, and makes you a better entrepreneur.
Andrew:
Right.
John:
The continuity and the life lessons that you keep building upon is such a great inspiration and huge life lesson for everybody.
Andrew:
So with that said, I would say that the two takeaways that I have from failing with that business are one, I need to learn how to mitigate my risk better. I was too exposed, it was my primary source of income, so when things went sideways, I was in a position where I could not, you know, I had to scramble hard and hustle out of that dark place that I was in, you know. So I had to get out of that through sheer determination, perseverance, and hustle.
John:
No, I love that. Sheer determination and hustle. Man, if you could have that come across when you’re pitching an investor, that’s what you want to see. Those are the unspoken things that people are judging you on when you’re speaking. They’re not asking you are you perseverance and determined. The more you have stories like you do of examples of that, the more real it becomes.
Andrew:
Right, agreed. Yeah, so number one point was mitigating my risk. Number two point is to figure out how to protect yourself, which is complimentary to mitigating your risk, but there are other ways I could have protected myself even better even just with a little bit stronger agreements we had in place from a legal standpoint to a financial standpoint to more control over certain areas of the business. You know, that is another really valuable lesson I learned and I’m glad I learned now because, because now I’m wiser from it and I’ll be able to apply that knowledge in future endeavors.
John:
Right before we started this interview, you were telling me you were in the middle of a capital raise. I’m sure our listeners would love to hear from you about taking all these lessons you’ve learned from being in prison, working with prisoners, helping them become startups, being an angel investors, writing for Entrepreneur, how do you pull all of that together and when you pitch, what are your secrets when you’re in the middle of doing a capital raise.
Andrew:
Sure. So, great question. I am currently in a capital raise. We’re raising a seed stage round. We’re looking at a convertible note of about $650,000 and so, you know, there’s so many different ways to approach a capital raise. First of all, there are three places that you can typically find funding. One is friends, family, and fools. Number two is angel investors, which play a more of a professional role than just the three Fs that I mentioned and then the third is obviously, you know, venture capital.
A lot of first time entrepreneurs think that if they have this idea, they just need to go out and raise money right away and, you know, I talk about being able to raise money without a product in place, which is possible, it doesn’t make it easy, but it’s definitely possible and I’ve done it on multiple occasions, but I think..
John:
Let me ask you, to expand on that, because that is such a key question that everybody asks me. How do I get money if I don’t have a prototype and you’ve written about it in Entrepreneur from having screenshots of slides and things like that, but it’s so valuable your skill set and very few people know how to do it. If you could tell the listeners, if you don’t have a working prototype yet, you can still raise money and here’s how I did it with A, B, and C.
Andrew:
Absolutely. So, I do talk about, I just wrote an article and it was actually on Quora, can I – I don’t remember specifically the question, but how do I raise funding without a product. Pretty much the bulk of everyone on Quora said, oh, you can’t do it, it’s not possible and I countered that point because of my experience and I know it’s possible because I’ve done it on multiple occasions. You know, when I helped raise – I had a 2.2 million dollar raise I was apart of, we didn’t have a product in place. You know, I’ve done it for multiple six figure investments where I had an idea and more than just the idea and I’ll explain the three things that I think that are instrumental in raising without an actual product.
So, three items in my opinion, in my experience, are team, validation, and some sort of demo. So, team is obviously referring to who are you, who’s your team, what’s your experience, why, again, are you the right people for this vision and how are you going to accomplish this. In terms of validation, validation can be anything from a letter of intent from a big customer. You know, if you’re developing a mobile app, go out and create a landing page and get interested users to sign up for this, you know, for your, let’s call it a beta or whatever it is that they’re signing up for, but validate your idea through actual people that have interest, so there are a number of validation techniques you can use.
You can go on Google and search them and find a list and then third is demo. If you don’t have a product, you must have some sort of demo whether it’s Photoshop designs, whether it’s, you know, I mean, even a drawing on a napkin is better than nothing at all, you know. I would recommend against a drawing on a napkin, but you know, have some sort of demo.
John:
Right. A little more sophisticated.
Andrew:
Right. Oh yeah, for our current capital raise, we don’t have a product in place yet, but what we’ve done is we’ve designed the front end, so we have all the Photoshop design files that we’re going to use to convert and actually create your website, but what we’ve done is we’ve used an application called InVision that allows those Photoshop designs to become real and clickable, so I can walk people through what our actual website is going to look like and what the platform is going to be and they get, you know, investors get a real sense of the platform in its entirety.
John:
That’s fantastic. We’re going to be sure to put that in the transcript notes and a link to that InVision that allows your drawings or your Photoshop designs to become real and click-able. That’s an incredible resource you just shared with everybody that I don’t think a lot of people know about. Thank you again for your incredible generosity of sharing your incredible secrets that obviously work. You know, what’s so important for me is working with my clients who have explained to them the importance of branding from the get-go.
So, even if it’s a Photoshop design, it should represent your brand. You need to spend some time thinking about what is my brand stand for, what is the logo going to look like, what colors are we going to pick, what’s the font, what’s the professionalism, is it fun, is it hip, is it sophisticated, that you just aren’t showing something that’s so off-brand. The more thought you put into something, even if it’s not an actual demo, the more people are going to understand it quickly and be willing to say, yes, I get that. Don’t you agree?
Andrew:
Yeah. I think yes and no. How about that?
John:
Okay. Please, I’ll take the no. Let’s hear the no. I love when people say. What’s the no on branding?
Andrew:
My only hesitation there is that sometimes people get stuck in this, we call it an analysis process or whatever you want to call it, but what happens is they think too much, they over think, and then the over thinking hinders them from acting, you know, so what I would say if the over thinking and the over analyzing is hindering them from being able to move forward in some capacity and make progress, I would say hold off on that and figure it out what it is that’s going to move you forward. On the converse side of that, I do think that, you know, branding is specially important, especially in today’s digital age, you know, I work on my personal brand, so I have a business brand, I have a personal brand, and so building my personal brand actually helps compliment and help grow and build my business brand, you know, so if I can show my expertise as a personal brand and show the things I’ve done and show the value I provide and have a compelling story that people can latch on to and be engaged with, you know, building up my personal brand will actually in turn build up my business brand.
John:
Everything is in sync. They’re not operating at completely separate worlds, so what I hear you saying is, it’s important to do more than just a napkin drawing and just put some thought and effort into actually doing a Photoshop design that starts your branding process, but don’t get stuck. I tell my clients all the time, it’s about being a progressionist, not a perfectionist.
Andrew:
Love that.
John:
So, put enough effort into it to make it look professional, but don’t get so caught up on figuring out the color of the logo that it prevents you from getting it done.
Andrew:
Right.
John:
Because it can evolve, everything is a pivot even with the branding and the logo, but don’t do nothing where it’s on a napkin and don’t have anything to show, but don’t stop yourself from having something to show, because it’s not perfect. So, there’s happy medium which is all about being a progressionist. I’m glad you like that.
Andrew:
Yeah. I love that and I totally agree. You know, because a lot of people will just over think everything and they’ll get stuck in this rut where they’re actually not even accomplishing anything and then, you know, what’s the point of going back and figuring out your entire branding strategy if you’re not even going to get through point one.
John:
Andrew, we’re approaching the end of the podcast and it’s gone so fast and you’ve been so generous with so many great tips, I can’t wait to have it all put together for you and our listeners, of course, so thank you for that. I want to ask you if there’s one or two books or one or two quotes that you really got a lot out of it that you’d like to recommend.
Andrew:
I have so many different books that I love. When I was away I read 197 books within a two year span.
John:
Wow.
Andrew:
You know, so I love The Art of War. You know, during that time actually, so The Art of War is a great book and I use all the time. There are a lot of specific books related to, you know, startups and entrepreneurship. During that time The Lean Startup was really big. If people haven’t read that, I really think that’s an important book to at least read, whether they apply it today or not or that’s kind of outdated is irrelevant. I think it’s still a great book to really understand some of the ways that you can go through the process that we’ve been talking about. There’s this quote that I really love, I can not remember who said it, maybe we can look it up, but it’s, I wanna say it’s like the CEO of HP, but the quote is something like, “If we have data, let’s use the data. If all we have is an opinion, let’s use mine.”
John:
Great. If we have the data, let’s use it, but if all we have is opinions, let’s use mine. That’s a great example of confidence, which is what I think an entrepreneur needs to have and express without being ignorant and that’s what you certainty come across as. I mean, you’ve obviously are perseverance and strong and you’ve shown our listeners how to have confidence and believe in themselves and believe in their own opinion. What a great ending. Andrew, how can our listeners follow you, support your articles, whatever else you might want them to – how to stay in touch with you, follow you on Twitter, give us all that detail.
Andrew:
Sure, sure. First off, thanks John, I’ve really enjoyed our time and appreciate what you’re doing. You can follow me, my website is AndrewMedal.com. I love getting connection requests on LinkedIn and always communicate there. Twitter @AndrewMedal is my handle. I’m Quora all the time. Andrew Medal. There’s only one Andrew Medal out there.
John:
Fantastic and then obviously anybody who follows Entrepreneur is going to see your articles and they can like them and comment and share it.
Andrew:
Correct. If you sign up for my newsletter on my website, you’ll get access to those.
John:
Ah, terrific. I highly encourage everybody to sign up for that newsletter. If you had one newsletter to sign up to for this month, that’s the one, people. I’ve gotten so much out of everything he’s ever written and it’s been a thrill and an honor to have you on the show. Thank you so much, Andrew.
Andrew:
Thank you so much, John. I really appreciate it.
TSP003 | Eva Ho – Transcription
Posted by John Livesay in Uncategorized | 0 comments
Welcome to The Successful Pitch, where we interview start-ups who have received funding, as well as investors who share their criteria for what makes a winning pitch – with your host, author and funding strategist, John Livesay.
John Livesay:
Hi and welcome back to The Successful Pitch. Today’s guest is Eva Ho, she is now the co-founder of Susa Ventures, that specializes in early-stage tech companies. But she has a fascinating story that starts way before that – she worked at Applied Semantics, where they got bought by Google when there was only 50 people at the company in 2003. She shares her story of what it was like to find out the news that they’d got bought by Google, and the next thing they knew, they were at Google Head Quarters and it totally transformed the 50 people’s lives that were working there.
She tells us all the secrets that she looks for when someone is pitching her for an investment. It all has to do with being authentic and coming across as someone who has integrity and passion. She said something that I think is absolutely tweetable, which is: You can’t fake passion. It’s such a true story. They need to know why you care about something. And she’s really not interested in knowing what your exit strategy is; she’s more interested in knowing why you’re so passionate about what you’re doing.
So the big mistakes that people tend to make when pitching her include saying they don’t have competition, and they don’t have a lack of validation and many more. Be sure to stay tuned to listening to Eva tell all the secrets of what it’s like to get bought by Google, and what she looks for when someone’s pitching her as an investor.
—
Welcome, everybody, to The Successful Pitch podcast. Today’s guest is Eva Ho – I’m excited to have her with us because she brings such a unique perspective. She has been at start-ups that have been funded and bought by Google, and now she’s an investor herself. She started her career at Applied Semantics, which was sold to Google in 2003, so then she became an employee of Google, so she has an incredible perspective of what it’s like to work at Google and what it’s like to work at a start-up that gets bought by Google.
And then from there she went to another start-up called Factual, here in Los Angeles, and was in charge of marketing, sales and operations, and she did everything from working with the tech people to crafting a keynote for the CEO. Now she is at Susa Ventures, which is investing in early-stage technology. So she’s going to give us an incredible insight into her journey, how she got started, what it takes to be successful at a start-up, and what it takes to get investment.
Welcome to the show, Eva.
Eva Ho:
Thank you, John, for having me.
John:
It’s great to have you here. So I gave the audience and listeners a little snippet of your background, but I’d love for you to just take us on your own journey of what made you decide that technology was for you?
Eva:
That’s a great question. So I don’t have a typical sort of tech background – I didn’t own an Apple2 or anything like that.
John:
[Laughs]
Eva:
I grew up actually as a refugee. I was born in China, I grew up in Mozambique, Africa, and through a very curvy journey, we ended up as refugees in the US, so a combination of public housing and all the various life factors, I didn’t actually get introduced to technology til I was in my mid-twenties. I randomly moved out to LA, and it wasn’t like I was previously inspired by technology, but I got here and met two inspiring people, by the names of Gil and Adam, who were the founders of Applied Semantics. I didn’t know much about what they were doing – they were building this interesting thing, what they call ‘meaning-based search engines’. I knew a bunch about marketing, we didn’t really speak the same language, but we connected much more on a personal level, and actually, we connected on the love of running, interestingly.
So I became their marketing person, and lo and behold, three years after that, the company grew into something that was very meaningful, and we were with the people behind AdSense and then got sold to Google. In many ways, it was sort of a dream journey. So that’s how I got started in tech, and after that obviously it became a love affair.
And not only being a part of Google, but I left and started a company between Factual and Google, called Navigating Cancer so I was coming full-circle to my science background and my undergrad with my strong passion for health. I did that for a little while, so just a myriad of experiences in tech. It was really a privilege to have met Gil and Adam early on.
John:
That’s such a great story, I love the fact that you’re really living the American Dream, right? Which is that anybody can make something of themselves, even if you aren’t born with a silver spoon in your mouth, basically. And I love the part where you talk about connecting with them on a personal level – you both were into running? Is that what it was you said? You’re both joggers?
Eva:
Yeah, that’s right.
John:
Because one of the things I talk about with my clients is how important it is to have a connection – not only with the team that you’re working with (I know that you consider the people you work with to be family), but also whoever you’re working with as an investor. To connect with people first on a personal level, before you start talking about the technology – would you agree?
Eva:
Absolutely, and I think if you’re lucky and you have a previous relationship with the potential investor, that’s easier, but for a lot of folks, it might come through a warm referral. If that’s the case and you haven’t met them before, it’s important to do your homework so that you know what they care about, what they’re passionate about, and I always like it when they actually know a little bit about me outside of the deals I do. If they say, ‘Oh, Eva, I actually see that you really like STEM education for children’, I’m immediately wowed that they actually took the time to know me a little bit. And vice versa. This is not a one-way thing. If there’s an amazing entrepreneur that I’m excited to meet, I will also do homework on him or her, so it goes both ways. I think you’re actually right, John – that connection resonance up front is really important.
John:
And what’s your favorite way to do homework on someone? Do you just go to LinkedIn? What do you use?
Eva:
I guess it’s so much easier today than it was even 5 years ago. Everything from if they do podcasts, like the wonderful ones that you’re doing right now, to basically anything that they have online, which is the somewhat obvious answer. A lot of it is really talking to my network and seeing if they know this person. That kind of comes full-circle to the importance of your own brand and reputation, and the fact that the investment and entrepreneur community in LA, specifically, is still highly provincial, meaning that everyone knows everyone and the first call is probably to someone that’s one degree away, or knows you personally. So it’s really important that we do a little bit of a background-check before we speak to you.
John:
So the due diligence starts even way before you start talking to someone? A lot of people who are looking for funding think ‘Oh, well the due diligence doesn’t start until after they like my idea’, and that’s such an important point for our listeners. The due diligence starts before you even get in the door, before they even look at your pitch deck. I love that. Especially with your background at marketing – can you speak a little bit about the importance of someone having a brand for themselves separate from their company? How do we brand ourselves? What would be your two or three tips that you would give someone who is an entrepreneur that wants to brand themselves, in addition to who they are as the entrepreneur of that company?
Eva:
Yeah, that’s a great question, John. Some of it is brand, and some of it’s pure reputation. I think if you are brand new and out of college, it’s very different than someone who’s been in the industry for a while. But I think the combination of having done good work in the past and having people that we know in common is the first sort of check for myself in terms of what type of reputation you have. From a brand perspective, I do go and read your blogs, I go to Twitter, I go to LinkedIn and see who else you’re connected with, so that sort of gives me a fuzzy, yet some sort of picture about who you are, what you care about. I care less about whether you are famous or well-known in terms of a brand, but much more about whether you’re a high-integrity person, and that you have built long-standing relationships. Those are the qualities I look for – the softer qualities.
John:
Yes, they’re so-called ‘soft qualities’, but my goodness! What investors are looking for when they decide whether they’re going to invest in a start-up are those soft qualities of character – is this someone of integrity? Is it someone who does what they say they’re going to do? Is it someone who has the ability to not give up easily and has perseverance? And who not only has passion, but also has a real explainable vision. Do you have any tips for someone on creating a pitch deck that expresses any of that?
Eva:
Yeah, so I think you’ve mentioned a lot of the core things that they have to be able to show within, literally and honestly, seconds or minutes. You have to convey everything that you talked about, so a combination of experience, leadership, commitment – all these things – integrity, authenticity, very very quickly. For most people, the attention span is short, so you only have a few minutes to convey and to bring all that to the table. I think coming forth and making sure that the initial delivery of your story or narrative starts off with the very powerful beginning of the arc, and it’s about pulling them through that arc where you take them through somewhat of an emotional journey of why you’re doing this.
John:
Yes.
Eva:
I always look for the why. A lot of people have the skills and the confidence and the experience, but they can’t convince me that they’re truly passionate about this. That’s the hard part – you can’t fake passion.
John:
You can’t fake passion. Boy, that’s a tweetable quote right there! Right from the podcast – we’re going to be putting that in the transcript, you can be sure. That’s great! Can you give us an example of how Factual would give an elevated pitch? I know you have a YouTube video out that I watched on your own personal passion for solving a problem and actually making datasets, as opposed to just aggregating data – I thought that was really fantastic. But I would love to hear you give our listeners an example of this passionate ‘why’. You can pick any of the companies you worked for; we’re just trying to get an example of what you think an example of good, passionate storytelling is.
Eva:
Sure thing. With Factual, when we started 7 years ago, the notion of big data was not a common household meme or topic, and that’s changed a lot. I think it’s pioneers and companies like Factual where our early mission or thesis is ‘Data’s going to be a core input engine to a lot of different types of businesses’. And most important, at a computer level, is where you need scale, so our initial audience was developers.
How can we open up and provide access to really important core data to a wide group of developers who are building really important things? That was our initial mission, and over time, we’ve learned that making big data sets is very complicated, so we started focusing on location. And now, Factual is one of the largest location databases out there, and we power lots of companies like Yelp, Twitter etc.
That’s a little longer than an elevated pitch –
John:
Right.
Eva:
But I think both Gil and I – and especially as Gil started and I joined him – we’re just super excited that we believe the world is going to be transformed by this really massive deluge of data, and it’s so important to make it accessible for machines to compute. He’s very much stuck to that, and even though I’m not at Factual anymore, it’s a delight to watch him carry this mission through.
John:
And you’ve followed him from your first company. Is that correct?
Eva:
Yeah, I have. Gil and I have been working together in some way for 14 years.
John:
Now, as an investor, and as someone who’s experienced that, can you speak to that? Everything I’ve heard and talked to from investors is that they love serial entrepreneurs, and they really love a team of people that have worked together before. Anything you can talk about in terms of the importance of the team and the importance of serial entrepreneurs with that team would be really helpful.
Eva:
Yeah, it’s interesting because I think there’s a lot of discussion around if you’re building a business and say you’re getting to a stage of presenting to investors, whether you want to be a solo person, two people, three people. There are lots of statistics and data around that. I just take it back one step – it’s much more enjoyable to share it with somebody else! Whether that’s one person or two people at the beginning, it’s a very tough thing to pursue, and it’s more fun to have that person. I’ve been lucky to have Gil, and in some of the past companies, I think for young folks who are starting off, what I look for is chemistry among the original founders – whether you went to college together, whether you played a sport together, whatever the reason that you guys came together.
I would say of all the companies that we look at, only I would say 10% really have a story that they bring together. Often, nowadays, it’s somebody who has a great idea and then they go out and find a technical co-founder. They might have only known each other for a few months, and that’s not a deal-killer, but it’s definitely more compelling when the two or three people have said ‘You know what? We’ve been thinking about this for 4 years, now we’re all at the right stage in our lives to pursue this and we’ve been excited about it for a while, and this is the reason we exist’, type of thing.
John:
It’s a mutual passion – we’ve been in the trenches together and we know we can conquer any problems that might come up along the way. It sounds like that’s what you’re saying, right?
Eva:
Yeah. Part of it is also because the journey ahead of you is so long that it’s better to have your trusted cohorts with you, who get you and understand with you. The turn-over in the early days is really high, and for us, we want to feel confidence that you’ve worked together and you get along. It’s kind of like a marriage: you get along and there’s a good prediction that you will get along in the future.
John:
Sure, almost like a marriage!
Eva:
Yeah, exactly.
John:
Can you take our listeners on that journey, because it’s such a unique, unicorn story that you were working with Gil at Applied Semantics. Tell us how long you were working together before Google said ‘We want to buy you’. What did it feel like that day? Where were you? How did you guys celebrate when you got the news?
Eva:
I was there for about 3 years, and it happened rather quickly and unexpectedly. The company wasn’t up for sale, we weren’t looking for a buyer, and as many know, that’s sort of the best position to be in. Google basically pursued us, but the acquisition happened over a very quick period of time, so I think we were all kind of in a cloud. Or at least I was, I don’t know how Gil was. But because it happened so quickly, it was almost like a dream state, none of us really believing it was happening. Even when it happened, I couldn’t actually even believe it because the next day, or within weeks, we were up at the Google Head Quarters, and they were announcing us on the Friday at their tech hangout, or whatever. It was honestly quite unbelievable.
I know that happens to very, very few people. There are times where we re-live it, but honestly, as much as that was a high, the high was more after the fact when we got integrated into Google and we actually saw the product take off and now become a truly significant part of Google’s revenue stream and monetary strategy, which is pretty awesome. A lot of companies get bought –
John:
Yes!
Eva:
And you have the high, and then quickly after, you have the low.
John:
Right.
Eva:
Meaning that if you don’t integrate it correctly, they fire a bunch of people. We never had that happen. It was actually very synergistic and happy.
John:
How great. Well I find it most fascinating that you just stayed focused on staying in your lane and weren’t trying to get someone to buy you, and that’s almost like dating again, right? You can’t be trying too hard to get someone to be interested in you. Do you have any suggestions for people who ideally would love somebody big to buy them? Like what to do to be attractive to someone like Google?
Eva:
I think one big tip is when you’re pitching to investors, don’t focus on your exit strategy. I think a lot of younger folks come in – I may even trick them as an investor, somewhat cruelly, and say ‘Hey, do you want to be sole in 2 years?’ And if they quickly say yes, I’m not the right investor for them. There might be investors out there who are looking for first or second base wins, but I think for the best founders that we like and that resonate with us are folks that are playing the long game. If they’re playing the long game and they’re building something great, selling to somebody should not be really top of mind. They love solving this thing so much, and they’re going to do it for a really long time. But the reality is that people tire.
Even in the most perfect world, after 6 or 7 years, often being an entrepreneur is very, very hard and there might be some folks that say ‘You know what, I may want to sell because I’m just exhausted’, or ‘I want to be a father again’, or whatever that might be. And that’s okay, too. We respect that from an entrepreneur, and if they’re looking for a buyer, I would say work with your investor, and they will help guide you through a process. Again, it’s most ideal if you don’t have to sell. When you have to sell, there’s a whole other process, but I think as long as you keep building value and product, and you say ‘Hey, maybe at some point I want to be sold to one of these big companies’, your investor team can actually be very helpful in helping guide you through that.
John:
Well it sounds like what you’re saying, Eva, is that if the passion is there and the reason why you’re in business in the first place is strong enough, the only reason you would want to get bought would be to make the product better, as opposed to being focused on the money, and that that’s what you’re looking for when you talk to potential people you want to invest in. Their passion and their ‘why’ is so specific that it’s not about the exit strategy, it’s about ‘I love what I’m doing so much’, ‘I want to make a difference in the world’ or ‘I love this product solution’. Is that accurate?
Eva:
That is accurate because I think any of the products and services that are useful and exciting, you’re going to get tons of acquisition offers. As a founder, you’re often faced with a good problem, which is ‘Do I sell now or not?’ You don’t have to sell, but every six months, you’re going to be approached by somebody, maybe you’ll be approached by an investment bank, whatever, and I think you have to have quite a bit of fortitude to resist and say ‘Hey, you know what, I think there’s a lot more value I want to create over time and I want to keep going at this’. Again, there’s no judgment if you do want to get out. I don’t think you’re a worse person. At first, for some of our founders, making $5 million is a lot of money.
John:
Of course!
Eva:
There’s a chance for you to make $50 million or $500 million, but we can’t ignore that feeling.
John:
Yes.
Eva:
And we will help you work through that, and whether that’s the right move or not. That’s sort of our job as investors, to help you think through that.
John:
Got it. What was the biggest difference between working for Applied Semantics before Google and after Google?
Eva:
Well, I think we just had so much more resources. We were this tiny company that was climbing up a hill – there was competition around the corner. In some ways it was wonderful, because it was a family of 50 of us and we all got along and hung out on the weekends, and it was quite a joyful and often, albeit stressful period. Like every little company, there’s some dysfunction in that, but in that dysfunction, there’s a lot of highs and camaraderie. I think once we moved over to Google, it was just kind of this wide open space where anything can happen, and now the resources have quadrupled.
I think, certainly it’s less stress because the risk is removed, but I think that the experience of being part of Google early where they still had a lot of that start-up energy. Being bought by Google today is very very different than being bought pre-IPO. It didn’t feel so different from Applied Semantics, and that’s why I think Gil and Adam were willing to do it because culturally, it was very symbiotic. We knew that going over to Google was an extension of our family, and we didn’t have to tweak ourselves to something we’re not. I think that’s why they were willing to do that.
John:
Another question I have for you is: What made you decide to go to the other side of the table and go work for Susa Ventures?
Eva:
I was one of the folks who founded Susa Ventures, and I think I had never really thought about going on the investment side until probably about 2 years ago. Just working at Factual and seeing all the big and small companies out there that need various data solutions, a lot of them could be solved by Factual, but honestly, some of them could not. They needed, say, Genomics Data, or they needed some other type of data that Factual didn’t carry, and I was so passionate about the data side and the extension of everything that I’d learned at Factual that I thought ‘What’s the best next step to scale myself and actually support people who are honestly smarter than I am?’ I think starting a fund was one way to do that, and I’m pretty happy to see how Susa has evolved. We’ve made about 25 investments and stayed very true to our data-centric thesis and mission, and I’m really proud to be a part of these young companies who are working on Fintech, or commerce, or mobile – things that were sort of peripheral to Factual, but not the core of Factual. I could leverage some of the experiences and skills that I learned from being at Factual.
John:
I love that question you asked yourself: How do I scale myself? It’s a great question that I’ve never heard anybody phrase quite like that. We always talk about how do I scale my business, but how do I scale myself? And that’s what was sort of the impetus for you to start being a co-venture in this, what a great line. You’ve made 25 investments already? Can you give us a range of what your average investment is?
Eva:
Our sweet spot is between $250-500,000, and we only do seed stage, so sub-$10 million in valuation is where we excel.
John:
Right. And if you had one piece of advice to give someone who wanted to get your investment, what would it be? Have a great pitch deck? Would it be get to know me first? How would somebody best get your attention? Or get an appointment to pitch you, even?
Eva:
I think a warm referral is always good. I think sending a cold email, not only for myself, but for most VC firms or funds, doesn’t really work. I think a lot of people do that – not a lot, I get pitches through emails, and those almost never work. I wouldn’t waste your time doing that. I would always say try to find somebody who knows somebody at the firm, and then come in that way. If you come in through a warm referral, we will always take it seriously. Certainly, having a deck that’s compelling is great. Having a good background is great. But that’s really it, there’s not a whole lot of magic.
We’re very thoughtful about what fits with us and what doesn’t, and if we’re not, we’ll respond very thoughtfully to you via email. If it fits and you have a chance to have a conversation with us, and it’s in that conversation of 30-45 minutes where you can make your case of why this is something worthwhile for us to invest in, and we talked earlier about how to think about that. That’s basically it.
John:
That’s great. Is there one mistake that you see fairly consistently when someone comes and pitches you? Where you’re like ‘God, I wish they would learn how to pitch better’, or ‘I wish they could explain what their product does in 2 or 3 sentences’, or ‘I wish they could tell me why they want to do this more’. Is there something consistently that you see and go ‘Oh, that’s a mistake’, or something that somebody could work on before they come to you?
Eva:
I think there’s a few. I think having authenticity still remains really core. I think a lot of people wonder how you can show passion and commitment without showing arrogance. And that’s the hard part. Basically when you come in and pitch, I want to push back. I’m going to say ‘I don’t think that’s going to work’, or whatever you face, we’ll push back, and you have to keep pulling that person over that hump. That’s not a mistake, but I think if you come in with too much of an attitude, that’s difficult. I think having unrealistic financials is also another one that’s hard – meaning I think a lot of people try to show the hundred million dollar at year 5, or profitability by year 2. A lack of validation, I think is huge. You can make all sorts of claims, but if it’s not backed up by customers or testimonies, stuff like that, [it’s a mistake]. And things like mentioning that there’s no competition, which is never the case, because there’s always competition.
There’s a whole set of – I don’t call them mistakes or pitfalls, that folks can do. I think if you’re pitching within ten minutes, you can gauge something like that, then I think the VC person can lose interest. The great thing right now is that there’s just so many great pitches that you can see on YouTube – watching somebody like Y Combinator and seeing those guys who are trained to be professional pitchers. Watch those and you will actually get a really good sense of how to do this well.
John:
Oh good, I want to put that link on the transcript. Who is it again, can you spell that name for me?
Eva:
All the pitches that are online are from Y Combinator.
John:
Y Combinator, of course, yes, got it. I thought it was somebody’s name, but now I’ve got you. Oh, it’s my bad hearing.
Eva:
No worries.
John:
Is there any one or two books that you really love that you think start-ups should read?
Eva:
There’s so many books, but I think The Lean Startup by Eric Ries. There’s so many, it’s hard. I actually read a lot of biographies, like by Andy Grove, so any of the great leaders – the books on Jobs are all really good. I loved recently Peter Thiel’s book on Zero to One. I read less of the classic management books, but take more inspiration from folks who have done this in such a big way, and I think that can really help a start-up founder to at least aspire to what they actually can be through hard work. So those are some of the books that are cool.
John:
My big take-away from talking with you is it’s all about authenticity, and even the books that you read. You’re reading books about people who are authentically themselves, and using that for inspiration for how can I be my authentic self. Great. Is there any last idea or quote or comment that you want to leave our start-ups on how to persevere, or how to think of something to do when they’re pitching, or before they pitch?
Eva:
Maybe one note for women, because I get asked a lot about that.
John:
Yes!
Eva:
I think there’s been more content written about this because a lot of women founders ask me: How do I do this? Can I do this? And is there any preference if they pitch to me versus. to an all-male team? So from my perspective, I’m pretty gender-blind, meaning I think there are a lot of innovations and amazing things to be built in the world, and will be built, and I think a lot of them will be built by women. I don’t lean forward in terms of saying ‘If you’re a girl, somehow I would treat you differently, or I see you differently, or I’m more inclined to invest in you’. I think there are plenty of competent women out there, and I think for women, in my career, being a girl has actually been a huge advantage versus a disadvantage. I think that’s what I try to look for with young women on believing that they can build the confidence to say ‘Hey, it’s actually pretty awesome being a woman in tech’, and if you have the hardcore skills and the confidence and the know-how, you actually are at a great advantage in tech.
John:
Fantastic, what a great way to close! If someone wants to connect with you, learn more about being inspired – especially if they’re women and believing that they can do that and see you as a role model or even learn more about your stem-cell education, you said, right?
Eva:
STEM education.
John:
STEM education, sorry. What’s the best way for people to follow you? Is there a website you want to send people to, or a Twitter handle?
Eva:
Well, thank you for all those kind words, John. My email is just: [email protected], I’m super accessible. And my Twitter handle is just: eva_ho.
John:
Okay, great. Well, you’ve been an incredible guest, thank you so much for your insights, your generosity, and most of all, your authenticity.
Eva:
Oh, thank you so much, John, for having me. I had a great time.
John:
My pleasure.
Thanks for listening to The Successful Pitch podcast. People say that the longest distance in the world is between someone’s mouth and their wallet. People can promise to invest in you, but then when it comes time to open up the checkbook, it doesn’t happen. Another way to look at getting funding is you’re on the left side of the riverbank, and you have to cross that river, and on the other side, is where funding happens. On the left side of the riverbank, you first have to make up your idea. Then you have to make it real. And then you have to make it reoccur. Once you’ve done that, you start to dip your toe in the water and you start to cross that river. That’s where I come in. I can help you get across that river faster than you could on your own, with a lot less frustration and confusion of ‘Why are you getting no’s’. So if you’re interested in learning more about how to get funded fast, go to www.SellingSecretsForFunding.com/webinar, and watch my free presentation that will give you a lot of free content that will prove to you that you can get funded fast and make your start-up a reality. Thanks.
TSP002 | Judy Robinett – Transcription
Posted by John Livesay in Uncategorized | 0 comments
John Livesay:
Hi and welcome back to the Successful Pitch podcast. Today’s guest is Judy Robinett, author of How to Be a Power Connector. Judy has a wonderful story about how she met Mark Cuban and then was able to get him to write a testimonial for her book, but she gave him something valuable first and she’s going to share that in today’s interview. Judy said, your network is your net worth and the importance of having a strong network could not be more key to getting an investor to say yes to your startup pitch. Judy said one investor told her that a startup can’t figure out a way to find me that probably means they can’t figure out a way to find their customers. One of the other things that Judy said that’s so important to find the right investors. Some angel investors, she said, can become devils and some venture capitalists can become vulture. So, let’s make sure that doesn’t happen to you and listen to her interview. Thanks.
Welcome to the Successful Pitch. Today’s guest is Judy Robinett. I am thrilled to have her on the show. She is a startup funding expert and author of the book How to Be a Power Connector . She has so much expertise to share with us today. I want to welcome Judy to the show and Judy can you just tell us about the importance of connecting since that’s what your book is about.
Judy Robinett:
Sure, absolutely. So, you know, I learned early on in my career, I kind of got stalled when I hit the wall in the fortune 100 company and I thought, what am I doing wrong? I’ve kept my head down, I’m working hard, I’m not getting anywhere and somebody pointed out to be me that I really needed to increase my emotional IQ skills IE networking and that there’s always been this unwritten rule of success that is your network equals your net worth and when I became CEO of a public company and started raising money, millions of dollars, I found out, again, my network didn’t really help where I was, so I needed to build one that was deep and wide and robust so that I had access to the funds that I needed and then I was asked to vet a small unknown company in Park City named SkullCandy when Rick Alden at year three was broke and had product stuck in China and only one distribution challenge and a super angel asked me to vet that and I became very fascinated with the startup world , so now I do that.
I can tell everyone that everything you need is attached to a human being and so, humans have the deals, humans write the checks, humans get you in the door whether it’s to investors, family offices, venture capitalists or even incubators, so it’s absolutely critical that you improve your skills particularly with strategic networking and, you know, the old school networking is dead. It used to be who you knew and what you knew, now it’s who knows you and so it’s absolutely critical and it’s so easy now with LinkedIn and Twitter and the access that you have.
John:
Can you elaborate? That’s such an important point. I really want to hit it home. Old school used to be who you knew and what you knew and now it’s who knows you and, of course, how do we get people to know us? Through social media like LinkedIn. That’s the point?
Judy:
Yeah. LinkedIn is critical. It’s 300+ million professional who all want to network. There’s wonderful groups. It doesn’t matter whether you’re looking for VC funding, angel funding, go to private equity group, all those groups are represented and you can do a simple search. The other one I used extensively is Twitter and I’m just amazed who you can reach out to these days. So, you know, when I did my book I was all excited. (#3:54?) signed my contract and then they said, “Judy, you’ve got to build a platform” And I was so naive I said, “What’s that?” And so now I’ve jumped in to Twitter heavy and I’ve just been amazed and really impressed with the people on it and how you have access now and so the Facebook is really historical, it’s about who you know. Twitter is about now, and future is really about Pinterest, but – and the other big thing that I tell people as far as access is how important it is to join powerful groups and so, you know, every week or almost daily someone writes to me and says, you know, there’s no money out there and I point out there’s 7 billion people on the planet. 369 trillion in global private wealth.
There’s no lack of money, there’s no lack of opportunities and we as humans are like chickens, we flock and so it turns out we all have problems, we all have opportunities. Well, the millionaires, the people who are accredited investors, their problem is finding a good deal. So, what do they do? You know, they hang out at pitch events and they are friends with people at the incubators, because they’re scouting looking for a good deal because they don’t want their money stuck in a bank account, you know, earning 1.7%. So, there are people looking for money and the point is where are they hanging out. So, it’s important.
Now, a couple of other things I suggest to people when I first moved to Salt Lake City, somebody asked me if I would consider being on a finance committee for a local governor’s run and the guy didn’t win, but being on there was where I met my first two billionaires.
John:
Wow.
Judy:
And then just another short story, I met a fellow in Salt Lake and he had been recruited by a top wealth management firm and he came into this very conservative area and happens to be black and gay and within two years he built this tremendous book of business, very successful. I said to him one day, “How did you do that? You came to town, you didn’t know anybody, you didn’t have any network.” He said, “I joined the symphony.” So, he paid a little extra to go to the, you know, meet and great and grab some snacks before the show started and rub shoulders with, guess who, all of his customers and so you think about, you know, where the people hanging out that need a deal.
John:
That’s such great advice. Go where the fish are, basically, right? If you’re targeting people who live a luxury lifestyle, figure out what’s – investors, typically angel investors live a luxury lifestyle. They’re interested in art, they’re interested in music, and they’re interested in culture, join the things that they’re interested in so you have a personal connection first. Would you agree?
Judy:
Yes. So, you know, I hate robot presentations. I mean, you never walk to up to a person and say, you know, “Jeez I’ve got this great startup and blah blah blah. I just need 1.5 million and I’m going to get 2% of the market in China and we’ll be billionaires!” You know, people make connections first personally. So, it’s critical that you, even if you go into a pitch event, you be you and you be real.
John:
Being authentic really is the key to making that connection and I talk to people all the time that I have this clients about the importance of people buying emotionally and then back it up with logic and most people want to lead with the numbers as opposed to the emotional connection, right?
Judy:
Yeah, so the numbers are all suspect, as you know.
John:
Right!
Judy:
They’re usually based off of a assumptions, so it’s anybody’s guess. So, you know, there’s two reasons startup fails. Number one there’s lack of customers, number two is lack of funding, and so you think about when you’re in one of those pitch events, your customers literally, those investors, and you know, it’s nice to hear about Kool Aid and how great your Kool Aid, your product, is and what you’re going to do, but you really need to show them who you are, your character, because one of the first things they look for is, “Is this guy honest?” There’s going to be hard times, you’re going to hit the wall, they want to know if you’re coachable and certainty they will look at your go-to-market strategy, what the ROI is, they wanna know when they’re going to get their money back, but yes, you know, be you, be authentic. If you can admit to some failings, have made pivots along your way, they’re going to say that you’re educated. They’re really looking for your judgment and your ability to think well.
John:
You know, that’s such an important point. We can’t emphasize that enough to the listeners is the willingness to be a little bit vulnerable and not come across like you know it all and you don’t need any advice. That whole concept of being coachable is what allows people to say, oh, you’re not just going to take my money, you’re going to let me have some input and we’re going to share our combined resource of brain power to make this successful and I’m going to be part of building this with you as a oppose to, I just want your money and goodbye, right?
Judy:
Yeah and angels don’t do that. I mean, the main reason that angels invest honestly is they like to coach, they like to mentor, they like to involved and use the experience that they have. I would say, you know, if you’re just looking for money that would be bad money and you can find that. There’s a lot of fools out there that you can get bad money from, but you really want people to help you, because, you know, guess what, no man can know it all anymore.
John:
That’s right. Can you explain a little bit more about using to Twitter to connect and reach out? Do you have a story of how you’ve done that or someone you’ve worked with as oppose to LinkedIn?
Judy:
Sure, so when I was new, I couldn’t even figure out – I mean, my adopted son Preston said to me one day, “You need to start tweeting.” I remember saying to him, “140 characters? What do I put? I’m in the shower?”
John:
Right.
Judy:
And I started sharing quotes and information about, you know, venture capital deals and stats and other things. I’m interested in all things entrepreneurial and people started reaching out to me, but you know, one lady I was really impressed with what she was doing with social media, ended up talking with her on the phone. She now handles my social media, but I called her one day and I said, “It’s Sundance, I’m going to be meeting with Jean Davis, she needs some help with her social media outreach. Would you come out here.” And you know, she about passed out. She said, “Of course.” So, she flew out. I never even met her at that point. This was just like a Twitter meeting and I have other angel investors reach out to me, you know, you end up seeing that people are so accessible to you.
So, people contact me, you know, for interviews saying, you know, I’ve got money to invest, so certainty, you know, it’s important to do that and again, you can find the thought leaders, you can tell a whole lot about people by what they tweet about, what’s in their profile, you know, the same thing on LinkedIn. You can read between the lines.
So, it’s important in your network, so research shows that the two things you look for just almost instantaneously. Number one is warmth, because you don’t want kind of stranger danger and the second one is a level of competence, but the third characteristic I tell people to look for is generosity, because just because someone can help you, doesn’t mean they will!
John:
Ah, right. It’s that generosity of spirit. Is it in their DNA? Are they someone who is opened to sharing ideas or at least a referral without needing something back right away. The warmth and competence. Those are three great takeaways for our audience. Warmth, competence, and generosity is what you want to look for so that you get what Judy is described as good money of someone who’s going to be helping you get through the bumps in the road that will happen.
Judy:
Yeah, some angels are devils. I mean…
John:
That’s a great quote. Some angels are devils.
Judy:
You have to be careful. Some angels are devils just like some ventures are vultures.
John:
Okay.
Judy:
But, 90% of high potential startups are funded by angels and there’s roughly 700,000 in the United States. There’s 300 angel groups that are active in the US. I was the managing director of Golden Seeds, the third most active group and it’s, you know, 300 accredited women, some men, and we syndicated deals with 120 other angels in early stage VCs and all of these groups you can get online and, you know, look at the application, many of them post what the due diligence is needed.
John:
Let’s have you speak a little bit about due diligence, because that’s one of your areas of expertise. What kind of due diligence are angel investors looking for when they decide whether they’re going to pick a startup to invest in?
Judy:
You know, usually angel groups have some, I guess, guidelines. So, some of them are very early stage and they will take just an idea. Some of them want to have proof of concept, so they wanna see that you really have, you know, customers. The VCs say the dog that will eat the dog food and so they will have certain criteria before you even apply. So, if you pass that criteria then you usually come and give a 10 minute pitch and then the angels get together and say, “Jesus, person looks good. Let’s see if they’d be easy to work with, you know, what kind of evaluation they’re expecting.”
I tell people to be very, very open, you know, don’t march in and say you’ve got a 3-5 million evaluation when you don’t have a customer, you know, they’ll just say this is an amateur that doesn’t know what they’re doing. So, usually the dance is can we work with this person. Do they really have a good concept? As soon as they make the decision to go into due diligence, for instance, Golden Seeds would put together a team and they will have a legal guru, they’ll have a couple of gurus that’s out of the specific industry, so they can look at the stats. Do the competitive analysis, the marketing. A good place to go look is TacStars. If you look at some of the angel groups there’s actually a list and Tac has one that’s five pages of due diligence questions.
They’ll look at your social security, they’ll look into your background and see if you’ve had previous litigation, but you know, initially upfront they’re looking to make sure, as you know, no hair on the dill and that means it’s clean, you’ve not gotten money from friends and family and cousins that isn’t documented, you haven’t given away, you know, massive amounts of stock so that at the end of the day no body is going to make money in particularly the investor. They want to make sure that you’ve got IP protection or you’re in the process, you’ve got trademarks, so there’s sections on legal, there’s sections on the competition, sections looking at the market place. They do go into the founding team’s background, what is their expertise. That’s just some of the major ones.
John:
That’s really helpful, Judy. Thank so much. I think the real key takeaway and the consistent thing that keeps coming up over and over again is when you first pitch they’re looking at, are you easy to work with and even when they’re doing the due diligence, they’re looking to make sure that you have integrity and you are who you say you are.
Judy:
You know, if you’re a pain in the butt, next. I mean, there’s a millions of deals out there and so if you’re a know-it-all and smarty two-shoes and think your evaluation is sky high, it’s like too much trouble to educate you.
John:
What is your criteria for what a good evaluation is? A lot people say, you know, I know all the numbers are suspect and I think I want, you know, x amount of money for this percentage in equity therefore my evaluation is this, but do you have a formula that you say that’s unreasonable or this is really how to be conservative in your evaluation?
Judy:
Yeah, so the best book out there and I recommend it to people, it’s out of print now, but Howard Stevenson was considered the Godfather of the entrepreneurial world of Harvard. He’s now retired and inhale help, but he has a book that he wrote with the co-founder of Angel Investing that’s probably the best I’ve ever read and it’s really to educate angels and there’s a capture in it on evaluations and there’s a Chicago method and all these different, you know, methods and at the end of the day, he said, you know, it really is what the investors are willing to do.
I mean, they’re the ones that they’re going to call it and if you don’t want the money, then fine, but he has a really good one that he liked and many people use it and you get points for a founder that’s done it before so you have expertise, you have an advisory board which shows you are coachable and you realize you don’t know it all. You have customers and you get so many points and I think it starts at a 1.5 million evaluation and moves up to the maximum of three. Now, that book was written many years ago, so you can actually find stats of what the going evaluations are and East Coast and West Coast, those are the main two markets and you can, you know, certainty look at that.
John:
Great, thank you.
Judy:
But it’s a combination of art and science. There is no format. At the end of the day, you know, really what are you going to do?
John:
Right, art and science. Great takeaway. The other thing I want to tap into because you are on – I want to have the listeners know about you a little more. You’re on Illuminate Ventures. Tell us a little bit about that and some of the other boards you’re on and advisories so people have a real picture of what you do.
Judy:
Okay, so I’m an advisor on two venture capital early stage boards. (#17:31?) in New York and our strategic arm is Nielsen and just did the first portfolio deal. The one that I’ve been on the longest is Illuminate VC out of Menlo Park. It is in the top 10% of performers and it’s an interesting back story. Cindy Padnos, who is the founder, had five million dollars and people kind of sneered and said, you know, that’s not enough money to invest and you’re not going to do anything. Well, she has her first unicorn in the portfolio and a couple of others that are valued at a billion and so an advisor, we have Ken Elefant of Intel Capital, Claudia (Fan Munce) from IBM Capital.
You can go look it up online and the same with (#18:16?). I’m also an advisor to SpringBoard, which was founded because women had such a difficult time getting into the VC doors on the angel investing doors and today we’ve raised the companies that have been mentored and we teach them how to a pitch and they go to market strategy have – we’ve raised 6.6 billion, had 11 IPOs, and probably more than a 145 strategic sells at this point and that’s a not for profit.
That’s another one you can go online and another one, we haven’t touched this kind of kind crowd funding I’d tell the listeners if they wanna learn about due diligence, go look up CircleUp. So, CircleUp is kind of a little further up. You have to have a dill of three to five million already in sales, but they’re really quick at financing, so it’s later than early stage, but they probably have the best documents online on due diligence that I’ve seen.
John:
Oh, that’s great. Crowdfunding. Thank you for that. Well, that brings us back to, you know, the real challenge for so many people whether they are women or men and SpringBoard or whatever is what do I need to have on my pitch that’s going to convince someone like you to wanna take it to the next level. What are you looking for in a pitch deck that you could give suggestions to our listeners on?
Judy:
You know, I’ll send you some documents that you can attach on the show notes. So, I have a couple of sample pitch decks usually no more than 15 slides, you know, I certainty want to see what your product is, your value proposition, I usually tell people if they can’t tell me the value proposition in one sentence they don’t have clarity, they don’t know quite know what they’re doing. I’ll give you an example, I sat on the university of Utah tech transfer center and I’ll never forget. I hear pitch after pitch after pitch and we’d have people come in and one guy go, yes, you know, we’ve got this mechanism of action with this chemical and it’ll help blah blah blah and he goes on for 20 minutes and I afterwards I said to him, “Why don’t you just say it fixes a hole in the heart?”
You know, so if you can get sophisticated enough to get your messaging right of tell me in one sentence. Tell me in one or two sentences what this is, what it does, then you know, you’re crystal clear. So, a short slide deck and certainty has information on the product, the market size, the competition, you know a little bit on the team, but I particularly look at, you know, competition and there’s thing that instantly earmark you as a amateur. For instance, either have no competition or very little competition and another question I’ll ask people is what your customer acquisition cost and usually it’s dear and headlights.
So, you know, your number one job is sales. You know, cash covers a lot of sins in a startup and so the focus needs to be cash flow and I do look for people telling me the truth. I’m looking for people that have good judgment, but I’ll send you, I’ll send you an article angels to avoid, I’ll send you one on how to do a pitch deck. Another thing I’d like to use with people and most people have heard about it is Business Model Generation and it’s a one pager that you put, what is your value of proposition, what is your pathway to a customer, who are your different customer segments, and you can do it on one page and usually after you work through that, it really makes messaging easier. So, that’s an important one.
John:
Well, Judy, you’re certainty model for our listeners all the qualities you say you look for in a startup, warmth, competence, and your incredible generosity to share with everybody all those things that you just said that we’re definitely going to post in the show notes about angels to avoid and your pitch deck tips. What I found really fascinating that you talked about is the two reasons why a startup goes out of business you had mentioned one, they don’t have customer and two, they don’t have funding, right?
Judy:
Yeah.
John:
So, of course it makes perfect sense that one of the key areas a lot of people don’t prepare for is what is the cost of your customer acquisition so that you don’t go out of business. So, it ties it in full cycle with what you open the show with and one of your big tips that rarely get mentioned in what people are going to get asked during a pitch deck or should be in the pitch deck to begin with so you have an awareness of, you know, if we’re going to get customers through Facebook, this is what our CPM is and this is what our cost per customer is or we’re going to spend money here, this is how much it costs to generation a customer.
Judy:
Yeah, because it’s when you meet a customer it’s kind of like battle plans are really good until you go to war. So, it’s when you meet the customer that you find out, you know, some of our assumptions are wrong or faulty or you may find out you could get more money by doing XY or Z, so Clayton Christensen, again at Harvard, famous on innovation says the research shows that takes three pivots before you get to the point of a consistent revenue stream, you know, you’ll find some customers even if you have an LOY signed or you’re showing there’s customers. That’s a big deal to investors, because there’s a gazillion ideas out there and just because it’s an idea doesn’t mean anybody wants it. I mean, that’s sad. I’ve met people who’ve spent three years, mortgaged their house and spent all of their friends and family money and built something only to find that nobody wanted it.
John:
Nobody wants it. Three pivots, that’s a huge, huge takeaway for our listeners. The fact that you need such passion and perseverance to keep pivoting. Most people give up after the first pivot and then another huge percentage probably give up at the second pivot, but if it takes three pivots on average before you really nail it and have something that people want, that’s a really surprising statistic for most of our listeners to be aware that you have to show that willingness and that’s why investors love serial entrepreneurs so much, right? They have tenacity.
Judy:
Yeah, they’ve learned and you learn from the market. I mean, the market talks to you. There’s a famous quote that says, you know, there’s more danger sitting behind a desk writing a business plan. You need to get out there, get out there with your folks. Big companies do this as well. Viagra, Viagra was a heart medication pill initially and then nurses noticed this strange side effect, you know, so they did a major pivot. Now the drug is available for women, so it happens all across different industries, you know, verticals.
The same thing with the money, you know I gotta tell you, it just hurts my heart when people have a brilliant idea and can’t get funded and another story, in Salt Lake I met a woman who had just a brilliant medical device, very simple, nothing complex, it was a permanent birth control device, little tiny thing that could be done in a doctor’s office, inexpensive, came as an RFP from China, obviously there’s customers all over the world; women in Africa walk seven miles to have slid open, they use scissors to cut the fallopian tubes, no anesthesia, many of them die and this woman had looked for funding for eight years and I looked at it and I knew, I knew it could go and she could make millions and she was in the wrong room. I talk about this in my book.
So many people I meet are in the wrong room whether it’s looking for funding or the right employees and I said to her, you know, you’ve got two strikes. You’re a woman and you don’t kind of belong to the local religion and we need to get you out of dodge, so I took her to Golden Seeds in San Francisco and then to a group in Boston. We got half a million dollars in less than six months. The company sold two years later for millions and she searched for money for eight years. She even mortgaged her house so she could cover her IP and I just wanna tell people, the money is out there. You make sure you get in the right room and lots of that in my book and if people just wanna contact me I’m happy to – or we could do a second show and go into more of these.
John:
I think that’s such a – I mean, the book again for everybody is How to Be a Power Connector and it’s one thing to be in the wrong room as Judy said and then when you get into the right room, what do you say? So there’s two steps, right, get in the right room and when you’re in the right room, what do you say?
Judy:
Exactly. So, you be real, you smile, say hello, shake hands, you know drop the elevator pitch, so I was raised, I was shy, I was bullied in Junior High, I didn’t dare talk to people. I mean, even in the corporate world, they’d have these events, I’d go late and leave early and I would hang out in the corners, I mean, I hated it and it turned out I wasn’t shy. I was worried about what other people thought of me and did I add value and so you be authentic, but I’ll tell you a secret and if people just did this, I call it my two golden rules. After you share your story and you go, you know, I’ve got this startup and we’re going to do great things and I’m trying to find my seed round, then you say two things, what other ideas do you have for me? And number two, who else do you know I should talk to? Those are golden. This is how I have billionaires on my Rolodex. It’s how I got Mark Burnett to endorse my book.
John:
Wow.
Judy:
And friends with people on Shark Tank and if you ask those questions, you will go, you will build your network up and out and that’s what you need, because on average people know 632 people, so you’re literally crowd sourcing from those people. The best people in their network for you to reach your goal.
John:
That’s such an incredible information and clearly it works if you have Mark Burnett endorsing your book and know people on Shark Tank. So let’s just repeat those two questions if we could for the listeners. The first one is after you share your story is, what other ideas do you have for me?
Judy:
Yes.
John:
And the second one is, who else do you think I should know?
Judy:
Who else should I talk to. Who else do you know I should talk to.
John:
Who else do you know I should talk to.
Judy:
And listen, the secret is most people will help you. So, research shows that if you’ve been raised in a lower to a middle class family, we’re taught not to ask! Put our head down and to work hard. Imagine what will happen? It’s a fairy tale.
John:
Yes.
Judy:
You have to learn to ask and when you ask, ask simple. I mean, you don’t walk up and go, “Dude! Don’t you wanna invest $800,000 in my company evaluated at $15million?” You say, “These are my ideas.” And people will help you if you ask, most people are wired to help others and they like to share advice and this is really true with angels.
John:
That’s so great. Those Judy secrets. What other ideas do you have for me and who else do you know I should talk. One of the key things to notice about those question is they are open ended questions. They are not yes/no questions. So, make sure that if you don’t use her exact words, which I highly recommend you do, whatever ideas do you have for me and who else do you know that I should talk to that you make sure any kinds of questions that you ask someone are not yes/no questions. Are you interested? That’s a yes/no question.
So, now that we know Judy’s incredible secrets of how she gets not only in the right room, but when she’s in the right room how does she get the right people to help her and not being shy to ask for her is, IE being coachable, is a really key takeaway for everybody. So, Judy, in the last couple of minutes, I just wanna see if there’s any other suggestions you have for someone who maybe has an idea that doesn’t necessarily solve a problem, because so many pitch decks are here’s the problem, here’s the solution, they have a new idea, maybe it’s a game or something along those lines that’s not really solving a problem, how would you suggest someone pitch something along those lines?
Judy:
Yeah, so those are the brilliant breakthrough things like Facebook. You can’t really do a business model on something. I mean, no body asked for a light bulb. There are brilliant things out there and, again, I would surround yourself with advisers, find people who will really give you advice, you know, and when you start sharing your story, I mean, never ask for money initially and what happens is you’ll find somebody and they’ll go, “Oh my gosh! I love what you’re doing. Can I help? Can I be involved?” And then you have champions and this is really important when you do angel deals, because angels, like the rest of us, can be finicky and you can do a great pitch an there’ one person in the whole group that goes, “You know, I think that is just a stupid idea. I’m not going to do it.” Well, if you’ve made friends with an angel that’s involved in that group in taking them to lunch, then they stick up for you. They’re a champion in that group.
So, in every town, in Salt Lake I just Adam Slovik. He has built and sold a company for a billion dollars, he’s one of my favorite angels. I take people to him like you’re mentioning that have an idea just to brain storm, help flush out what would be the best way and more importantly, which angel group makes the most sense. Also in the VC world, all of those people, you know, Tim Draper invests in angel deals on the side. He has Draper university. You can go look at that.
So, you know, it’s important, I guess to get the people first. You can be honest and upfront. Usually ideas like that come out of universities, research labs and sometimes just by a regular person. You can get resources at all the universities, at the community colleges, even the SPA offices. I mean, I would just make the rounds because there’s gold, you know, something else I wanna tell people is, we all have a network already.
On average, peer research shows we know 632 people and I can tell you 99% of the time the answer that you need exists already in the network you have and just another quick story. My agent called me one day and she goes, “Judy, I think you need to talk to Mike Muhney. He built ACT software, sold it for 4 million, he’s the father of the CRM industy and he has this brilliant app called Viber that’s for contacts, keeping track of connections.” We get on the phone and talk. He flies to Salt Lake and I said “Mike! I’ve never heard of your app. What are you doing or marketing? How are you acquiring customers?”
And he talked for a few minutes and he looked really said and he said, “You know, if I could just get a story in Success Magazine.” I looked at him and I said, “Mike, when you go back to Texas. I want you to call Wendy who I’ve only known for six months who you’ve known for six years. One of her friends is Darren Hardy, the founder and owner of Success Magazine.” And he literally almost fell off his chair. I can tell you this happens to me every week. So, you need to share your story with the people you’ve already got. My basic formula is…
John:
Quality relationships.
Judy:
Quality relationships + strategy to your goal. Quality relationship + strategy. So, it’s important. You know when people talk about be persistent, be scrappy. You know, I met with a VC guy and he said if you can’t figure out how to get to me, you certainty not going to figure out how to get a customer. So, you know, besides using the network you have and getting in the right groups is the other thing I’ll tell you is talk to strangers. Everyday there’s probably millionaires walking by you.
You know, I met a guy that was a billion and he was in coveralls, you know, work clothes, and we only talk to strangers 2-3% of the time and if you think about critical important people in your life, usually your spouse, they were a stranger at some point! So, we’re taught as kids just embed in our head, strangers are danger and that works well as a kid, but not as an adult. So, start participating. Just say hello, say hi, if you start doing that, because yes, very good things happen to you because of your working hard and planning, but if you think about it, the most important things are usually luck and serendipity and that is all about positioning and you can make those things happen.
John:
I love it. That’s such great advice and what a great quote that the VC said. If you can’t figure out how to get to me, you probably can’t figure out how to get a customer. So, that’s great tips. As we’re wrapping up the show. Is there any other book beside Howard book that you mentioned? Howard Stevenson’s book on due diligence that you would recommend for startups to read, besides yours, of course.
Judy:
Certainty I do like the business model generator, but I’m going to send you the actual work sheets that are fine and it’s okay. I like Art of the Start by Guy Kawasaki. There’s two or three that I like and I’ll send you some of those so that they will help people.
John:
Thank you. Judy, this has been such an informative, jammed-pack full of incredible secrets, information, and insights for our readers. I mean, the big one is what other ideas do you have, who else do you know that I should talk to, coming across authentic, being warm, it’s just been such a great interview, we can’t thank you enough for your generosity and sharing your brilliant and your knowledge. Everyone should obviously pick up the book, How to Be a Power Connector. Judy has her own website, she is a couch, she is a speaker, she’s clearly someone that you want to have in your own Rolodex so that you can network and really help her get to know so that she could make a difference in your business. Judy, thank you so much.
Judy:
Yeah, people feel free to reach out to me on LinkedIn or Twitter or my website and I’ve also been asked by so many people, I’m going to put together an eight week webinar on how to get funded. I’ll probably interview you on it.
John:
I would love that! That would be great.
Judy:
Thank you and listen folks, everybody out there, I mean, really, just do it. Reach out to people, they will help you, I promise.
John:
Great ending. Thanks Judy.