The 10 Rules of Business with Karla Nelson
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Karla Nelson, who has created ten rules for business based on her five-year-old. It is absolutely adorable, memorable, and actionable. She said, “Startups don’t die from a lack of good ideas. They die from indigestion and giving up.” She said, “Productivity is not activity. You need to be really focused and have a strategy on how to get these relationships with investors to actually pay off. It’s not just about having conversations with people without a strategy in place.” Finally, she said that, “The death of entrepreneurs is solitude. It’s so important to collaborate and get help.” Enjoy the episode.
Listen To The Episode Here
The 10 Rules of Business with Karla Nelson
Hello and welcome to The Successful Pitch podcast. We have a return guest that I am ecstatically thrilled to have back. We had Karla Nelson on in March of 2016. She was episode 51. Now we’re in the 100th plus episode. Karla is someone who has so much valuable content. I just had to have her back. We were having lunch in Sacramento where she lives. She is the epicenter of all things Sacramento, whether it’s media, contacts in television, radio, contacts in the startup world. It’s just amazing to see somebody with her pulse on everything going on, not just in Sacramento but literally globally. Karla has done a TedTalk. She really is a people catalyst. I can speak to that firsthand. Karla, welcome back to The Successful Pitch.
Thanks so much for having me.
You have so many exciting things going on. When we were talking about what you’ve created here; you’re going to have your own podcast and a webinar and a book coming out. I’m completely fascinated with this concept that you talked to me about called Child’s Play: The Ten Rules of Business brought to you by a five-year-old. It’s so simple you can remember them, and so effective you’ll want to. That is so intriguing to me because it’s catchy, it’s memorable. Tell me and everyone else listening how you were able to transfer your expertise as an entrepreneur, an investor, an expert trainer into how you came about the ten rules of business.
Rules of Business: Always keep your cool.
It’s actually quite a funny story. My four-year-old at that time, the apple doesn’t fall far from the tree, was just approaching her fifth birthday and she said to me, “Mom, when I get older, can you teach me everything there is to know about business?” Of course I chuckled saying, “Darling, nobody has the market cornered in regards to business. But if you’re good and you make good choices, I’ll be glad to teach you everything that I know about business.” It stopped there for maybe a month or two. But I was still keep thinking about it. She kept on asking different entrepreneurial questions in the meantime. There was one day, it was one of her first days of kindergarten, she was very frustrated about something. She was not necessarily melting down but getting extremely upset. I said, “Klaire, rule one of business: Always keep your cool.” Instantly, she transformed into this very calm five-year-old who had just learned this amazing secret about business and entrepreneurship, which is to keep your cool.
That was so effective that a couple of weeks later, she was on her scooter in the backyard. We have a big piece of concrete that they can ride their scooters pretty fast on. She bit the dust and had scrapes all over her legs. She ran inside and she was crying. She had this big old scrape. I said, “Klaire, rule two of business: Get up when you get knocked down.” When she turned around and walked right outside and got right back on her scooter, I thought, “I might be on to something here.”
Not only is it great for entrepreneurship but it’s great for parenting and the combination. Talk about a huge market there. Let’s talk about where you came up with these first two rules yourself because this, ‘Always keep your cool, never let them see your sweat’ concept, it’s so much harder to do sometimes than it looks. If you’re in touch with yourself at all, you get angry, you get frustrated especially when other people do things that just rub you the wrong way, whether it’s your own hot button. Or for me, if I see somebody bullying somebody else, I just see red and it’s very difficult for me to keep my cool when I see that behavior. Any tips on how to do that?
I’m right alongside you in that regard. In my younger years, I would respond way too quickly. The way I’ve really identified when something is pushing my buttons is just to step away. We’re always taught, “You never want to burn a bridge.” Those two are closely related in regards to keeping your cool. But then also, you never know who’s going to be on a team, who you’re going to work a deal with. You just don’t want to get to a point where you’re not thinking logically, but you’re thinking solely emotionally. I always like to say, “People buy with emotion and back it up with logic.” That’s working in a buying scenario. But in a relationship scenario, especially early on where you can get very frustrated and you respond too quickly, what I have found is if you just let it sit there for a couple of days, it’s no longer that raw sense of urgency of something that you have to do now. Anytime you feel like you have to respond or if you feel frustrated or hurt, one of the things you have to realize is ask yourself, “Why is that?” because there’s typically a bigger underlying reason of why that is. Then really look introspectively and just take a little bit of time before you respond. If you have any of that tension in your response, it’s probably not a good time to respond.
Taking that deep breath, sleeping on it, sending an email out, all of that good stuff. Of course getting up when you get knocked down. That’s perseverance 101. You fall off a horse, they always tell you to get back on that horse. It’s true of startups. That’s the whole concept of pivoting, isn’t it?
Absolutely. One of my good buddies, John Kunhart, he ran a $300 million venture firm here in Sacramento. He has a great quote that is, “Startups don’t die from lack of a good idea. They die from indigestion.” It’s just getting back up. The other thing he always says to the different companies that he had looked at for probably ten to twelve years as they were putting the fund together is the fact that where you start is likely not where you’re going to end up. You look at a company like Airbnb, their early days, they were selling air mattresses. Now they’re the largest hotelier because they saw a problem. The way that they initially looked at solving this problem is to tell people, “Use your room. Let people rent them out. By the way, we’ll sell you the mattress to be able to put them on.” Look where they ended up. They ended up having no real estate, no product. Where they started was very different than where they ended up. If you can always continue to come back and get up when you get knocked down, as long as you’re solving a problem that’s large enough, you’ll end up getting there. You might not look at all as when you looked when you first started.
[Tweet “Startups don’t die from lack of ideas, they die from indigestion.”]
When he was saying, “Startups don’t die from the lack of good ideas, they die from indigestion,” the indigestion is basically a metaphor for getting knocked out, right?
Absolutely. They just finally go, “I’m done. I’m sick. I’m tired of whatever it is.” Startups is not an easy world. We’re slightly like gluttons for punishment. You’re constantly having to pivot, constantly having to be innovative, constantly having to jump over these hurdles. The number one thing that you can do is just get back up. I love the Chinese proverb, “Get knocked down seven times, get back up eight.”
Let’s talk about rule number three. How did that come up to being through Klaire?
Rules of Business: Relationships are everything.
She was very frustrated with her brother one day and she was saying several things that were not very nice about her brother. I interrupted her as she was talking poorly about her brother. I said, “Klaire, rule three of business: Relationships are everything.” Instantly, she realized that just by saying something negative, she was impacting the value of the relationship with her brother. She responded so quickly on all of these because it was her own learning, I was just using the concepts that we all know are accurate. We all know contextually we can apply these in many different ways, but that, for her, as far as relationships were everything, she just realized that, “It’s more important that we have a good relationship than I complain about all the things that he’s not.”
There’s another little story in there about how she was at an event for a friend and got a little bored.
A good friend of mine, Allen Batten, he’s an international trainer. He’s worked with many of the Fortune 25 companies. He was doing his eighth book launch. Because Klaire was doing so well, I told her she could earn these different meetings. She’s been in pitch meetings with me. This particular one was a book launch that she had earned. I took her to the book launch and this went on a lot longer than I had first anticipated. After an hour and a half of having a five-year-old sit very quietly, the second hour and a half was actually getting a little hard for her. When she was getting antsy, I just leaned over and said, “Klaire, what’s rule three of business?” The next hour and a half, she just sat there paying attention, engaged. Of course there’s probably a hundred adults there and she was the only five-year-old, to say the least. To have her sit there for 30 minutes was pretty impressive. It was her learning. She also sees all these people. She’s looking up to them as mentors. To apply the fact that everyone in that room, relationships are everything, she was just always wanting to rise to the occasion.
This area really is your expertise. You have, as a people catalyst, training. You break relationships down into three categories. Can you go over those for us?
In our training, we identify three different areas in being a people catalyst. Any great CEO understands and knows that in order to be a people catalyst, you have to have a great relationship and dynamic for your team and your strategy, your customer/client strategy, as well as your consumer/channel partner strategy. Those three conversations are extremely different; the team dynamics and what they need and what you need in order to support them, the client strategy and what you need to be able to support them, as well as the promoter/channel partner.
If you don’t know what conversation you’re having, what people tend to do is all they do is talk about benefits. Somebody comes to join your team, “We’re great. We’re great. You want to be a part of the team,” versus purpose versus, “We’re strength based and we leverage your strength in the midst of the team. This is our team. We think you’re a good dynamic.” Even with the client, they lend towards just the benefits. When you take a look at the channel partner/promoter, this happens all the time where people go, “Let’s go get coffee. John, you get to talk about how wonderful and great you are and I get to talk about how wonderful and great I am.” Then you separate ways and nothing ever comes of it because the conversation is not about just how great we are. We have to pull back the layers of potentially what would inhibit us from having a business relationship as well as are we an appropriate fit? If you don’t have that conversation, you can’t push that relationship down the path.
That’s such a key that most people really ignore. They leave and go, “I’m networking. I’m talking to people and nothing’s happening.” You just gave everybody the magic key to open that door, which is the values have to be matching, the brand has to match, all of the quality levels have to be there. There are a lot of things that people have to feel really comfortable before they make intros and referrals, right?
Absolutely. You have to be willing to go there to have that conversation and those relationships. Most of all, it’s difficult to have that even if you’re unconsciously competent at doing that. To become consciously competent and have a process and a strategy around it, you’re just so much more effective because productivity isn’t activity. Just because you’re active, it doesn’t mean you’re being productive and you’re moving that needle forward. Having a very clear strategy, that’s a relationship strategy, just allows you not only to have clarity around the conversation, but also to have metrics around it, to be able to measure. Then you can manage that and then teach and train others to manage it. That’s truly duplicating yourself For instance, if we’re talking the promoter conversation, a sales manager, now you’re duplicating this process and enabling them to be consciously competent at a specific strategy and then put metrics around that strategy so you could manage it.
[Tweet “Productivity is not activity.”]
Rule number four in the world of Klaire, who wanted to go to the mall.
Rules of Business: Anything worth doing is worth doing well.
This one has paid its dividends a million times over again, John, because she wanted to go to the mall and play in the little kids’ area. I told Klaire, “That’s fine, but go clean your room.” Up until this point I always had to help her; teach her how to do her bed and whatnot, how to organize and put things away correctly. I said, “Fine. Go clean your room. If you do a great job, I’ll go ahead and take you to the mall.” Five minutes later she runs back downstairs and says, “Sure, Mom. I’m done.” I said, “Did you do a good job?” “Yeah, Mom, I did a great job.” I walk upstairs and I take a look at it. Of course, things were shoved under the bed. It was obviously one of those kid deals where you’re just trying to find any place to put something. I looked at her and said, “Klaire, rule four of business: Anything worth doing is worth doing well.” She’s cleaned her room everyday by herself since that day. She keeps it really neat and tidy. It was pretty amazing. I even have a picture that I took of her room after that first day because I was impressed. I thought, “She’s five years old and she’s really truly so hungry for entrepreneurship that she’s applying these rules.” Of course I was just happy because I thought, “I’m never going to have to clean her room again.”
Then it leads right into rule number five, how do you respond when someone’s trying to teach you something?
This is a big one, John. How many people do we work with, both our clients, ourselves, being trainers, coaches? Klaire, she would respond to her dad and probably myself as well, I would notice her responding to her dad frequently with the two words before he ever completed a sentence, which was, “I know.” He’s trying to teach her and she would just constantly use this. I’d correct her every single time but it wasn’t effective. I actually was upstairs and I was viewing him trying to coach Klaire. I interrupted and said, “Klaire, rule five of business: Always be coachable.” The cutest thing happened right after that, John, is when she said, “What does coachable mean?” Of course she completely understands it now.
I chuckled and I said, “You have to be open that you don’t know everything. If you are not open, we can’t teach you anything.” Believe it or not, this is probably the rule of business that shows up the most for Klaire, is to be open and be coachable and listen when somebody that has been there, done that. Look at your podcast, it’s so valuable. If somebody has 25 years of experience, you have to be open to say, “That’s how you viewed it. That’s how you solved the problem. I don’t need to know everything.” It’s my favorite model, the Henry Ford model. You don’t have to be the smartest person in the room. You just need to be able to go find the smartest person to solve that.
Investors look for that characteristic as one of the most important characteristics in any founder they decide to give money to, because they want to give their money and they want to give their advice. If you’re not open to being coachable, then they’re not going to want to work with you. It’s really important to get that. Let’s take it right into rule six. This story of Klaire on the beanbag playing with an iPad, I love.
The kids these days, they have their electronic equipment. I think she was just getting to first grade, much cooler than kindergarten. She had her iPad and I looked over at her and she had actually responded, when I asked her a question, with that nice little kid head bob to me. I just thought, “They’re five years old. Did I just see a teenager head bob?” Instantly my instincts said, “I’ve got to fix this problem really quickly.” I told Klaire, “Klaire, your attitude determines how far you go.” That one was actually squished pretty quickly with Klaire. That one doesn’t come up too much. It was very interesting to me that when you have a child that has confidence, basically these rules are teaching her more confidence. The whole previous rule of business, ‘Always be coachable,’ it’s just so effective to have her realize that, “If I have a poor attitude, then it’s going to inhibit me from being able to do all those things that I want to do.” That was definitely a cute one. I’m sure we’ll see her head bob come back during the teenage years where I’m going to have to really pour back into those two rules.
Your attitude, you either give up or you focus on how far you’ve come and you keep inspired or you get all frustrated by you not being perfect and you get discouraged and you give up. That attitude is everything, which leads right into one of my favorite rules that you’ve come up with. An investor said, “Don’t try to boil the ocean,” to me once when I was talking to him about what’s important. I thought, “Don’t try to boil the ocean.” I’ve never heard that expression before. Tell us what that means to you.
Rules of Business: Focus, focus, focus.
First of all, I love “Don’t try to boil the ocean.” That is just fantastic, especially in a startup because you think of the indigestion part we were talking about and boiling the ocean. Those two are so closely related because if you take on too much, you can’t be effective. I’m an entrepreneur, I have six or seven different ventures I’m working on at any given time and then I also am a mom. In the morning, there’s a very strict timeline. Literally, they have checklists in the morning. Otherwise, it just doesn’t work or we’re not on time or whatnot. Klaire was really trying to get into getting prepared for school. I put a lot of onus in them. They have a lot of checklist items to do and take care of the dogs and things like that. I was constantly having to remind her, “Klaire, your shoes, your this,” just constantly. It’s because she has, very much like me, a little ADD going on where you get pulled in these different directions. You see the dog, what do you want to do? Play with the dog. Go back to go get your shoes.
There’s one morning and after, I swear, the hundredth time of telling her what her next step should be, I said, “Klaire, rule seven of business: Focus, focus, focus.” She literally, in an instant, was staring at me and then she knew the next item on the checklist. She just went and did it. I didn’t even have to say anything. I don’t even know if she said a word. She just went right over. It was probably her shoes because that’s always the one that I’m on top of her. She laced up those shoes and continued on her checklist. I never tell her what the next step is anymore. I just say, “Klaire, what’s rule seven of business?”
Let’s assume people are going, “I’m going to be coachable. I’m going to be focused. I’m going to give investors a great pitch. They’re probably going to ask me questions either during my pitch or after my pitch.” What’s the biggest mistake they can make after they get asked a question?
It’s not to hear the answer. That’s why we ruled right into rule eight of business with Klaire. I was actually telling her about a very important story. There’s two different mistakes I’ve learned when you don’t listen. One is not hearing. What I mean is, not opening up your ears to the point that you are not thinking anything on your side; not how to respond, not that they’re right or wrong. Just being open to hearing those words and empathizing with whatever it is that they’re sending your way. The second one is to actually not do something with the information that you’re given. For Klaire’s, even the one leads to the other, the first leads to the second. For her, when she’s being communicated with, a lot of times she will want to respond or she will want to just not completely see your side. If it’s directions, then she missed a step in the directions or I have to remind her. There’s really two steps of listening and one feeds the other one.
For this particular situation, it was pretty serious. Her grandparents were in a horrible car accident. Her grandma broke pretty much every bone in both of her legs. I was trying to communicate to her this and she kept on interrupting me. Then I told her, “Klaire, rule eight of business: Listen, listen, listen.” After she stood there and did hear it, she was very concerned. It was cute. She went back to rule three of business, ‘Relationships are everything,’ and helped me put a big care box together and drew some cards up for them as well. ‘Listen, listen, listen’ is so critical from the young ages, she was five at the time, all the way to pitching an investor.
So many of these are connected too because think about ‘Always be coachable’ and ‘Listen, listen, listen,’ those two are so closely tied as well because I truly have to hear what somebody is saying to me then to open up and then go, “Okay.” That doesn’t mean you don’t listen from twelve different aspects of entrepreneurship and then come to your own conclusion and move forward. What it means is, when somebody is talking, you give them your undivided, open-minded attention of where they’re coming from and what point they’re trying to make. Otherwise, as entrepreneurs, the very thing that we’re looking to do, which is risk everything in pursuit of some dream, ends up working against us because we don’t see enough pitfalls or challenges. We’re experientially learning instead of just intellectually learning.
Listen to all of your senses, your gut, everything. When an investor asks you a question after your pitch, I always coach people, “Rephrase the question in your own words to make sure you heard the question properly.” The worst thing in the world is to think you heard what the question was and you give them that answer and it wasn’t what they were asking. Then they think you’re avoiding answering them and you’re no longer trustworthy and the deal is off. The real bonus is, after you answer someone’s question, I always tell people, “Go back and say, “Did that answer your question?” Because sometimes it didn’t and you need to get it clarified. Sometimes it did but it generates another question. That’s what you want to have, is collaborative conversation. I really love rule eight. Rule nine is probably my favorite. Why don’t you tell us about the time you were at the gym eating pizza?
Rules of Business: Gratitude is always the best policy.
One of our gym actually has a lot of soccer games there and whatnot. Every once in a while after we get done working out, we decide to completely ruin it and go eat pizza. We had taken the kids to get pizza. I had also let them have a very unique treat, chocolate milk. As we were finishing up dinner, my daughter looks over and says, “Mom, I’d really like some chips.” I was basically, “No.” I had already gone over my junk food threshold for the month. I said, “Klaire, rule nine of business: Gratitude is always the best policy.” She wasn’t happy with my no. But immediately I followed it up and I said, “Look. You’ve got pizza. You’ve got chocolate milk. Why don’t we be very thankful for what we have instead of not being satisfied with that.” I just used that one actually yesterday. Anytime they press for more and more, because one of the best things you could ever tell your child is no. How much do we learn from ‘no’ even as adults? Figure out a different way. Be innovative. No doesn’t mean it can’t happen, no just means the timeframe that your expectations are might not be the same.
That’s rejection in general; whether it’s rejection on getting funded or rejection on somebody joining your team.
I always say this, “Disappointment is when you didn’t get what you wanted in the timeframe you wanted it.” If you change that thought process of it and you’re thankful for all the things that you do have, it shifts your energy into, “The answer is yes. It just might not be on the timeframe of yes.” I really try to do that too with Klaire, is to say that, “The answer is yes.” My background used to be in finance, so we did loans, real estate, commercial against businesses, all different combinations of them. Then PPM’s, help raise capital, that kind of thing. I used to tell everybody when they looked at their financing, I said, “The answer is yes.”
Which brings us right to rule number ten.
This one’s a funny one because as I was sitting at the gym, I remember thinking, “I really want to make this one big.” Because I knew I was going to stop with the ten rules. You’ve got to keep some simplicity. I was very aware of everything that was going on. Her brother, Cole, has now been piggybacking the rules now. He’s learning but he was only two when I started. If I said, what’s rule three? Klaire didn’t want to respond, Cole would chime in. Now they hold each other accountable when Dad and I put up the rules of business. Rule ten, I sat there and I was diligently watching them, because I wanted the last one to be really, really good.
As we got done with dinner at the gym, I always ask Klaire to clear the table. She grabbed the big pizza tray and she started piling up all the napkins and paper plates and whatnot on the tray. I noticed she was just about ready to topple over. She had way too many stuff on the tray. I interrupted her and I said, “Klaire, rule ten of business: Never be afraid to ask for help.” She responded right away. It was interesting. She didn’t ask myself or dad for help, she asked her brother for help. She said, “Cole, will you help me throw this stuff away?” Of course he jumped up right away and helped her throw the garbage away. I remember thinking, “I really could use rule ten of business a little bit more.” That was a huge learning for myself. So many of us, we go at it alone.
I know I’ve shared on the previous podcast, I love the quote I got from a good friend of mine, Ernesto Sirolli, “The death of an entrepreneur is solitude.” The thing that makes us strong about being able to risk everything in pursuit of this purpose, passion, idea that we can turn this thought into a thing, ends up working against us because we think we need to be all things. We think we need to do it all. A lot of times we think, “I can do it better than someone else,” all these different entrepreneurial challenges. Truly we’re much better, all the stats show, all the research shows, that we have unique strengths. That’s why the people catalyst aspect of it, the first piece is, “Who are you and what is your strength?” If it’s not your strength, don’t do it. Because what happens is you trade your peak work in all the wonderful brilliance of who you are for weak work that robs us of our enthusiasm and our passion. We’re not good at it, so why try to do it anyway?
[Tweet “Death of Entrepreneurs is Solitude.”]
There’s a whole ecosystem that you have to learn in order to get funded. You have to know what investors want to hear in a pitch. You can try to figure all that out yourself or you can get somebody like Judy Robinett to tell you, “This is what you need to do step by step” and you get there much faster.
Funny you say that, John, because that’s how I referred you guys to so many different entrepreneurs. They come to me, I’m later stage as far as that. What I mean is, I can connect you to investors. But what I can’t do, I can’t prepare your pitch deck. Are you kidding? Number one, that’s not my strength. I always work with somebody else in doing that because it’s a unique problem that you need to solve. Here’s the thing, I could have 500 investors to introduce to entrepreneurs and I still can’t introduce them. Why? Because they’re not prepared. They’re not going in there. The thing is that we can see it from a million miles away. Newbie, it’s all over. What’s funny, John, is how many people that it’s not their first rodeo, they’ve done it over and over and over again, and they know that they can’t even create their own pitch deck. What do they do? They find somebody that that’s what they do and let them solve that problem for them.
Karla, how can people keep up with you on social media? You have a great webinar on how to be a people catalyst. Tell us all the good things that people can get more of you.
If you’d like the free webinar on how to be a people catalyst, then you can go to the website www.KarlaNelson.com. You can just put in your email and get that free webinar and take a look at it. It goes through not only the ten rules of business but also the different areas on how to be a people catalyst. It goes into a little bit more depth around those three different relationships that you need to have, especially as a CEO. Even if you’re a sales manager or whatever area of the business that you’re focused in on, relationships are truly everything. You solve problems with people. The more strength you have in your relationships, not only the happier you’re going to be and the more successful person you’re going to be, but it’s truly the key to business.
It’s Karla, what’s your Twitter handle?
It is @KarlaLNelson.
We’re going to follow you. Thank you for sharing these charming and memorable ten rules of business. You rocked the podcast for the second time out. Congrats on that.
Thanks so much for having me on the show, John.
My pleasure.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- @KarlaLNelson
- Karla Nelson
- Karla Nelson’s podcast
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How to Get 7M in Funding with Mark Sears
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is Mark Sears, the CEO and founder of Cloud Factory. Mark turned a two-week vacation to Nepal into a six-year journey creating his startup. He’s raised over $7 million in multiple rounds of funding and takes us through the journey of just how he did it. He said, “When you see the world as flat, you can then build your brand globally. They key is punch above your weight limit.” In other words, get top talent. When you have a culture that defines your why, your passion, your mission attracts the top-T people to join your team and that’s really what investors are looking for when they give you funding. Enjoy the episode.
Listen To The Episode Here
How to Get 7M in Funding with Mark Sears
Today’s guest is Mark Sears, the founder and CEO of Cloud Factory, which is a startup focused on changing how the world works by using technology to make it easy for startups to scale. Who doesn’t want to do that? It believes that talent is equally distributed around the world but opportunity is not. He has a mission to create meaningful work for one million people in the developing world. That’s going to be an interesting topic for sure. Mark, welcome to the show.
Thanks very much. It’s my pleasure, excited to chat.
Mark, I always like to ask my guests, what was your passion for starting Cloud Factory? How did you get on this entrepreneur journey?
It definitely was born out of a passion, out of a personal life event, you’d say. 2008, my wife and I are Canadian, we decided to head over to the Middle East. My wife got an opportunity for a job there and I was running an online company receiving software royalties and we were just in a position where we could do it. We don’t have kids yet, we want to travel and we can do that from the Middle East.
It was back in 2008 when we were there that we had an opportunity to travel. On our bucket list was to go to Nepal, so in 2008, we went to Nepal for a two-week vacation. I had two very good Nepali friends that I had the opportunity to go meet their families. It was during that time, you mentioned in the intro, that we’ve learned and believed in the thesis that talent is equally distributed around the world but opportunity is not.
It was definitely on that trip where I recognized that. I met three young software engineers and just was blown away. I’m a software developer as well, I don’t get to do too much anymore, but that’s how I started. We really saw the opportunity. It’s something like there’s 1.1 billion people have come online for the first time in the last five years and there’s another billion coming online in the next five. We’re in the middle of a decade where two billion people are coming online. They’re super talented, they’re hungry, they’re hardworking and we just really found this opportunity. That two-week vacation actually turned into living in Nepal for six years. It was. It was Kathmandu, Nepal. That’s where a lot of our operations are today. It certainly wasn’t a vacation. We’ve worked pretty hard those six years to get things off the ground.
[Tweet “Get 7M in Funding: A 2 week vacation in Nepal turned into 6 years”]
I’m always interested in helping startup founders, when they’re working on their pitch, come up with the reason why. Your “why” of why are you doing this besides making money has to be so much bigger than just making money. Investors want to know what your “why” is when they decide whether they’re going to fund you when you’re pitching because that’s what keeps you going when things don’t go well. Let’s talk about your philosophy on why they must, not only define it but you say redefine their “why.” Can you tell us what your “why” is and how you’ve defined and redefined it?
Get 7M in Funding: Our “why” is creating meaningful work.
You’ve allude a little bit to the crazy ambitious social mission of connecting a million people to online work. Our “why” is creating meaningful work. We believe that work is this a huge and wonderful thing when it’s done right. There are so many people in the world that do not have that opportunity to work. Earning, learning, growing, finding community, work is more than a paycheck. That for us is what drives us. We‘ve all received opportunities to get where we are. As a team, we get to come together, build a really great profitable business that can scale and create opportunities for many others, and especially for people that live in places where there aren’t many. Our “whys” is definitely about that. We’ve got tons of t-shirts, create meaningful work t-shirts, lots of different things that continue to remind us of our “why.”
It has been a really big focus of the company. We spend a lot of time thinking about what is meaningful work, why are we doing what we are doing, and building a culture really around that idea. The opportunity and the responsibility for us is operating in places like Kathmandu, Nepal and Nairobi, Kenya, where our operations are, is how do you do this in a way that can really invest into the next generation of leaders? Because we employ mostly eighteen to thirty year olds, about 2,500 people on a part-time basis, and around almost 200 on a full-time basis. It’s really an important aspect for us and I think it served us well. Like you said, when things don’t go as planned, you hit road bumps, things never go in a straight line. It’s always a crazy jagged left and right turns, and there’s no question that being able to make decisions through the lens of your “why” is important. It served us well.
Assembling a team is one of the most important things that investors look for. I think having a “why” defines the culture of the startup you’re doing and then that helps you filter out who belongs to your team and who doesn’t. Would you agree?
No question. It’s played a big role. The “why” is a big part of attracting the right talent and filtering out some of the talent that we don’t want as well. We absolutely want people who want to be a part of a growing successful tech startup. But we also want people that get excited about the opportunity that we specifically have as a company. I believe it has attracted people for the right reasons. I believe we’ve been able to punch above our weight in terms of recruiting people that are excited about the social mission that we have. Like we talked about, it also helps us all stay united and grounded in the ups and downs that can be the startup life.
[Tweet “Get 7M in Funding: Punch above your weight class, get top talent.”]
Because it allows you to attract better talent when you have a culture and a “why” defined that makes it really strong, right?
Yeah. It’s no question. Everyone talks about millennials and just how they’re looking for more purpose necessarily than just compensation. I think that in general, there’s been a big shift obviously. When you’re dedicating so much of your life to work, you want it to be something that has some purpose and meaning and end-of-the-game game. I know for me, I was a part of a great startup, we raised $40 million. We grew from five to 140 people in fourteen months. It was fantastic. But I ended up leaving that startup because they didn’t have a “why.” I literally woke up, sleeping under your desk, working 20 hours, sleeping for four hours under a desk as a developer and project manager and product manager.
The only why that I was given was we’re making games run faster on Japanese teenager phones. That wasn’t enough for me to continue investing what I was investing. A lot of people have that. A lot of people are looking for and really needing to understand. Even as families, people want to understand when their spouse is going to be gone, and sacrificing. What exactly are we even as a family investing into?
That’s clever. Everybody has to be invested in making this a success. Take us back, Mark, to how you raised money. Can you take us back to what it was like pitching for funding? Tell us exactly how you came up with the amount you wanted, was it from one investor, multiple investors? Anything you can share on that journey would be very helpful for our audience.
Certainly, I can take you back but I don’t even have to go back that far. We’re very active in a fundraise right now. We’re daily in the thick of it, which is great. It’s fantastic. I’ll go back to beginning. We’ve raised about $7 million to date. We started with a $700,000 seed round about four and a half years ago. It very much shapes the company that we are today. We found a small private equity fund. It’s a $12 million initial fund. The second fund is now $50 million. We ended up connecting at a conference. They were just raising the fund. They really liked what we were doing. Had a thesis that involved emerging economies and the rising middle class as producers and consumers, etc. It was very, very interesting conversations. It led to us coming to Raleigh, Durham, North Carolina where they were based. We ended up opening up our US sales marketing headquarters here, which was not the plan.
That was a very interesting raise that has led to a very significant partner, obviously a board member and mentor in many ways. That was an interesting raise because they were actually, like I said, raising their fund at the same time. We were their first investment for that fund. I was doing a little bit of a dog and pony show for them as they were raising their funds saying like, “This is the type of company that embodies our investment thesis.” It was weird to be helping them actually raise their money in order to get a portion of that as our seed investment.
It’s so important that your investors also fit into your culture as well. That sounds like you found the perfect fit there.
It’s actually been hard because they set the bar pretty high. It’s hard for us to find, since then, to find people that are really ready to get strapped to the mast and bring more than just capital.
I always talk to people about, when you pitch, especially for the seed round, you need to be able to say, “Here’s who we help and what problem we solve.” Can you take us back a little bit, Mark, to a 90-second elevator pitch that would describe that so people would go, “That’s interesting, we want to have you come in and give a ten minute pitch to the group,” or what have you.
Get 7M in Funding: The story was really mostly around the opportunity; what would it look like if we were able to take this platform.
Four and a half years ago, it seems like a century ago. It’s hard to do the time travel back. There’s no question that seed round versus our series A versus our series B that we are currently raising, absolutely different things that we are talking about and able to talk about in our pitch. Back to the seed round, we didn’t necessarily have a large established team even at the time, in terms of a leadership team. We weren’t putting forth team. We weren’t putting forth revenue, obviously at that stage.
The story was really mostly around the opportunity. We talked a lot about what would it look like if we were able to take this platform, at that time we had a technology platform or work platform that split work up into small micro-tasks and allowed us to do a lot of automated quality control and really allow us to connect to a company so that they could send work in via API, so over the internet. We had some technology. We definitely did a lot of demos of that to help them understand the vision and the fact that we have some progress. The problem that we really pitched was more of the bad alternatives that are out there right now for our target customers. People that need to get back office work done right now are doing it in a pretty old stale traditional way. It’s the typical outsourcing type model. We just knew that there was a better way to do it that was very, very tech-centric in its approach.
We talked a lot about the pain that was involved in the current ways that the customers we talked to were getting it done and how we can use technology to do it much better. It was more from that perspective. It was more from the opportunity of the amount of talent that’s available in what we call emerging or frontier locations, like Nepal and Kenya. You have obviously Urban India and Urban Philippines and China that obviously are contributing a lot to getting work done. Be that high level IT to more of the back office business process outsourcing, etc.
We talked a lot about the emerging locations and how they’re coming online with such amazing talented people. Obviously, at that time we were based solely in Nepal, we hadn’t expanded to Kenya. We talked a lot about that. We were in a great place. We had a great engineering team at that time, so we were able to train up and see a great Ruby on Rails team. We had a lot of fire power in terms of engineering. We had a great opportunity, obviously a huge supply of talent. We were able to show a glimpse through our technology that there’s a better way to get routine repetitive work done.
I want to underline something you mentioned there, that you really were able to paint a picture of the pain of your ideal customer or potential customers. The more you understand your customer’s problems, the better the investors think you have the solution. It sounds to me like that’s exactly what you did there.
I would maybe just tweak that to say that it proved that we knew how to build the solution and deliver the solution that could take away that pain. Obviously, at the seed stage, you may have something but you’re still far away from product market fit, most companies. For us, it was showing that we understood the bad ways that are trying to solve the current problem their customers face is one thing. Like you said, gave the confidence that we could build and scale a solution.
[Tweet “Get 7M in Funding: Understand your client’s pain to show you can execute the solution.”]
Now, you’ve got some revenue. You hit some milestones, I’m assuming, and you decide, “Now, we’re going to go for series A.” How much was that?
It was a total of $5 million. It was $3 million equity and $2 million debt.
What were the differences in the pitch? Obviously, you now have some traction. Do you talk about what we’re going to do with this $5 million? Do you talk about exit strategies at this point? What kind of questions are you getting asked that are different from the seed pitch?
That’s a good question. The story and the pitch around our series A was a lot of it had to do with our growing customer base. Yes, we had a revenue that was trending well. The numbers were good for the stage. That was there. The biggest story that we centered on was the quality of our growing client base. We had a group of customers that really proved that we were onto something. If so and so is trusting you and paying you this much money this quickly, that’s exciting. Having that referenceable client base that’s actually paying significant money, and the key was that it was growing. We’d have a customer that came on at $10,000 a month and they were going to $20,000, $30,000 a month. That kind of expansion from quality names was probably the biggest story in our series A pitch.
Let me ask you a couple more questions around that because it triggers three questions. The first one is, do you keep in regular contact with your clients? Because I know a lot of investors tell me that that’s one of the key things that they look for, that you’re proactive in reaching out to your customers to see what they like and don’t like. Do you have a system in place to do that?
Get 7M in Funding: We’ve actually recently launched a formal customer success team. We work with our customers regularly.
We do now. We’ve actually recently launched a formal customer success team. We work with our customers very, very regularly. But like you said, that’s a little bit more in the reactive way when things need to get done. We do now have a customer success team that is proactively checking in. Those touches have been really, really key for us. For us, it’s different because our motivation obviously is to have very satisfied customers, but we have so much expansion opportunity. When people like using Cloud Factory, when they trust it as a great way to get their work done, they grow their spend immensely. That makes it really easy for us to not look at it as an expense at all. It is absolutely a great investment for our business. That makes it easier. You want to stay in close contact.
Would you recommend startup founders like yourself to start that proactive connection sooner than later?
I think it’s definitely required. Obviously, everyone’s deal size and model is different. If you’re selling something that’s a one-time versus a SaaS subscription, if it’s a $300 deal size, if it’s a $100,000, obviously, there is a correlation between how much you can really invest into each client relationship depending on some of those variables. For where we’re at, there’s no question that if you have the ability to really be touching key accounts regularly in a proactive way, then of course, there’s the question of, is it over email? Is it over phone? Is it over video, Skype, or what have you, or is it in person? Then we really look at all of those mediums and determine really according even to customer spend. When we have a quarterly business review, that’s the proactive. We have a quarterly business review with our larger clients and that’s on site in person for our top accounts. For medium sized accounts, we do a QBR but it’s probably over video conferencing.
You said an acronym there, QBR. I just want to make sure everybody knows what that means. Would you define that really quick?
Quarterly Business Review.
Did the investors talk to your top customers to see why they were sticking and growing so fast before they give you your series A funding?
Yeah. We did do client references. Ironically, literally five minutes before we started talking today, John, we actually just initiated another round of client interviews with the investors we’re talking to for this round.
You are getting customers to scale very fast, right? That’s one of the things that investors love to see when they’re putting money in at any round level. Let’s talk about your expertise that you can share on how can startups scale smarter and faster?
Like you mentioned at the very beginning, that’s our core business. Essentially, that is what Cloud Factory’s whole purpose is in coming along side clients to help them scale their operations. Every business nowadays is thinking differently than they were ten, twenty years ago, where it’s not about necessarily having all full-time employees. We see most of our customers and companies thinking that I’ve got strategic work and non-strategic work.
For strategic work, I need to have my employees. I need to own that workforce, those need to be my actual employees. But for everything that’s not strategic, I really need to be thinking about more contingency ways to really staff that part of my business, to get more elasticity and sometimes to get more expertise. We often will draw a pyramid where at the very bottom base of the pyramid is automation and AI. Everyone wants to shift as much work as they can for efficiency reasons to that place. All the work that we can possibly automate, that’s what we do. We can justify the upfront investment of actually developing those models and technology.
Above that is looking more at a solution like Cloud Factory, where you’re able to get an on-demand workforce, where you’re able to have some levels of elasticity. You pay for what you use. Learning how to almost use a company like Cloud Factory as a tool in your tool belt to grow your company is something that we’re seeing is what a lot of winning companies are doing. Then you’ve got your full-time employees, doing your strategic work. Even at the very top of the pyramid, we often put experts. Even looking at freelancers, consultants, and contractors, I don’t necessarily need to hire those people, but there’s times when you have to pay $200-$500 an hour. Beginning to think about that core, middle of that triangle or pyramid as your full-time employees, but how do you then compliment and build your business, call it an enterprise 2.0 model, where you’re really thinking about how to augment your employees for growth and scaling operations.
It sounds like you’re using and applying this pyramid to your clients, which allows them to scale, which in turns then gives you more revenue because they’re seeing success so they spend more money with you. Is that accurate?
That’s exactly right. You got to get work done and you’re trying to find the best way to do it. Efficiency is important, but convenience and there are a lot of other factors. When someone begins to understand that, “I don’t have to do a traditional outsourcing. I don’t have to just hire freelancers. I don’t have to try and hire full-time employees or interns or temps or all these different ways to do it.” We love when people get it. That’s exactly how we can help them grow and they can obviously help us grow.
Let’s go back to, whether it was your seed round or your series A, because I’m imagining the answers are very different. One of the questions that comes up when you pitch for funding is, what’s your barrier to entry to competition? In other words, why can’t Microsoft or Google do what you’re doing? They’ve got all the money in the world and just wipe you out. That’s a big concern that investors have no matter what business you’re in. How did you prepare for that question?
Get 7M in Funding: For us, going to strategic locations and building those data centers looks completely different.
That’s a great question. Defensibility. I have a pretty non-standard answer for a tech company. I’m still a little apprehensive in sharing it, but you asked it so directly I feel like I have to. There’s no question, obviously in terms of intellectual property and protecting intellectual property and technology. We’ve got 55 engineers who have been working for years on our technology. We feel really confident that we’ve got a great head start in terms of technology.
That’s not actually where I usually go in answering this question. It’s really more about something we talked about earlier, with the “why” and the culture. The branding and for us, we have this thesis as a business that someone’s going to create the world’s workforce. The same idea of Cloud computing and AWS and other companies going to strategic low cost locations, building massive data centers, writing software on top of it to virtualize it and rent out slices of that to the world, to power the computing resources of the world. We believe that Cloud labor is also completely inevitable and someone’s going to do it.
For us, going to strategic locations and building those data centers looks completely different. It’s actually building delivery centers and it’s building very intelligent workforce model where we’ve invested a ton into. In 2012, we hired our first 25, what we call Cloud workers. We tried putting them in teams of five and they’re working from home but they would meet weekly with one of our full-time employees and a full-time employee, we call it Cloud seeder, would actually supervise twenty teams of five or 100 of these Cloud workers. We would do leadership lessons every week. We did community service projects. We’ve done over 4,700 community service projects as a company.
All that I say is that we’ve actually spent a huge amount not just developing technology, but developing a workforce model and a culture and iterated on a way to really know. The key is that we’ve done this with boots on the ground. This was me and my family and then other people coming from Canada and America and other places to live in Kathmandu and now to live in Nairobi and for us to partner all together to really do that. Whereas a lot of our competitors are tech companies building platforms in New York, San Francisco, Seattle, etc. that have never met any of their workers. They certainly have not been through to it. I usually get fairly graphic. How many of the other tech CEOs have gone through thirteen bouts of whatever living in a developing country?
We know that that’s a big part of the future of work, truly seeing the world as flat and leveraging technology to do it. But it’s a lot more than just technology. It involves building a culture, building a workforce model, being the best gig in town for the people that you’re trying to actually hire a talent for. We believe defensibility can be in that area of culture. It can be related to why. It can be a little bit more intangible than just how many patents you have.
[Tweet “Get 7M in Funding: See the world as flat when you build globally.”]
The fact that you have boots on the ground, it keeps going back to the team. Everything is the team at any stage of the funding and not only is of the team that are here in the States, but the team around the world that you have boots on the ground. That’s a great, great answer. One final question, do you get asked a lot at any of these funding rounds about the exit strategy during due diligence? Do you think that the investors are looking to get a return on their investment in three to five years with somebody big buying you?
No question. Literally this morning, I had that conversation with investors that are pretty late stage. This is definitely a very recent and relevant question. Almost every fund that you talk to, they’ve got a life cycle, they’ve got a term. The key question I think to ask is, “How many years into the fund are you?” Usually, if it’s a ten-year term, they have to place all their money in the first five years. If they’re in year three or four, that’s trying to get later in the sense that they’re going to be looking for a faster return than if they just started in the last year or two. I think that’s something we’ve learned as we’ve talked more with different funds. Three to five is obviously a very standard answer. You can give whatever answer you want. When you sign that final definitive agreement and close, there’s usually going to be some terms that are related to them getting liquidity in some way, shape or form. It’s a key part of the terms.
When you have a growing company that really has big ambition to really continue growing and scaling, you’re going to be taking follow-on capital. Oftentimes, that follow-on capital is actually another option. It’s not as simple as, “Are you thinking acquisition or IPO?” There are different management bio and other PE, private equity type options that really do provide a very potential path for exit for funds that are on a fixed term.
Mark, is there a particular book you would recommend someone read, either about startups or life in general the “why,” anything that you think would help people.
Get Backed: Craft Your Story, Build the Perfect Pitch Deck, and Launch the Venture of Your Dreams
The first that comes to mind is a couple friends put out a book, I think it’s probably about a year ago. I went through a business accelerator with them. It’s a great book called Get Backed. Definitely, for anyone who’s raising capital, it’s 100% required. Everything from email templates, in reaching out to investors, getting warm intros, a big part of it is around creating the pitch deck, creating a story, forming a storyline, story arch, it’s an essential. I definitely broke it out again as we prepared for this round.
How can people follow you? What’s your Twitter handle? All that good stuff.
I’m @MarkTSears on Twitter and Cloud Factory is The Cloud Factory. Fairly active on Twitter and quite active overall on social media. CloudFactory.com, our blog is there. That’s probably the best ways.
Thanks, Mark. Congratulations on all your success. I’m sure the next round is going to be equally successful and we’re going to look forward to you coming back on and telling me about your successful exit in a year or so.
That’s good. Sounds like a plan, John. Thank you.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Cloud Factory
- @MarkTSears
- @TheCloudFactory
- Get Backed
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Bring Value To Build Trust with Josh Elledge
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest is Josh Elledge, who is an expert in public relation and pitching yourself to get on television and get media exposure. Investors love to see start-ups that have some publicity because it shows some traction and some social proof. He said, “You need to be more transparent and authentic when you pitch yourself and bring value as a way to build trust.” If you want to get an investor to trust you, bring value. If you want to get a TV producer to trust you, bring value to them. He said the big framework is, “Who can I serve versus who can I sell.” That big distinction along with don’t be a “ME” monster is really just the tip of the iceberg of great things that you’re going to hear.
Listen To The Episode Here
Bring Value To Build Trust with Josh Elledge
Today’s guest is Josh Elledge, who is on a mission to help entrepreneurs attract the perfect audiences. He’s the founder and chief executive of SavingsAngel.com, and has literally emerged as one of the nation’s leading experts on consumer savings. SavingsAngel.com has become a major operation, employing up to 50 employees and grossing more than five million in sales over the past eight years with less than 500 spent in advertising. Hint: it’s all public relations, which he’s an expert in.
He shares his successful couponing and saving expertise with millions of families, both online, a speaker, daily syndicates. Columnist for nine newspapers. He’s appeared on television and radio over 1,500 times. He also has his own podcast, the SavingsAngel Show, which is the number one consuming shopping and savings lifestyle podcast on the planet. He shares life hacks and deals and who doesn’t want that?
He’s consulted hundreds of successful entrepreneurs in creating that same sort of success which led to the creation of upendPR.com, which I’m proud to say I am a client that I fully endorse this because he has done amazing help for me. It’s a Software as a Service membership-based website which provides a step by step video coaching live training access to a million plus media content. Let me tell you, startups, you need to get PR. That’s what investors want to see as social proof that your idea is going to get traction. Josh, welcome to the show.
John, thank you so much. That was quite an introduction. I’m all flustered almost.
I mean every word of it. The passion behind it is authentic, as you know. Let’s talk about, you are a multi-hat entrepreneur, which I think is going to be really interesting to the listeners to learn how you took your five years in the US Navy with Desert Storm. Obviously, that taught you some lessons. Then you went right into starting your business and your podcast, and now this upendPR. I’m sure it all dovetails together, doesn’t it?
Bring Value | PR is all about relationships.
It does. It’s really amazing because I have all these individual experiences. For example, I went to school to become a Family Therapist. I got to the end of that and I started doing a lot of work in internet development and I thought, “Did I just waste three years of my life in studying Family Therapy?” It comes to find out that my experience there has been extremely valuable. Because in my work now in helping so many other businesses get PR, one belief that I have is that PR is all about relationships. I take a family science approach and a relationship-psychology approach to public relations. I think that’s part of the success not only are we having with our other clients, but with my own public relation success for SavingsAngel.
We’re going to do a deep dive into that because, as I constantly tell all my listeners on The Successful Pitch, it’s all about the relationship that you build with the investor before they give you money, that they want to invest in people they trust and like and know. The same is true whether you are talking to an investor or talking to a journalist to cover you in the press or have you on their television show, right?
Yes. I think more than ever, everybody craves authenticity. Investors crave that. Audiences crave that. When you’re wanting to work with influencers and journalists, they crave that. The more you can give that and the less that you can just take off the sales and marketing hat. Yes, we have sales and marketing objectives that we need to hit but I’m telling you that based on my experience, the best way to achieve those goals is you’ve got to be real. This old day of Popeil’s Pocket Fisherman or just these fast talking pitch people. That’s great and they’re fine, they’re successful. But I think that audiences more than ever, they just want to know what the real you is like. They don’t mind the warts. They don’t mind the ugly, as long as you are willing to be transparent with them. I find that the more transparent you can be, the more audiences seem to like that.
[Tweet “Be more transparent”]
The investors tell me all the time, “Please have your clients be more human when they pitch and not become robotic.” The same is true when you’re in front of the camera, right?
Yes. John, I’m sure you have seen some incredibly stilted, robotic, inauthentic pitches and you’re probably like, “Okay.” I’m not making fun of anybody because we all have the tendency to do that. Again, as a potential investor myself, I would look at somebody, and if they will just have a conversation with me and just say, “We really got our nose bloodied on this and we learned this.” I would love that. I would feel like I’m just having a conversation with somebody who’s very excited, very passionate about what they do. But yet they don’t have to give me this glossy, veneer feel to their company. Because again, that’s going to cause me to put my guard up.
The investors tell me all the time, “We actually like people who’ve bloodied their knees a little bit and tried other things that haven’t work because that show us resilience and perseverance, and all the skills that are necessary.” That they can’t just say that I’m this kind of person. They tell a story that shows that and the vulnerability, now we’re connecting.
Let’s go back to your Family Therapy expertise. Long time ago, I was actually in a car accident and had to wear a neck brace for a short time. Nothing serious like a metal thing, but like a thing where you don’t turn your neck. I was going to go see a friend of mine I hadn’t seen for years perform. I took that off in the car, because I didn’t want to draw a lot of attention to myself and I didn’t want to seem like I’m this weak injured person. I went and saw her perform and talked to her and then left. Somebody said to me, “Why would you ever do that? That needs to be perfect. You could damage your neck and you were in pain.” As opposed to saying, “I was in a car accident, I hurt my neck.” It was my big a-ha moment, that when we’re vulnerable, that’s how people connect to us.
If you look at social media celebrities, I think that some of the most successful celebrities and bloggers and podcasters are the ones who are not afraid to be vulnerable and share very personal things. Now, you may or may not be comfortable or willing to share the very personal things in your life, and that’s fine. But just know that audiences like that. We started figuring this out with the advent of reality TV shows, and of course we know that that is not real reality, but it’s manufactured authenticity. The fact is we still like to see the daily lives of individuals. We love Shark Tank. We love seeing those failures and those frustrations. We learn from that. I love seeing where other people fail. I love sharing my own failures and hoping that somebody else is going to learn and not make the same mistakes that I did.
Since you opened that door a little bit and talked about the value of vulnerability, let’s hear about one of your failures. Because it looks like everything you touch turns to gold.
If you only knew. I think that any successful entrepreneur will tell you the exact same thing, “You don’t know the backstory.” It’s the backstory that is always the one where people change their answer from, “I wish I could have what they have.” No, you probably don’t because you wouldn’t be willing to make the sacrifice. In my case, I lost not one home, but two homes. One a little bit more graceful than the other. I also had ended up declaring personal bankruptcy long ago, in trying to grow a business that wasn’t necessarily a very good business model. I experienced that. Again, this was a long time ago. But that experience toughened me up. I’m so grateful that I had those experiences of failure.
When I owned a small town newspaper for a couple of years, one of my biggest problems and one of the biggest reasons I failed is because I was afraid to “sell.” The reason why, John, is that I felt so inauthentic when I would go and offer this to potential advertisers for the newspaper. Even though I had a great product, yes, we had evidence that our product worked for the businesses that we worked with. But for some reasons my idea of what selling was, was that it was just trying to convince somebody to do something.
[Tweet “Bring value as a way to build trust”]
In fact, my definition today has nothing to do with that. It is finding ways that you can bring value to other people. If there’s a fit, great, if there’s not, that’s fine. Find other ways. You bringing value to somebody doesn’t necessarily mean that they are going to buy your product or service today. You are going to find a way to bring value to them, give them some kind of insight, give them some great advice, give them some tips and lead them to a competitor. What’s going to happen is they’re going to trust you. Even if it’s not a perfect fit today, in the future, they’re going to say, “That John Livesay guy, he really stirred me right. I want to do business with him because he gave me some good advice, and he had nothing to gain from that.”
I just want to pause there for a second because I want everybody to really digest what you said. Everyone says, “I need to build trust. That’s a given. But how the heck do I do it?” You just gave us the secret. Build value by giving away some advice, some content, whatever it is, that may or may not result in an immediate sale, but it builds trust.
Bring Value | Their guard is going to be down because you are just focused on serving them.
That’s why I’m such a fan of using publicity. Of the millions of dollars that we’ve earned for SavingsAngel, we’ve done no advertising or marketing, next to none. Everything we do and how I’ve just trained myself is just to give, give, give all your best stuff away for free, and people will appreciate that. They’ll get to know you. Their guard is going to be down because you are just focused on serving them. They’re going to get to like you because they’re spending time together with you. Eventually, that time together is going to lead to trust.
We’re always moving the “know, like and trust” factor by just being in service. Again, I know a lot of us are like, “We’ve got to earn money. We’ve got to increase profits.” A lot of the stress that I think a lot of us have as entrepreneurs and startups is that we need to make sure that money is coming in and we’re growing financially. That generally leads us to, who am I going to sell to today? I would just ask you to consider reframing that first question when you start thinking about work, to instead be, who can I serve today? If you do this, it may take a little bit longer. It’ll feel like it’s taking a little bit longer at first because again, you’re focused on just serving, becoming a thought leader, becoming a subject matter expert and being respected in your industry. But here’s what happens. After maybe it’s a year, maybe it’s two years, what are you in such a big hurry for, really, honestly, when most of us are going to be on this earth for at least 70-80 years. I don’t want to say that you’ve got plenty of time, but you’ve got time if you set this up for yourself right.
[Tweet “Who can I serve vs who can I sell?”]
Instead of focusing on selling, selling, selling, just spend a lot of time just networking. Go do pro bono stuff. Find incubator and accelerator groups that you can volunteer with as opposed to just being a student. Find groups, meet-ups, organize groups, or you just say, “I’m going to do a free workshop on this online, nothing for sale. If you know someone who could use my services, great, but that’s not why I’m doing this. My goal is just to become more well-known in this industry.” It feels so good to be a proprietor in a business where that is your question for the day.
Josh, I want to share with the audience one of the amazing tips that you gave me. Since you’re all about, “Who can you serve?” let’s give them something really smart and tactical that you shared with me, since I’m one of your clients. I want to give this to the listeners because we’re in that same mindset of who can we serve.
You were watching me on a television show and I was saying that a pitch should be clear, concise and compelling. You said, “Those are great three words but you’re saying them too fast for the listeners to really grasp that.” The same would be true when you’re pitching an investor. What is your technique that really works now? The next time I was on television I used it and it was fantastic, much better. I want everyone to really have at least one amazing tactic that they can see just how great you are in helping people get better.
If you rifle through those three words so quickly, John, those are your words and those are not the words of the viewer. If, however, you say, “You need to be clear,” and then you pause, what’s happening now is the listener is now internalizing that word because you’ve paused. Now, as opposed to just taking your word for it that you have a definition of what clear is, it forces me to think about, what does clear mean to me? Now, I’ve internalized that definition.
If you say, “To have a great pitch, you need to be clear, concise, and compelling.” You’ve got those pauses, those pregnant pauses in between there. We need those verbal pauses. I don’t know who said this but, “The most beautiful music is the silence between the notes.” I don’t know where that came from or if that’s a real, legit quote or not. It really caused me to think about that, especially as speakers, as a broadcaster. I’ve done a lot of radio. I was a broadcast journalist for the United States Navy. When I was in school, you we’re always just petrified of dead air, of not filling up the silence with noise. It’s the silence where your investor that you’re pitching to gets the moment to just think to themselves about what you just said, what it means to them.
It really exudes confidence because only people who are confident can take that pause. If you’re nervous and your adrenaline’s going 240, there’s no way you can pause. That is the importance of confidence with practice.
You are so right. I really didn’t think about it that way. Another thing, I used to volunteer to teach high schoolers. One thing that I just hated was you would ask a question and then they wouldn’t answer. Everyone just gives you black stares. That used to make me so uncomfortable. Instead, I read it or learned it. I was reading about becoming a better teacher. Learn to enjoy that uncomfortable silence because that is what is pushing those students to come up with an answer. Because it’s uncomfortable for you. It’s even more uncomfortable for your audience. But this is good because we want to force them to share an answer.
One thing we do, and in sales we can do this too, is we ruin it. We ask a closing question but the person that we’re chatting with, they don’t answer right away. It could because they’re formulating the best way to answer that and we mess it all up by saying, “Oh, blah blah blah,” because we don’t want them to feel uncomfortable. No. We need them to feel just a little bit uncomfortable so that they engage with us. It’s not a bad thing if people are staring at each other for a few seconds while somebody decides that they’re going to open up their mouth and talk.
In sales, they would say the first person to speak loses, which I think is a horrible way of saying that. The first person who generally speaks is going to be the one who makes some concession. They’re going to move forward in a direction that perhaps they weren’t thinking about before. It’s not against their will, it’s just they’re going to say, “Okay, I guess we are going to dance.” They are going to take a step in dancing together that maybe they were just nervous about at first.
That was one of the big secrets that I talked about in my first book, The Seven Most Powerful Selling Secrets. The most powerful selling secret is getting comfortable with the silence in the room. The way that I have learned to do that is to become comfortable with the silence in your head first. Then you become comfortable with the silence in the room. Because many people have all these negative self-talk going on. That’s what causes them their own anxiety to fill the silence.
I tell people, “Just say, ‘I’m patient and calm’ three times after you’ve asked somebody if they want to invest or want to buy, whatever it is.” That gives the person some time to say yes or no or ask a question without feeling this whole old school way of selling that you referred to of whoever speaks first loses. People can feel that energy. As opposed to, “I’m patient and calm,” while you decide whether you want to say yes or no. That has really been a big tip for my clients to sell more, get investors to engage with them more. You open the door and now we continue the dance and say, “Here’s what not to do and here’s the best way to become comfortable with the silence, is to get comfortable with the silence in your head.”
I am telling you that this conversation right here, this is like a million dollar gold right here that you’re getting if you put this into practice. Take it from two people that have done relatively well in business, and it works.
It does. Josh, what do you think makes a good pitch? When you’re pitching, it’s all the same. You’re selling yourself. Whether you are selling yourself to a print journalist, a television producer, an investor to fund your startup, somebody to join your team, the list just goes on and on. It’s so important that we learn how to pitch ourselves in a way that seems authentic. What are some of your best tips on that?
Bring Value | If I can see that they’re passionate about the industry that I’m looking to hire them in.
Authenticity is extremely important. I know one thing that you talk frequently about is the fact that a lot of times, and I have this from time to time, when you interview somebody and you say, “Do you have any questions?” If the first word out of their mouth is they start asking about their salary, their benefits or that kind of stuff. It’s like, “Wrong answer.” It felt like, “Okay, I get it.” You have concerns, you’re interested in yourself. I totally get that, but it’s not very impressive. What I’m looking for, if I’m interviewing somebody, is if I can see that they are passionate about the industry that I’m looking to hire them in. Or if they are passionate, I’ve shared with them my mission and they’re like, “Oh my gosh, I love that.”
If they can understand why I do what I do and I can tell that they’ve enrolled themselves into my enthusiasm, then I’m going to feel a real connection with this person. I’d love to bring them aboard my team. I feel like skills are easy. Anybody can learn skills. But if the passion, the drive and the love is not there, then it’s just not very attractive. Similarly, if someone is pitching their product or service, if they know a little bit about me as an investor and they know the kind of things that I’m really passionate about and they tailor that pitch to the things that they know that I’m really into, I’m going to resonate with that. Because they may find out some of the causes that I really care about. It’s not that difficult to find that out from potential investors. Just do a little bit of due diligence and you can find that out. You might want to target your message.
When you talk about pitching your product or service, you might be talking in terms of all the things you need and want, but really you should be thinking about, what does the investor want? What do they really want out of it? Yes, they want to make money out of it, but there are some emotional intangible things that money can’t buy. I wonder, and John, I suspect that you have some great information on this, what are those intangible things? How can we make that a part of our pitch?
Everything you’ve said I’m completely in sync with. Doing the due diligence on an investor before you go pitch them, looking them up on LinkedIn, see what other charities they might be involved in; if they are a foodie, if they like travel. Find some point of connection outside of the business that allows you to establish rapport with them. I did this with a television host I was going to be on, AM Northwest. I watched a couple of segments that they had on their website to see what she was like, the host of the show. One of the people she had on her show the day before she had me on was a therapist talking about your hot buttons and how do you get rid of them and where do they come from. She said, “My hot button is I don’t feel good enough.” This is someone who’s had a talk show for 22 years in Portland.
I had about 30 seconds to talk her before we went live on camera. I mentioned to her that I watched that episode and I said, “I was so surprised to see that was one of your issues. A lot of people have, “I’m not good enough” as an issue.” I said, “Do you think that’s what motivates you so much?” She’s like, “I’m not sure. That’s an interesting question.” She said, “I grew up poor. When I was ten years old, my mom took me to the grocery store and they were giving out free samples of cookies. I just said, ‘Do they have nuts in them?’” and the woman looked me up and down and said, ‘Beggars can’t be choosers.’” The entire set gasped. No one had ever heard her tell that story and they’ve known her for years. I just touched her arm and I said, “I’m so sorry that happened to you.” “And three, two, one. You’re live. Hello and welcome.” But we had that moment of bonding and she couldn’t have been nicer to me on camera. It’s one of my favorite interviews, because of that due diligence.
Wow. It’s one of those simple things that if you’re thinking only about yourself and what you want, you might not take that extra step to learn. If I’m working with an investor, and obviously this is something that we’re going to be attached at the hip on, they’re going to be nervous. They’re going to want to make sure that this is a smart investment for them. What value can I bring them? It’s those sorts of things that make all the difference.
Now, speaking of bringing value, the audience of The Successful Pitch is a lot of founders looking for ways to stand out from the crowd. Investors hear about 2500 pitches in a year and only fund 25. How are they going to get that 25? Having publicity is one great way to do it, yet they can’t afford a $5,000 a month publicist. Tell them what they can do with upendPR?
That’s who we work with, and honestly, that’s why I started upendPR. SavingsAngels has done fine. We’ve had a great run now. We’ve been in business for about ten years. We just never did regular advertising because at the beginning, especially, I didn’t have the money to do it. I really just leveraged my experience of working with the media. Along the way though, I tried hiring PR firms. At one point, I blew over $25,000 trying to hire it out myself. Unfortunately, the returns just weren’t there because what most PR firms like to do is charge you a lot of billable hours for a lot of work. They like to manage stuff, which if you’ve got a big, big, big budget, it’s a fine way to go. But if you’re really nervous about how you’re spending your money, just know that someone is going to have to just put in the time.
PR is one of those things that you cannot outsource completely until you’re rolling in the cash because it gets real expensive. Nobody, John, and I know you’ll agree with this, nobody can represent your brand, your company, as well as you can or the founder can. When you try and outsource that, if the pure message was solid black and you’re trying to outsource the selling of your brand and the pitching of your brand, it’s just going to be a light shade of grey. No one can explain it. No one is going to have the passion like you are.
Bring Value | What we designed upendPR to do would be to be very friendly to any brand who’s looking for a solution that’s about $2,000 or under.
What we designed upendPR to do would be to be very friendly to any brand who’s looking for a solution that’s about $2,000 or under. That’s the first thing. Knowing that and knowing that our target audience just doesn’t have a huge budget to do that, but yet they want results, what can we do? Instead of outsourcing everything to us, we work in conjunction with the founder, with the owner. Sometimes they are really busy, so we have to be very careful about giving them too much stuff to do. But what we want to focus on is say, “Look, if you want media exposure, it’s not that hard. We’re going to help make introductions, we’ve got access to all the software just like any other PR firm. We’re going to help design and write pitches with you so we can send to the media. We’re going to identify exactly who you should be communicating with. We’re going to make sure that your press kit and everything about your website communicates authority because that is going to improve our success rate. But at the final leg where you are actually going to start interacting with the journalist or the producer or the writer, whoever it is the influencer, we need to make sure that that communication comes from you,” because that’s the most authentic way of doing it.
A lot of journalists, and I worked as a journalist myself, see public relations people as a necessary evil. In most cases, PR people are just trying to sell you stuff. Our guard as a journalist, your guard is just up. You’re like, “Okay, someone is paying you to sell the blah blah blah.” I shut down a little bit when I get an email, unless it’s from a really, really big company that I know and love already. If it’s from a company I’ve never heard of, why would I interface with them? However, if I get an email from the founder of a startup and they’re like, “Hey, Josh. I’ve been following you on SavingsAngel for quite some time. I read your column. I’ve seen your TV segment, blah blah blah. I really love the emphasis that you put on helping consumers save money. You may or may not be interested, but we developed this service. I’m not sure if it would be a fit for your audience but it would be my dream to be able to, in some way, provide service or value to your audience, just because you’ve done so much for me.”
That pitch right there, your success rate just went from 10% to 20% up to 70% to 80% easily. Because you approached that influence or that producer, that journalist, as a fan. Their guard is down. Everyone wants to feel appreciated for their work. If you begin with appreciation and then you’re authentic about what your ask is, you start there, and then you also share, “The reason I thought of this is because I’ve gained so much from you. I’d really love just the opportunity to reciprocate in some way or be able to serve your audience in some way.” This is the most important thing, in terms of pitching, you have to remember, there is going to be an ask. Let’s say you’re pitching a blogger, now my recommendation, if you’re pitching a large prominent blogger or a social media person, you should not ask for anything in return. You just want to provide content.
As a matter of fact, I would go so far as to say these words, “I don’t need any links back. I don’t need any promotion. I don’t need any kind of traffic or anything. That’s not why I am doing this. I just love what I do and it would be a huge honor to be able to serve your audience.” Now, here’s what’s going to happen. Professionals will reciprocate. But you have to give them the space to reciprocate. I get emails all the time. You know why they’re doing it. They’re doing it just so they can have the incoming link juice. All influencers know exactly what you’re doing when you want to guest blog or whatever. If you just approach them and say, “Look, I’ve followed your blog. I really love it. I’ve learned so much. I specialize in this one very specific thing and it would be an honor for me to be able to serve your audience in some way.” You tell them, “I don’t need any links back.” You have given them the space to reward you back.
It’s almost like another way of silence, isn’t it? It’s the same space, the three to five seconds after you’ve asked someone if they want to buy. You’re giving someone space to decide if they want to have a link back or not.
[Tweet “Don’t be a ME monster”]
Yes. Again, you know what a professional is going to do? They’re absolutely going to hook you up. Sometimes amateur bloggers will forget, but all the professional ones I know, they’re not going to use your content and not source you. You just have to let them do that. It’s like if you’re at a social function and you’re networking, we’ve all been there, right? Where this one motor mouth, he’s a “ME” monster. You start talking with them saying, “Where are you from?” Then all of a sudden he just goes into robo pitch mode. It’s like you want to wave your hand in front of his face and go, “Is there anyone in there? Is there a human being?” Let’s have a conversation first and if it comes up naturally and organically about your product and service, that’s cool. But otherwise, just ease off on the selling machine there.
You said something earlier. Before I let you go Josh, I just want to really get into it just a tad, which is you’re complimenting someone about how great their blog is. I just want to encourage everybody to literally really prove that you’re being authentic by being specific. “I’m a big fan of your blog and one specific blog you wrote where you said X, Y and Z really resonated with me because I went through something similar or it helped me get over the death of my grandparent,” whatever it is. If you get that specific and personal, that means so much more than just saying, “I’m a fan.”
Yes, absolutely.
Josh, how can people follow you on social media? How can they learn more about upendPR.com? Any posts you want to recommend?
If you don’t mind, I actually prepared a gift for everybody too. I do a lot of work on Twitter and I love connecting with people on Twitter. I find it just such an efficient way of communicating and networking. I get so much business through Twitter. You can follow me @JoshElledge. If you Google me, Josh Elledge, you’ll find all kind of stuff about me. The gift I was going to give is I actually have a Twitter Publicity Mastery Course that I normally sell for $100. For those who are listening, please don’t post this on social media. This is only for people who have listened to this entire program. If you go to upendPR.com/pitch, it should fill in a coupon code for you. If it doesn’t, then just type in the word PITCH in the coupon box. That will give you that course for free.
Wow, that’s just generous. Thank you.
Yes, because I have just been so richly blessed by the connections that I have been able to make on Twitter. I think Twitter is confusing for a lot of people in that they just don’t really understand how to use it. They understand how to follow a hashtag during a presidential debate or a sports game or something like that. But wow is it powerful. That is probably one of the most important tools you can use to increase your own PR.
Thanks again, Josh. You’ve been a fantastic guest, as I knew you would be. I am honored that you decided to come on The Successful Pitch.
Thank you so much, John. The honor is mine.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- SavingsAngel.com
- SavingsAngel Show
- UpendPR.com
- The Seven Most Powerful Selling Secrets
- @JoshElledge
- UpendPR.com/pitch
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