Jason does an impression of Trump
Brandon Brown, Grin
The founder needs to sell the product first before bringing onboard any sales representatives. We need to build out the play book first. PlayBook must help uncover the pain and map the pain to the problem and sell the solution to the company
Need to figure out how to spend money in the engine to generate more than proportionate sales. Sales Pods proposed winning by design. Individuals from sales and marketing functions that are depending on each other and grouped together as a team. Around 35K per month to build out a sales pod. Growth rate doubled.
Yosiat Gimbernard, Odoo
Presentation format
- Describes the difference between traditional ERP and single use case apps.
- EPR has high implementation cost. Single use case apps are all over the place
- Describes the pain of managing all the single use case apps.
- Focuses on product and usability
- 150,000 companies using Odoo
Roland Ligtenberg, Housecall Pro
The Viral evangelism loop characteristics. Always ask them how they hear about the company?
Once you have a base of users that are interacting more frequently with you, do start thinking about how to implement the evangelist program.
- buys product
- loyal customer
- helps you find other customers
- and helps find other evangelists.
Components
Written component
- Title of program
- Who we are targeting
- What they need to do to qualify
- needs to be objective / quantitative
- challenging but not unobtainable. Only the top 10% can qualify
- minimum 15 reviews with a 4.5 star average
- hijack the endowment effect
- Why should they do it
- exclusive. Its earned and not bought
- priority access
- generate status
- make sure you are listening to them and show them respect
- make sure you respond fast
Visual component
A soldier will fight long and hard when given a piece of ribbon. Give me enough medals and I will win the war.
- Need to give them a badge
- recognition
- offline: see them face to face so things are more impactful
- example
- meetups
- events
- Conferences
- Tradeshows
- mastermind events
- recognized in front of their peers
- small little tokens make it feel real
- online
- internal and external communities
- FB groups
- Forums
- Directory
- Spotlights
- Case studies
- Create assets
- makes it easy for them to brag
- leverage curiosity to increase virality
- allows for easy to reuse
- physical User certificates that is hand signed.
- give them Stickers they can put on their physical accessories
- their customers see it
- their competitors see it
- Create Facebook and Instagram content they could reuse
Ashley Whitehurst, Syndicates Launch
The investment funnel
- Online/Written Content
- In-Person Education
- Accelerator
- Syndicate – funding size 100K – 650K
- Lead
- Backer
- well connected high network individuals
- Startup
Syndicates are useful for closing the current round. Flexible investment amount.
Keeps your Cap table clean.
- Fees range from 10-15K so if lower than 250K not suitable
- Too slow 1month to close
- If privacy is an issue then don’t use it.
Minimum viable metric
- has syndicate lead
- investors lead for the round
- 50%+ of the current round closed
- 18-24 months of runway
- 50K MRR w/50%+ Mom Growth
- 10,000+DAUs w/5% + WoW growth
Due diligence
- P&L
- Org chart
- Cap Table
- Lack of vesting schedule
- Founders is fully vested
- Dead weight on the cap table – owns more than 10% of the equity that is no longer contributing
- founder is the only full time employee
- Detailed bank statements
- low bank balance
- paying personal rent out of the company
- slow growth
- Founder Q&A via webinar
- 70+ investors
- Need a FAQ documentation
- 30% about product
- 25% about performance
Why syndicate investors are passing
- usually just invest in the founder
- lack of moat
- valuation is too high
- market is not too big
- not part of his investment thesis
The wire and sign for banks it a painful process. Vacations and burning man get in the way.
Investor qualification
- making more than USD200K per year or
- asset has more than USD1million
Aileen Lee, Cowboy Ventures
Worked with Mary Maker who is one of the world’s class research analyst. The willingness to have conviction and willingness to standup on what you think when no one else believes it. The early believer of Amazon.
Current trends
While software is eating the world. A lot of the companies that do not have profit margin structure of software companies are being invested as if they are software companies. WeWork is one of those classic examples. Its becoming hard to raise money for businesses and for certain people. Ratios will collapse.
We are in major tech trend right now. Priorly was social which made marketing easy. Cloud, SaaS and mobile made it easy for people to dislodge competitors. These trends are around 15 years old already. Investors are always ready to deploy cash.
War chest strategy
Real Estate Tech was an up and rising trend which allowed the ability to deploy capital. There is too much money chasing too little opportunity. WeWork has something physical so it feels easier to value, aka real world virality like Uber.
For 5 to 10 years the ecosystem has been in this war chest strategy paradigm. Investors invest in growth. They were willing to fund 20% growth versus 10% while burning more. It pushes the founders to take the money and promise the moon or blow up trying.
The risk is asymmetrical between investors versus founders and employees, since investors just need to make sure one company makes it while the latter group are all in.
Slow and steady growth
The slow and steady growth examples. Founders firmly believe their products are differentiated and don’t want to pretend to be something they are not.
Choice between these two tracks is based on personality of founder and investor expectation.
Due to the prevalence of war chest strategy the environment has became really sharky.
Dollar shave club
What is the biggest risk and who can address the risk. Micheal the cofounder was able to address the risk for the consumer digital marketing company. The category was open for disruption due to the way its currently being sold. Razors were easy to ship. Patents were expiring.
Mindset
Just find one or two of the right investor to invest in the company. Don’t have to waste time listening to how other founders are killing it. Just focus on the batting average.
Need to have a unique insight into the market or a technology twist. A lot of the markets are well understood.
Lack of diversity in the VC
Most funds right now are private and very small. Most VCs don’t have friends who are not white and not male.
The easiest way to fix the problem was to start her own firm. She was a venture backed CEO. Sales reps report progress and attend a lot of meetings but didn’t close.
Lots of people rejected her while raising money for CowBoy ventures. Most have never invested in a single founder and single GP fund. The three funds are from the same set of LPs so not much need to look for new LPs.
White men are hired on a promise and women/minorities are hired from the past.
Founders need to consider how they signal the market to change this trend.
Lipsyncing
Hiring female partners who don’t have cheque writing ability.
Macro economic trends
Concerned about our industry taking money from Saudi Arabia
Investor assessment criteria
- tight presentation
- founder understands product and market
- Clear revenue model
- huge potential market
Guillaume Cabane, Growth Advisor at G2
Key to success product and distribution
For distribution, create a distribution moat.
Distribution channel saturation.
Google CTR is dropping
Facebook has finite inventory. Cost per click has increased by 50% within the past 5 years. Not going to be viable comparing against LTV of customers.
Move beyond average. Forecast the value of each customer in the funnel and choose the right acquisition approach.
- Self service
- Enterprise
- Budget per lead
Levels of influence in a purchasing decision
- business colleagues
- community
- marketeer
- sales person
outbound emails need to inject personalization by using their logo, their font, their screenshot.
Use clearbit to predict who is coming to the site. If potential high value customer make chat available. Drive engagement to hijack reciprocity.
Create an engagement that is cheap, qualified and memorable.
If selling complex product, remove pricing to avoid anchoring which makes it hard for sales people.
Test different UVP with very different valuation.
Enterprise B2B hard to use Facebook. Send data back to Facebook to train their ML ad model using our forecast.
Once converted users to dollar, then instead of tracking number of people converted then track how much dollar converted.
Nate Smith, CTO Lever
how to hire people?
Don’t write job description. It’s useless. Candidates just ignore them. Write the impact overtime. 1 month, 3 month and 1 year.
Hiring the candidates for roles once you understand. Helps interviewers evaluate
Saves time.
What they will own. What they will teach. What they will learn.
Really need to horn your pitch and track them via a CRM. Keep selling them the culture. Make sure to chat verbally before providing a written offer.
Sara Deahpande, Maven Ventures
Levers to optimize funding round
speed:
process is in your control. Leverage momentum. Keep the investors informed in the process. You are always raising.
investor fit:
individual partners and firms reputation/brand as a working partner. stage and sector focus for the investor. chemistry
size of round:
start with how much you need. What milestones you will hit and how long that runway will be.
valuation:
make sure not too high otherwise will be hard to justify the valuation of the next round. They might have ownership level requirements and how much they need to deploy
Example
10% ownership at seed
20-25% ownership at A round
Trade offs.
valuation versus investor fit. Round size vs valuation. Speed versus valuation.
The success of the underlying business is the most critical criteria to even consider raising money.
VC operations
Assuming 50 million USD fund.
Timelines
- First 3 years to deploy
- 10 years to generate returns
Fund allocation
- 20% for operating costs and fees (USD 10 million)
- 40% reserves for follow on rounds (USD 20 million)
- 40% for writing initial checks to spread over 20 companies to generate yield for LPs. Aka USD1 million each. (USD 20 million)
Payout
- LP expect 3X returns on the original 100% investment
- 20% carry on returns
Industry benchmark
A strong return of an upper quartile VC firm for USD50 million injection will return 175 million which is 4.4X returns.
viable exit scenarios
Scenario 1 for USD50 million returns
- zero dilution
- 500 million exit
- 10% ownership
scenario 2 for USD50 million returns
- 50% dilution,
- USD1 billion exit,
- 10% ownership
