You Suck at Intro Etiquette
An intro is worth its weight in gold. Don’t waste one by saying the wrong thing, or worse, not replying at all. Here are some notes on how to maximize your success in either sending or receiving intros.
Give Freely without Expectation
Those who “horde” contacts and are unwilling to provide intros are bad stewards to their community. Actively suggesting people that you might be able to intro someone to will not only build a positive relationship with them, but if done correctly, will build your relationship with those that you’re intro-ing them to as well.
Subject Lines Matter
I typically go with something like “Bob Smith <> Jim Jones”, or in the case of introducing two firms “Initech <> Intertrode”. If the symbols are too archaic for you, just make it clear that you’re introducing two parties without coming off like spam.
Grease the Wheels
A successful intro includes a personal touch. Find a commonality between the parties and share it. Do both people have kids in college? Maybe they like to Ski? Find something and use it.
Clearly State the Reason
It can be as simple as “Bob is looking for a contact at your firm, and given your shared passion for coffee, I thought you should get some!” Make sure all parties know who wants what and why you’re playing middleman.
To: email@example.com, firstname.lastname@example.org
Subject: Bob Smith <> Jim Jones
Hey Bob, how’s the knee?
Wanted to introduce you to Jim over at Intertrode. Jim’s been looking for some help on a bug related to the 2000 switch and when we discussed it I immediately thought of you. Jim and I worked together on that project last year and he is an avid skier like you, so I thought you’d get along great.
Jim, Bob is an old friend who has been with Initech forever and should be able to help with your UTC issues. If he gives you a hard time just remind him that I have photos of his college hairstyle. ;-D I’ll leave it to you to follow up.
Intro replies need to be timely. If you’re the one being introduced, it’s your job to reply, and now. If the person you’re being introduced to replies first, you’ve lost the game.
Personally, I love giving intros, but if someone I intro doesn’t reply before the intro-ee does, they’re going to have a hard time getting another one from me. Ever.
Respect the Risk Being Taken
An intro is not something to be taken lightly. The person making the introduction is expending political capital and providing an implicit reference for you. By not following through properly, you’re embarrassing the supplier and making yourself look bad to everyone involved.
Thank the Supplier
Establish your relationship with the person providing the intro by thanking them in your reply email. Something simple, like “Thanks Bob, I owe you a beer next time I’m in Chicago!” can go a long way to setting the tone of the discussion going forward.
Move the Supplier to BCC
This sounds trivial, but it matters. Very rarely does the person providing the intro want to be copied on every single follow up email. By moving the supplier to BCC (and saying so in the reply) you get a chance to acknowledge the supplier and let them know that you’ve replied while removing them from the ongoing thread.
Subject: RE: Bob Smith <> Jim Jones
Thanks Ed! Let’s grab lunch next week, my treat. (Moved to BCC)
Bob, nice to meet you! I’d love to pick your brain on this issue we’ve been having with conversion of UTC in our 2000 switch project. Can I buy you coffee later this week? I work downtown, happy to come to you.
This Isn’t Rocket Science
Overall, just be timely, use proper grammar, and don’t abuse the intro supplier’s generosity and you’ll be head and shoulders above the majority.
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“Priorities: Growth > Profit > Revenue > Eyeballs > Demo > Prototype > Pitch Deck > Idea > Funding”
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Ten lies entrepreneurs tell themselves
Startup founders spend so much time trying to convince others that their company is “crushing it” that sometimes we can convince ourselves of how easy it will be to succeed. Here are a few lies we tell ourselves.
1. "Once I get funding, it’ll all get easier." - Nope, it all just gets harder. If you are looking for easy I know some corporate recruiters that are hiring.
2. "I need the latest and greatest hardware." - No, you don’t. Some of the best stuff is written on the oldest gear. My first product (abject failure that it was) was written on a crappy Dell desktop and my dusty old MacBook (which, tank that it is, became my wife’s, eventually her parents’, and is still running today).
3. "I shouldn’t bug that person, they’re too busy." - Just ask. If they’re too busy and don’t reply, ask again. Ask until they say no.
4. "Social media is a good use of my time." - Probably not. A little goes a long way, but it followers don’t mean much if you don’t have anything to sell. Build it, then talk about it. If you’re big enough to need a real social media presence, you’re probably big enough to hire someone to handle it.
5. "Equity is cheap." - Oh you sweet summer child. You’ll only make this mistake once.
6. "It doesn’t matter what my customer thinks, I have a vision." - Customers can be a strange species, but if someone tells you something really off the wall, it’s probably worth spending a little more time to learn what the background story is.
7. "Splitting the equity evenly is the only fair thing to do." - It may sound like it, but eventually there’s going to be a decision that divides the team, make sure that there’s a clear leader with the power to make final decisions.
8. “Equity should be given to myself, my cofounders, and employees via direct grants.” - NO. DON’T DO IT. Have a vesting clause for everyone (potentially including yourself). You might love your cofounders but you never know when someone is going to abandon ship, meet a girl, or lose their mind.
9. "Big company X knows more than me." - Have you ever talked to someone at one of the big valley companies? They may have some smart cookies, but the spread isn’t that wide. Chances are you’ve got a an opportunity to go toe-to-toe with one of the big boys and make a dent.
10. "If I get on TechCrunch, I’ll be huge!" - Not quite. My companies have been on TechCrunch a few times (http://techcrunch.com/2010/10/08/60mo-gives-quickbooks-a-minty-dashboard/, http://techcrunch.com/2011/01/19/after-a-fateful-tweet-60mo-raises-series-a-from-lightbank-yo/, http://techcrunch.com/2012/05/03/freeagent-acquires-financial-software-startup-60mo-lands-investment-from-lightbank/, http://techcrunch.com/2010/02/04/microsoft-sharepoint-socialfest/, http://techcrunch.com/2009/01/23/2008-rearden-commerce-has-a-heck-of-a-year/). While the sheer amount of traffic that a TechCrunch post can represent is hugely appealing, I’ve found readers of tech blogs to be somewhat shallow in their interest. Of the tens of thousands of hits you might receive, only a small percentage will take the time to sign up for your product. An even smaller percentage will actually engage with your product, making the traction generated by a post on a major blog sexy, but ultimately of little value aside from hype.
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Six ways to maximize your accelerator experience
When joining an accelerator the experience can often be overwhelming, especially for first-time entrepreneurs. Here are six ways that you can get the most from your time at an accelerator.
Connections - The most valuable thing you’ll get from being a part of an accelerator class is the built-in access to smart people that have already built companies, raised money, and been through what you’re going through. You might even get connected with potential customers or partners so don’t hesitate to ask for intros if there’s a fit.
Guidance - If you think you know everything there is to know about what your company is going to face, you’re wrong. Be receptive of the guidance you’ll receive from mentors, accelerator team-members, and your fellow classmates. Don’t squander the opportunity to pick their brains, ask tough questions, and get insights into your business from a pair of fresh eyes.
Focus - For many first-time entrepreneurs an accelerator is an opportunity to focus on their business that they may not have experienced before. Don’t succumb to shiny object syndrome. Spurious pivots can cost more than just wasted time, they can leech off precious momentum and make advisors and investors nervous about your ability to follow through.
Productive Distractions - However, when an opportunity presents itself be prepared to take the leap and commit to a new path. Many of the people you’ll meet or the lessons you’ll learn will inspire you to new ways of thinking. Maybe the founder of another company could use your help, or a new market need will become evident by talking to customers.
Money - The money invested by accelerators is typically minimal in nature. Just enough to keep you in ramen while you get off the ground. This is really the least important direct value an accelerator brings to the table but indirectly it facilitates your ability to focus and is the basis around which you can build a valuation in the future.
Exposure - Along with the connections you’ll get will come exposure to a broad swath of the public. Many accelerator programs have built-in PR teams and your demo day equivalent can be a turning point in your business’s prospects. Be an extrovert and get your name out!
Remember, your time in the program is limited so take advantage of every moment. In a startup the time is your worst enemy and every tick of the clock brings your closer to running out of capital, momentum, and stamina.
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Leap Motion Controller Review and Thoughts on 3D Motion Control
When I preordered the Leap Motion controller, I knew that it was going to be a step toward the future of human / computer interaction. We’d all love to see the type of interface highlighted in Minority Report become mainstream, but what we don’t realize is how ingrained the mechanics of mouse / keyboard interaction have become in our daily lives.
I met the founders of Leap Motion at SXSW and got a chance to play with a pre-release prototype. In the somewhat structured environment, lighting, and applications, the product performed well and provided a surprising level of near-instinctual usability. When interacting with a simulated school of fish, you could move a proxy of your finger around slowly and they’d follow it, swarming in a roughly orb-like shape around the slowly glowing fingertip surrogate, or move your finger quickly and scare the virtual fish away, swimming in all directions. Very cool.
It was impressive. Truly, the most obvious opportunity for motion detection lies in video games. With the Kinect, the motion controller of the Wii, and PS Move, the concept is already mainstream. We’re likely to see continual expansion of the movement-as-controller theme in gaming for the foreseeable future. On the PC, however, we’ve seen very little traction in the space aside from a few apps that recognize gestures seen by your computer’s webcam (https://flutterapp.com/, http://www.pointgrab.com/, http://eyesight-tech.com/).
Enthusiasts have been hacking the Kinect to do amazing things (http://www.popsci.com/category/tags/kinect-hacks) for some time, and the platform appears to be ripe for becoming the standard, but the hardware has been said to be “inelegant”, and the API even less so.
Cue the Leap Motion. Bring a well engineered, simple piece of silver-clad hardware together with an above-average finger/hand/utensil tracking system and you’ve got a recipe for awesome that can’t be denied.
It is pretty awesome. After unboxing, I plugged in the controller (helpfully, two cable lengths are provided, though bluetooth will eventually be implemented), downloaded the software and went through the quick orientation.
The natural sunlight in my office seemed to wreak havoc on the sensors, but really, who needs sunlight, right? After closing the blinds, the interaction was as smooth as I had experienced when trying the controller before. The orientation was neat, and after setting up an account on their proprietary app store I got a chance to try a few of the apps out.
Cut the rope is just like you’ve experienced on touchscreens, though the finicky nature of keeping your finger where you want it, moving fast enough to cut the rope, but not so fast that the controller loses track of your finger can be a struggle. Holding your finger in place to select menu items proved more of a challenge than the actual game, and brings up the questions of which “click” convention is best, hover over time, or push by moving your finger forward in 3D space.
The Flocking app was nifty to play with again, but has limited longevity of interest.
I did install the Touchless app, which, while having huge potential, drove me a bit batty. Trying to control your PC with your hands sounds great, but is more difficult than it sounds. As an example, I tried to surf Reddit exclusively with the use of the Leap Motion and failed miserably. Not only are the links and buttons too small (even with using browser scaling) to accurately click, but scrolling with two fingers was a complete nightmare. I’d hold out two fingers, move them forward to touch the imaginary plane in 3D space, then drag up, then pull them back. Nine times out of ten I somehow flubbed the gesture, either not moving them far enough forward, or somehow holding my fingers in a such a way that the controller could no longer sense two distinct digits. To type (using my laptop’s built in keyboard) I had to reach over the controller, which somehow triggered the Spaces gesture, causing me to have to reselect the browser, ultimately having lost focus of the field I was trying to type in.
Most surprising was how much work holding your hand up is. I’m obviously out of shape, but the effort of holding my arm up to keep my fingers in place for an hour just to surf the web a little was enough to make me hold my right elbow up with my left arm as a ledge. Awkward.
Ultimately, the concept has legs. The future of interaction will likely have an increasingly motion-controlled element, but I don’t see hovering ethereal keyboards as a valid concept anytime soon. The tactile response of touching a key or clicking a mouse button is really a requirement of our current way of thinking.
In order for motion control to become a usable standard, there a few things that are going to take time to resolve.
- Training is going to be fundamental in driving 3D motion control to the mainstream. Touchscreen interaction is already making us think differently from the mouse and keyboard, just like typing slowly phased out penmanship as a desired skill, but touchscreens still have a tactile element. Training ourselves to focus on and interact with thin air will be a crucial step.
- Conventions need to emerge. I don’t think the current conventions for scrolling and clicking are going to cut it. The mouse and keyboard are the parent of touchscreen interaction, but I don’t believe that touchscreens are the parent of 3D motion control. It’s a whole new world, and as such, we need to rethink the concepts of hover, selection, scrolling, navigation from scratch.
- Acceptability is unsurprisingly an issue. Waving my hands around like a madman in the comfort of my darkened office only makes my dog curiously tilt her head, but in a Starbucks? Probably not going to fly. Until motion control is a bit more known and waving your arms around making gestures in public is accepted, it’s unlikely you’ll see it take off in the mainstream. Talking to Siri in public is one thing, but holding my hands out like a zombie in want of brains is quite another.
The Leap Motion is undoubtedly cool, and portends the direction of things to come, but if universal and ubiquitous motion control is the future, the future is a long way off.
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Reasons investors aren’t calling you back
You’ve gotta kiss a lot of frogs in life, and finding an investor to lead your funding round is no different. You will get rejected. Often.
Just like when you’re selling your product, fundraising requires suspension of disbelief on the part of the investor who is guaranteed to be skeptical of your pitch. In competitive markets, angel investors can get pitched hundreds of times a month, so it can take a lot to move the needle and get them interested.
Here are a few reasons you may not be inspiring them to get out their checkbooks:
Your idea is crap
Every idea is earth shattering in a vacuum. Only when exposed to external influences and compared to what’s going on in the rest of the market does the value of the idea become apparent.
Rare as truly novel business or product concepts are, when they do come along it’s nearly impossible to ignore their potential. Many investors long for the chance to get involved in a game-changer and are eager to capture the potential upside at a premium.
Most likely? Your idea is unoriginal and has low (or nil) intrinsic value. Does the world really need another location-based bar-discount mobile app?
Stop putting stock in the value of the “idea” and focus on identifying and aligning resources to execute on the idea.
You’re trying to boil the ocean
Stop trying to be everything to everyone. If your idea isn’t achievable with the resources available to you, you’re just spouting hot air and wasting the investor’s time.
It’s easy to get distracted by platform companies like Amazon, Salesforce, Google, Intuit, etc. who seem to have a product for everything. This has led to innumerable entrepreneurs thinking that they should pitch themselves as a company in the same vein.
In the past year I’ve met four different companies who want to be platforms for healthcare providers and patients to make appointments, file insurance claims, pay bills, and manage medical records. That’s great, and I can see the market need, but what piece are you going to do first? Unless you’re expecting to raise $2-3m up front, I don’t see how you can expect to execute a vision that broad. Start with the feature that represents the most market pain and grow from there.
Pitch what’s achievable and you’ll be taken more seriously. I promise.
You don’t have a team that can execute
So often I see “business people” pitching investors with nary more than a back of the envelope sketch of how the product might work. They don’t have any code written, and they don’t even have the team to write it. If you expect someone to write you a check without having the product built, at least showcase a team that can get it done.
Products don’t sell themselves (believe me, I’ve made that mistake). You will need a team member who is versed in sales. Even if your product is a free B2C app, you are going to need to sell someone someday.
Planning to run operations yourself? Good luck with that. Hope you know how to withhold and pay payroll taxes for all the cities your employees live in. Hope you’ve got experience in multi-nexus sales tax remittance. Ever set up a merchant account and done bookkeeping for thousands of transactions a month before? This is just the easy stuff; wait till you’ve got a team large enough to need an HR department.
Not sure who your lineup might be missing? When you’re chatting with an investor post-pitch, ask them “Who could we add to round out our team’s experience?” They’ll be happy to give you some thoughts and maybe even a few names.
You dismiss major competition
If you’re building a “marketplace for local services”, I’ve got news for you. It’s been done. Yes, you might be able to find a niche and carve out some significant revenue, but dismissing Yelp and Angie’s List (both publicly traded), as “non-factors” will not earn you the respect-for-bravado that you’re looking for. The right way to address direct competition is to focus on the specific reasons that your product is a better fit for the market, how you intend to compete against a significantly larger resource pool, and what you’ll do if/when you’re not able to get a foothold going toe-to-toe.
Also, maybe highlight historical acquisitions of start-up competitors and what the economics and terms looked like if a strategic exit is a potential scenario. No, you’re not planning to die on the vine and soft-land with your competition, but it happens more often than you’d expect. Be prepared.
You missed the boat on a fad
There is always a “hot” concept in the startup world. Whether it’s mobile calendar apps, photo sharing networks, stop-motion video apps, find-your-friend-at-a-bar apps, or whatever floats the market’s boat, these fads are quick to grow and even quicker to fade. When Instagram sold to Facebook, the market was inundated with new photo sharing apps and networks. People were pitching their unwritten projects for million dollar investments and talking about their “projected billion dollar exits” as if it was now commonplace to sell a revenue-less fledgling photo app for ten figures.
Here’s your rule of thumb. If you’ve noticed that there have been a lot of investments in the XYZ space, it’s too late for you to start a company in that space and take advantage of the hype. Chances are, by the time you notice it, the investors (and the tech press) are already tired of it.
You don’t have traction
Traction is unquantifiable. No specific number of users or monthly recurring revenue figure is going to magically make you investable, but growth is usually more important than anything else.
Having numbers to show is the first step. Making sure that your metrics (you have metrics, right?) are strategic and targeted toward your company’s goals is the next step. If you’re not currently focused on revenue and are in a land-grab competitive situation, then your metrics need to be concentrated on gaining new activations. Your traction is how many people have signed up for or used your product, how quickly that monthly (or weekly, or even daily) figure has increased, and how you project that as potential revenue down the road.
Some of the best pitches I’ve seen were one slide with a chart of number of activations per day shooting up and to the right. There’s just something about having traction that adds a magical quality to your pitch.
What can you showcase to potential investors? To me, the only valid answer is growth, but different investors like different things in different companies. A loosely prioritized list:
- Growth: How quickly are you adding users? What’s your monthly increase in revenue? It doesn’t really matter what it is, so much as the fact that it’s growing. Show a line chart with the classic hockeystick pointing up and to the right. Bonus points if the rate at which it’s growing is increasing as well.
- Profit: What’s your return on every dollar you spend? What’s your cost of acquisition compared to lifetime customer value? How many months does it take to recoup the acquisition cost? Bonus points if your return is getting higher or if you can lower acquisition cost through scale.
- Engagement: Whether you’re charging for your product or not, how much time and energy customers are putting into it is a great indicator of viability. What percentage of the feature-set is being used? How long on average are people using the product for each day? How does engagement relate to retention?
- Revenue: Bringing in cash is always great, but it’s almost worthless if you don’t know how much it’s costing you to bring it in. Just talking about revenue is a red flag for many investors because a $10m annual run rate sounds great until you have to disclose that it cost $20m to get it.
- Eyeballs: When you’re touting how many thousands of hits your site gets every day you’re really talking about potential revenue. No, you may not have figured out how to monetize all those eyeballs yet, but you will eventually and that’s what an investor is interested in. Even if you never monetize them, your eventual acquirer will want to, so you should present an idea of how it will be done and how much potential they hold.
You have the wrong attitude
Let’s be clear that no one owes you anything. They don’t owe you a meeting. They don’t owe you the benefit of the doubt. They certainly don’t owe you an investment.
A certain level of bravado is to be expected from entrepreneurs like us. We see the value in what we’re doing and use our confidence to try to convince others of it. We ignore the problems with our business and forge ahead seemingly unaware of the dangers that lie ahead. It’s when that personality trait gets out of control that we get ourselves in trouble.
You know your business better than anyone else, but be accepting of feedback and try to answer the tough questions that invariably get asked. Don’t get upset or condescend when someone doesn’t understand your business model. Don’t roll your eyes when the VC incessantly name-drops or mentions his private jet. Don’t freeze up when the projector won’t work with your laptop.
Would you invest in someone who was kind of a jerk? Probably not.
Your goals and motivations don’t align
Even if you’ve done everything right, there are plenty of reasons you wouldn’t get a call back. Most likely, your business didn’t fit the “themes” of the current fund. “Themes” is a loose term for the types, sizes, expected timeframes, and expected returns on any deal that the fund makes. Some funds might focus on network effect in B2C, while others focus on recurring revenue B2B, while others focus on freemium mobile apps with microtransaction monetization. Some funds only invest in pre-IPO businesses with $XXXm in revenue (but you only pitched them because your uncle knows a guy there right?).
Outside of fund themes fit, there are a ton of alignments that need to be evident before an investor will be interested. Make your intentions for the business known. Plan to IPO in ten years and retire in 30 years as CEO? Say so. Want to sell to Yahoo! within 18 months? Bring it up. Want to focus on product and design and bring in someone to run operations? That would be good to know.
If you’re pitching an institutional investment vehicle, whether a VC fund or a state economic development group, you need to understand the internal workings of the organization before showing up. What are the objectives? Who holds the reins? Are you pitching a VC who is approaching the end of a fund? What timeframe for exit is expected? The economics and politics behind venture funds can be exquisite in complexity, so do a little research and show up prepared.
Regardless, you need to be persistent
I can’t stress enough that to find the right investor you need to be determined. It takes literally hundreds of meetings and pitches to make a funding round happen, so be prepared for the long haul and don’t let the onslaught of “No”s discourage you. Learn from each failed pitch and adjust your messaging for the next one.
Remember that investor cash is just a means to an end. Raising money does not equal success; it simply acts as a tool to achieve it.
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