Author Archives: T.A. McCann

The Playbook – what the water (oceans and pools) taught me about entrepreneurship

Last week I was the featured guest on The Playbook, a series put on by Geekwire focusing on athletes turned entrepreneurs and the lessons they draw from sports. John Cook did a bunch of research about my swimming and sailing past and even dug up some dirt from my brother (we founded 2 companies together). It was a fun and personal conversation that gets at a lot of my past, present and even some future.

A good summary of the event is here — https://www.geekwire.com/2019/save-rupert-murdochs-finger-startup-lessons-entrepreneur-t-mccann/

Video of the whole session is here — https://youtu.be/e_7_kCuU4MI

And, we were lucky enough to have Guillaume Waitr there to do real-time sketching of the event and my key points.

Thanks to John Cook and the whole Geekwire crew for having me at the event and all you do to help the PNW ecosystem thrive!

A new podcast for entrepreneurs…

I’m a huge fan of Techstars. Brad Feld was one of my investors in Gist back in 2009, about the time that Techstars was getting off the ground and David Cohen and the Techstars fund is an investor in Rival IQ. I’ve mentored Techstars teams in Boulder, New York, LA and on every program we’ve had in Seattle since 2009. It’s been amazing to see their growth and impact they’ve had on the whole startup ecosystem.

So, I was honored when they wanted me to be one of the early guests on the Give First Podcast. It’s awesome to see them sharing even more knowledge and lessons learned from founders with the community. I hope you enjoy and share too.

Important things I’m not doing, yet (ITINDY)

When you talk to experienced investors and founders of startups, they tell you it’s all about “focus”, but how do you make that actionable and structured? As the business changes and evolves, a founder (you) will also get lots of ideas (some good, some bad) from your team, customers, investors, other companies…but how do you know when or if to act on these?

For me, I developed the ITINDY approach – which stands for “Important things I’m not doing, yet”. As the ideas with merit roll in, I add them to this list, acknowledging both their value (Important) and the fact that I am not losing my current focus to act on them (Randomizing) but I might in the future. Then, I set 2 types of milestones to review the list or specific items; one is “date based” like at the beginning of the quarter or June 1. The second type of milestone and the one we use most often is a “success metric” which could be achieved in the near future or never depending on how the business grows and how right our assumptions were. Examples would include revenue (X MRR), Y number of customers, a funding round > Z, the 10th new hire…all very specific and quantified. If you chose incorrectly on a market, pricing, a sales strategy…you might never achieve these metrics which is where the date-based milestone comes in, giving you an out to make major changes in strategy.

Often, as part of my strategic plan, I have these goals aligned, so they should happen around the same time assuming the business is growing as planned like; we should hit 50 customers, 25K MRR and our 10th hire around June 1. By setting this expectation for me, the team, my investors, even customers we all get into a good flow of the things that are “important now” and the things that might be important in the future and most importantly an expectation on when we’re going to discuss and decide about doing or leaving something on the list.  As we approach the date or success milestone, we also know it’s time to review, re-order the list and collect relevant data to make a decision, which drives a strategic planning session. FWIW, I usually do this in a Google Sheet where tab 1 is the high-level strategic plans and goals (months across the top, key priorities, and metrics down the side) and we keep ITINDY on a separate tab. As we reorder/group the list for strategic planning, it has a way of outlining who we need to hire next, what projects we want to fund (raise more money) or what major features to build.

I have used this method with really good success to keep the team aligned, working toward near-term goals, but with the expectation that we will keep evolving the business as a measured and methodical pace and avoid the proverbial “shiny penny” scenario. Stay focused and make your list!

P.S. – this will work for your personal life too.  For example, at some point I would like to teach at the college level, write a book, hike the TA trail in New Zealand, do a transatlantic crossing on a big multi-hull, land at Nairobi airport…and the list goes on.

5 questions to ask every VC (at the beginning and end of the first pitch meeting)

Raising money from VC’s creates a long-term relationship, so you may as well get a good understanding of each other and set up the foundation for a strong two-way dialog.  The VC needs you as much as you need them, so the discussions should feel balanced where you’re learning about each other on equal footing.  So, I suggest these questions to begin the first meeting and one important one at the end before you go.  Getting started…

I’ve done my general research on the firm but tell me a bit more about the current fund? They should answer with the fund size (e.g. 200M), when it was raised, total invested to date, the remainder left for follow-on investments.  Have they had any exits from the current fund (which companies, you can research later to find out how much they invested and likely returned)?  Does the fund has any specific theme or stage focus (seed, Series A…)?   Depending on the answers, you can get a sense of how likely they are to do new investments (you) and how the fund is performing so far (are they looking for some swing-for-the-fences (they have already done well on something or are very confident) or need safer bets).  If early in the fund life (they usually invest aggressively in years 1-4, then follow-on with good companies years 4-7 and need to return the fund in years 7-10, but are likely going out to raise new funds around year 5-7 depending on how it’s all been going) you get more latitude in both their interest and time to make the company work.  So, understanding where you fall in their overall cycle is important.

For  the last few investments you (partner) or the firm did, can you tell me about the dynamics?  This should include their check size, did they lead or follow someone else, how long did the process take from first meeting to a funding decision?  You are looking for a clear process, a timeline of 4-6 weeks (or less).

Can you tell me how the firm makes decisions?  This should include some generic dialog about the # of partners, who decides on what, when they have meetings (most on Monday’s) and how many deals they have in progress right now.  Make sure you have some sense of the pecking order of the partner you are working with and how many other people you will need to convince.  New guys have a harder time doing deals or they likely take longer as they want to satisfy everyone and/or doing safer bets, so tenure, rank and the recent success of the partner matters.

Is there any area where you think you/your firm adds unique or disproportionate value?  Most VC’s give you a bullshit answer about a big network, ability to connect you with X or Y and some help with building out your team.  If you hear some good specifics, you can be done with this question.  If you get vague answers (highly likely), you can press one further with, “If I talked to 2-3 of your CEOs (currently funded companies) what would they say is an area where you have been especially helpful?”  Again, you’re looking for some specifics and preferably in areas where you need help to grow your company.

Now do your pitch…keep it shorter than you think it should be (~30 mins), pause for questions along they way…don’t read your slides…focus on customer traction and specifics…make sure they know how much you are raising and where you are in the process… then…time to go for the close…

On a scale of 1-10, 10 being you’re going to give me term sheet Monday with no questions on valuation, based on what we’ve discussed, how would you score this opportunity? You’re likely to get some squirming on this one but wait for an answer.  If you sucked, you are likely to get a 5 or 6 (they are being kind and not telling you it’s really a 3).  7-8 is pretty good and you’re not likely to get a 9 or 10, but if so, awesome for you!  I usually follow this up with a “what would we need to do/focus on to get you to a 9?”  This pins them into quantifying the aspects where you need to improve, at least for their investment criteria.  In some cases, they will ask for things that you do not plan to do and be OK with that as VCs vary widely on their criteria which can be affected by many things, some in your control, many not so much.

With the answers to these questions in hand, you should have a very good sense of the likelihood of next steps or an investment.  With issues around fund dynamics, you’re not likely to change that (unless you are a 9 or 10).  For the areas to improve, keep the investor updated when you make marked progress in these areas, usually around customer traction, shipping product or team additions.  Regardless, this dialog has demonstrated that you have an interest in them, that you can ask specific questions and understand how the relationship might blossom.