Thinking, learning and just interested….

I just finished reading Brad Feld’s latest book, Startup Communities. While I encourage every entrepreneur to read it, it is even more important for anyone who wants to make their city better, more fun and creative by driving a culture of entrepreneurship and startups. There are lots of great anecdotes and examples from Boulder (where Brad lives) and other communities, but the most important lessons for me really boils down to taking action. It’s about the people in each community who invest their time and effort to start things that help entrepreneurs connect, share ideas and support each other. These people take initiative and act in ways best described by the Techstars Mentor Manifesto. I am lucky to be part of the Seattle scene and there are lots of people who are making our approach unique and valuable, so I say “thanks” to them, can I get an alleluia. Everyone plays a part but I wanted to call out a few people who’ve had significant impact on me and inspired me to do more.

• Andy Sack – Techstars – for bringing the program to Seattle, for fighting through cancer to keep it on track and for continued support of the process of starting new companies
• John Cook and Geekwire – for telling the world what we are doing and amplifying our messages
• Geoff Entress and Andy Liu – for often being the first people to write checks and inspiring us all to support companies with effort AND money
• Connie Shaw – University of Washington – for connecting the students- faculty and startup community and driving entrepreneurship into every corner of the U
• Marc Nager and the Startup Weekend crew – for making it easy for everyone to get started, learn on the job and for spreading those ideals across the globe
• Luni Libes – Fledge – for making us think harder about how we measure impact and social responsibility and making companies that really matter
• David Nilsson – EO Seattle – for bringing entrepreneurs from all areas together to get smarter and more connected
• Rand Fishkin – SeoMoz – for teaching us how you run SeoMoz and inspiring us all to be better leaders
• Brad Feld and Foundry Group – for writing it all down, investing in leading companies here in Seattle including Gist (mine), Cheezburger, Big Door, SeoMoz…and for putting the entrepreneur first.

As part of the community and someone who has benefited from all your hard work and commitment, I say “thank you”. We are better because of you!

image credit: http://hrfishbowl.com/2011/11/thank-you-yo/

Tomorrow is Demo Day at TechStars Seattle and the teams are readying their pitches for a group of prospective investors.   Following Demo Day, the pace of courting and closing investors will be super fast.  Here are 7 tips/actions I have been giving the teams to prepare for an effective and quick fundraising.

1. Create a Dropbox with all of your materials.  As you get solid investor interest, create a copy of the folder and share it with prospective investors.
   1. Powerpoint of your short (6 mins) and longer (60 minute) presentations (if you have a video pitch, include it as well)
   2. Product summary, features, roadmap… get the investor excited about what you are building
   3. Team background – includes the team bios and social profiles…help an investor get to know you better
   4. List of current/previous investors, mentors, advisors and contact info – they want to know who else is supporting you
   5. Customer/User testimonials/profiles – the voice of a customer is very powerful.  Show photos, bio info, how they found out about you, how long they have been using the product…If the customers are open to being a reference, note that as well
   6. Other supporting docs – this may include market reports, press mentions…anything that helps support your perspective on the market and/or size of the opportunity
   7. Funding docs – term sheets, closing docs…(ask your attorney) – once you get investor interest, you want them to have all the docs they need to review
2. Create an FAQ (frequently asked questions) – most investors will ask the same questions, at least to start off, and you should create tight, formal answers to these questions.  Have them in a doc so you can respond quickly (likely in email) when you get asked.  Include data and specifics where you can.  If you get the same question more than 3 times, create a solid answer and write it down.
3. Develop company profile pages.  You want to make sure users, investors, potential employees… can find you easily.
   1. Crunchbase
   2. Angel List
   3. Twitter
   4. If you have extra time;
      1. Facebook fan page
      2. LinkedIn company page
4. Develop a target investor list (Gdoc, spreadsheet) – Fundraising is a sales process and you should have a solid list of prospects.   The more focused you can be on who (best investors for your space, stage…) and why (because you are like X where they made money before) they should invest, the better.  Here is an example spreadsheet to get you started.  Make notes in the spreadsheet or you can use some lightweight CRM tool like Yesware (built right into Gmail).
5. Develop a kick-ass summary to be used for email introductions to potential investors.  This is likely 2-3 paragraphs, like an elevator pitch, but should be really dense with market data, progress/traction, links to the site, team credibility…Your advisors will use this to make intros.
6. Refine your “use of proceeds” pitch and supporting documents.  How will you spend the money?  How long will it last?  What goals do you expect to achieve by the next time you will need to raise money?  Most of your spend will likely be for people/headcount, so consider when and who you will hire and their impact on the burn-rate.  If you have significant areas of additional spend (e.g. marketing) be as specific as possible about what and when you plan to spend.  Investors want to know what they are “buying” into.
7. Mobilize your supporters (key influencers, investors, advisors…) to promote and accelerate the momentum. Make it easy for them to take action. Ask them (via email) to;
   1.  Follow, Promote, Share… your social pages, especially Angel List.  This will add credibility to your company and build awareness
   2. Add data and ideas to your Investor list 
   3. Make direct introductions to potential investors

Going deep and engaging with customers is a critical part of start-up success.  I recently did a talk on this at the Founders Institute outlining the ways I like to do this and with many examples from our early days at Gist.  If you are developing a new business idea, check this out.   Here is their description;

Inside FI gives you exclusive access inside the training sessions of the Founder Institute. To get updates when we release new videos, follow us onTwitter or subscribe to our weekly newsletter here. 

In this talk from Seattle Founder Institute, T.A. McCann highlights the importance of understanding both your customers and competitors in depth. He also stresses the value of knowing your influencers, being an expert in your space, and expanding your tribe by trading value for value.

http://fi.co/posts/703

Building a company requires building a tribe (team, advisors, investors, users, partners…). To build a tribe, you need to provide frequent updates to make sure everyone stays informed, aligned and energized.   But, keeping these groups informed is a technical challenge. So, when I found the guys at ThinkFuse (during Techstars) I was overjoyed and joined them as a mentor right away. Now, 2 years later they have been acquired by Salesforce (awesome for them) but are now planning to shut down the service on July 25 (sad for us).

So, to replace them for my team, the companies I advise and lots of other people I recommend the service to, I am now trying out;

http://15five.com/ – seems like it has much of the Thinkfuse with templates, email summary updates…

https://idonethis.com/ – which is really simple and easy to set up.

www.weeklydebrief.com – Aydin (CEO of Thinkfuse) reccomended it to me.

A Quora question on the same subject here – http://www.quora.com/Thinkfuse/Now-that-Thinkfuse-is-selling-to-Salesforce-what-are-some-other-options-for-easy-organized-team-status-reports

If you have a very large list (like customers or users), you can use http://mailchimp.com/ (we did at Gist for our marketing), but this is overkill for smaller teams, investors, partners…

Also playing with a Google doc/Google Group solution for this as well.

The real key is to be able to add a group of people, create template-based status updates, (the system sends updates via email to the group), allow people to respond to the email with comments (preferably in-line with) and everyone can see a history of the updates and comments. Clearly a simple email distrbution list can work too, but has none of the nifty features of these other solutions.  Still looking for the right way to build the tribe.

Other ideas?

I work with a lot of startups as a mentor, advisor and as a CEO on my own.  I am often asked about how, who and when to partner with other companies.  Here is what I usually say;

Don’t partner until you have product/market fit – It is very easy to be distracted by partners early in the life of a startup.  In these early days, you are still looking for the right blend of customer-value proposition, feature set and business model. Until you have this working pretty well (~10,000 users or 10 paying customers), I would not recommend doing much partnering.  Focus your very limited time and resources on building and iterating the product.  Once you know what you are all about and where it works, you will have a much cleaner story.

Don’t partner with other startups – Both companies are small and trying to find their way in the world.  They have high variability in what they are doing, when they could deliver and in what direction they are moving.   For partnerships to work, they generally take about 2-3 months to negotiate (if they are meaningful), easily 3 months to get implemented and then another 3-6 months before they start bearing fruit.  In that time (6-12 months) a startup could have easily changed direction a few times.  Here are some common scenarios that could happen during this timeframe:

• The startups move toward each other and become competitors (bad partnership).
• They move away from each other and then do not have the resources to deliver on what they agreed upon (bad partnership).
• In many cases, they run out of money and then all the hard work is for naught (bad partnership).

In addition, most startups have very limited working code or value (customers, market share, other partners…) so before partnering ask yourself what you will really attain from the partnership. Don’t get me wrong, partnering with other software companies (assuming you are a software company) can be a good idea if it’s the right fit. If you’ve decided partnering is right for your startup, here are a few tips to help.

Focus mostly on marketing managers – These are the people who control marketing budgets, sales conferences and events.  This is where you will acquire customers or market awareness.  These guys are also usually frustrated that the product teams are too slow in delivering certain features that they deem important to the market or customers, and are more eager to fill the void with partners like you.  They also know what is happening on the ground (vs. biz dev people who talk a good game but cannot actually make too much happen) and can give you a good view into what go-to-market programs are applicable.

Start small and informal – It is easiest to start with inclusion in a specific event or marketing program.  Get a tactical win and learn from it. Do not try to over-engineer a broad partnership before you understand how you will be marketed and what some potential customers think of the value of your combined solution.  I like to pick events as it is time-based and usually puts me directly in-touch with a bunch of the partners customers and often times carries some press potential as well.  Attempt to “get on stage” by being the “cool new thing” that a marketing manager can show off or at worst try to lead a session in your specific area of expertise.

Look for a lead customer example/win – Assuming you can get inclusion in a tactical event or program, try to identify 1-2 potential high profile customer wins.  You should be able to know from talking to the marketing manager who the important customers are at any given event and double your effort there to meet them and develop a game plan for success.  In parallel, find the “most innovative and aggressive customers” the partner has and try to get traction there.  They are not likely the biggest, but are more likely to try your solution, quickly.  Focus on two big ones and two innovative ones and do not let yourself get spread to others until you win there.  As you make progress, keep using the specific names and examples as you talk internally at the partner. For example, “we are working with (marketing manager) and (salesperson) to deliver a joint solution at (important and well known customer) to show off and promote (important customer/scenario) as a leader in the space.”  If you can do this, everybody wins.  If you can get interest, you can leverage this to expand with other sales/marketing people.  You will need to keep this rhetoric going in every venue you can find as you broaden the story and footprint inside the partner company.

Find areas that they think are important, but do not have committed resources – This can be an emerging trending area in the space (e.g. adding social media to CRM applications like we did at Gist) or an area where a major competitor has good traction.  Give marketing and sales managers (and your now joint customer) useful market data and examples of others who are having success.  You need to be seen as the expert in the space and having data, examples, news articles and references from other thought leaders makes the story all the more real and creates pressure on the partner to see you as strategic and critical to their success.

Focus on working code – Big companies are slow.  This goes for the company you are partnering with and their customers.  So, focus on real working code and demos of your stuff and theirs.   Nothing gets execs more excited than seeing something working and it really greases the sales cycle or on-stage marketing demos.  In the absence of working code, do a really good job of “coding in PPT” which would include high-quality mock ups of the solution you are proposing vs. a bunch of bullets on a slide.  Make people think it is real and they can deploy it tomorrow and keep in mind “tomorrow” for them may mean months vs. days.

Focus on public APIs – If you are partnering with someone on the data or service level (e.g. Facebook, Twitter, LinkedIn…) focus on working and public APIs.  Anyone with good data gets a hundred requests a day from random startups like you to get access to something special.  Even with a good VC connection, they are not likely to want to give this to you, so don’t ask, just focus on making something cool and meaningful using their existing APIs and then demonstrate what you could do if you had more.  Also, if you have real user data in phase one (using only public APIs) that is compelling (> 10,000 for B2B and 100,000 for consumer services) and/or clear market differentiation, you are more likely to get a meeting, but asking for anything special is going to slow everything way down.

Try to do everything with a handshake until you have traction – Contracts take a huge amount of time and are usually very expensive (legal fees, travel and time).  So, try to do your first trial runs without any agreements in place (other than a standard NDA using the big companies standard forms).  Focus on the market (customers and market awareness) vs. looking at each others code.  If you can get good interest from the market or customers, then you can start looking at something more formal or longer term, but wait until you get strong interest from ~5 customers, sales reps, marketing people…

Finally, partnering like other things in a startup is a competency.  So, to be good at it, everyone in the company should have an understanding of what is required, that you are choosing this as a key way to expand the business and that everyone (investors, marketing, dev, test…) should expect to be engaged to make it work.

Overall, I generally think time is way better spent focusing on your own product, your own users and iterating as quickly as you can without the distraction of partners.  Have a different opinion or success story, share it here.  If you choose to go after deep partnerships, I wish you the best of luck!

image credit – http://screenrant.com/dumb-dumber-sequel-farrelly-brothers-schrad-103620/