My Pitch

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This week I did a presentation to ATDC's CapVenture class of 2010 on "honing your elevator pitch."  You can take a look at the deck on Slideshare.  The presentation covers three things.

The first is that you need to explain what you are doing to someone in three words. The typical reaction to this statement is that doing so is impossible because of the technical complexity of the offering. I don't buy that story. Find your three words.

The second was the creation of a simple one liner and adding a second line to create a positioning statement. The process that I follow is a combination of what Geoffery Moore's "Crossing the Chasm" and Chris Coleman's "The Green Banana Papers" (which I highly recommend for technical founders with little knowledge of marketing).

Finally I went through the elevator pitch.  We all need to change the name.  People don't talk in elevators. The construction of your elevator pitch needs to be between 75 and 120 words in seven or eight sentences. When you give the pitch as a speech it should last between 30 – 60 seconds.  I would lean toward the low end on all these parameters. The most important thing that no one tells anyone is that an elevator pitch is not really a pitch. It is typically a conversation that takes place in a sit down meeting over coffee or lunch.

So one of the interesting things about having a startup on the side is that you can use it as a living case study.  I used Socialytics as an example for all of the above.

Three words

Social media analytics.

One liner

Socialytics provides social media analytics to marketers so they can measure and improve social media marketing effectiveness.

The pitch

Social networking has become the number one activity on the Internet – ahead of email. As a result, social media is a fast growing marketing channel forecasted to reach $27 billion in five years. Very similar to online marketing in 1998, social media marketing is on the verge of a huge shift. Fans and followers are equivalent to the eyeballs of yesteryear. The vast majority of web marketing spend has moved to advertising vehicles that enable companies to measure return on investment. I believe the same thing is going to happen with social media. Socialytics is building the ability to measure and improve social media marketing effectiveness. Every marketer will require a product like ours.

The presentation and pitch were highly inspired by a must read article by Steve Blank.

I actually pitched Socialytics as part of the presentation. I have to tell you something. I give a lot of presentations and have no stage fear, but it was terrifying to get up in bunch of a bunch of people and pitch your idea. And this was after pitching to family, friends, and advisors over the course of the past four months.

But it went well.  While the pitch is far from perfect it seems to resonate.

August 26, 2010  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Presentations

Entrepreneur’s Eye Chart

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Entrepreneurs' Eye Chart

Please    (125 Point Type)

Give Me Money  (80 Point Type)

Because I Really    (40 PointType)

Really    (30 Point Type)

Need It.    (24 Point Type)

My Venture Can Make Both of Us Lots of Money    (18 Point Type)

If Only You Could Read My Wonderfully Compelling Presentation    (14 Point Type)


Courtesy of the wonderful folks with lots of money (and eye-strain) at Blue Rock Capital.

August 23, 2010  |  Comments  |  Tweet  |  Posted in Presentations, Venture Capital

Team Meme

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If you put Ron Conway and Paul Graham on a stage together talking about investing you learn some interesting things.  


At about the 23 minute mark of the video PG starts talking about team size. Four is bad. One is a bit better. Two and three teams seem to do best. This started quite the discussion across the Internet about startup teams. A part of that discussion is listed web log style below.

Technical Co-Founders Are A Myth; Michael Pope.

What To Look For In A Business Co-Founder; Jason Baptiste.

Business Cofounders Are A Dime A Dozen; Joshua Volz. 

The Magical Founding Team Mix For Web Startups; Dharmesh Shah.

As I said before this whole meme started, I like three.  You need a developer, most important person in the bunch. If you don't have a person that can build a functional product you are doomed. Number two is a a front end developer that can also design. Design is very important in this day and age. You need these folks to work together as a product team. A business person is nice but not necessary number three (tough thing for a business guy to say). This biz person needs a combination of what some of the links point out. The business person needs to bring money, the access to money, customer development skills, the ability to do deals, marketing skills, and a strong grasp of technology.

I also agree with lots of folks that it is easier to teach technical people business skills than business people technical skills. Lots of advisors and mentors that are willing to take talented technical folks under their wings and teach them the ropes.

How about you?  What are you looking for in a co-founder?

August 17, 2010  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Management, Startups

Razor the Nook

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So I was standing next to this friend of mine the other night when he casually mentioned that he might be joining the board of Barnes & Noble. My first reaction. Dude, the Nook has no chance. No one talks about the Nook. No one uses the Nook. I sit in a Barnes & Noble Starbucks quite a few days a week and I have never ever seen anyone even pause to look at the huge Nook display at the front of the store. You have to give that thing away to get anyone to use it. It's the only hope. Quite possibly Barnes & Nobles only hope not just in the eReader market but for their survival. In ten years there are not going to be any bookstores to walk into.

Well I get up the next day find out that Barnes has broken off talks with a gentleman named Ron Burkle to expand the B&N board by three seats, and that a judge had ruled against Burkle in his attempt to increase his ownership position at B&N. Ron Burkle is seriously rich. He is in the Forbes 100. He owns an investment company called Yucaipa.  

So quicker than you can say kindle Yucaipa started a proxy fight.  Mike McQuary, whom I worked with for a number of years, is on Yucaipa's slate of nominees for Barnes & Noble's board of directors.

If you are ever going to read SEC filings proxy statements are the best. Proxy statements filed by a party other than the registrant are the very best. They are full of intrigue. Buried with the proxy statement is this little gem:

In Yucaipa’s view, the B&N College acquisition (Barnes and Noble purchased B&N College for $514 million. B&N College just happened to be owned by the Barnes & Noble CEO and his wife) benefitted the Riggio family but does not make strategic sense for the Company. It gave Barnes & Noble over 600 retail textbook locations and essentially doubled the Company’s exposure to a “brick and mortar” market segment most at risk to technological changes, including increasing online textbook sales and digital textbook downloads. Yucaipa believes this capital could have been better and more timely utilized to support the Company’s digital media and e-books strategy.

Yucaipa understands the need to aggressively go after the e-books market.  And my bet is that McQuary is thinking the same way I am about what to do. Amazon wants to view Kindle as a business that will stand on its own. Apple is proud of the iPad. 

Barnes & Noble has got to get price/promotionally aggressive on the Nook. Is anybody asking for a Nook this Christmas? No. Change that by giving the things away on Black Friday with the purchase of x number of books. Treat the Nook cost as a marketing customer acquisition expense. With a small and shrinking market share a razor and blades strategy is B&N's only chance in the digital media and e-book world.

If they don't use it Barnes and Noble becomes Tower Records.  

August 16, 2010  |  Comments  |  Tweet  |  Posted in Business, Current Affairs, Marketing

Being Hacker-Centric

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As is often the case PG has an excellent essay up on “What Happened to Yahoo” (no exclamation point from him).

While the entire is a must read the money quote for me is:

Yahoo treated programming as a commodity. At Yahoo, user-facing software was controlled by product managers and designers. The job of programmers was just to take the work of the product managers and designers the final step, by translating it into code.

One obvious result of this practice was that when Yahoo built things, they often weren’t very good. But that wasn’t the worst problem. The worst problem was that they hired bad programmers.

In technology, once you have bad programmers, you’re doomed. I can’t think of an instance where a company has sunk into technical mediocrity and recovered. Good programmers want to work with other good programmers. So once the quality of programmers at your company starts to drop, you enter a death spiral from which there is no recovery.

Good stuff.  The question is how do you build a hacker-centric culture.  PG has some thoughts. I saw a good example this morning.

We are sitting around the kitchen counter eating breakfast when the Kokomo Kid asks “You know anything about SQL?”  “A little, why” was my cautious reply.

While it just so happens one of the companies where she works as a controller, QuantiSense, sent out a throw down challenge. Who is the best SQL expert? They distributed one of the tests that they give to developers when they are being interviewed. The test went to the entire staff. The entire staff was expected to complete it, including writing a little code snippet at the end.  So my wife, who is the part time controller, is reading SQL code and trying to determine the output of a command string.  It just so happens that the sample table had a few null values.  She could not determine how to treat them as different versions of SQL treat null values in different ways.

So my wife, the controller, who before this morning had never ever looked at a line of code in her life sent this note:

What variant of SQL are you using?  Don’t I need to know this in order to understand how Null values are treated?

 
When you get your controller to ask what version of SQL you are using to figure out the output of a query I would say that you might be on your way to building a hacker-centric culture.

 

 

August 13, 2010  |  Comments  |  Tweet  |  Posted in Business, Management, Startups

Think Small

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Sometime toward the end of the first quarter the deal dam broke. Lots of activity. Lots of term sheets. It seemed like these deals had something in common. There seemed to be a trend. So I did a little math. While I am by no means the MoneyTree I counted up 15 deals that had been funded in the past six months that I some knowledge of closing in Atlanta. All of them in the infotech space. Total of $24 million raised. Average deal size $1.6 million.  

It is interesting to break out the angel and venture deals.  Seven angel deals closed at an average round size off $508k. The smallest deal was $300, the largest $750. The VC deals averaged out to $2.6 million. 

The $2.5 venture round has made its way to the South. 

August 12, 2010  |  Comments  |  Tweet  |  Posted in Angels, Venture Capital

Scrappiness

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Well the folks over at TechDrawl are sure stirring things up these days. An article about the golden age of consumer focused startups morphing into a conversation about a constitutional amendment on the ballot in the fall concerning non-competes. Oh my!

But somewhere buried in those comments is this little gem by Wayt King:

I wrote checks totaling almost $1M to fund ATL startups. But the
quality of startup deals that I ran across was disappointing. So I
basically "gave up" at the end of 2009. Where are (were) the fundable
ATL-based web services startups, and why couldn't they figure out that I
was writing checks? IMHO, there is angel money available in Atlanta for
consumer web deals (though not via ATA); it's the scrappy entrepreneurs
who are in short supply. Stop complaining, quit your day job, burn the
ships, and "make something people want." Fail quickly, and do it again.
And again. Just Do It.

Wayt is making two points here that deserve more than just a passing comment. 

The first, which I have been advocating, is that there are not many fundable seed stage deals in Atlanta at the moment.  This is also supported by the recent change, and the stated reason for the change, in Shotput Ventures model.

The second, which is a little more disturbing, is that it is not just the overall quality of the startups but the scrappiness of the entrepreneurs.  Here is a guy that dropped a $1 million over the course of two years on seed stage startups, many of them in a very public manner, and he is not seeing deal flow. I am sure there will be some thoughts that he should be more public or easier to find or have a web page. I ain't buying it. An entrepreneur has to be smart enough and aggressive enough to find the person with the check.  Some points that back Wayt's assertion.

FoG is pretty well read by the Atlanta entrepreneurial community. You know how many people took me up on my open offer to help them work a deal to get funding? Zero.

I have written many times about Profounder, a seed-stage investment company where I am a special partner. You know how many entrepreneurs have asked me about the firm this year? Zero.

There are two conclusions I draw from this. The first, which I hope is true, is that entrepreneurs are becoming better educated about what a fundable company needs to look and feel like. The second, is that entrepreneurs need to get more creative and aggressive in uncovering the funding they need to grow their business.

Stop complaining.  Just do it.

August 11, 2010  |  Comments  |  Tweet  |  Posted in Angels, Entrepreneurship

You Have To Know

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One of my favorite blogs to read these days is 10,000 Startup Hours.  Quick and easy reads with tidbits of wisdom.    

There was a recent story on 10,000 that told about a conversation that David had eavesdropped on between a potential client and a web developer.  David concluded his post with "If you outsource the work without understanding it, you’ll get someone who is accustomed to saying “yes” over and over."

I am going to take this one further.  If you do not understand a critical function that you are outsourcing and possess the knowledge and skill to manage it closely you will fail.  If you don't know how to code, don't outsource development.  If you don't know how to work with the press, don't outsource public relations. Never ever have I seen this pulled off successfully.  And the one or two times I have seen it work out marginally OK, it has been a very painful learning process from a timing and money point of view.

Don't do it. 

August 10, 2010  |  Comments  |  Tweet  |  Posted in Entrepreneurship

Venture Here

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Venture Atlanta is Georgia's largest technology investor conference.  It connects emerging Georgia technology companies with top-tier angels, bankers, and venture capitalists.  This year the conference is taking place at the Georgia Aquarium on October 12th and 13th.  

Venture Atlanta is currently seeking technology businesses in all stages of growth that are currently raising or looking to raise capital within the next year. There is no cost to apply or present. Simply go complete the brief application and submit a two page executive summary. Applications close on Friday, August 20.

August 9, 2010  |  Comments  |  Tweet  |  Posted in Angels, Presentations, Venture Capital

Nonstarters

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From Merriam-Webster:

Main Entry: non·start·er

noun

Date: 1902

1 : one that does not start

2 : someone or something that is not productive or effective

I have been thinking of this word for sometime.  I see two different types of startups that are nonstarters on an almost daily basis.

The first is a team of technical co-founders that do not know how to sell or market.  They are not comfortable with it.  They have built something.  No one is using it.  They just need $250,000 to hire a sales guy or a marketing girl or they want to outsource to an agency. But they don't understand or want to understand customer acquisition.  They just need the $250k for SaM.

The second is the business guy or girl with an idea. A vision. Might be a good one but they have no skills to create a product out of their vision. Not only do they not have technical skills, they have never been involved in building a product.  They don't have any technical types in their networks and they are looking for some stranger to join their company as a co-founder and work for sweat equity.  Or they need $250,000 – $1.2 million to build the product.

These are both scenarios that do not start.  How to be more effective.

The tech team needs to invest the time to understand their potential customer buying motivations and putting together a prototype customer acquisition machine so they can gain some traction, revenue, and proof that they have a product that solves a real problem.

The business types either need to belly up to the bar with some personal credit card debt or use their personal network to make their way to a person that is willing and able to build a product prototype.  They will have proof they can actually make what they have been talking about and be able to get some customer feedback on the product direction.

If you can't build both a product and and a method to acquire customers there is no chance, no hope, for success.

 

August 6, 2010  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Startups