I received an email from one of my founders the other night that made me feel like a proud daddy. No, it wasn’t that they IPO’d, or raised $20 million, or closed a big deal, or got TechCrunch to wax poetic about how awesome they are. It was relating to me the support she was getting from fellow Resolute founders and how appreciative she was:
it’s almost 1am
I am on email with 3 Resolute founders
there are intros flying, advice coming and going, drinks and dinner being organized, calls scheduled, virtual hugs exchanged, + lots of talk about how we all need a freaking break
it feels AWESOME to have these people in my life. Fucking insanely awesome. I am having a high moment now and it’s thanks to you and I wanted to tell you.
At Resolute, we like to think/say our “value-add” is much less us and much more the community of founders we have brought together. And, as we have grown over the past 12 months to a community of 25 awesome founding teams, the connective tissue between founders is taking hold and a real support network is coming into place. Which is incredibly gratifying for me to see. Even more gratifying is when founders like Nataly reach out to thank me — even though the whole point is that it is really about them not me.
What is also cool is that Nataly is founder of Happier, Inc, “the Happiness Company.” And her email made me happier all day.
(reprinted from The Wall Street Journal).
The single best thing you can do to raise an angel round is find the right anchor investor. Just like wolves and sharks, angels often travel in packs. There’s the Google diaspora, the Paypal mafia, YC alums, liquid Facebookers, the list goes on. Your challenge is to break into one or more of these packs and then get spread around like a hot potato. Win over an angel who is well connected with one or more of these packs, or co-invests frequently with a group of other angels, and get him or her to introduce you around. While it might take you some time to find your anchor angel, once you do it will pay off in spades. And at in the end the yield on your time will be much higher than randomly meeting with dozens of folks who might write you a $15k check.
So who are these uber angels who can get your syndicate filled out in a snap? Unfortunately there’s no master list out there, so you’ll need to do your homework. Angellist obviously is the place to start, but don’t stop there. Talk to as many founders as you can and find out if they had an anchor investor who brought in a number of other angels. Ask angels themselves. Be resourceful. And then, once you’ve built a list of target anchors, focus your time on getting to them.
There is a great interview with Crispin, Porter + Bogusky CEO Andrew Keller on Think With Google. Here is a summary by way of some excerpted quotes:
The digital age, and social media in particular, have changed the social contract between people and brands. The expectation of the relationship has become far more intimate.
From a consumer’s point of view, social media and digital tools are more closely related to a brand’s products than a brand’s “advertising”. They are the company. That makes them huge branding opportunities but also liabilities as well. If you can create a digital tool that becomes an important part of people’s lives, you’ve connected people to a system they won’t ever leave.
[Before], “content” was seen as a go-between connecting humans through shared experiences, [and] “advertising” was something that was only ever able to stand next to the conversation. Now, great brands are that conversation, while entrepreneurs and start-ups are the new rock stars. The products they dream up and the motivations that drive them are culture’s new aspiration. So in the same way we take it for granted that films and songs are art and entertainment rather than products that need extensive advertising, a well-built brand can create that advantage for a product, giving it the same kind of social currency that can’t be ignored and doesn’t need to be “marketed.” The intimacy and opportunity of the digital age has been a huge contributor to this shift.
Keller’s point is a fundamental one. The shift from brand advertising as adjacent to the “conversation” to brands being that conversation (at least when done right) has such implications — not just for brands but also for innovators creating new platforms where that conversation will take place. One of the big opportunities in this shift is for entrepreneurs to build platforms where this conversation takes place, and to understand that their business model is not limited to brand advertising, but commerce itself. During the ’90′s people used to talk about the “3 C’s” of content, community and commerce. But the Internet as a medium hadn’t evolved to the point where the 3 legs of of the stool really were connected. Now, it has.
I had a board meeting yesterday with a company that is now about 4 months out from completing an accelerator program, and over the course of the meeting it became clear to me that there is a pretty distinct transition for a team exiting an accelerator program and becoming a funded seed stage startup. Here are a few of my observations:
- While obvious, it is worth pointing out that the goal line has moved. It is no longer demo day. It is building a successful business. You should think hard about what your next set of high level milestones are — most likely (though not necessarily) the milestones necessary for a successful Series A.
- During the accelerator program you likely are advised to focus on just one thing for a period of time, and then shift to another objective for the next period of time. You no longer have that luxury. You probably need to round out your team. You need to start worrying about scalability. You should be evolving your analytics to be measuring all the right metrics. You need to be experimenting not just with the product but with all available growth channels. You might be dealing with partnerships, and you (hopefully) are or soon will be dealing with customers. All are priorities from here on in.
- You need to evolve as CEO. While you should still have a “day job” that is deep in the weeds getting stuff done, you increasingly have a new job which requires you to pull your head out of the weeds and think on an altogether different plane. You are chief strategic officer — you need to be watching what is working and what is not, and defining and redefining the company’s vision and strategy. This requires an ability to shift back and forth between low-level tactical minutiae and bigger picture, longer term strategy. You need to start seeing short and medium term OKRs as dots along a line that goes further out to a plan and a vision for a thriving valuable business. If you haven’t done this before, it will be hard. Spend time with CEOs who have successfully made this transition.
- You are head of investor relations — which primarily means identifying all the areas where you need help and getting your board (if you have one) and investors to provide help where they can. It also means thinking about your next financing. You are chief people officer, in charge of recruiting and also dealing with the inevitable HR challenges.
- And, lest you forget, you also are the chief EXECUTIVE officer. This means you are the boss. You need to make hard decisions and rally the company behind those decisions. Whereas you and your co-founder(s) might have made all the decisions jointly, as your organization and business evolves it needs a single leader at the helm. You need to figure out how to redefine your working relationships with your co-founder(s).
If this is daunting, the good news is you don’t need to complete this transition overnight. But you need to do it pretty quickly. Particularly if you are a first time CEO, the best thing you can do is find a CEO mentor who can be a coach, advisor, confidante, listening ear. Being CEO can get pretty lonely, and it will help to have some company along the way.
Paul Graham just wrote a great post called Startup = Growth. Few would disagree with his premise — that the essence of a startup is fast growth.
Graham goes on to explain what I’d call the “YC Theory of Startup,” whereby a founder’s goal is to grow a certain percentage (say, 5%) per week, from the very outset. I don’t ascribe to this theory. The ability to grow very rapidly in the very early days does not correlate with strong sustained growth. Achieving product-market fit in a very small market can sustain phenomenal very early growth. In the YC Startup approach, a founder would be satisfied in the early days of this scenario and would not feel a need to question the size of the market he or she is going after:
“If they decide to grow at 7% a week and they hit that number, they’re successful for that week. There’s nothing more they need to do. But if they don’t hit it, they’ve failed in the only thing that mattered, and should be correspondingly alarmed.”
Rather than focus on defining a problem, building a solution, and hitting a 5-7% growth rate by Demo Day, personally I’d rather find founders who are more likely to have very high impact. Here is where Graham has some great wisdom:
“Usually successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them. Perhaps later they step back and notice they’ve found an idea in everyone else’s blind spot, and from that point make a deliberate effort to stay there. But at the moment when successful startups get started, much of the innovation is unconscious….What’s different about successful founders is that they can see different problems.”
For me, this is the takeaway from Graham’s post — the founders you want to back are ones who can see different problems.
Big congrats to @Seth and the @DJZ team on their launch of DJZ, as covered today in The New York Times! I’m thrilled to be a part of the team here; and thrilled that this marks the 6th time in our brief history that Resolute is backing a founder we’ve worked with before.
I’ve been a friend and fan of Seth’s way back to when he was a New Yorker. And, a story that is not widely known, Seth was in many ways that “Great Uncle” of Dogpatch Labs. It was Seth, as CEO of Social Media, who found the upstairs space at Pier 38, rehabbed it, and made it into what became the cool space it was. When we moved Dogpatch from the Dogpatch region of SF (did you ever wonder where the name came from?) to Pier 38, Seth was, literally, our landlord, and our partner in building the vibe that it became known for.
Then, of course, Polaris backed Seth and Billy Chasen in the venture originally called StickyBits that ultimately became Turntable.fm.
So much of this business is about the web of relationships and friendships you build over the years, and it is a great thing when you get to back someone over the course of their career. Thanks for the opportunity to be part of this journey!
Yesterday I tweeted a phrase I came across that strikes me as great imagery for seed stage entrepreneurs:
From small acorns might oaks grow.
It is a long, long journey from a seed stage startup to, using the metaphor, a Mighty Oak, but I do believe it makes a difference to have the Mighty Oak ambition from the outset. Founders aspiring to be Mighty Oaks typically take seriously the job of laying the right foundation for a strong company. This is a critical but increasingly overlooked aspect of the seed stage. Amidst the explosion of boot camps and accelerator programs, I worry that seed stage entrepreneurs today are largely focused on building the right slide deck and metrics for demo day (note to the audience: 100% week-over-week growth isn’t particularly meaningful when going from 10 to 20 users).
But, A great Demo Day pitch does not a Mighty Oak make.
In my experience, Might Oak founders are extraordinarily picky about the first generation of employees and keep the bar really, really high. They also focus a lot on culture, defining the startup’s mission and values early on. And while they foster a culture that is tolerant of mistakes and failures along the way, they imprint onto the fiber of the company a unifying aspiration to create something of lasting value and impact.
Challenge yourself to be a Mighty Oak founder. Who knows, you might actually get there.
Ben Horowitz had a characteristically great post last week, on GigaOm, called “A Good Place to Work.”
Lots of wisdom in there for entrepreneurs and operators, both as to why you should make your company a good place to work, and how.
But, as an incurable people-collector, something else stuck with me. In describing how Bill Campbell clearly built a good place to work at Go Computing, Ben refers to some of the great people who went on from Go to do great things. This, for me, is the ultimate sign of a good company — a company whose alumni make great entrepreneurs. By this standard, Netscape and PayPal were really good companies; Yahoo not so much.
Will LinkedIn, Facebook, Twitter, Zynga, Dropbox and Square prove to be good companies? That’s what I’m trying to figure out.
Today I read that Ben Lerer raised $13 million for Thrillist. Thrillist started as a newsletter for guys, but after acquiring JackThreads, it is now a really interesting content + commerce play.
It’s easy to see Thrillist and others as leveraging commerce to monetize an audience. But I prefer seeing them as a commerce play with lower acquisition costs.
Either way, content + commerce can be a winning strategy and is emerging as an early theme in the Resolute.VC portfolio. More on that to come.
The other day I was talking with a potential investor in my fund, and in the course of the conversation I took a fairly strong position that was a little outside today’s conventional wisdom. To which the potential investor said he really liked my conviction, which is something he looks for in fund managers.
Which got me thinking — conviction is something I look for as well in the entrepreneurs I back. Duh, right?
But it’s not as simple as it sounds.
It’s an awesome thing that it has become as easy and cheap as it is to start a business. But one of the more subtle downsides, at least for an investor, is that it requires less conviction to be an entrepreneur. Because the barriers are so low, the idea that it might be fun, interesting and/or cool to try a startup is enough of an incentive for many to give it a shot. Which is fine — but it’s not the same as an entrepreneur who has a borderline manic drive to attain his or her vision. I once blogged about the traits of successful entrepreneurs overlap with the definition of hypomania. And I still feel that way. For me, you gotta be just crazy enough to believe you can do something nobody else on the planet has — or at least think you’re gonna die trying.