This week was the last "normal" week in Techstars, before the pitch practice madness begins. The final week was full of workshops, with the last workshop on Friday, and the topics varied from selling techniques, to common VC (venture capital) pitch mistakes, to PR (public relations) strategy.Read More
After dipping briefly following Mentor Madness (at least in feel), the pace here has started to noticeably increase again. That mostly means founders and teams have less time for distractions, and are putting in even longer hours than usual. New product is being shipped, and more time is being dedicated to fundraising and sales, in preparation for Demo Day. As such, the focus this week was mostly on product development, and putting more pressure on growth.Read More
Phil Libin has been tweeting VC pitch tips that are pure gold the last few months, and given we're coming up to Demo Day here at Techstars Boston (May 25, you're invited!), it seemed a particularly good time to highlight some of the best. This post is modeled on one from Stelios Constantinides called Paul Graham's Startup Advice for the Lazy, and curated with a Demo Day presentation in mind.
Demo Day VC Pitch Tips:
- Why this? Why you? Why now?
- Label your axes.
- When you're practicing the presentation in your head and you think you might apologize for some part of it, fix it instead.
- Put aside financial interest and describe what the world looks like if your startup is successful. Make us want to live there.
- Use your company name and logo intentionally and only when you want to have an impact. Don't waste them on your slide masters.
- It's ok to be nervous and awkward. We're looking for authenticity, originality, energy, infatuation and mastery; not polish.
- You won't get credit for hedging your bets; that's why we have portfolios. Build your startup around a sharp point of view.
- Don't read your slides.
- Even if this is the hundredth time, try to remember what you felt like the first time you pitched this idea. Do it like that.
- Humility > bragging > false humility.
- Clouds of random logos; whether customers, competitors, partners or previous experience; are not effective slides. Rethink.
- Try this: delete all logos, clip art and bullets from your deck. What's left is what VCs actually remember. Is it good enough?
- Retention better than growth as early predictor of startup success because it's less effected by hype. Engagement is 2nd best.
- Finish early.
- Bullet points often mask incoherent trains of thought. Rewrite as complete sentences t see where you're fooling yourself.
- Don't rely on partnerships to reach your early adopters. Maybe a good way to scale, but a bad way to start. Do it yourself.
- Try not to violate more than one long-established, conventional wisdom, unquestioned truth at a time. Or less than one.
- Unless you really, really know what you're doing, please stay away from the font menu.
- Speak at your normal pace. If you find yourself struggling to get through the deck on time, cut slides. Better than rushing.
- These are words you don't need to use anymore: "SaaS", "Cloud", "Mobile". "Blockchain" is borderline.
- It's really weird to add up the years of experience of each member of your startup team and present it as a single number.
- If you get knocked off your script, don't rush to get back to the slides; good opportunity to show you really know the problem.
- Be rigorously optimistic: Believe that the world will get better. Know that it’s your job to improve it. Have a plan to do so.
- This should go without saying, but please don't trash talk your customers... You know what? Go ahead. Makes my job easier.
- Hide the bullet marks from a slide. Look stupid? You wrote some jargo-gibberish and the dots were tricking your brain. Rewrite.
- Quick bursts from external events, like an AppStore promo, are great, but evidence of sustained growth is much more persuasive.
- Great products aren't neutral. They have a strong point of view inextricably tied to every design decision.
- Make sure your CAC ain't whack, yo.
- Eschew industry jargon, even when everyone else babbles it. It doesn't show mastery and it makes you blend in, not stand out.
- Anonymous customer testimonials feel dishonest. Ask for permission to use real names or omit.
- Products that help people do something good are generally more interesting than ones that try to prevent something bad.
- You don't have to open with a joke.
- When measuring retention, try to eliminate early noise. Something like: what % of week 2 users are still active in week 4?
- For just about any metric, an improving trend is more interesting, and predictive of long term success, than a single point.
- Every slide you show dilutes the impact of every other slide. Keep this in mind when deciding what to include in your deck.
- If you're going to list advisors on your team slide, be prepared to talk about what advice they're giving you.
- The world probably doesn't need more ads. Smarter, better, fewer: sure.
- Design your deck with the right empathy point: optimize for the experience of the audience, not the comfort of the presenter.
- Don't fetishize "disruption"; it's a side-effect of successful innovation, not the goal. Focus on creating big new value.
- Don't worry about raising too much; you won't regret more cash in the bank, even with dilution. Worry about spending too much.
While I didn't get to reflect on Techstars during the last couple weeks as much as I would have liked, given that I was traveling back to Montreal and Nova Scotia on the weekends, last week was yet another week full of learning. And while the title of this post is Fundraising, we aren't really there yet. But the workshops at Techstars were focused here this week, and they were so good they deserved the title.
We had fewer sponsors this week, which let all of us (including Associates) really get into our work, and we had another couple great workshops and Founder Stories.
This workshop, while perhaps not the most interesting of topics, was very useful. The workshop focused on modeling different investment and cap table scenarios and the resulting equity distributions. The bottom lines:
- You need to understand in detail all the implications all term sheets you consider, including the future consequences with your likely fundraising milestones.
- Beware taking a lot of convertible notes - this can kill you down the road.
- Pre-money vs. post-money has major implications for every deal you do, but make sure you know all the different situations it applies, as they're often wider than most people think.
- The combination of employee equity pools, equity guarantees (for things like accelerators), and high amounts of capped convertible debt can spell disaster for founders, so make sure you don't end up in this situation.
- The investors you're dealing with have done this a hundred times; get a mentor and/or lawyer who is equal to the task and has your best interests in mind.
The bottom line here is that with a few small mistakes in interpretation, you can end up with very little equity. Don't take fundraising of any kind trivially.
This workshop was given by David Cohen, and was the single best resource I've ever been exposed to on closing an investor. I'm still trying to find some public resources to share since it's so good, but for now here are some tips (keep in mind this is based on Techstars companies only):
- You should have an amount of money to raise as your target (call it 'T'), and should 'know' that you can exceed this target. In other words, the overask is the killer in fundraising.
- If you have a demo day coming up, you should be aiming to have at least 1/3 of T committed going in.
- Ask investors you have developed relationship with to "help you" by committing early.
- Don't ask them to lead, just to commit.
- Make it safe for them to commit (ie. no cheque required).
- "Soft commit": agreement to invest specific amount of money with specific, well understood conditions.
- Example of one condition: "I can't commit without the valuation." "Will you commit, assuming the valuation is ultimately acceptable to you?" - provide the "out".
- Practice active listening to get to commitment.
- Your job is to remove concern, not solve it.
- Once condition is mentioned, write it down, repeat, ask if you got it right, ask what else.
- Your goal is an exhaustive list of conditions under which they will invest.
- Ask clearly for the commitment at the end:
- "So, assuming [condition 1], [condition 2], [condition 3] are met, I understand you are willing to commit $[___]."
- Ask if you can use their name when talking with other investors.
- Enjoy having your lead investor!
Okay, so it's not quite that simple. But the active listening, and removing concerns was a huge revelation for me. Everyone will tell you that once you have a lead investor, things become considerably easier, as investors like to invest with others, but this is the best methodology I've ever seen for getting the soft commit you need to get other investors on board. Enjoy!
While the details of this story, as with all Founder Stories, are kept among those who are present when they are told, this was one of the more amazing stories. Tom Leighton from Akamai, a company which has been through a bunch of ups and downs on all sides of the business, from the valuation to the leadership, shared his story with us, and some of the most amazing takeaways I got were based on Tom himself:
- Being humble, kind, and extremely successful are not mutually exclusive. To the contrary, I think that a disproportionate number of great entrepreneurs are good people, and Tom is a great example of that.
- Leadership and the ability to be a CEO can be learned; the caveat is that it might take time. Tom himself was with the company for many years before stepping into the role.
- Culture and hiring is extremely important to the company; on the topic of navigating crisis, breaking bad news, or other general obstacles for the ups and downs of a startup company are often a non-issue when you have a great team made of great people.
- You have to be lucky to be good, and good to be lucky. This old cliché holds true for most aspects of life - but you need to always be positioned to take advantage of opportunities that come your way. Often they can be the break you need to get ahead, or to keep the company alive period.
If you're more interested in the story, check out this book:
- No Better Time: The Brief, Remarkable Life of Danny Lewin, the Genius Who Transformed the Internet - Molly Raskin
Airplanes & Productivity
I flew home this past weekend for a funeral, which while obviously a sad occasion, provided me some much-needed reading time during my flights. I was once again reminded how valuable carving out undisturbed time to read and learn can be. During one ninety-minute flight, and the last three quarters of a book (Traction, in this case), I had the best ideation session of the past several weeks (maybe even months), and no doubt it was the lack of distractions aside from my book, notepad and pen.
Whenever you can, make sure to escape somewhere to take some time to read and think. And don't just hope it happens - schedule it in your day.
The books I finished recently:
- Traction: A Startup Guide to Getting Customers
- The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
Until next week!
This was the last week of Mentor Madness at Techstars Boston, and for the most part, everyone was breathing a sigh of relief. Usually investors are the last ones to participate, so despite being near the end, you still have to on your game. That also meant that Workshops began; Workshops are often lead by mentors on topics in their area of expertise, and generally follow the focus of the program: Build Team, Build Product, Growth.
This week we had two:
- Customer Interviewing: this was a detailed presentation of how to set up customer interviews, the right questions to ask, and the questions to avoid, with an example interview done in the middle. Super useful.
- The Power of the Network: a summary of how to leverage the Techstars network, and the associated tools, which include LinkedIn. Again, super useful, and Techstars does a great job of utilizing their network in general. While the opinions I've received on the topic are obviously biased, many would argue it's the most valuable network for entrepreneurs globally.
So, we'll start with those.
I think this is probably one of the most overlooked skills in the entire of entrepreneurship. Not only can customer interviews help chart your product development, sales strategy, and basically every consumer-related aspect of your business, but this is where you can find out if your startup idea is worth something in the first place.
The key takeaways:
- Surveys can serve as validation tools, and that's about it.
- Be as vague as possible to start - don't tell them what industry you're in, even remotely what your startup does.
- Good interviewing is good listening - you want them to tell stories.
- Stay away from 'shallow' (yes/no) questions.
- Avoid "have you ever had ____ problem".
- Always go for more "tell me about the challenges you've had with _____" (ex. note-taking).
- Interviews should be conducted with two people, one who is clearly in charge and one who is taking notes - can enter conversation occasionally by asking "do you mind if I ask a question?".
- You always want to dig deeper and get the stories; good follow-up questions include things like "why?" and "how often does this happen?".
- Wait for the other person to speak and elaborate themselves - using silence is important.
- Get people to demonstrate their stories and experiences if possible - you can then ask questions based on the demonstration.
- Approach interview as "how can I disprove my core assumptions?" - don't be married to your value proposition.
- Try and find the current way this person is solving your problem.
- Can source interview people from Craigslist, Taskrabbit - you should be getting valuable information after 2 or 3 if you're doing it right, and you shouldn't have a problem filling more than 45 minutes.
Power of the Network - Techstars & Otherwise
While some of this workshop spoke about how to best leverage the Techstars network specifically, there was a lot to be gained from the LinkedIn and general networking advice:
- Spend 10 minutes every day responding to points of contact (on LinkedIn) - congratulate people on new jobs, introduce them to someone you know in their new city, comment on their post, etc. (Go to My Network > Connections to see updates).
- Publish blog posts on LinkedIn - particularly if you post elsewhere too; it's a great way to show off your skills to people, and to dictate your own specialties and positioning.
- Little-used feature - you can keep notes that are private to you on first-level connections - just look at their profile and you'll see the option below their header.
- Use Conspire to get introductions. Look for lowest number of people in pathway, not necessarily strongest.
- Go to My Network > Connections > Settings to integrate with other services.
- University affiliation is a great way to turn a conversation from cold to warm, and is underutilized; check out the Advanced Search in detail.
- Use My Network > Find Alumni to source talent, or VCs/investors.
- Search former employees of a certain company to get intelligence and background information.
- Look at who has viewed your profile - if you don't have the right people viewing it, change your profile.
- Use your skill endorsements as a gauge for how other people view your skill set and expertise.
- Look at who is the most-viewed in your network - they have the highest social influence and capital; utilize this.
I won't say much about the Founder Stories this week, since they were so personal and emotional. That being said, they did really drive home a few key points for me:
- There is more to life than startups, or career success, or pretty much anything except family and loved ones. Never lose perspective.
- Desperation is a great motivator; use it as a tool (and by this, I mean implement it artificially whenever possible).
- The arguments against immigrants in any country are stupid. From an economic standpoint, they create disproportionate value. Aside from that, see point 1 - these are all people seeking the same things as you are.
- Obstacles are just that - obstacles. And yours are probably much less daunting than many that many, many, other people have faced and overcome. In other words, if you think your life is hard, it probably isn't.
- People are amazingly resilient.
I'll use the opportunity to point back to one of my favorite articles from Paul Graham, titled Life Is Short.
The end of Mentor Madness is a net positive for me, and I'll probably dedicate a separate post or two to the whole process. In the meantime, you can refer to Deb McGargle's post about it.
If you haven't read any Techstars posts yet, start with my summary of Techstars Week 1. This was another Mentor Madness week at Techstars, and while the pace picked up even further both in terms of number of sessions and mentors, the productivity in the sessions improved even more. A combination of better mentors and a better understanding on both sides of how to make the most of the sessions made this possible. And for those of us sitting in on the meetings, there was even more to be learned - particularly on the subject of sales, and why you should have them.
"I'd rather sell something I have to build, than build something I have to sell"
...was my favorite quote of the week. And it summarized the sentiment of many of the mentors; get out and sell! Not that teams aren't doing it already. But as one mentor pointedly asked, "Are you a product founder or a sales founder?"; the answer, more often than not, was product founder. But in my opinion, the sales founder (or manager) is critical, and will more often than not determine the outcome of the company in the early stages more than the product founder.
On more than one occasion, when the root of an issue, problem or roadblock was reached, the result was founders realizing they don't need to build the next feature, or refine the product, or build the sales team, or anything else, besides actually selling.
Big Teams Help Early Sales in Techstars
More often than not, those teams which are doing the most selling are those who are larger. The bigger teams (10-16 people) have personnel who are dedicated to selling, and don't have to be involved in the day-to-day operations of Techstars, including Mentor Madness meetings, and the result is that they are selling full-time. Smaller teams struggle to find the time and resources to get all the tasks done they would like, and sales often suffers as a result. Even within these teams, mentors often felt that sales should be a higher priority, and while it sometimes may be a time-consuming or frustrating process (meetings, calls, emails, etc. don't always feel productive), ultimately sales are the strongest metric and validation of your product or idea, and key to ongoing success in the business.
(Caveat: often larger teams are large because they've figured out selling.)
Generally, this week, the advantages of having a great salesperson, or people within the team dedicated to selling full-time were particularly noticeable. If you can build a larger founding group, or at least one that has one completely sales-dedicated person, it will pay off down the road. Alternatively, some of the teams here have realized that the CEO/founder(s) is not a strong sales person, have brought in dedicated salespeople, and have quickly seen the rewards.
Asking Questions is an Art
And yet, it's also so simple. One of my favorite sessions this week was a lesson in just how easy - yet rare - it is to ask great, in depth questions. Mostly, it just revolves around asking "Why?", way more times that you think is appropriate. "What are you doing on the sales front?"..."We're focusing on building the product and relationship with our first big client"..."Why?"..."They're a big client, and there's big potential with them in the future"..."Are you developing your old product still?"..."Yes"..."Why?"..."We don't want to leave our old clients"..."Why not focus on your current product and client, and closing more sales with people like them"..."Uh...I don't know"..."Why?"..."We just wanted to make sure we nail it with this client"..."So why not sell others in the meantime and roll out the product to them too"..."Um...yeah. That sounds good."
A long example, but the result is clear - asking "Why?" (and slight variations of it), even when it's uncomfortable for those across from you, will often lead to some self-reflection or realizations that would not have come if the first answer is accepted. I was surprised (and to some extent amused) during these sessions, at just how powerful this can be.
Interestingly, this tactic is often quoted in classics like How to Win Friends and Influence People as a tactic to be a great conversationalist - just keep asking "Why?", and push the other person to elaborate. Eventually some very interesting things will probably surface.
Founder Stories: Varied Backgrounds, Testing Ideas, and the Infinite Wisdom of Sailing
Founder Stories are quickly becoming one of the highlights of my week, and not just because there's free food and beer involved. This week several founders spoke, and I was once again reminded at just how varied the backgrounds of entrepreneurs in general, and particularly those here, are. Multiple languages, countries, childhoods, educations, and more were highlighted, and while these are very different people in general, there are many similarities in the way they run companies, the questions they have, and their reason for being entrepreneurs.
Obviously the uniting factor between them is their passion for building great companies, but from my perspective, it just highlighted how valuable varied experiences and backgrounds can be in building your company, in a program like this, and in building your peer group as an entrepreneur in general.
As a sidenote, one of the founders told a story about their time sailing, and a particularly harrowing experience that taught them a larger life lesson. As an avid sailor and enthusiast of all things water-related, I could relate particularly well, but I also found it amusing at how many metaphors sailing can provide, and on a larger level, the value of participating in individual sports, sport in general, and being put in stressful situations. But those things will have to be saved for another post. And of course the story also made me want to go sailing.
The stories this week also gave some insight into where great startup ideas come from. There were people who stumbled into their startup, others who tried something they deemed crazy at the time, and others still who built previous experience in a field in building their company.
The lessons from these stories can be summarized as follows:
Start small and test your idea - crowdfunding, a short trial with little to lose, get a paying customer, etc. - whatever you do, find a way to test it at little risk to yourself.
If you figure out you're onto something, be aggressive; once the test is done, don't forget to keep pushing.
Surround yourself with great people: most of the startup ideas had some element of support from others - whether it be friends who will encourage you instead of discourage, family who will chip in a few thousand because they believe in you, or a partner who encourages you to take some time off work and test your idea - surrounding yourself with the right people can make all the difference.
It's easy to see the learning of teams beginning to accelerate, with more productive mentor sessions and large projects being undertaken by many companies. KPIs and metrics are beginning to become a larger focus, and it should be exciting to see the growth focus begin to become central.
The summary from this week:
ALWAYS SELL - selling makes (most) everything better.
Having a team to which you can delegate can keep your momentum and pace high - consider when building your initial team.
Asking great questions, and having great conversations, is often just a matter of asking "Why?" a few more times than feels comfortable.
Don't forget to find out about fellow entrepreneurs, and surround yourself with great people.
Always go sailing whenever possible.
In the beginning: test your idea, sell first, and surround yourself with great people (do I need to say this again?).
Check out the learnings from Techstars Week 4 here.
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Cofounder conflict was the reason I recently left the startup I'd spent 11 months of my life building, which you can read about here. I've heard, asked and read about how to select a cofounder, and usually the advice comes down to two things:
- Only found with people you've known for a long time (professionally or otherwise), who you know you work well with (ie. friends).
- Don't found with friends, as this can cause conflict down the road.
I think the answer is a combination of both.
My First Cofounder Experience
When I was in my last year of university, and had started to explore entrepreneurship, I was looking for cofounders. The problem was, I didn't really know any. Those that I'd spent time working with in school were all mechanical engineers. My roommates were in the sciences, or other engineers. My friends were from class - mechanical engineers.
I was looking for the typical startup team: hipster, hacker, hustler (though I think these terms are almost cliché now, and I dislike using them).
Being a mechanical engineer, at the time I hadn't really figured out my role - hustler I guess? Anyway, I had the ideas, and knew I could pitch and solve problems, so I wanted to lead a team.
Eventually, I founded with a friend who I'd met through social events for scholarship students who was working on his CS degree, and we searched for a graphic designer. Eventually we found one, and she was actually great. But the result of that team? We had different priorities, and both the other members went off to work. We still remain great friends, but our startup didn't go anywhere.
So what were the problems with that team? Well, we had zero experience. Or very little anyway. And our goals and expectations weren't aligned. I'd built up some personal runway from summer jobs, while one of our cofounders had student debt to pay off, and the other wanted some experience working. We ignored this to start, but our future was doomed from the beginning.
My Second Cofounder Experience
While you can read the details here, my second cofounder experience didn't work out either.
This time I founded with a team that, on paper, had great complimentary skills, and way more experience. Early on, we agreed on general areas of responsibility, which were based both on our interests and our perceived strengths, which were essentially based on our resumes. We hadn't worked together before, but we got to know each other a little bit, and everyone seemed pleasant.
In the end, our responsibilities started to overlap, we had different expectations for the level of work we produced and the attention to detail, and the trust that is essential for good partnerships began to deteriorate. The result was discomfort for other team members, and ultimately I stepped away when there was disagreement about rearranging roles.
Who's a Good Cofounder?
So who do I suggest you found with?
Found with friends, but be prepared to lose them.
What is essential for a good founding team?
Trust and respect
Confidence in the abilities of each other
Personalities that blend well
Complimentary skill sets
To truly evaluate most of these characteristics, you're going to have to spend some significant time with each other. In my case, some of the current friends I would consider founding with are old hockey teammates, or longtime friends. I wouldn't consider someone I just met as a cofounder, regardless of their pedigree. Employees you can fire - it's much more difficult with cofounders.
So why do you have to be prepared to lose them? Because at some point, you may need to make a decision that is best for the company, and that might mean something bad for them. Like being removed. If you can't separate your business judgement from your ties as a friend, you'll be screwed. It's happened to me. If they're really that great a friend, then they will understand anyway.
Finding Your Cofounder
So you're like me 18 months ago, and you want to found a company, but you don't have any potential cofounders. How do you find them?
An unfortunate truth for a young wannabe founder: you can't just find them. You're going to have to put some time in. The time you spend building a great network and getting to know cofounders is going to be much more valuable than starting with someone you don't know, and then ending up killing the company a few months later.
Step one: put yourself in a position where you are working with a bunch of other like-minded people.
For me, this breakthrough came with The Founder Institute. 50 of us started, and only 14 finished, most of them founders of their own companies. So how did that help me? Well, I found my cofounder there, and while it didn't work out, you're immediately in a group of 50 people who are interested in entrepreneurship, which is a start. Second, these people didn't all drop out at once - they dropped out over time, and during the process, you get to work with them, see their work habits and abilities, and generally get to know each other. The reverse is true as well - people will be much more likely to want to found with you when you demonstrate your value. I was great at pitching during The Founder Institute - this impressed a lot of people, and got them past the fact that I was a young guy with seemingly little experience.
Other areas to get this type of experience? For students or recent grads, try The Next 36. Try getting a job with a startup company near you (http://www.builtin.com/). Try getting a job as an analyst or an intern at a local accelerator or venture capital firm (in Montreal, try FounderFuel or Real Ventures). You will immediately be exposed to people interested in entrepreneurship and get to demonstrate your value to them, and evaluate their value too.
Step two: network like crazy.
There are a million (okay, not quite) meetups and events centered around tech and startups in cities worldwide. Need a technical cofounder? Go to the Ruby meetup and try to make friends. Need a marketing guy? Go to the digital marketing meetup. Go to Startup Open House. The key here is that these are relationships you are going to cultivate over time - don't expect to immediately find your cofounder. And make sure you follow up with these people. Go out for coffee occasionally, stay in touch, go to more networking events together, maybe even go out for a beer (or five).
Step three: reach into your past.
Though most of the friends I graduated with were getting the same degree as I was, some of my old friends from home, or those that I grew up playing sports with, and generally those who were old friends, graduated with complimentary degrees. Some of them had even expressed interest in entrepreneurship. When you're a year or two out of school, you should have plenty of friends around your age who have graduated from university, but are maybe in a different location, or already working. Reach out and see what they're up to. Eventually tell them what you're up to, and see if they've ever thought about entrepreneurship. Again, make sure to follow up. Ambitious young professionals, particularly if you are (or were) friends, will move cities for a great opportunity (ie. your future startup together).
Don't forget: you're going to have to put some time into this. If you're still in university, and thinking about what you'll be doing afterwards, that's even better! You can be all ready by the time you graduate. The same rules apply to you as above, you can just look in some different places as well - go to the CS events and hackathons, and find those that are interested in starting a company after graduating. Go to the business competitions and find the marketing and sales people who are interested in really developing that product they sold to judges in the pitch competition. Hackathons are also a great opportunity to work together and get to know each other
Startup Weekends are another hackathon-like experience which you can use to get to know other people interested in entrepreneurship, or evaluate how your potential cofounders work.
Here's a great link summarizing a bunch of resources for entrepreneurs in Montreal which you can use to help you, and Google can help you if you're in other cities.
Don't forget: found with friends, but be prepared to lose them.
Founder Institute Experience
I think the first time I went to a Founder Institute (FI) information session was in the spring of 2014. I had just started a company with a friend from McGill, and we had gotten as far as competing in a couple of pitch competitions and creating a business plan. Founder Institute sounded interesting, but, to be honest, it wasn’t going to fit my schedule. I’d already made plans to go back home for the summer and work with the Coast Guard for the fourth summer in a row. But, my cofounder applied, and I helped him a bit with the application process. He didn’t get in.
That was about the last I had heard of it, until the fall came around, when I had made the decision not to attend graduate school, and instead pursue the venture we had started in January. I was back in Montreal, and attending just about every networking event I could, one of which was a Founder Institute informal drinks meetup, where there would be some previous founders and the program directors.
I decided to apply, and got my application in nice and early, including the optional short video.
Fast forward a couple months, and I’d also applied to The Next 36, a summer entrepreneurial program in Toronto targeted specifically at undergraduates. I’d been selected to attend Selection Weekend, for the second time (I wasn’t selected the first year). I spent quite a bit of time during December and January networking with others going to Selection Weekend. Sometime in mid-January, I received notification that I’d been accepted to Founder Institute. It was nice, but I didn’t think much about it at the time.
Well, the outcome of Selection Weekend for The Next 36 (at the end of January) was about the same as the year before – a great weekend, and great people - but I wasn’t one of the ones selected. So Founder Institute it was.
Until that point, I hadn’t really researched Founder Institute a whole lot – I did this during the few weeks leading up to the program start instead, and I began to be more and more intrigued. The program is targeted at professionals who have work experience; it now has chapters in over 40 cities worldwide; the attrition rate is around 60-80%. As we got closer to the start date, it was revealed that this cohort of the Founder Institute had received the most applications of any cohort, worldwide, ever. Things were getting interesting.
After being read the riot act by the program’s director, Sergio Escobar, on the first night, I wrote down my goals for the program, as I do with most things, professionally or personally.
They were as follows:
impress mentors with work ethic
be one of few to make it through program
establish relationship with some top entrepreneurs
gain network that could lead to jobs with their startups or others
jump start new business
gain network of potential co-founders
All pretty reasonable I think. I thought that this would be a quick jump into the entrepreneurial scene in Montreal, and perhaps address one of the biggest problems I was facing as a young, new, entrepreneur – finding good cofounders. I was also seeking some structure, after spending four or five months living in Montreal making completely my own schedule, and doing the things I thought best to move the company forward, without any real experience.
As it turns out, the Founder Institute was all that and more, and if I sat down now to consider the goals I should have set at the beginning of the program, they would be much different. More on that later.
My first few business ventures, have been, without a doubt, failures. I was going to say ‘complete failure’, but if that’s the view you have on any failure, then it actually was a waste of time – mine certainly haven’t been.
The attrition rate for Founder Institute is usually mentioned at being somewhere around 60-80%. I know for our cohort, we started with over 50, and we are now down to 14. So it’s not an exaggeration.
So why do so many people fail to reach the end of the program?
The first reason: it’s hard.
Some assignments seem initially impossible, unreasonable, foolish even. A large number of dropouts will rationalize dropping out because of them, saying things like “well, this isn’t the best thing for my business right now”, or “I should be spending my time on other aspects of the business”. The analogous situation for me growing up was the guy on every sports team I ever played on that always seemed to have an injury – he couldn’t play that day because of a hip flexor, the next because of a knee tweak, and he didn’t want to make it worse; you really knew that he was just looking for a rationalization not to face something tough.
The solution: find a way to get things done, no matter what, and be conscious of rationalizing your decision to get out.
The second reason: life gets in the way.
I hated to see some of the founders in this cohort drop out. They were great people, with great ideas and the skills to execute them. I probably would have invested in their company (if I had the money, or the time to follow up). But the Founder Institute is not a part-time commitment. I think they bill it as a 30-hour-per-week commitment; that’s just not true. If you have a full-time job, expect to work less on that than on your Founder Institute work. If you have kids, prepare and plan to schedule time with them, likewise for a spouse or girlfriend.
Out of 14 founders about to graduate the program, only a few still have full-time jobs, and of those, I don’t think any have a family, and most, as far as I know, are single.
Solution: if you want to finish Founder Institute, you had better be ready to commit full-time to your company, and the program, before the end. The old “quick, cheap, fast: pick two” cliché could be applied here in a new form: “FI, family/social life, full-time job: pick two”.
The third reason: your idea isn’t good.
This is probably the most difficult obstacle to overcome. In theory, you should be able to figure this out in the first few weeks – the program is set up so that you actually start with three ideas, and through talking to potential customers you figure out which one is interesting. But what happens if none of them are interesting? Then you’re behind. And you have to come up with new ideas, and complete the customer validation again, and still keep up with the assignments, and then re-do the assignments once you find a new idea, and then finish the special assignment you got because you’re behind, and…you get the point. Once you get behind in the program, it’s a struggle to get back in front. The upside of this happening? You’ll be able to re-enroll in the program next time, and until then, you’ll have a ton of time to think up new ideas, and test them.
Solution: spend time prior to the Founder Institute coming up with ideas, and research customer development methods to try and get some feedback. Ask for a coffee with the directors to chat about ideas – usually their intuition for idea quality is valuable.
Completing Founder Institute
So why do I think I was successful in completing the program (bar an improbable exit in the next two weeks)?
Most of it has to do with the few points on why people failed.
First of all, I have a chronic fear of being someone who leaves things unfinished; it’s probably unhealthy actually. I’m still hoping to finish, this summer, the remote-control sailboat I started building 7 years ago. But it is going to be the best damn remote control boat around; and the best part – next time I build one it will only take me a tenth of the time, and probably a tenth of the money too.
The result of this fear is that I will do whatever it takes to finish something that I’ve started and committed time to. I also have a competitive streak, so when they told us the first night that 60-80% of people drop out, I took that as a challenge. The combination meant that I never saw an assignment as impossible, and I found a way to get everything done. Sometimes entrepreneurship is about finding a more clever way of doing things – cynics would perhaps sometimes call this cheating – but finding a way to get things done is what entrepreneurship is all about.
Second, I didn’t let life get in the way. Going into the Founder Institute I put all my focus on completing the program. I ended the previous startup I was working on. I traveled home and then didn’t plan any significant trips in the near future. I sorted out my living situation for the next few months, and I accepted the fact that I might not see my friends as much.
Now, I’m in a pretty fortunate situation to not have any commitments that can’t be shoved aside – good friends, and soon-to-be-graduates in the Founder Institute have wives and/or multiple children – you can’t just sit them down one day and say “right, well, I’ll be back in four months”. But they’ve still had chats with their partners and kids about what they are undertaking and why, and have their support. They make a conscious effort to schedule time to spend with them, and I do the same with my family and friends. But you have to be ready for that.
Third, I spent a lot of time prior to FI coming up with, and evaluating, ideas. I’d like to think my nose for good ideas is getting better – I don’t think I’ve experienced a steeper learning curve than the past 10 months, part of which is related to idea evaluation – and I managed to come up with some good ideas before heading into Founder Institute.
How do you get good ideas? That’s a topic for another post, but quickly, my guidelines would be try and stick within your areas of interest or passion, think about emerging markets, and most of all, get outside input. I sat down multiple times with friends, other entrepreneurs and family to brainstorm and evaluate ideas.
Founder Institute Benefits
Now that I’m at the end of the program, I can reflect a bit about what the program gave me, and whether or not my goals at the beginning of the program made sense.
Some did: there is no doubt that the program gives you relationships with top entrepreneurs, a great network in which you could definitely find a startup job, and a network of potential cofounders, as well as the places to find them.
But it also gives you so much more. Instead of just relationships with top entrepreneurs, I now have relationships with top entrepreneurs, venture capitalists, angels, bankers and lawyers from the top firms in Montreal, and further, even Silicon Valley. If I don’t, I probably know someone who does.
I no longer want a startup job – I believe it’s totally possible to build my own company. If I did take a startup job, it would be because I believed very strongly in the company or product, and I’d want to play an important role.
The value of the network of like-minded individuals and entrepreneurs is huge. I can’t overstate how important it is to surround yourself with great peers, and that’s become so much more evident over the past four months. The days when you feel overwhelmed, someone else just closed a sale, or added a new hotshot mentor, or released a beautiful product revamp, and all of a sudden, your motivation is back and you figure things out. And vice versa. And at the end of those brutal days, you can all go get a beer, or a whiskey, or maybe a few tequila shots if it was a really bad day, and laugh about all the dumb things you’ve all done so far, and once the hangover goes away, you’ll feel much better.
Perhaps the biggest benefit of the program, however, is raised expectations. Personally, professionally, from your peers – everything is higher. I’m no longer thinking about whether building a successful company is possible – I wonder whether we can build it to a hundred million or a billion. I wonder if we are going to raise a million or more for our seed round. I wonder about which person in the cohort is going to be the first to get acquired, or go public.
And even if we don’t manage to raise a million dollars, or we do fail, I know that one day I will reach those milestones. After all, if the Founder Institute taught me anything, it’s that persistence, above all else, will create success.