Bob and Pat talk with David Feinleib – VC, startup mentor and author of Why Startups Fail: And How Yours Can Succeed.
David’s experience as General Partner with a $2B VC firm, starting 4 startups (two acquired) and now author of a must-read book for founders gave us plenty to talk about.
We discussed finding the right Big, the one key metric that stands above all others, jumping the VC Chasm, why you should start with a 30-second marketing video, why you need to be very clear about what your building, taking the “sales learning curve” at a proper time and speed, and more.
Thinking about doing a MicroConsult with Bob Walsh? Stop by 47hats.com and let’s chat a bit about your startup as a first step. I hold free “online office hours” Monday-Friday 6:30am-7:30am and 4-6pm PST UTC -8. Details at 47hats.com. Or, send me your startup question via AskBob, and let’s get a conversation going!
Play it now!
URLs mentioned/relevant to this show:
- New York Times: How the U.S. Lost Out on iPhone Work.
- Joel Spolsky: Two things about SOPA/PIPA and then I’ll shut up .
- Brad Feld: A Few Last Thoughts On SOPA/PIPA From Last Week.
- David’s Blog.
- David is @vcdave on Twitter.
- Why Startups Fail: And How Yours Can Succeed at Amazon.
- Public video examples of what Dave meant by 30 second marketing video: here and here.
Notes from Pat:
· Sorry for some of our audio difficulties in the interview
· If you want to jump right to the interview, it starts at 12:16
· Biggest mistake is not doing it!
o Take the risk sooner because it doesn’t get easier
· Mentoring should be valuable to both parties
· DIY accelerator – when Dave finds an entrepreneur
· Great exercise is to make the 30-second marketing video before building the product.
o Why is anyone going to remember this?
o What does my product do?
o How am I going to get it out there so people care about it?
o Works equally well for consumer, business, whatever
o One of the toughest but most valuable exercises to recommend
o People love video – it’s quick, it’s fun, and it’s a forcing function
· Q: How to reconcile need to focus with need to go after big market?
· A: They’re different things
o Go after a big market because this is really hard – sometimes it’s precisely because there’s not much market to go after
o Focus comes down to being very clear about what your building, how you are going to get it to market, and what are the really core pieces you have to build to get it to market
· What’s the ONE thing you’re going to do better than anyone else
· Q: Do you prefer horizontal or vertical markets?
· A: There’s many different ways to go after a market. Horizontal vs vertical is often a question of timing. You might start with one and more to the other
· Your idea is a “big idea” if it’s going to reach a large number of businesses or consumers – it doesn’t have to be particularly fancy, but it needs to make a difference in a lot of people’s lives
· Q: How big does it have to be to get venture capital?
· A: It’s one thing to say it could be used by a lot of people, but HOW are you going to reach those millions of people or thousands of businesses.
o That’s what’s usually missing from a pitch – how are you going to take that idea to the next level that could result in a huge outcome
· Q: What degree of uniqueness is required?
· A: Quite often those who are later to market get to benefit from those who came earlier. You gotta have just the right product-market fit to be the one who hits it out of the park
· Often someone will have a great idea but won’t understand the market itself. Getting adoption is about building a product people want, but it’s also about doing the basics of getting the word out and understanding users of your product
· The kind of business you want to build is a very personal decision. Some people enjoy smaller or “lifestyle” businesses. Others are more interested in businesses that lots and lots of people will use.
· The “sales learning curve” – don’t try to accelerate sales before you’re ready
· “net promoter score” – will customers refer you to others?
· Cohort analysis is important, but you need to have enough customers to make it work. Ultimately, you have to test what works
· Q: how do you jump the “VC chasm”
· A: A mentor is really helpful … a lot of the work is PRACTICING your pitch and responses to likely questions. You also have to be genuinely enthusiastic about what you’re doing. Finally, you have to understand the profile of your investors – present them a story for why your company is going to provide them their desired outcome.
· Q: How do angel investors fit in?
· A: It depends on the angel – some are looking for big outcomes, some are not
· Getting VC funding can seem unapproachable but it’s not – if you have a good team, a good idea, and can tell your story well, you can get funding
· Q: Is this still a good time to raise money?
· A: Now is a great time
· Dave is a classical violinist (as is Patrick)