How to Invest In Your Talents, Build Your SaaS Team, and Tell Your Startup Story w/ Kristian Andersen

Powderkeg Podcast with Kristian Andersen, Partner at High Alpha

In this episode you’ll learn from Kristian Andersen, serial entrepreneur, investor, and Partner at Venture Studio High Alpha:

  • Kristian Andersen SaaS LeadershipWhy geography is not a factor in the success of your start up. (6:30)
  • Why developing your narrative can mean the difference between success and failure. (22:00)
  • What separates the winners from the losers in terms of mindset.  (27:30)
  • The importance of gratitude. (32:00)
  • How to hire A players into your company. (37:00)


Show notes for this episode are also available on the Powder Keg Podcast Website Here >>

Links and Resources Mentioned in this Episode:

Key Business Leaders:

Startup Books:

Key Entrepreneurship and Leadership Quotes:

“Really, really good entrepreneurs are fundamentally really, really good story tellers.”

“Investing in people is a really, really quick way to effectively build your own brand.”

“Talent is the atomic unit of success.”

Powderkeg Podcast Transcript:

KRISTIAN ANDERSEN and MATT HUNCKLER

 

Matt: You have been very integral in helping several different start up and technology communities connect, grow and nurture that progress along the way; and much of that has been through your work with Studio Science – formerly KA+A. And I have been lucky enough to work with you on a handful of projects, several projects, over the years, with different tech companies and fast-growing agencies; and I remember… do you remember the first time we met?

Kristian: I’m embarrassed to tell you that I don’t recall the first time we met. We’ve known each other a long time.

Matt: We have known each other a long time.

Kristian: So I can certainly cite some more pivotal interactions, but tell me: what was the first time we met?

Matt: So I mean obviously I remember this better because I was a nobody at the time.

Kristian: Well, we were almost certainly both nobodies at the time.

Matt: Definitely not true. You still had the same swagger that you have today, and it was clear that you knew your stuff; and I definitely remember that, because I had just sold my company down in Bloomington doing what you do on a large scale, on a very small scale for small companies. And so I listened very intently when I first met you.

Kristian: Was it BlueLock?

Matt: It was with Brian Wolff.

Kristian: Brian Wolff, yeah, right.

Matt: So Brian, who’s an investor in Gravity Ventures with you, was my mentor; and we were able to meet up with you at your old Broad Ripple office, in the corner office.

Kristian: Back in the hood, yeah.

Matt: Yeah. Max Yoder welcomed me as the intern.

Kristian: That’s a pretty good person to have meet you for sure.

Matt: Absolutely; who of course we hired in to do Orr Fellowship a year later. So a lot of connections happened in KA+A.

Kristian: Yeah. He was the big one though. That was a coo for the Orr Fellowship…

Matt: Absolutely.

Kristian: To get Max, and it was a coo for us to get him. He walked in as a wet-behind-the-year, kind of junior. It was interesting; he applied for a design internship position, and was not studying design. We actually couldn’t find any relevant skills that he had that were applicable to our business, but you know, some people just make that big an impact; and he walked out and I said we’ve got to figure out a way to make a place for him.

Matt: Yeah? Absolutely.

Kristian: It was a good decision too.

Matt: I’m glad you did. I don’t think I would have… I wouldn’t have known him prior to the Orr Fellowship hiring process if that wasn’t the case. Same with Cruse

Kristian: Yeah?

Matt: Cruise was an Orr Fellow of that class.

Kristian: Yeah, that was an exceptional vintage.

Matt: Yes.

Kristian: Yeah.

Matt: But that was the year that I met you, and you certainly made an impression on me at that meeting and in the following meeting, which of course was over oysters at Bruges; which is kind of your… it will always stick out in my mind. It was the first time I ever had oysters.

Kristian: Were they mussels or oysters?

Matt: Mussels, of course they were mussels.

Kristian: I just want to represent the brand.

Matt: Way to represent the brand. All right, that’s good. That’s good. Well, you know, one of the things that I immediately noticed about you was what a passion for entrepreneurship you have; and not just here in Indianapolis, but all over the country and all over the world – which is where a lot of your clients are now, is pretty much all over the place. So you’ve built up over the last – what, 11, 12 years with Studio Science?

Kristian: I’m kind of like an ageing movie star at this point. The foreigners, right? We’re not, there’s conflicting reports on when the actual launch date was, but yeah, we’ve been at this for really over 13 years.

Matt: So why is it important, or why do you have such a passion for entrepreneurship and people starting companies outside of Silicon Valley, and outside of New York?

Kristian: Yeah, I mean my passion really isn’t limited to folks that are doing it outside of those geographies, right?

Matt: Sure.

Kristian: I happen to have a deep affection and a lot of respect for folks that are doing it in those geographies as well. I think what I find interesting about entrepreneurship in kind of less visible locales, is that it’s a slightly different game, right? And I’ve always had a penchant for the underdog, I guess. It might stem from a diminutive stature; that’s what my mom says. I’m not sure, but it’s… growing up in Arkansas, which is a really kind of unbalanced, pretty economically repressed and depressed state, right? So it comes in as a solid 49 typically on most meaningful measures of economic vitality. Yet even in a state that, you know, is much maligned for being kind of behind the times, you look at certain pockets of a place like that – and it’s certainly not unique to Arkansas. How you explain the rise of, you know, the largest retailer in the world, right? How do you explain the rise of one of the largest transportation logistics companies?

Matt: Which is Walmart and…?

Kristian: Walmart, JD Hines, Tyson Chicken.

Matt: Yeah.

Kristian: You know, and Dillard’s Department Stores, Acxiom, which was really kind of the original big data company, right?

Matt: Yep.

Kristian: Came out of Little Rock. And out of really, kind of the most unlikely places – and actually you obviously see that around the world – that necessity is the mother of invention, right? And that success is not limited to zip code, right? But I think most people, specifically kind of aspiring entrepreneurs and people who are still kind of trying to feel their way through kind of their personal ambition levels, feel that they have to move, they have to go somewhere else, they have to locate to what has historically been thought of as the center of power, in order to build a big, meaningful business; and the truth of the matter is that’s not true, and I would argue that it’s never been true. I would say it’s less true today than ever. You know, technology has been such a great democratizer in terms of locale; but kind of observing this and being kind of an amateur student of economic development – specifically outside of kind of tier one cities – it dawned on me that there are really, really big opportunities. I mean in the finance world they would call maybe arbitrage opportunities, right?

Matt: Yes.

Kristian: And rather it be Indiana, or parts of Ohio, or Kentucky, or Oregon; I mean pick your state, right? Not all of California is Northern California, right?

Matt: Absolutely.

Kristian: There’s a lot of areas in the rest of that state that this is true for as well. I really wanted to help carry the torch and tell the story about the power of entrepreneurship, and how it can transform communities, and the economic development prospects of kind of historically depressed economies.

Matt: Well, you’re doing a really good job of carrying the torch here in Indianapolis; and one of the recent articles that you’re quoted in quoted you as saying: ‘We used to feel like we had to apologize for being located in Indianapolis, and that’s not the case anymore.’

Kristian: Yeah.

Matt: Do you talk a little bit about that?

Kristian: Yeah, we say now we think of it as a competitive advantage, right?

Matt: Absolutely.

Kristian: And you know, it’s important to kind of separation the kind of ra ra cheerleading from fact, right? Because there is a dynamic where you do have to kind of fake it till you make it a little bit. You have to do that as a person. My dad used to always say, you know, ‘act as if’. Right? You know, dress for the job you want, right? And there is some of that that is true for individuals, cities, states, and you know, countries, right?

Matt: Is there an entrepreneur that has done that well, that you can think of?

Kristian: Uh, probably all of them. You know what I mean?

Matt: Yeah. Absolutely.

Kristian: Because really, really good entrepreneurs – and I’ve strayed away from your initial question – but really, really good entrepreneurs are fundamentally really, really good story tellers.

Matt: Yes.

Kristian: Right? And it doesn’t mean that they’re telling stories that aren’t true, it means that they are telling the most interesting, most compelling, most articulate story possible. So is there an example of an entrepreneur who faked it till they made it?

Matt: That really stands out to you?

Kristian: Well, the question would be give me an example of a really successful entrepreneur that did not do that? And that’s when I’d have to go do some homework.

Matt: Sure.

Kristian: Right? You know, as a general rule, they’re phenomenal story tellers, and they’re having to make a silk purse out of sows ears in most cases, right? They don’t have enough money, they didn’t necessarily go to the right school, or have the right degree. They’re trying to sell a vision for a product that doesn’t exist yet to customers they haven’t found yet. Right? So, no, I think that is actually a critical – and I’m making a very clear distinction between lying and being a good story teller, and being able to cast vision, and being able to get people to follow you. Lying I have zero tolerance for; but telling a good story, being able to craft a vision and articulate that well, and get potential customers or employees or investors excited is an absolutely critical skill. And at the state level – if you look at a state like Indiana – you can’t literally start with nothing. Right? You have to have some raw material, whether it be your brain or deep pocketbooks, or as, you know, Peter Thiel talks about, you’ve got to know a secret that very few other people know. You’ve got to have one or more of those things to really spin things up, and in Indiana we were really blessed by having all the normal stuff; highly educated, you know, workforce, the good old-fashioned – not myth – but kind of fact of the Midwestern work ethic.

Matt: Yep.

Kristian: And a number of businesses that had created kind of micro clusters for us to take advantage of from an entrepreneurial perspective, and that’s why when today I say we used to have to kind of explain away why we’re based in Indi, today we lead with that because in so many parts of the country now this particular city is recognized certainly as being a hotbed of marketing technology. Right? And it’s not limited purely to marketing tech, but certainly that’s kind of the sharp end of the spear.

Matt: Sure.

Kristian: We’ve had a lot of success. Certainly a lot of that owed to ExactTarget, but it really transcends ExactTarget, as you know. Many companies before put a dent in the universe here, including Interactive Intelligence and Software Artistry.

Matt: Aprimo.

Kristian: Aprimo, and so on and so forth. And through that we’ve built such a dynamic base of talent, managerial expertise, a large hiring base; it’s why just over the course of the past few months a number of companies that are headquartered out of state have begun opening offices – a pretty rapid clip here, right? To take advantage of that arbitrage.

Matt: Yeah, absolutely. Well, it kind of goes to the point of sort of branding your city, and being able to get everyone behind a single message. And sort of that vision casting aspect of entrepreneurship – you’re going to probably cringe when I say this word – is a little bit of developing a personal brand.

Kristian: Yeah. I do cringe a little bit when you say it, yeah. I know exactly what you mean.

Matt: I knew it would, but you know, I don’t know what other phrase… Until you come up with a better phrase than personal branding, you know, I do think that the personal brand of an entrepreneur is very important, and clearly impacts the way the company is branded. Can you talk a little bit about what you coach entrepreneurs – whether they’re young or not – but first time entrepreneurs, as they’re going about vision casting and building their pitch deck, and going out there raising money or building prototypes; what are some of the things that you frequently encourage entrepreneurs, or course correct with entrepreneurs, around branding their start up?

Kristian: Yeah. Well you know, the irony is one of the things that will kind of damage your career early on – if you’re wanting to position yourself as an entrepreneur company building – is to spend too much time and effort trying to figure out how to brand yourself as an entrepreneur or a company building. Right? It’s always… used to be a turn off. Now, the older I get the more empathy I have; but it always struck me as interesting or odd when a 22-year old walk handed me their business card and it would say kind of ‘serial entrepreneur’ or something like that on it. Right? I’m sure there are 22-year olds who are legitimately serial entrepreneurs – there’s not a lot of them. You know, at the end of the day the best marketing is a great product. Right? So this is true for software companies. This is true for automobiles. This is true for cities that are trying to figure out municipal branding. And it’s also true for people.

Matt: Yeah.

Kristian: Right? So those who are focused on kind of the traditional approach to personal branding, which is all about building your own mission statement and relentlessly being present and visible on social media, and showing up to every conference, and trying to get on the panel…

Matt: Right.

Kristian: And so on, and so forth. If all of that energy was being funneled toward building a product – and I mean in some cases the product being a person. Right?

Matt: Yep.

Kristian: How you create value in the world. Right? I think you would see a lot more success. And I’ll give you just a finite example, right? The way to build a great personal brand is to help people. Right? So that may be the people you work with, it may be the person you work for today, it may be the people who you are trying to hire or attract into your company, it could be people in a non-profit space, people at your church. Whatever the case might be, right?

Matt: Yeah.

Kristian: Investing in people is a really, really quick way to effectively build your own brand. If you have a reputation for being somebody who gets stuff done, who when people ask for help delivers that help, that is so much more effective in establishing credibility and boosting your visibility, rather than just being noticed. Right? And I’m not saying that you shouldn’t blog and be active on Twitter and… of course you should, right? But all of that should be, I believe, done through the lens of ‘How am I helping? How am I creating value?’ Right? ‘How am I making the world a better place? How am I advancing the agenda of my organization or the city I live in?’ And I think that’s where people most often go wrong; and I can cite a whole lot of examples – and I won’t bore you with the details – but it seems like a simple truth, but it’s one that people have a hard time grasping.

Matt: Well, lets get a little specific there, because I really like that idea of entrepreneur as a product. Right? Before maybe they even have a product built, and an entrepreneur viewing themselves as a product. So if entrepreneurs out there are viewing themselves as a product, what do you see – at this point in time, 2015 – what are people out there hungry for in terms of a product as it pertains to an entrepreneur as a product? What kind of entrepreneurs does the world need right now?

Kristian: You know, unfortunately what the world needs and what people are hungry for are rarely the same thing.

Matt: That’s a good point.

Kristian: People are not particularly rational, as you know, and have a hard time kind of playing the long game, right? So you know, I fear my answer will be kind of unsatisfactory because it’s so banal and obvious; but the simple version is we need more people doing, and less people pontificating. Right? So, I mean we see this, you know, everywhere; in our business and the companies that we work with and the companies that we’re talking to from an investment perspective. Execution trumps everything, right? Ideas are cheap. You and I meet with people every day that have ideas. I’ve never met anyone that didn’t have at least one hundred million-dollar idea rattling around in their brain.

Matt: Yeah.

Kristian: Right? Ideas are cheap. You know, in terms of currency, it’s people that actually kind of advance, move the ball forward; and that means rolling up your sleeves and being prepared to face a whole lot of rejection and casting aside any sense of entitlement one might have about what the world owes them, or what they deserve.

Matt: Yeah.

Kristian: Once again, that’s human nature, right? I mean, we are kind of broken people innately, right? And we constantly have to battle selfishness. Right? I want. I deserve. Why me?

Matt: Sure, sure.

Kristian: So on and so forth, and I think the people who end up being most successful are folks that get to work building something that has value that transcends themselves. Right?

Matt: Yeah.

Kristian: And once again this goes back to how you do personal branding well. I can tell you how to do it wrong. Right? If it’s focused purely on you building your CV, making sure you’re the most visible, brightest light in the room….

Matt: Mm hm.

Kristian: Over time that pays; you may get some pops from it, but it pays diminishing returns over time. Humility is so underrated.

Matt: Yep.

Kristian: It is unbelievable, and people talk about it all the time as if it’s like this core value that everyone shares; and I’ll tell you, true humility is in extraordinarily short supply.

Matt: It’s hard to come by. Hopefully a little less hard to come by here in the Midwest.

Kristian: Yeah. You know what, there’s even this perverse arrogance in the Midwest about their humility; they love to talk about how humble they are.

Matt: It’s true. It’s true.

Kristian: Right?

Matt: Guilty right now.

Kristian: Yeah. Well no, it’s interesting; I was on a road trip with someone the other day and we were kind of comparing the different geographies and what’s true about them, and I was making this case for Midwestern humility, and he was like, ‘You know, even in the Midwest you see humility perverted into vanity, where it becomes this bad…’

Matt: Look how humble I am.

Kristian: Look how humble I am. It’s a little bit like when somebody gets their Oscar and they, you know, any time somebody says, ‘I’m so humbled by…’ they actually mean the exact opposite of that. Right? So it’s another word that is slowly losing its meaning.

Matt: Yeah. That’s true. Well, let’s say that founders out there watching this right now are working on building great product, and they’re building a great team – as best a team they can with whatever money they’re bringing in from their product. There’s still some amount of communication that they need to do in order to continued to attract the right talent, potentially attract investors, and market to clients. What are kind of like – especially in the early stages – what are some of those things, as let’s say a founder’s going out to start the fundraising process; how can they communicate who they are and what they’re about effectively with their brand, or what is to become their brand?

Kristian: I mean once again, I think it goes back to story telling; and I really don’t make a distinction, so I talk about…

Matt: Should there be one story? Should there be many stories?

Kristian: Oh no, there needs to be one story. It certainly can be contextualized for the audience.

Matt: Sure.

Kristian: But no, there needs to be, there should only be one story; and that story needs to live in the product.

Matt: Okay.

Kristian: Not exclusively, but I’m not… we tend to fall into this way of thinking where there’s marketing and there’s product; and those are different things. Right? One is, you know, how you fulfil demand, and the other is how you generate demand; and I tend to think that those are not the same thing. Increasingly, as people purchase experiences – not products – you have to think along the lines that the continuum is different. Right?

Matt: Yep.

Kristian: So the retail experience if there is one, the advertising experience if there is one, the product experience – so actually interacting with what I’m paying money for, the services experience that I’m dealing with; if I have a problem or I need to return it, or something broke. I mean, that’s all the product.

Matt: Sure.

Kristian: And really the most successful products are stores, right? And I mean, if I said: ‘Hey, name the three most interesting dynamic products on the planet?’ Right? Whether you said the Nest thermostat, or Tesla, or a MacBook Pro, or whatever – those are really kind of like living narratives. Right?

Matt: Yeah. Absolutely.

Kristian: I mean literally. It’s a story, and it’s a story that’s constantly being tuned, and it’s constantly being tweaked. So my first point would be that you need to view your product and that experience of consuming it – buying it, consuming it – as part of that narrative. More specifically, in the fundraising process I like to think of the pitch deck as it’s a novel, right? It is hopefully not a work of fiction, but it’s a book. It’s a story; and it has a plotline. Right?

Matt: Okay.

Kristian: That should be clearly articulated. It has a protagonist.

Matt: Mm hm.

Kristian: Right? You’re a product coming to save the day. It has an antagonist; what’s the problem that’s being addressed?

Matt: Yeah.

Kristian: What’s the great wrong that has to be righted? It has a de noir, it has a climax, right? The climax may be when that problem gets solved for a particular customer. If you’re talking to investors it might be when there’s liquidity in there, that puts money back in the investors pockets; but I think if entrepreneurs would force themselves to think in terms of the narrative, constantly the narrative. Who’s our hero?

Matt: Mm hm.

Kristian: Who’s are enemy? Right? What’s the great quest or challenge that’s been put in front of us? Right? Kind of the hero’s journey.

Matt: Yeah. I like that.

Kristian:  That goes a really, really long way. And that way when you get nervous, or you need other people to help carry the water and tell the story, you know… We might all give slightly different versions of what happened in Star Wars, but in general we’d be able to tell the same story. Right? And it’s the same thing when you’re raising money, and you’ve got a COO, or if you’ve got a co-founder and you’re split up, or you’re in different planes and your pitching different groups. You want to be singing out of the same hymn book. The same things true when you’re selling to customers. The same things true when you’re recruiting. And this is why the idea of story, living inside of the product, living inside your organization, being a culture, is so critical; because if you’ve got a story that’s properly articulated and codified then it’s not just up to you to be able to tell that story.

Matt: Yeah. Let’s get a little more brass tacks; how long should that story be?

Kristian: Once again, I think you’ve got to contextualize it, right? So, if you’re at a launch festival you’ve got two minutes. It should be two minutes long. Right?

Matt: Yeah.

Kristian: You know, if you’re sitting down, recruiting a VP of Sales, you can take a lot longer to tell that story; but you know, if you want to think of it through the kind of rubric of the investor pitch, right? Obviously, less is more. And you know, 10 to 15 slides, following that plot line of who we are, what we do, here’s the problem, here’s how big the problem is – which is a really critical thing that many entrepreneurs get wrong. Right?

Matt: Yeah.

Kristian: There are a lot of terrific problems out there, that are real and no one’s going to argue with the fact that they’re real; but if you’re successful in addressing it, in a vacuum it may not be sufficient to build a venture scale business around. One thing, because the one thing that – I’m really on a Peter Thiel kick now, so forgive me – but the one…

Matt: I read Zero to One based on your recommendation.

Kristian: One of the things he points out in that book that I think is critical is that most really, really big ideas, A. seem dumb. Right? Initially.

Matt: Mm hm.

Kristian: And, B. appear to be attacking a problem that’s too small. Right? So you really need to understand how big the opportunity could be. The flip side of that is, folks that are only targeting ten billion dollar minimum total addressable markets I think are missing the boat, because many, many great ideas are great because they actually change consumption habits; they change the way people behave. So trying to size that market before you’ve disrupted it can be an impossibility, and I think if people are too fixated on that it means we’re going to miss out on a lot of great ideas.

Matt: That’s a really good point, and I think that if you can kind of shape that in your story, right? And show… who was it? I don’t remember who was talking about how they did this effectively, but it was literally; in this industry this company did this. In this industry, this company did this. In this industry, no ones done it yet; that’s because we’re doing it. Are there other things that you see that kind of escalate that story to the climax, or sort of the apex moment of the story?

Kristian: Yeah. I mean once again a lot of this is conventional wisdom, but I think we hear it so much that it loses its efficacy.

Matt: Yeah.

Kristian: You know, another big deal in the story telling process is you really have to… people have to care about you, the individual.

Matt: Right.

Kristian: Before they can care about your product, right? Or even care about the problem that you’re trying to solve.

Matt: How do you make someone care about you.

Kristian: Yeah. That’s a good question. A number of the things that we’ve already touched on, right?

Matt: Sure.

Kristian: So it really comes down to, who do you want to invest in? What are the character traits that exist – and this differs from investor to investor for sure, but there’s some commonality, right? By and large people want to invest in winners, right? Now that seems kind of crass.

Matt: Yeah.

Kristian: But it’s the absolute fact, and winners have kind of one defining characteristic.

Matt: Mm hm.

Kristian: Are you ready for this?

Matt: I’m ready.

Kristian: Okay. Winners believe that they are going to win.

Matt: Yeah.

Kristian: Right? So losers think they might win if everything goes according to plan and nothing happens, you know? Nobody screws with them from the outside and the market doesn’t get disrupted by a third party. Winners don’t think about that that stuff.

Matt: They don’t have a Plan B, C, D…

Kristian: As soon as the shoes are laced up, they’re out there. They’re not just trying to win; they believe that they are going to win. Right? I mean Ali is like the greatest example, right?

Matt: Sure. There is an example of humility.

Kristian: Yeah. Well you know what’s interesting, there was lots of things that he knew he wasn’t good at.

Matt: It’s very true.

Kristian: Lots of stuff. Right? He happened to be right about the one thing he believed he was good at. Right? And that was whipping people. So don’t confuse humility with fake self-deprecation, or self-flagellation. That’s not what I mean. You can know you’re really good at something…

Matt: Right.

Kristian: And still manage to be humble in the process. And also baked into that is people want to invest in winners, they want to invest in people who they believe are teachable – because nobody knows it all, right? So coming across, somehow striking that balance where you are confident and self-assured is critical, but also that you are flexible, because we know that you are going to need to be, coachable, teachable. And I’ll tell you, you know you can’t read a book on it, in terms of that person. Right? I mean, it’s like everything else; you’ve got to practice those things. You’ve got to practice being confident.

Matt: Yeah.

Kristian: You know, it’s all about like, at bats. Right? And that’s why constantly pitching, working on a story, interacting with people, refining your method – in many ways talking yourself into what it is you’re trying to talk other people into.

Matt: Yeah.

Kristian: Is so critical. I do believe that there are probably some entrepreneurial genes that are passed along from mother to daughter, or father to son; but as a general rule, most of that is a function of training and learning.

Matt: Well if you’re in America the chances are you have some of those genes in you.

Kristian: Yeah. That’s right, that’s right.

Matt: Well so, those are really good pieces, you know, in terms of the character and bringing out that character in telling that story; your own entrepreneurial character as well as the protagonist and antagonist in your story. You know, as you’re going through and developing a relationship, you know one of the things that I’ve always admired about Studio Science is even though I haven’t always been your biggest client – nor have I probably ever been your biggest client – the care that you take in developing that relationship with just little things, you know; like sending gifts. You know, when I was on the front page of the IBJ, you guys were the first people to send a thank you note. Talk to me a little bit about, 1). Where did you get that trait? Because I know it’s not you writing every card, but it comes from you, the founder of the company.

Kristian: Yeah.

Matt: And can you maybe tell me a little bit about why that’s important?

Kristian: Yeah. Well certainly it’s not – as you noted – that’s the culture of Studio Science, and the culture of gratitude is really strong here; some gratefulness, being grateful. And I think we are all, I know we are all really grateful to have the opportunity to do what we do for a living. I mean it’s a really dreamy job.

Matt: Yeah.

Kristian: You know? And we’ve been successful at it, and we’ve been rewarded along those lines, which has been terrific; but that – at the risk of sounding trite – that’s definitely not why we do it, because there are easier ways to make money.

Matt: Yeah.

Kristian: As they say. I think everyone here is really grateful, and so it’s… when you are yourself satisfied and content and grateful, and acknowledge the fact that you have a lot of stuff that you may not deserve, it makes it really easier… it makes it a lot easier to be happy for other people.

Matt: Yeah.

Kristian: Right? Gratefulness is the exact opposite of resentfulness. Right?

Matt: Sure.

Kristian: And so what that leads to, is it leads to a culture of celebration, where you not only want to celebrate kind of your own successes, but you naturally just want to celebrate other people’s as well.

Matt: Yeah.

Kristian: Right? I think it’s one of the reason why we’ve been such an active and prolific cheerleader of this community, is that we’re proud to have played some role in its ascension; but more than anything we’re just happy. We’re happy for the people who live here and work here, we’re happy for the people that have those successes. And you ask where it comes from and, you know, I think that in my case – it certainly doesn’t all come from me here – but in my case I was certainly raised in an environment where I was reminded to be grateful. Right? Where that was part of the culture of my family, to give thanks, and to give thanks religiously – if you’ll pardon the pun. And that spills over into every aspect of your life, right? It does not mean that I am never resentful, it doesn’t mean that I never look at somebody and go, ‘I sure would like a car like that someday.’ But I think it’s sincere, and I think interesting, it’s gratifying to hear you say that about Studio Science. I think that’s something that this team owns, and spends a lot of time trying to be really intentional about.

Matt: Mm hm. What – you know in terms of that being a core value for Studio Science – 1). Do you think that that needs to be a core value for all companies? And then the follow up question is, do all companies need to define what their core values are?

Kristian: I mean the second, the last question is simple. Yes. I mean at some point there needs to be some shared understanding about what’s important.

Matt: At what point is that important? Do you think that’s before you hit the road pitching?

Kristian: Yeah. I think in the beginning, right? I mean – and once again, you know, I’m certainly not saying we’ve always been good at that, and that’s always a process… I believe values can change by the way. Right? And most people would say, ‘No, you set those in stone and those become your guiding lights.’ No. I think things change, people change, and what may be important ten years ago, may not be as important to you. Maybe you achieved that, or maybe you thought that was important to you and you realized over time that it wasn’t; but no, I think you absolutely have to be really proactively engaged in evaluating what’s important.

Matt: Mm hm.

Kristian: Documenting that somehow. And this is the role of CEO. Right? Is to establish what is important for that business, and then relentlessly communicate that down to the organization until people are sick and tired of hearing it. In terms of should gratefulness be a core value for all businesses? I mean, I have no idea. Far be it for me to say what should be important to them. So no. It has been important for us; it has served us well. It’s been something that we can galvanize around and rally around, and it’s certainly paid dividends. It’s the kind of quintessential ‘what goes around comes around’ scenario.

Matt: That’s good. We talked a lot about what companies can do to communicate well, and to grow; specifically focusing on product and developing the right messaging around that, at the right times. What are the things that companies… what are those things that growing companies need to avoid? And you know, we obviously touched on some of that too; focusing all of your time and attention on doing the ‘look at me’ side of things. But what are some of the pitfalls you see, especially in fast-growing companies, which you work almost exclusively with fast growing companies?

Kristian: Yeah. I think the biggest thing – I think this is a pretty easy question actually… As we like to say, talent is the atomic unit of success. Right? So that’s kind of the irreducible complexity of success, is who are you working with? You know, you’ve got a crappy product? If you hire the best team they will fix your crappy product. Right? You’ve got bad customer service? You hire the right team; they will fix your bad customer service. Talent can fix anything.

Matt: Mm hm.

Kristian: Right? It can fix a bad product. Literally. Right? It can fix a broken sales model. Literally. And so getting the right people on board is so critical; and everyone pays lip service to that, right? Everyone, ‘talent’s our most valuable resource’, or whatever. The reality is that when you’re a hyper growth company, and you’re hiring 50 people a month, or 50 people a week…

Matt: Yeah.

Kristian: Right? It can be really difficult, almost impossible, to hire well across the board. Right? So when you’re the size of Studio Science, it’s not easy, but it’s manageable. Right? If we need to slow our role to make sure we’ve got the right folks on the team, we’ll just slow down. Right? If you’re a hyper growth venture backed company that, you know, the wolves are at the door and the competitors are circling and IBM decides to get into the business, you can’t take your foot off the accelerator. So hiring is so critical, and getting that right is so critical, and so difficult; and so knowing that at scale it’s going to be almost impossible to continue to hire A players, building the right type of culture with the right type of values, that are rigorously and religiously conveyed to those inside of the organization, can help smooth out a lot of those rough patches; because the second best thing you can do next to hiring the right person, is firing the wrong person quickly. Right?

Matt: Yeah.

Kristian: And if you’ve got the right culture in place, and the right values in place, and the right people in place, the host organism will reject. Right?

Matt: Yeah.

Kristian: Folks that are not good fits, folks that are either toxic or not up to the task. It’s not always up to bad people, sometimes they just don’t have the horsepower. Right? And when you’re into the hyper growth curb, especially early on, a couple of bad apples can really muck up the works, you know? I mean this is – once again, this is kind of conventional wisdom – but the interesting thing about A players is A players will hire, and subsequently inspire other A players.

Matt: Right.

Kristian: The problem with letting just one B+ person in the door – and that’s tricky, because B+ people walk like A+ people, and they talk like A+ people; it can be very, very hard to understand the nuance. The minute one of those folks come in the door, the wheels gonna fall off the wagon; because B player hire and inspire C players, and C players hire and inspire D players, and it’s like a virus. Right? A players are so unique in that regard. And I’ll tell you, if you want to know the secret to divining the difference…

Matt: Mm hm.

Kristian: How do you know an A from a B in the interview process? It’s pretty simple, I think I’ve got it down.

Matt: Let’s hear it.

Kristian: When you ask them the kind of perfunctory question about, ‘Tell me about one of your greatest failures. Like when a project went wrong?’ You know, this is kind of standard interview 101. What you’ll find is that the A player and the B player will both tell you about the failure, and then you’ll say to the A person, ‘Why did that happen?’ Here’s what the A person will say: ‘I failed to do X and then recognize that until two weeks later, and by that point it was too late.’ Or, ‘My manager told me to do X, but I decided to do Y and it failed.’ Or, ‘I slept through my alarm.’ Or whatever the case may be. A B player – the cause will be external. Right? ’Well my boss insisted that we use an offshore development firm, and they didn’t really understand what we were trying to do, and they…’ Or, ‘We had this new sales guy came in, and he sold a bunch of vapor that doesn’t even exist in the product yet. There was no way for me to…’ Right? It’s always going to be some external event, or individual, or set of circumstances, that drove the failure. And I mean to me that has proven itself to be the clearest, cleanest, crispest way to distinguish two parties that on paper look almost identical. How do you know who’s really… who’s got the bandwidth and intellectual horsepower and humility, the leadership to move to the next level? That simple test usually will render that out.

Matt: Do you ask that question too, to entrepreneurs who pitch to you? Or do you have a similar kind of litmus test around character?

Kristian: You know, it’s interesting. The way we deal with someone who’s coming and asking for money, and the way we deal with somebody who is gracious enough to consider coming and joining us – we manage that a little differently. Right? So those are two different… It’s an interesting question, I’ve never thought of it that way; but those are two very different processes. There’s a different set of patterns that I personally am looking for in an entrepreneur. Right? And once again, a lot of this is kind of intuitive, or intuition driven. Some of it is a little more practical and linear. You can ask some questions. And the first thing is to be a great entrepreneur you have to be oriented toward entrepreneurship, right?

Matt: Yeah.

Kristian: And one of the simplest ways to find out the answer to that question is to ask them about their entrepreneurial background. I mean it is shocking… I mean it is really, really shocking how similar the backgrounds of most successful entrepreneurs are. I mean there are a series of very similar… You know, I always ask, ‘Tell me about the first time you remember making money on your own.’ Right? And I mean like clockwork, it’s the same answer. I mean, contextualized a little differently, but they were selling cinnamon toothpicks on the playground, or they were having their mom drop them off at 7-11 and buying lemonheads, and then crossing the street to the elementary school and marking them up 50 percent, or they were selling T-shirts to the sorority girls when they were in college, or they were mowing lawns at the beginning of Summer and by the end of the Summer they were running a crew of five of their friends mowing lawns and they were just counting checks. I mean that cadence of being a starter; being able to execute, being able to build teams – whether it was in third grade selling cinnamon toothpicks, or you know, brokering T-shirt printing to college kids – it’s really, really similar, and as you… Just because you did that does not mean you will be successful. That’s not my point. But those who are successful, by and large, a disproportionate number of them have similar experiences. As a matter of fact, a disproportionate number of them never even had real jobs.

Matt: For those with real jobs, who haven’t already started an entrepreneurial venture; should they stay away from starting something?

Kristian: That’s a good question. So if you have not exhibited the gene historically; are you saying is that enough of a reason to not move into entrepreneurship? I don’t know. That’s a good question.

Matt: It probably doesn’t matter what you say, because the person that’s the right person would start no matter what you said.

Kristian: That is an excellent point. So yeah, for anyone who that would dissuade them – they’re ignoring what I’m saying anyway. So that’s good. And I think the answer is no, because I think that you can come to things late in life. And really that’s certainly… yeah, absolutely. And I also think that the – I’ve used this word several times today, it’s an important one – I think the context of entrepreneurship has changed dramatically, and will continue to change as well. Right? So as we largely continue to move into this kind of free agent nation idea…

Matt: Mm hm.

Kristian: Right? The idea of, ‘Well, I’ve been at the same job for 28-years, I don’t know if I…’ We’re not going to have one of those conversations in the future. Right? So I think that one of the things that’s happening is everybody is having to become, at least at a micro level, entrepreneurial even in their day-to-day jobs. So I don’t know that the cinnamon toothpick test will be as meaningful five years from now as it was five years in the past.

Matt: That’s a good point. Well, Kristian I could probably ask you questions all afternoon if you’d let me.

Kristian: Yeah, we’ll save some.

Matt: But I know you’ve got a lot of stuff to do, and we’ve got another conversation coming up in a couple of days. So, anything else you want to touch on? Or something that you just really wanted to expand on but I cut you off?

Kristian: No. I got it all out of my system.

Matt: Awesome man. Thank you so much.

Kristian: Hey, thank you. A please.

Matt: Likewise.

13 of the Smartest Questions Investors Ask Entrepreneurs

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is the smartest question an investor has ever asked you?

1. What’s the Biggest Threat to Your Success?

Andrew ThomasThis question forces you to demonstrate your ability to realistically evaluate your market potential and the maturity to acknowledge that threats exists. The investor is also testing your composure — as this question can cause defensiveness. If asked, take a deep breath and be honest about your threats and how you will address them. This builds confidence and trust instead of a red flag.

– Andrew ThomasSkyBell Video Doorbell

2. What Happens if You Get Hit by a Bus?

John RoodOf course the founder is critical to the enterprise, but especially for small businesses, I’ve found that smart investors want to make sure you have a clear pathway to generating enterprise value that isn’t just you personally working 80 hours for the rest of your life. Luckily, this can help you prioritize delegation, which you should be thinking about anyway.

– John RoodNext Step Test Preparation

3. Why Is This Opportunity Any Different Than Going to Vegas and Throwing It All on Red?

Jonathan LongI’m currently consulting for a new app and they have one investor who is funding the entire program. He jokingly asked me, “Why is this opportunity any different than going to Vegas and throwing it all on red?” While it was more of a joke, it was a legitimate question. You need to be able to sell and defend your concept. If you can’t, why should an investor feel comfortable writing a check?

– Jonathan LongMarket Domination Media

4. What Happens if Facebook Goes Out of Business?

Piyush JainWe were starting out an app idea completely based on Facebook. Investors asked what happens if they go out of business. We went blank. We ended up reshaping the model, though, so it would not be fully dependent on Facebook, and it ended up being a better app. Sometimes we tend to over-rely on big systems which can be more susceptible to failures than we are.

– Piyush JainSIMpalm

5. Why You?

Blair ThomasHaving to answer that very simple question can often stymie even the best stakeholders. Are you different? What do you have to offer that your competitors do not? Why am I investing in you when there are 12 other companies competing for my dollar? It can be a difficult question to answer, and one that you should have an answer for. Be prepared to argue your case as a differentiator.

– Blair ThomasEMerchantBroker

6. Why Now?

Charlie GrahamGreat market timing — more than even team or idea — has traditionally been the best predictor of a company‘s success. Chances are someone else has tried an idea similar to the one you are pitching. What fundamental change has occurred in the market that makes right now (versus 3-6 months ago) the best time to start this company?

– Charlie GrahamShop It To Me, Inc.

7. How Can I Help?

Zoe BarryThis question is a litmus test. Keep in mind not all money is equal shades of green. I’ve found the best investors want to know what my challenges are and where they can add value. Once an investor puts money into your company, their role is to help the management team build a great business. If an investor doesn’t ask you how they can help, don’t take their money.

– Zoe BarryZappRx

8. Why Can’t You Just Bootstrap This Business?

Ross ResnickUntil an investor asked me this question, I was convinced that outside investment was the only way to start a company. Answering his question forced me to analyze my initial product development road map and reimagine it to be immediately cash flow positive and self-sufficiently scalable. This fundamental shift enabled rapid, responsible growth.

– Ross ResnickRoaming Hunger

9. Who Is This For?

Vik PatelWe often develop business ideas by looking at successful models and applying them to a different domain — the Uber-for-X approach. It’s easy to miss the most important point: Who is this for? Being asked that forced me to think concretely about the people for whom I would be solving a problem and make the appropriate changes to the execution of business ideas.

– Vik PatelFuture Hosting

10. What Excites You?

Ty MorseAn investor asked me this to find out what motivated me, and I think that’s what investors need to know. Are you going to pursue this idea until it succeeds? Do you have the drive, the energy, the passion to make this work? This question gets to the core of who you are and lets investors learn a little about who they’re investing in.

– Ty MorseSongwhale

11. How Long Do You Think the Money Will Last?

Vishal ShahThis question forces you to demonstrate your understanding of the revenue streams, cost structure, cash burn and runway. VCs want to know how you plan to spend the money and if what your ask is realistic enough to get you to your next milestone. If you seek to raise too little or expect an unrealistic runway, it indicates that you haven’t thought through how you will scale your business well enough.

– Vishal ShahNoPaperForms

12. Does Your Business Align With Your Experience?

Erik SeveringhausLon Chow asked me why my experience didn’t match the market I was entering, as I left a successful career at IBM to start a B2Ccompany. There’s a lot written about product-market fit, but not enough on founder-market fit. Does the founder truly understand nuances of the industry? What makes it tick? Lon zeroed in on the misalignment in our first meeting and I realized just how right he was.

– Erik SeveringhausSimple Relevance

13. Why Are Other Investors Passing?

Fan BiDon’t take it as a passive-aggressive question and get defensive. You should have a good answer. The best answer you can hope to provide is that they didn’t believe in the market or where it’s going. Different investors have different theses on macro trends and will understand other investors not believing in yours.

– Fan BiBlank Label

What’s the Biggest Mistake Entrepreneurs Make When Pitching for Seed Funding?

seed funding mistakes

Seed funding isn’t easy to come by, especially when most founders handicap themselves from the get-go.

Despite the wealth of knowledge online and platforms like Angel List and Gust, I hear that founders still make the same mistakes over and over. So, I asked several experienced investors from around the United States:

What are the biggest mistakes founders make when pitching for seed funding?

And here’s what I heard from these seed investors: most entrepreneurs make similar mistakes (and all can be avoided). Read the expert-investor responses below, and follow these 3 strategies to mistake-proof your next pitch. Be sure the read the “Seed Funding Action Items” at the end of each section…

1.) Do Your Homework Before Asking for Seed Funding

“It’s remarkable to me how many entrepreneurs approach us without doing any research in advance,” says Brad Feld, managing director at VC firm, Foundry Group.

And Feld isn’t alone. Most investors also find the lack of prep from entrepreneurs a bit frustrating.

Dave Knox, Partner at The Brandery

Dave_Knox1-283x300

Perhaps the biggest mistake is they way that an entrepreneur approaches. I get numerous requests where an entrepreneur reaches out to me cold. I read email so its not that I skip over these emails. But instead in almost all of these cases, I can tell that the entrepreneur has put ZERO effort into reaching out to me. They don’t customize the request. They don’t take time to read about The Brandery. And they don’t look into my connections or background to see what we have in common. Take the time to get to know an entrepreneur and target the people that are a great fit. If you spend the time to learn more about the investor, it will do wonders to your success rate.

Seed Funding Action Items:

  • Research your contact’s investor fund or investment group website
  • Read and review contact’s personal website (if they have one)
  • Researched the investor on LinkedIn and Angel List for connections or background you may have in common

2.) Focus On Building a Relationship Before Asking for Seed Funding

We’ve talked before about how to get seed funding and this first important step: build a real relationship with your potential investor. And this one sounds simple but executes hard.

Ting Gootee, Partner at Elevate Ventures says, “Seeking outside investors is no different from establishing a long-term relationship where both parties hope to realize certain benefits.” 

Ask any investor out there, and I’ll bet that anyone with a heart would agree.

 Dr. Tony Ratliff, Angel Investor

Tony Ratliff The first number one is that the entrepreneurs try to close the deal on the very first contact or pitch. When really they should be trying to point out the problem, share their story and get us to take the next step. It’s kind of like dating -you don’t ask to get married on the first date. Most investors want to invest in the entrepreneurs, not necessarily the idea because start-ups pivot all the time. So don’t try to get married the first time you approach an investor.

Seed Funding Action Items:

  • Be genuinely interested in other people. Ask questions.
  • Seek to understand your potential investor’s motives. What are they looking for in an investment? How do they want to get involved (beyond writing a check)?
  • Be vulnerable. Share a personal story.

3.) Prepare Your Seed Funding Pitch

Every seed investor has his or her own interests and qualities they look for in a seed investment.

“Have some level of proof of concept,” says Scott Orn, Partner at Lighthouse Capital. Others look for their own must-have ingredients to clear the threshold into that land of “OK, I’m interested…”

Ezra Galston, VC at Chicago Ventures

Ezra Galston

One of the biggest mistakes are entrepreneurs who focus the majority of their time/energy on explaining market sizes or revenue models or other ethereal subjects. We will spend our time researching your market and drawing our own conclusions. We care about how an entrepreneur executes and want to hear data points on accomplishments, growth, and traction, whether those take the form of revenue, users, or team. But more than bullets, we care about how those accomplishments happened – because, again, the focus is on executional ability

 Andy White, Partner at the VegasTech Fund

Andy White

There are a ton of great products out there that no one knows or cares about. You have to show that you understand your market and the demand for a solution to a big problem. Then you can show off your really cool tool.

Seed Funding Action Items:

  • Research your industry inside and out.
  • Practice your pitch with a trusted advisor.
  • Do you know what your investor is most interested in learning about your business? If not, it doesn’t hurt to ask.

The most important thing is to keep improving your pitch for seed funding. If you a potential investor decides to pass, follow up and ask why. It’s ok to request feedback on your pitch and presentation, too.

So, when you venture out to raise seed capital, don’t pass up the opportunity to learn something.

Have you made your own mistakes in your quest for seed funding? What lessons have you learned?

Learn more about seed funding and startup fundraising with Verge! Sign up for our email list for weekly tips and tricks from the experts.

How To Re-Invest In Midwest Startups

Indiana and the surrounding Midwest has an exciting history of software entrepreneurship.

Large sales of companies like Software Artistry and Baker Hill in Indianapolis, and Resite in Bloomington, started a movement that has snowballed into a powerful Midwest startup community.

In this interview from the The Innovation Showcase, entrepreneurs and business leaders from around the Midwest share their perspective on how to keep the momentum going and re-invest in Midwest startups:

First you have to have success. And early software successes in Indiana made way for even bigger wins for the state, including an Angie’s List IPO, Compendium acquisition by Oracle, and of course an Exact Target IPO and subsequent acquisition by Salesforce.

Meanwhile, hundreds of software startups have launched. Some have folded, some have stabilized, and others have flourished.

“We’ve generated a bunch of small companies,” says Mike Trotzke, co-founder of SproutBox. “It’s time for us to start picking the winners and doubling down.”

This year’s Innovation Showcase, with more than 70 fundable companies, resulted in one company walking away with $128,000 in resources to continue their growth. We’re recalibrating venture funding in the Midwest. What else can Indiana and the Midwest do to double down on entrepreneurship?

Drop a comment below and let us know. You can also read the full transcript for the video above:

IMG_8541

 

Matt Hunckler:

We have had a lot of success here. We’ve built on the successes of Software Artistry and going back to Baker Hill. A number of the Indianapolis companies that have exited, obviously Resite in Bloomington and what that spawn was Sproutbox; and that whole movement, all the way up to Angie’s List IPO and the Exact Target’s IPO, and subsequent acquisition.

What do you think that means? What do you think those exits and those pieces mean for Indianapolis and Indiana, in general? And what do we need to do to build on that momentum? It’s kinda like what do you do after you have the Super Bowl here? Do we go for the next 2.5 billion dollar exit? Or we just keep getting small wins?

John Wechsler:

John Wechsler, founder of Launch Fishers.

I have some very strong feelings about this, and I have— for the last couple of years when I was with Mike Kelly and Jason Vasquez, and the others at Developer Town. Couple of years ago, I’ve seen..guys, 2014 is gonna be the bellwether year for entrepreneurship. And in actual, it’s 2013.. turns out it’s probably gonna be 2014— the bellwether year for entrepreneurship and startups in Indiana. For many reasons, one, the ecosystem that’s building. But, several of these major exits and liquidity events that have created dozens, if not hundreds of millionaires with the temperament, the interest and the financial capacity go out and try at themselves. And that is first and foremost, what you need in an ecosystem. You have to have that success and that, you have to have those that were successful go out, try it again and pull others into this wacky world of entrepreneurship, right? And that’s really what makes Silicon Valley so special. It didn’t just happen in the last ten or twenty years. If you think that, you’re misinformed.

The first place I went to when we moved out there was— in fact, JP and I might have actually done it together.. the Palo Alto-Hewlett Packard garage. And literally stood there and just look at it and thought, “man, forty years ago at that time.” Now, forty-two years ago it all started right there. And it took several spin-outs, and exits, and multi-billions of dollars coming and going to build that ecosystem. And it won’t happen overnight. You have a few of these happen. You have a period of entrepreneurial kind of growth. And then it happens again. And we can already see those next special companies that are growing up right now. I won’t embarrass anyone or take my shots at naming the ones that I think are gonna win but man, you can see this.. building. And there’s a lot of excitement and a lot of opportunity.

John Hanak:

John Hanak, Director of Purdue Research Foundation.

And I think, John, related to that is when you look at what’s happened and where there have been exits, almost all the founders, almost all of the key employees are still here. I mean, they’re still in Indiana; they’ve not left. We have cases— John Wechsler, that left and came back which is awesome. I’ll always remember that first time I called you when I found out you were coming back. It was so critical.

We have successful companies in Indiana that have been started by people that came back from Silicon Valley. Dan Haze, up with the Health Call in Merrillville. Jeff Reedy was Scale Computing. We have lots of examples. And what’s happening is.. what I really believe is happening as you talk to everybody that does come back or that doesn’t leave; they’re staying for quality of life. And that is just absolutely huge aspect to this ecosystem in Indiana.

Mike Trotzke:

Mike Trotzke, co-founder of SproutBox.

So, our first fund is now about five years old. And we are definitely focused on what I think is that next phase. This has been a topic of conversation with us a lot. We’ve generated a bunch of small companies. Two, three, four, five, six people companies. And it’s time, from our standpoint, for us to start picking the winners out of those. Start doubling down into the companies that we think are really gonna be the big ones. And, I think a lot of these ecosystems that have popped up— the small, little groups, are in that phase.

Whether it’s now, it’s time to look at the companies, call the herd, get behind some. Take advantage of the fact that there’s a ton of new capital available in the state; to help fuel the growth of some of our winners, and take them to the next level. I think the co-working models are essential, but the next phase is to start having companies at least in Bloomington that are in bigger shops; going out and getting their own office. They’re starting out 10 employees, 20 employees, and 30 employees so that we can get the cycle going. Like what happened with ReSave, we are the only one. We built this company, we sold it and reinvested. We want to take that 20 companies we’ve created, and do that with all 20 of them now. And that’s kind of our next phase. So, I’m very optimistic about that, given the climate of the rest to save Indiana.

Jeb Banner:

Jeb Banner, CEO of SmallBox.

Just to kinda go back to what John (Hanak) was saying about quality of life, I think that can’t be underestimated. I think that a lot of focus is given to funding and talent. And that’s great! We need those things in terms of the ecosystem. But, when you think about the other side of that— it’s the habitat, right? Anyhow, that’s the co-working spaces, but also the cultural trail. It’s the bed and breakfast going into Broad Ripple finally, right? A place people can actually stay.. about going either far north or for south. So, I think that the tech community, and especially the people with a lot of money which now we’ve got a bunch more or soon have a bunch more— need to look at that ecosystem. Think of the quality of life aspects if they really wanna make a long-term bet. Make those investments as much as the investments in the company, and find ways to build-up that infrastructure so that this is the habitat for the talent. And I think that was the approach of the Speak Easy that we took is let’s just build the space. We’re not gonna tell them really what to do. And the animals came. You know, they happen. It took over. They ran the zoo now. And I think, that’s the way it works.

Mike Kelly:

Mike Kelly, Managing Partner at Developer Town.

So, I think from my perspective, one of the things in terms of the people that we talked to who are starting companies today versus the people we talked to three years ago– it’s just night and day difference, right? And it’s not only the people locally who are now just becoming serial entrepreneurs, but it’s also the people who look at Indianapolis– who wouldn’t have looked here before, right? So, the number of deals that we see potentially coming out of Chicago, who would have never looked at Indiniapolis three years ago, but now, legitimately look down here and say, “well hey, we’ve heard about Indianapolis and some of the things you guys have going in there.” It’s really nice news once company sell for really big, large amount of money, right? That gets attention. And so, it’s not only the capital that is created here and stays here, hopefully. It’s also what that attracts to the space. And I think, Verge— and everything that you’ve done over the last couple of years, and there’s a ton other groups at that point. There, just that attention, and the attention of Startup America and the attention of some other things that are going on here, creates a gravity that brings in better opportunities which is ultimately what drives the wheel, right? The better ideas you get, the more people out there pitching. And you know, as those flow to the top, that’s how you drive that engine. And I think, for us, it’s really great to work with these companies. And to move that forward. But, it all starts with those exits coming back here and working here, right?

 

What’s the Biggest Mistake Entrepreneurs Make When Pitching for Seed Funding?

seed funding mistakes

Seed funding isn’t easy to come by, especially when most founders handicap themselves from the get-go.

Despite the wealth of knowledge online and platforms like Angel List and Gust, I hear that founders still make the same mistakes over and over. So, I asked several experienced investors from around the United States:

What are the biggest mistakes founders make when pitching for seed funding?

And here’s what I heard from these seed investors: most entrepreneurs make similar mistakes (and all can be avoided). Read the expert-investor responses below, and follow these 3 strategies to mistake-proof your next pitch. Be sure the read the “Seed Funding Action Items” at the end of each section…

1.) Do Your Homework Before Asking for Seed Funding

“It’s remarkable to me how many entrepreneurs approach us without doing any research in advance,” says Brad Feld, managing director at VC firm, Foundry Group.

And Feld isn’t alone. Most investors also find the lack of prep from entrepreneurs a bit frustrating.

Dave Knox, Partner at The Brandery

Dave_Knox1-283x300

Perhaps the biggest mistake is they way that an entrepreneur approaches. I get numerous requests where an entrepreneur reaches out to me cold. I read email so its not that I skip over these emails. But instead in almost all of these cases, I can tell that the entrepreneur has put ZERO effort into reaching out to me. They don’t customize the request. They don’t take time to read about The Brandery. And they don’t look into my connections or background to see what we have in common. Take the time to get to know an entrepreneur and target the people that are a great fit. If you spend the time to learn more about the investor, it will do wonders to your success rate.

Seed Funding Action Items:

  • Research your contact’s investor fund or investment group website
  • Read and review contact’s personal website (if they have one)
  • Researched the investor on LinkedIn and Angel List for connections or background you may have in common

2.) Focus On Building a Relationship Before Asking for Seed Funding

We’ve talked before about how to get seed funding and this first important step: build a real relationship with your potential investor. And this one sounds simple but executes hard.

Ting Gootee, Partner at Elevate Ventures says, “Seeking outside investors is no different from establishing a long-term relationship where both parties hope to realize certain benefits.” 

Ask any investor out there, and I’ll bet that anyone with a heart would agree.

 Dr. Tony Ratliff, Angel Investor

Tony Ratliff The first number one is that the entrepreneurs try to close the deal on the very first contact or pitch. When really they should be trying to point out the problem, share their story and get us to take the next step. It’s kind of like dating -you don’t ask to get married on the first date. Most investors want to invest in the entrepreneurs, not necessarily the idea because start-ups pivot all the time. So don’t try to get married the first time you approach an investor.

Seed Funding Action Items:

  • Be genuinely interested in other people. Ask questions.
  • Seek to understand your potential investor’s motives. What are they looking for in an investment? How do they want to get involved (beyond writing a check)?
  • Be vulnerable. Share a personal story.

3.) Prepare Your Seed Funding Pitch

Every seed investor has his or her own interests and qualities they look for in a seed investment.

“Have some level of proof of concept,” says Scott Orn, Partner at Lighthouse Capital. Others look for their own must-have ingredients to clear the threshold into that land of “OK, I’m interested…”

Ezra Galston, VC at Chicago Ventures

Ezra GalstonOne of the biggest mistakes are entrepreneurs who focus the majority of their time/energy on explaining market sizes or revenue models or other ethereal subjects. We will spend our time researching your market and drawing our own conclusions. We care about how an entrepreneur executes and want to hear data points on accomplishments, growth, and traction, whether those take the form of revenue, users, or team. But more than bullets, we care about how those accomplishments happened – because, again, the focus is on executional ability

 Andy White, Partner at the VegasTech Fund

Andy White

There are a ton of great products out there that no one knows or cares about. You have to show that you understand your market and the demand for a solution to a big problem. Then you can show off your really cool tool.

Seed Funding Action Items:

  • Research your industry inside and out.
  • Practice your pitch with a trusted advisor.
  • Do you know what your investor is most interested in learning about your business? If not, it doesn’t hurt to ask.

The most important thing is to keep improving your pitch for seed funding. If you a potential investor decides to pass, follow up and ask why. It’s ok to request feedback on your pitch and presentation, too.

So, when you venture out to raise seed capital, don’t pass up the opportunity to learn something.

Have you made your own mistakes in your quest for seed funding? What lessons have you learned?

Learn more about seed funding and startup fundraising at The Innovation Showcase on July 10. Grab your all-access pass here:http://theinnovationshowcase.com

 

13 Skills You Should Learn Before Starting Your Business

We all have business skills we wish we learned sooner. For some it’s sales, for others it’s office politics. For me it’s how to fix a damn paper jam. Regardless of your situation, one thing is clear: We all could stand to learn things sooner rather than later. Today, 13 Entrepreneurs answer the question:

What’s one skill you wish you learned earlier that would’ve helped you launch your business?

John Rood1. Basic Bookkeeping

Starting as a solopreneur, it was easy to keep books in a simple spreadsheet. However, I kept at that for a year longer than I should have. It’s worth investing a couple thousand upfront to get someone to set up your books and accounts the right way.
John Rood, Next Step Test Preparation

 

Corey Blake2. Grace

I have always been agenda driven. As I get older, I find that I’m learning the skill of grace, which is about being present with people where they are, with no agenda. So rather than approaching sales from the standpoint of closing, grace allows me to approach sales from the standpoint of alignment. That saves massive headaches down the road, breeds confidence and adds value, which adds revenue.
Corey Blake, Round Table Companies

 

Mark Krassner3. Leadership

When I first started out, I thought that leadership was about being nice and making people’s lives as easy as possible. While I do still think it’s paramount to be kind and compassionate, I’ve learned that leading means challenging people, and encouraging them to do something that’s outside of their comfort zone. This perspective shift has helped accelerate my business at high-octane speeds.
Mark Krassner, Knee Walker Central

 

Martina Welke4. Adaptability

In retrospect, I think one of the things that slowed us down in the early days of our business was our attachment to our original vision and expectations of how it would evolve. Instead of learning from moments of resistance along the way, we tried to force our assumptions into reality. Now, I try to remain open to surprises and change course accordingly.
Martina Welke, Zealyst

 

Ryan Flanker5. Focus

Avoid spreading yourself too thin and focus on one thing instead. At VerbalizeIt, we try to avoid the word “and,” as in, “we focus on this and this and this.” We made mistakes early on by trying to create a solution for every customer use case. Eventually we learned that doing so was not sustainable. It’s okay to say no and to focus on one’s core vision.
Ryan Frankel, VerbalizeIt

 

dave-nevogt6. Reverse Thinking

Earlier in my career and when I first launched my business, I thought very much in terms of the “next step” without giving as much attention to the impact those decisions would have on my business down the road. Now, my decision making process involves reverse thinking. It works by taking the desired end result and building the required steps leading up to it.
Dave Nevogt, Hubstaff.com

 

Brittany Hodak7. Graphic Design

I own a content creation company but have no design experience. When it’s difficult to express an idea or concept, I have to try to hack my thoughts together on paper or in PowerPoint. I wish I’d taken the time to learn InDesign in college.
Brittany Hodak, ZinePak

 

Andrew Thomas8. Risk Assessment

The ability to accurately assess risk is a skill I have learned over time yet wish I had learned earlier. I can certainly point to opportunities that I did not pursue because I overestimated the risk. You can take a few more chances when you are young and I wish I had approached those opportunities from the “why not” perspective that I do now.
Andrew Thomas, SkyBell Technologies, Inc.

 

Brennan White9. Sustained Networking

Early on in my career, I thought of networking as a discreet task that could be started and finished. I’ve come to learn that networking never ends and is simply an extension of relationship (and friendship) building, which is something I’ve always been great at. Once I took the label away and realized I already possessed the needed skills, my businesses have taken off in new, exciting ways.
Brennan White, Watchtower

 

Liam Martin10. Employee Management

The skill I’m really trying to learn is how to become a good manager. I’ve discovered that employee management is a lot more difficult than I thought, and that to continue to scale I have to spend more time managing people than actually doing tasks. For entrepreneurs this can be difficult, and if I had worked under a good manager previously it probably would have helped me considerably now.
Liam Martin, Staff.com

 

Janis Krums11. Coding

Finding quality developers inexpensively is really difficult. Had I known how to code, I could have not only built a prototype of our business model much faster, but also increased the rate at which we developed the actual platform. What at times has taken months to complete would have taken days — which would have allowed the company to quickly understand what worked and what didn’t.
Janis Krums, OPPRTUNITY

 

Juha Liikala12. Delegation

Money is always tight in the startup phase. Don’t let that lure you into trying to do everything yourself. Focus on your strengths, utilize them and delegate other mission critical roles. You might have to hire a professional, but when compared to the fact that you might not launch at all because of your DIY approach? It’s just not worth it. Value your time and delegate.
Juha Liikala, Stripped Bare Media

 

Ioannis Verdelis13. Marketing Savvy

I should have learned more about marketing and PR. It is now a strong part of our business, but we learned how to do this by making dozens of mistakes first.
Ioannis Verdelis, Fleksy

Winning Startup Trade Show Ideas from The Innovation Showcase

It’s been a big year for Santiago Jaramillo and the BlueBridge Digital team. The kind of year that landed him on the Inc. 30 under 30 list.

Startup Conference Tips to Win

Santiago Jaramillo, Founder and CEO of BlueBridge Digital.

A year ago, BlueBridge had fifteen clients and three employees. They now have over 110 clients and more than fifteen employees, but that’s only the beginning–with plans to add 199 jobs over the next nine years, Santiago and BlueBridge are only going to continue accelerating.

And when Santiago pitched at The Innovation Showcase in July 2013, the team was already well on their way to growth mode: they took home 1st place in the Early Stage Startup category, attracted lots of attention from the startup community in Indiana (and around the country), and have continued to innovate in the mobile space.

So when Santiago shared with me how he and the BlueBridge team prepared for The Innovation Showcase, I knew it was advice worth heeding.

Santiago explained that three things take the most effort and time to prepare for startup conference and events: the exhibit, the team, and the pitch. Catch the full interview and my takeaways below.

Winning Startup Trade Show Ideas

Startup Trade Show Idea #1: Be Intentional with Your Exhibit

Attendees at most conferences won’t have any clue what your company does when they walk through the door, so start with the pain or problem you solve. Try to avoid industry jargon. Your goal is to be understood–to create an “Ah, yes, I see!” moment–not to speak over attendee’s heads.

BlueBridge delivers Mobile Apps as a Service (MaaaS?). Which may or may not come across clearly, even to a techno-literate audience.

Keep your exhibit simple, like your pitch, Santiago said. Put a lot of thought into the few items you will bring, and keep attendees laser-focused on the real value you provide–not the chintzy usb drive the booth next to you is giving away.

Startup Trade Show Idea #2: Be Intentional with Your Exhibit

Startup teams are tight-knit, but that doesn’t always mean that everybody is on the same page going into scrutinous environments like The Innovation Showcase. Prep your team with finely-tuned talking points to make sure the message is consistent. Rehearse.

“When you start describing what you do,” said Santiago, “There are just so many solutions out there that people wonder why you should even exist.”

So why does BlueBridge exist?

“There are more smartphones sold than babies born in the world,” said Santiago, chuckling. “It makes you laugh, but it captures their attention…and they’re willing to listen to how we’re solving that issue.”

Key Startup Trade Show Idea: Ask yourself what key metrics you can share, and how you can create buy-in from attendees with your reason for being.

Startup Trade Show Idea #3: Perfect the 60 Second Pitch

Startup Conference Pitch

Santiago Jaramillo and his partner Adam Weber delivered a conversational, easy to understand pitch that really resonated with the judges.

At The Innovation Showcase, companies only have 60 seconds to pitch–but since founders really only have about a minute to get the point across any time they pitch, the lightning-fast 1-minute pitch gets a lot more use than you might think.

“Put yourself in the shoes of your audience,” said Santiago. “You have to really simplify and condense.”

Key Startup Trade Show Idea: Keep your pitch simple. Really simple. Questions afterward do not always mean the pitch was unclear–often, they demonstrate real interest.

Santiago’s pitch style earned him a win at The Innovation Showcase–and if you’re thinking of applying for the 2014 Showcase, his advice is certainly worth incorporating into your pitch: “Be very specific, clear, and simple. Those people don’t know the industry and buzzwords like you do.”

“You want to be either loved or hated, but not ignored or confused!”

The Innovation Showcase is accepting exhibitor applications until April 30, 2014. Get your application in now for a chance to secure one of the first 15 spots!

Startup Investor Insights: Elevate Ventures’ Ting Gootee

When you score as much as the Seahawks did in the Super Bowl, the way people refer to you starts to change. They call you things like “dominant,” “effective,” and “the best.” 

Elevate Ventures has been called many of those things.

That’s why I was so excited to hear what Elevate Ventures’ Vice President of Investments, Ting Gootee, had to say about what she considers when evaluating deals–and what startup founders should know about how Investors approach deals–on one of our recent Investor Panels.

Startup Investor Insights: Elevate Ventures’ Ting Gootee

Investor Insights Elevate Ventures Ting Gootee

Ting Gootee, VP of Investments at Elevate Ventures

Not All Money Is Created Equal

If Firm A agrees to the same terms as Firm B, why would their investments be any different?

Because, as Gootee pointed out, not all investors bring the same resources, network, and commitment level to the table.

“Look at it as a partnership,” Gootee urged founders. “When you take money from someone, they are in this with you for a reasonably long time.” Startup funding is not marriage, but the investor panel agreed: it’s close.

As with any relationship, Gootee said, you’ll want to look for three Cs when evaluating your potential investors.

The Three Cs of a Healthy Investor-Startup Relationship:

  • Competence. Do your due diligence on your investors. You can bet they’ll be doing theirs on you.

  • Character. You’ll depend on

  • Chemistry. Are your goals aligned well, or is it more of a loose fit? You’ll want your investors to be in lock-step with your goals so you can leverage your relationship with them effectively.

“Know that you are in this for the long term, and know that there will be bumps in the road,” said Gootee. But, as she illustrated, if you have kept the Three Cs in the front of your mind as you secure funding, you’ll encounter those bumps in the road with the confidence that all parties involved want the same result.

What Makes Investors want to Invest?

As Gootee pointed out, you should not ignore the human side of the investor-startup relationship. And her investment team at Elevate certainly doesn’t.

  • Gootee looks for “Someone that is comfortable managing the human side of business. As early stage as they are, there is a lot of subjectivity in finding the right fit.”

  • The second thing Gootee and her team at Elevate Ventures look for in a founder is leadership. But, as Ting so rightly asked, “What does that mean?”

    • When she evaluates a founder, Gootee wants to see servant leadership. “It’s not just about you, as the founder,” Gootee said. “It’s about the resources you can bring to your team.” That, Gootee said, is how companies can really grow and scale.

Gootee’s fellow panelist, Gerry Hayes of Slane Capital, agreed with Gootee and explained that the difference between a founder and a CEO can mean the difference between whether or not an investment will be made.

Both investors concur that the founder may not be the person to scale the startup–which really gets at a key insight I got from this panel:

  • When they’re evaluating founders, investors want to see someone who is willing to acknowledge that, although they built “their baby” until a certain point, in order for it to grow bigger than themselves, they may need to assume new, different roles. Be humble.