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My First-Ever VC Pitch

I recently had the opportunity to pitch a VC firm. Hummer Winblad, to be exact. As someone who never thought he’d ever do that, I have to say it was all rather cool. Here are the details:

THE IDEA: Over the past couple months. I dreamed up an idea for online retailers to connect to social networks. I won’t say too much about the idea, because you just never know if it might see the light of day sometime. But I did take the time to lay it out via Google Presentation. That was pretty fun, I have to say. I had all these hack graphics courtesy of Microsoft Paint. Primitive, but it worked.

ASKING AROUND: Once the idea was written down, I needed to find out if it has legs. I didn’t worry about someone stealing the idea or anything. You can’t learn anything keeping the idea bottled up. So I asked a few friends to take a look at it. To my surprise, I got a lot of “great idea” responses. Followed by, “isn’t Facebook going to do this?” The feedback pumped me up, even if Facebook was going to do it.

CO-FOUNDER: I don’t code, can’t code, shouldn’t code. I needed to have a development partner. Well, I met a dev buddy and shared the idea with him. He liked it, and agreed to be a co-founder. So, good feedback from friends, and a co-founder who could actually make the idea a reality. Things were going well.

MARKET FEEDBACK: I talked with two different e-tailers about the idea. Both really liked it. Each had his own take on what he liked, and I was pleased with the responses. Good feedback from trusted friends, a dev co-founder, good response from potential customers. Check, check, check!

THE PRODUCT: Uh…we actually hadn’t built anything yet. Hmm…was this going to be a problem?

THE VC INTRO: I sent a link for my Google Presentation to a contact at Hummer Winblad. I had met with him a couple years ago to interview for a VC associate position (didn’t get it). To my surprise, he emailed back and said he’d be delighted to hear more details. I was thrilled, despite having no actual product to demo.

VC PITCH DECK: I needed to convert my original, handcrafted presentation into an investor deck. This was really pretty easy. First, a couple of VCs have written blog posts about what ought to be in a pitch (here’s a good one). Having spent several weeks researching the idea, the slide contents were pretty easy to pull together. The hardest thing was the financial projections. But even those weren’t too bad. See Glenn Kelman’s post on Guy Kawasaki’s blog for some very useful advice.

THE PITCH: My dev buddy and I arrive early for our pitch. We set up in a spacious conference room with a flat-panel screen. We’re a little nervous, but our attitude is “we have nothing to lose”. The VC runs late. Finally, my VC contact and an Associate arrive. We start the pitch. Good attention, questions are asked, dialogue is occurring. I’m feeling OK about it. Then they ask about what stage we’re at. “Seed. No product built as yet.” At that point, the pitch came off the rails. We were gracefully pointed toward the angel investor route. Alas, no follow-up meeting would be needed.

POST-MORTEM:

  • In this web 2.0 age of free software and services, it’s safe to say you’d better have some actual product to demo. Only well-known successful entrepreneurs could get away with not having an actual product while raising money, and it’s unlikely they would ever do so.
  • The entrepreneurs are the best prepared and most acknowledgeable people in the room when it comes to their idea. VCs can seem intimidating given all the pitches, investments and experience they have, but they’re generally learning in real-time from the entrepreneur.
  • Don’t sweat getting a ‘no’. Is it the idea, the company or the VC? Focus on your own view here. If it’s the idea, what needs to be fixed? If it’s the company, what can improve things (e.g. actual product)? If it’s the VC, there are many others.

So that’s my first-ever VC pitch. I’m noodling on what to do next. The product remains, as of yet, unbuilt.

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Do Bankruptcy and Startup Go Together?

I just left my old company, Pay By Touch, after 2 1/3 years there. You may have heard about it. The biometric identity company that raised $270 million (or so) and subsequently filed bankruptcy. If you need a refresher, check out the Valleywag coverage. Some glaring inaccuracies, but a decent accounting of the company’s woes.

One thing Pay By Touch is endeavoring to do is emerge from bankruptcy, right the ship and move forward in its business. It’s an interesting process.

Some companies have done the bankruptcy thing, and were able to achieve a certain level of success. United Airlines is a somewhat recent example of such a company. However, is it possible for a startup to pull the rabbit out of the hat?

Having just been through it, let’s examine the effects of bankruptcy on an early-stage company:

  • Customers stop dealing with you
  • Vendors stop dealing with you
  • Existing employees spend a lot of time looking for new jobs
  • Employees leave in droves, voluntarily or through layoffs
  • New employees won’t come near the company
  • Senior management can no longer focus on execution, which filters down to everyone
  • Creditors, investors and management shift, sell or shut down company priorities and businesses, paralyzing most initiatives

An essential element of an early stage company, especially one in technology, is progressing forward on something the team believes in. A friend from college used to say that if you’re not moving forward, you’re moving backward. He’s right.

Bankruptcy robs a startup of the oxygen it needs to live and grow. Not money (although that is important). Rather, the esprit de corps and belief in the big future.

I’ve got a number of friends still there, and I hope Pay By Touch pulls through. What they’re trying to do ain’t easy.

Confessions of an Online Video Luddite

comScore says that consumers are watching 3.4 hours of online video per month as of December 2007, a report highlighted in this post on Silicon Alley Insider. That’s a 34% increase in time spent viewing since January 2007. Apparently we’re enjoying online videos more than ever.

Except me. I’m not a fan of online videos. Three reasons:

  1. Too long for the videos to load
  2. If I get impatient and start the video immediately, I get annoying latency
  3. Investing 2, 3, …10 minutes of my time is too much

#3 is the one that gets me most. After waiting for the load time or enduring the pauses in the video as it loads slowly, the payoff better be good for my time. And generally, it isn’t. I’m not talking watching episodes of Lost on my iPod. Rather, I’m referring to these home-built efforts. They just aren’t worth the effort.

The comScore survey indicates that average online video duration is 2.8 minutes. The shorter time for the videos makes sense. Longer videos will exacerbate the issues above.

Reading, on the other hand, is a great experience. With RSS, I can pretty quickly size up the article and determine how much time I care to invest in it. I learn more in 10 minutes of reading/scanning my RSS reader than I do with 10 minutes spent on videos.

Super Tuesday with Twitter/Twittervision/Google

Enjoyed using the Twitter mashup for Super Tuesday. Some algorithm (Google-created?) identified Super Tuesday-related tweets. Twittervision mapped these to Google maps. So you’d see comments pop up alongside someone’s picture, with their location on the Google map. Very entertaining.

There were plenty of Europeans and Australians chiming in that night. A few Latin Americans and a decent showing of Canadians. Demonstrated for this insular American how engaged the rest of the world is in our politics.

Also, by the end of the night, there seemed to be a 43-minute lagtime between posting a tweet and seeing it show up on the map. The typical comment display plus move around the Google map may have been ~10 seconds. So that’s roughly 258 tweets at any given time waiting to post.

Feed the Beast

My initial foray into blogging. Not sure what form it will take, nor can I establish a consistent theme for it. But the most important thing is to…

FEED THE BEAST

Blogs generally will not get much readership. Sad fact. This one may be lucky to get anyone beyond myself. But I know for sure that if the you maintain minimal content, infrequently updated, NO ONE will ever bother. So you need to keep the posts going. Just post, baby! If you do it enough, you’ll find your blog “voice”.

The great thing about Twitter is that it’s quite easy to build up content with those 140-character posts. Don’t overthink it, just type and go. And a hat tip to a blogger I’ve never read before today, Andrew Shuttleworth. His post about just getting going was an inspiration for me to just start writing.

Now, can I hook up my Twitter feeds to post here…?