Live Pitches on Periscope

I like to think of myself as an early adopter. What self respecting nerd/vc isn't an early adopter, at least for some things.  However, when it comes to social and messaging applications I am practically a Luddite. I hated friendster and myspace and certainly didn't think the world needed Facebook. I didn't get Twitter. for years I resisted texting when email would do and I continue to refuse to use messaging apps. (Zuckerberg deserves a special place in hell for allowing people to send me messages through Facebook on desktop but then making ME open messenger to read them.)

I don't invest in social so this hasn't been a huge detriment to my personal or professional life but it does make me feel slightly less cool. The biggest drawback has been that I tend to get shitty usernames because I join a bit late. (Hey @jake, when you get sick of using Twitter let me know). 

All that said I've decided to give periscope a try. When Periscope and Meerkat blew up last year my initial reaction was that these were unnecessary social/communication tools destined for the dust bin of history but I've recently watched some periscope feeds (@sacca is pretty solid) and am sold.   In the next month or so I hope to begin a series of live pitches. It seems to me most founders never get to see other founder's pitch (demo days don't count) and it could be really valuable. It could also be a total failure. We're just experimenting and living on the edge here.

If you are interested in pitching live via Periscope let me know @runvc. Lets do this thing. 

**If you have some secret sauce you want to keep confidential we can kill the feed during that portion of the pitch. 

 

Demo Day Pitches Are Too Polished

I get less and less value from demo days. I attended the 500 Startups Batch13 demo day this past week and each of the pitches followed a very specific formula. By the time the 3rd or 4th pitch was over, the companies all started soundingindistinguishable from one another. It’s hard to make a secondary marketplace for cosmetics sounds like a 3D printing company and yet they somehow managed. This isn’t polishing presentations, it is grinding them down into a standardized unit for mass consumption. Each of these companies is crushing it with X% margins, XX% MoM growth and $$$ in ARR. Each has super secret ongoing conversations with big industry players and each just might be able to squeeze you into a round. What do the companies do? Its not entirely clear but they are in a big market, isn’t that enough?

I don’t want to cast shade on 500 Startups because I think their program is valuable for the companies and I don’t want to demean the companies who presented, many of them actually shine when you talk with them 1:1. The problem is that demo day seems to take everything exciting and interesting away from these companies. I don’t know if it is the time constraints or some desire on the part of the accelerators to level the playing field between their stars and their bench but whatever it is, I think it does a disservice to the companies. If I were to give any pre-demo day advice it would be to standout, whatever it takes. If you have impressive metrics drop them on me quickly but then move on to the human part of your story. Be unique! Be relatable.  

Raise capital with a purpose

Eric Paley wrote a great post on TechCrunch (Wasting time with the Joneses) over the weekend about the temptation for startups to raise as much money as their competitors just for the sake of raising money. Eric explains in much better detail than I possibly could that this is a terrible idea.

One symptom of this disease (brought on by too much capital in the market) is that the traditional “Use of Funds” slide in a founder’s pitch has fallen by the wayside. Most pitches I see these days approach use of funds as a total afterthought. If they include the slide at all, its something like 70% for hiring, 20% for marketing and 10% for cushion, full stop.

Seeing so little thought go into how the company might use the money they’re raising is a huge red flag. If you don’t really know how to use the money but you’ve raised a boatload, you will be under pressure to spend it and if you are under pressure to spend it without a plan, you are going to spend it poorly. In these cases you will often see founders spending the money on a hiring binge. Hiring is the easy/lazy solution to a problem. If you can’t think of a nuanced solution, just brute force it with more people.

I think founders are afraid of putting their real needs/projections to paper. They worry that they won’t know exactly how to spend the money or that we might pick apart their strategy. As Field Marshall Helmuth Von Moltke once said, “no plan of operations extends with any certainty beyond first contact with the main hostile force.” I don’t expect founders to actually spend the funds exactly as they had planned. Stuff happens and founders need to be dynamic, they need to adapt on the fly. The point is, I want to know that the founders have put thought into what they are doing and aren’t just raising capital out of fear.

Final thought, don’t raise money unless you need it and if you do need it, make sure you understand why.