We recently had Sean Percival and Robert Neivent at Galvanize’s San Francisco campus to lead a workshop on the basics of raising a seed round. Here are their most important rules for founders trying to raise a seed round:
Rule #1: Have a Story (with Metrics) to Tell
It’s a lot easier to fundraise if you have something successful to show off to investors. But before you even think about raising, make sure you have a good vision statement, a compelling story, and a clear understanding of the problem you’re trying to solve. This is especially important if you’re very early and don’t have a lot of traction just yet.
If you’re further along, you can (and should) rely more on good metrics to show your success. Know your run rate, user acquisition costs, and churn rate like the back of your hand. You should have a few powerful customer testimonials to share as well.
Investors won’t be intrigued unless you provide them with a clear picture of your vision and success.
Rule #2: Start Building a Network
For better or worse, people tend to invest in people they know. This can really suck for founders who don’t have existing VC connections. Thankfully, tools like LinkedIn, Angellist, Twitter, Crunchbase, and others make it pretty easy for you to research investors and gain valuable intel.
See what mutual connections you have (even loose ones) and try to figure out a way to get a warm intro to the perfect investor for your startup. You don’t have to go to VCs directly – reach out to their friends, previous investments, and other people who will recommend you to them.
Next, start putting together content in the form of newsletters and blog posts to share company updates without being too salesy. Not everything has to be a pitch – put information out there so VCs can become familiar with your company. Try to get to know them instead of aggressively pitching them.
Finally, use a CRM to keep track of who’s engaged. It’s a complete waste of time if you send emails out to potential investors and don’t keep track of them.
Rule #3: Have an Actual Pitch
Never approach an investor say, “I want to pick your brain.” This a huge red flag for VCs. You’ll sound unprepared and will essentially be asking a VC to provide unstructured advice for 30+ minutes. Like everyone else, they’re busy and only want to put meetings on their calendar that are valuable.
VCs are being pitched constantly, so you’ll only be able to get through the noise if your pitch is short, to the point, and memorable.
Here’s a basic outline of setting up and executing pitch meetings:
- Prepare a brief elevator pitches as well as a longer presentation (30 seconds > 3 minute > 30 minute)
- Put together 10 slides
- Schedule meetings
- Make your pitch conversational – allow them to ask questions and start a dialogue
- Finish with a call to action, and tell them you’ll send a follow up email to answer questions and provide more materials
If you don’t hear back from them, look for topical reasons to reach out in the future, e.g, new investors, company updates, etc. Find ways to bring yourself top of mind without just pitching them over and over.
Above all, investors care about your growth rate, revenue, and user base. Avoid custom metrics, as they don’t say much about how your company is actually doing. And remember that churn rate is a critical component of your pitch. Know it well, and know how to explain it. If you have high churn (above single digits), your product probably has a problem.
Watch the entire workshop or read the transcript below:
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Robert: It’s a lot easier to fundraise if you have something to show that you are being successful already. So if you are really early then have a really good vision statement, you have a good story, a problem you solved. This is…and explain why it is, but you have to start with that before you can start fundraising. A lot of times people show up to the fundraising and they’ve got no story, they are not clear on what their problem is and they’ve got no metrics. So it’s hard for me to figure out…I don’t know how to invest in that. I don’t have a clear picture.
So first have a clear picture of the problem you are solving if you are very early. If you are little later, have good metrics to show. Run rates, user acquisition, low turn rates at least a few testimonials. So my first statement is that. Second thing…how long an answer do you want? Do you wanna keep going?
Sean: Keep going.
Robert: Keep going. Okay. So now let’s assume you have a story to tell. The process, the next thing I’m gonna say is start building a network. People invest in people they know. It may not be fair. It’s not the way the world works. It just is. The fact is if they know you, they’re much more willing to invest in you.
And by network I mean don’t just show up and throw your cards around. That isn’t that helpful. Build the network, talk to other entrepreneurs, go to events, try to get people to know who you are. This is valuable. You do this throughout your career. This isn’t just for fundraising. Almost everybody who’s invested in me, I knew before I needed money. It’s much easier to talk to them that.
Okay, so that’s just the first thing. As for tools, let’s go into some very quick ones. Yes, you probably all know LinkedIn. There’s also a bunch of things like forums especially for engineers, Stack Overflow, all these types of things are all useful to connect with a bunch of people. Don’t be completely obvious in your…I am not gonna connect to Sean and say, “Hey, I’m looking to raise funds,” because he’s probably not gonna accept it, but if he has a reason to talk to me otherwise, it’s lot easier. AngelList is useful. Gust, especially if you are in the mid-west is useful. LinkedIn, certainly, useful.
I actually do most of mine by working with other entrepreneurs. I know this sounds a little odd. I build up…and for me, it’s mostly talking to other entrepreneurs who know who I am and then they send the letter of recommendation to a VC they’ve worked with. So it expands my network dramatically. So I work with hundreds of entrepreneurs a year. At least a few of them like me, maybe a few. The point is that they know…yeah.
Sean: I think most. I did have one recently “Yeah, I don’t like Robert.” We’ll talk about that later. But that is 1 out of probably a 100.
Sean: It’s good. Good ratio.
Robert: Yeah. So the point is that don’t just try to go to the VCs. They are very difficult to get to. Think about your other people who would recommend you to people and that oftentimes is very helpful.
Sean: Let’s talk about that because the one thing I hate is the cold intro, the wrong intro, the intro at the wrong stage, the intro from someone I don’t know. You talked about network building. How do you get intros? How does this work? What’s the best way to do this?
Robert: Intros. So this is a good one. So let’s assume for the moment you go out on AngelList. You make a list of about 200 investors. Your first statement is, assuming you’ve got your story, you’ve got metrics, do they invest in your field? Have they invested in similar companies in your area? Have they invested the amount you’re looking for?
I can’t tell you how many people I know partners at Excel. These guys do $10 million. Approaching them asking for a 500k check, that’s the wrong business. That’s not what they are doing. They should look. It’s public [inaudible 00:03:24] CrunchBase, AngelList, CB Insights all these things show what they are doing.
You should know that they have invested a similar amount you’re looking for, should know they’ve invested in companies in your field. You should look at their Twitter and see what the heck they are talking about. I cannot tell you how many people, Manu Kumar who is from K9 says he has a page, a web page that says this is why I invested and this is my philosophy and he has some basic statements. I think one of them is founders must be technical. If you approach when you are not a technical founder, you’re fucking wasting time, his and yours.
Sean: Those are…I wish more of…I should do that. I wish more VCs would do that. Homebrew, I think has a great page where it’s like, this is exactly what I am looking for and it’s nice because the founder is like, “Yeah, I wanna get money from them.” I’m like, “Yeah, but you are not even close.”
Sean: Here’s the link. But like yeah so…but this is where founders struggle so much where they just don’t know how to get started, they don’t understand relationship building. I agree, it’s a bit of a courting process and like even with Dave, I think I knew Dave for three years before he wrote me a check. I never even thought about asking money. But I built it up, we drank together [inaudible 00:04:24] Texas in Southville [SP]. We did all this stuff. It’s like courting. You don’t get laid on your first date and if you do, usually it’s a bad partner.
Robert: Yeah. I was about to say.
Sean: You can but it’s like oh, usually it doesn’t work out.
Robert: If you get laid with your VC on the first date, you’re definitely in a problem.
Sean: Yeah and I don’t think a good VC would write a check right away too, but even on their demo day…
Robert: Well, maybe to get you to go away. In my case.
Sean: Maybe or no. On demo day, I think there’s illusion…it happens in YC a little bit, not as much with us that you go to demo day and then, hello, the money rains down and it’s like the stock market floor.
Robert: I agree. That’s actually a really good point.
Sean: That’s not true.
Robert: It’s about relationships building up, but it’s also about them having confidence in you and that happens over a period of time. Sometimes that’s drinking [SP], but sometimes it’s…and this is common for me, I meet with a lot of entrepreneurs or VCs and I am talking about “So my company is doing well and here’s my metrics.” I am not asking him for money. Six months later they’ve heard the metrics for six months. They, “Oh, yeah I know about.” Now they’re familiar. It’s a lot easier for them to deal with you.
This is why I often recommend to entrepreneurs, as you get these connections, do a monthly newsletter to these investors, “Hey, here’s what we are doing. Here’s how the company is doing. Here’s what we are doing.” It’s familiarity. Yes, we get hundreds of emails, but they still skim through them. They are looking for deals. Remember, it’s their job to make an investment. Ultimately, they are looking for you. So newsletters, monthly updates about how things are going. Don’t pitch them constantly. Give them information. Here’s a very common one for me. I was approached by…I built up a reputation for knowing certain things, let’s just freeze it. It’s actually in security…
Sean: Oh really? What’s that?
Robert: It’s in the security space.
Sean: Oh, yeah that’s right, the weird stuff.
Robert: So I’m just gonna avoid the topic too much. Let’s just say I am familiar with how to breach certain things in government security protocols. So the point is that I got approached by a VC who said, “I was thinking about investing in this company, can you do an eval for me?” I went in. I did an eval and I gave him a nice eval. Well, if I had needed an investment, that’s an easy way for me now to call him back and at least get a meeting. You have value to them.
VCs do not have time to do many things that you can add value to them. I recognize this by often times sending certain VC friends of mine updates “Oh, I know you’ve invested in this company. Here’s an update for you on that space by the way.” And it’s a very short article. They’re like, “Oh, that’s cool. Thanks very much.” Be hopeful. I do this on a fair basis. I spend a small amount of time every day helping my network which means I have favors to call in later.
Sean: Yeah, I call that the Karma bank. I’m not super religious, but it’s like I want my karma bank full at any time because I don’t know when I need to cash in. Let’s roll back on that monthly idea though and that’s such a simple basic idea. And I think like your flow. You meet a VC and it’s like, “Hey I am working on XYZ. I would love to keep you up to date about that,” and that’s great. There’s no commitment, there’s no rush, I don’t feel like you are being too aggressive. You’re not turning me off. I’m like, “Okay cool, Great.” Very non-committal but allows me to stay there and you stay top of mind with this investor. Every month they are getting something from you and, as we talked about a lot, it’s all about selling momentum. So this first few bullet points should be we added two new costumers. Let’s say you’re SaaS, “We did 10k more in revenue. We did this.” Hit me with the numbers so I know something’s happening here.
Robert: I am just gonna add one more point to it. Short, sweet, bullet points. Get to the point.
Sean: Yeah, no novels. Yeah.
Robert: No novels. Most of them they are reading on their phones. I will be very honest with you if you send me an email that has more than three paragraphs, it is extremely unlikely I will see your fourth paragraph. And if the three paragraphs are more than a few lines long, I probably didn’t get past the first one.
Sean: Yeah. I’m the same way. I am a skimmer and like yeah…but this is the challenge where it’s like U.S. founders entrepreneurs like you are very passionate. You’re very bold. You have all this stuff to say. We cannot consume that on 100 a day basis. It’s just too much for us, and we have short attention spans. We’re thinking about going skiing and our vacations. It’s really, really tough being a VC. So make it easy for us, really, really short and succinct. And I think the ideal format is it’s three bullet points to start off with. And we talk about this in pitching too like you don’t wanna get up there and do this long drawn out pitch where it’s your life story times this and that. It’s like you get up there and it’s like, “Yeah, we are the best solution to [inaudible 00:08:27]. We’re doing 100k a month.” You’re just hitting me the things that are hooking me. Same deal with that email.
Robert: Yeah. By being short and sweet, it can probably get read. And I’ll also add one last tool segment to this. You can track emails. This is very simple tool…
Sean: I turned all these off because this is very annoying to me where I had a founder…he was here actually…I think he is in galvanized [SP] but he came out to me and he was like, “I saw you opened my email twice. Or I saw you opened my email three times. Why didn’t you write back?” So I turned off all that shit. That drives me crazy. But others don’t…
Robert: Some people do.
Sean: But others don’t.
Robert: Yeah. So I was about to follow that sentence with but be polite about the whole thing so…
Sean: Use those, though? That’s okay. We can have some point, counter point. That’s okay.
Robert: Yeah. So don’t walk and say, “Hey, I see you opened my email.” That statement is exactly why it’s bad. But it is important…
Sean: Once again dating, “I’ve been standing outside your window watching you. Do you wanna go on that first date now?”
Robert: I am not stalking you, but you really think that underwear went with your socks. I mean, seriously…
Sean: Exactly. It’s too much.
Robert: But my point is like often times, I’ll send presentations and I wanna see if they’ve opened or reviewed them. Depends on your point of your relationship, but tracking is useful for you. But don’t be overly aggressive about it. And it just is but…I’ll phrase it differently. Most VCs, yeah, I’ll tell you all of my systems are blocked. Good luck. I block out all the pixels all that.
Sean: Me too.
Robert: But a lot of people, it’s okay as long as you are not super aggressive and it’s helpful to you.
Sean: What about other tools? Because I think the one challenge with founders is that you got so much going on. You live in a world of shed, everything is crashing, building crashing. How do you keep track? Boomerangs, stuff like this, what do you think are the real tools to use?
Robert: Depends on the company. If your company has a CRM in place already for your sales team, you can use that for fund-raising. How many people have you contact, last time you contacted them, you can put them on drip campaigns…
Sean: Yeah. Okay, looks like a Streak like a Gmail plugin.
Robert: Yeah. Streak, Pipedrive, well if you have a lot of money RelateIQ, ToutApp, all these types of things can be integra…well ToutApp isn’t a type of CRM, it’s a drip campaign. But you can use your sales tools to approach them. Here’s my statement. For me, it’s a very systematic process. I make my initial lists. I write down when I’ve contacted them. I say what I’ve done with them. I keep track of it either in a spreadsheet or a CRM. It’s a process for me. It’s a daily process for me. That’s how I do it. Some people prefer to do it in these blitzes, I don’t. I like to do a little bit each day and just keep looking for interesting news to send them, keep dripping along on this.
But the most thing is I track it all. It is a complete waste of your time if you are sending an email and you’re not tracking who you are contacting and when. The worst is, here’s an interesting note for you, VCs have cycles. They go through events or other things like that. If you know they’re going to an event, that’s important. “Okay, I am gonna go to that event or not.” It changes how you do things.
Sean: Yeah, I’ve been stalked at events, too. I think that’s why Dave doesn’t go to as many events anymore because he can’t get through the door. It’s just like every few feet. But what’s the etiquette? Should they come up? Should they hug me? Should they lick my cheek?
Robert: Okay. Wow.
Sean: Should they follow me? What should they do?
Robert: I followed you. That worked. So I think, for me, cold is very low yielding. I don’t think I’ve ever sent a cold email and gotten an investment. Most of mine, I think as I mentioned earlier, were for introductions. I have a friend, he got invested by…I am making this up, this is not a truthful statement. Fred Wilson invests in a friend of mine. He did very well. He had a successful exit. I said, “Hey, would you do me an introduction to Fred.” If he does an introduction, it’s much more likely that I get a conversation. So that’s how I do it, but this takes long time. Not everyone can do it that way. Your statement about events, I actually don’t attend major events. I actually attend things like startup-to-startup, Stanford Angels, and Entrepreneurs, much smaller ones, but the big thing for me is I never pitch them in my company. I get to know the person. I talk to them about…I don’t pitch them because as soon as I pitch, their defense mechanism goes up. I just went, “Hey, you’re interested in this…”
Sean: It’s not the right venue though because…well, especially let’s say you give a talk, and that’s the toughest thing where you give a talk and there’s a few people afterwards and then…but it’s not the pitch. It is “Once again, love to tell you more about what I am doing? Can I get a card?”
Sean: So you are doing legion, I guess.
Robert: Yup. In the best I’ll phrase it, I’ll go back to his statement on karma. If you can offer them something first, it’s much more likely you can get something later. I know it sounds a little weird, but it is human condition that if somebody gives you something even if it’s trivial, bottle of water or something, whatever, you feel the need to return the favor. This is called reciprocity if anybody…I manipulate this all the time. I cannot tell you…
Sean: I’ll be aware of this now.
Robert: …how many VCs I’ve walked to at an event and handed them a bottle of water and I get three minutes of time.
Sean: Yeah, that’s…
Robert: I can tell you very rarely do people notice it unless you are doing it very badly.
Sean: Yeah, and if don’t just wanna talk, you’re so focused on delivering and then all sounds a bit hectic. So, it’s probably like oasis. You’re like, “Yes, water please.”
Robert: Again, the bigger problem is if you hand them a bottle of water and start pitching your company, it’s obvious. So, I’ll give you an example, there was this speaker…I was at an event…I forgot…Jim from Maven. Jim Scheinman [SP]. Anyway, I’ve known him for a little while. We’ve bumped into a few times, and he was giving a talk and I noticed that it was running late. So, I actually found him and I said, “By the way, it’s running 20 minutes late. I figured I’d save you the time.” That’s it. I walked away. He didn’t know who I was. He didn’t care that much at that time. After four or five interactions, after he got done talking, I tried it with him again, didn’t pitch. A year later, we have a very in-depth conversation about financing. At that point, he noticed who I am. Still, haven’t pitched him. After that he came up to me and said, “What company are you doing?” Now, I talk to him about my company. It takes time.
Sean: That’s a good sign like if the investor is pushing, they are showing some intents. It’s much easier. But we should also classify too the worst thing you can ever do to investors, busy people, you never walk up and say, “I want to pick your brain.” This is like the worse thing, so don’t put this in emails. Don’t…investors, mentors, anyone too it’s like we have such little brain left, we’re busy and it’s just a weird thing to say. And I guess the other challenge is, I get this too. People, they take the romancing too much and like, “I wanna take you to your favorite restaurant. I am gonna take to the best.” I am just like…
Robert: Yeah, that creeps me out actually.
Sean: Well, it’s like yeah, I’m trying to work through a lot. I’d love to sit down with you for a half hour. I don’t know if I’m ready for a two-hour dinner.
Robert: So the last note on this is…
Sean: It happens.
Robert: Think of it a lot of this as you’re selling to somebody who gets sold to 10 times a day. It’s really pretty overload. So, a lot of times your techniques cannot reflect the standard method. Here’s the interesting, and you’ll notice we’re saying this, this mean if you look at the overall of what we’re talking about, it’s a long hard process. There is no shortcuts to this. They’re very rarely is. Demo day is not going to work unless they’ve got some from…there’s a long process to a lot of this. That means I cannot tell you how many meetings I’ve had to sit in that were a complete waste of time, but I did it because I wanted the karma or I wanted something from someone. It just works this way. I actually feel bad for people that have just graduated from college. They’re trying to fundraise for a company because it’s brutal. Now, there are a handful of companies like…
Sean: Now you’re scaring them. Please stop.
Sean: Let’s move through that process. I do agree, it’s long and painful and also it will always take two times to three times longer than you’d expect. So if you’re like, “We’re gonna raise this in three months.” You’ll be raising for six months, guaranteed. Time of year is important, too. I’ve screwed this up before. It’s like, “We’ll done by September.” But, all of a sudden, November comes around and we are not done, and then it’s like everyone’s really checking out and things are getting pushed even further. So, I actually…let’s move through this like speaking of courting or dating, let’s get beyond first base. You got the card, they know who you are, they call you into the office. What is that meeting? What should I do as a founder?
Robert: Okay. So let’s talk a little bit about the process here. Before…remember I talked about you have to have your story. Here are the three main commands, you should have a very brief elevator pitch ready, very short, simple, easy to understand. You should have practiced this on a bunch of people.
Here is the way to practice it. Go to your mother, give your line to them, you’ve got 60 seconds and ask her what we do. If she says, “I don’t know, dear.” It’s a bad pitch. People should get the idea pretty much what you are and approximately where you are in first 60 seconds.
Sixty seconds is actually really long. It should be more like 30. That’s the short version. This isn’t so much for VCs, it’s for conversational. You’ll need this. Second is a three-minute version, sort of a slightly longer version. The next is your 30-minute version which is what you are gonna use for meetings.
So before, the investors says, “Why don’t you come by and talk to us?” You should have a…and there’s a 10 slide template. I send this out, lots of investors send it out. It’s a slide template that you should use for these meetings. It has 10 questions that need to get answered for the meeting, okay? You’ll notice 10, not 60 slides, not all the…it’s a very short summary of their company in 10 slides. When you go to the meeting now…so this is my standard, I go to the meeting, please do not open your laptop and start your presentation. I personally don’t like this. It’s bad.
Sean: I agree. You should give them the option. But seriously like…
Robert: Yeah. What would you like? The first I usually do is I talk to them and I ask them a question, “Hey, you know this.” have a small conversation with them. You might find some interesting information. Oftentimes, I say, “What would you like to get from this meeting today?” And a lot of times the answers that question will steer your along, I cannot tell you how many times I’ve been in a meeting and somebody comes in, “Well, you know, I looked at the slide, but I just don’t understand how you make money.” Okay. That’s a very important thing I need to answer in that meeting. If you don’t ask questions, and you run blindly, it’s only a random chance that you answer the key questions in their head.
Sean: You can lose them too or it’s like they start spacing out, they get on their phones because presentations are fairly boring and yeah, especially for 500. It’s like, “No, let’s have a conversation. Just gonna have back and forth and we’re gonna sort of suss this out and see what’s there.”
Robert: Yup. So I’ll come into a conversation with them and usually I’ve done enough background where I know they’re investing in Marin [SP]. I say, ” Hey, I see you are investing in this company. You are like this. We are similar to this, only we make a little more money, our margins a little higher.” I’m just…now he starts talking, he’s like, “Well, how’s your margin higher?” It’s a conversation. We’re talking about my company, but it’s conversational. He’s gonna follow the important threads to him.
Before the end of the meeting, I wanna make sure I’ve gotten through the main areas. You have that 10 slide, but realistically most VCs will guide the conversation. They’ll say like, “We invested in this other marketplace and they had this horrible problem.” “Oh, well here’s how we solve that problem.” You’re answering their key concerns. By the end of the meeting, if you’ve done this well, they don’t have their concerns anymore. There are no hidden concerns. Okay? Does that make sense?
Sean: So that first meeting typically is of one partner, right?
Robert: Yeah, generally it’s gonna be…oftentimes it’s an analyst. Depends upon where you are.
Sean: Yeah, but let’s not talk 500 because we do it a little bit weird. Let’s talk standard flow. What happens at the end? What should they do next?
Robert: So, there is a bunch of things that are good for meetings. The first thing is, this is commonly I have a conversation with them. Usually, somewhere in there I run through the presentation. Usually, it’s only about 10 minutes of presentation just to make sure they have it. Then I say to them, “Does this look like it’s a fit for what you are looking for?” And sometimes you get some concerns too small, too early, some things like that and you say, “Okay, well if it’s a little too early what is it you’re looking for? What’s the stage you’re looking for?”
Okay and if it really is bad, this is me personally, I call the shot and I say, “Well, I certainly understand that. I’ll keep you updated when we reach that milestone.” They may not invest now, but maybe in a year they do. Again, back to the whole networking. You’re building this for the future. If it does look like an okay, don’t press for an answer. They’re not gonna give you an answer in the meeting. What you wanna say to them is, “It looks interesting.” You say, “Oh, would like any materials for your partner meeting?” or something like that.
You wanna get something called a call to action in there, but remember, these guys get this every day, 10 times a day. So if you go, “Well, can I call you tomorrow and see if you have an answer for me?” They’re gonna blow you off, right? They’re not gonna do it. But you can say, “If this looks interesting, I’m happy to send you some materials to make sure you can bring it to the partner meeting. What would you like me to include?” It’s called…you’re giving it to them so it’s nice…it’s a nudge along that you know they’re gonna have a partners meeting, you know you wanna follow up with them.
But it also gave me an excuse to send them an email, a follow-on. You want to be able to initiate action. If you say, “Oh, you know, thanks for having a meeting. Let me know if you are interested?” Now, you’ve got no action to take. You’re waiting for them and honestly, they’ll probably forget. Even if you were a great company, they’re probably gonna forget. But if I say, “Well, I’ll send you some follow-on material.” I’m gonna remember. I’m gonna send the email. It gives me a reason to do an action.
Sean: Well, let’s say that meeting goes really well, in fact, I really hit off. Things are going well, and then I email them. I don’t hear back. Email again, I don’t hear again.
Robert: That’s about 80-90%, yeah. I mean the fact is…
Sean: What do you do?
Robert: So, well I’m gonna actually mention this is more personal than maybe general advice. So the first thing is, generally speaking, being if you keep sending the same email “Hey, you didn’t respond.” This is a waste of time, and it actually discredits you. You’re lowering beneath. You’re like, “I’m desperate or whatever.” I put them on a trickle campaign and I send them something, “Oh, I see you invested in this. Congratulations on this investment.” And this will go on sometimes for a while. I tried to…
Sean: So you’re looking for topical reasons to re-engage?
Robert: Topical reasons or something of interest because I want to keep the conversation going. It reminds them enough where if they really were interested in following me up…I will point out that some people disagree with me on that. Some people actually go into more aggressive. It’s just not my style. I build my network for the long-term. I have large numbers over large periods of time and that makes it easier for me.
If I received a personal introduction, I might ask the person who did the introduction and I’d send them an email pre-written for them to send along saying, “Hey, I heard you met with them. How did it go?” And maybe they’ll respond to that other person. If I had no other introductions, a lot of times I look for things that are topical. Also, by the way, things like Newzly, Nuzzle, and a few others are really useful. I search basically every day on all these…everybody in my contact list. It just tells me what they are up to, key things about them, and if I notice they’ve done a key investment or key action, I’ll send them an email saying, “Hey, you know, it was great meeting with you two months ago. I just noticed you did this investment. This looks really cool. I’m glad you guys are still active in this field.” Not asking for anything, but…
Sean: I like those because I can delete it and not have much guilt.
Robert: Yeah. That’s the whole idea.
Sean: It’s nice.
Robert: But it reminds you of the company and the person.
Sean: Top of mind.
Robert: You constantly bring yourself to top of mind. Every now and then, and it is very small, you’ll get an answer back like, “Oh, yeah, how are you guys doing?” Now he’s now invited you to give him an…
Sean: Yeah, I’ve done that. What’s the latest? And get some updates.
Robert: Yeah, what’s the latest? I do this all the time because I get overwhelmed. I can’t get to an investment. I use all the time. I say, “What’s the update?” Succinct, short metrics that are there, especially, here’s the really good if you’re good at this. If in the meeting they say, “We invest in revenues of blah.” You could say, “We’re 80% towards your stated goal of revenues of blah.” It showed you listened to him in your reply. Now, he knows you’re paying attention so your emails are more worthwhile reading.
Sean: I would never do this. What about the VC? You are engaging with him and him and her is like, “Oh, have you tried this? Have thought about selling cars?”
Robert: Oh, yeah, the pot shotting.
Sean: Yeah. Why don’t you do this, why don’t you do five different things like…
Robert: I never do that, but you know you should hold the mic…fine. So pot shotting, I call it pot shotting. It’s advice giving, whatever. It’s very common. Here’s the biggest mistake, you get into an argument. Most people are smart enough not to get into an argument on it or disagree, but some people do it. It can happen.
Sean: Yeah, those meeting really get awkward when…yeah.
Robert: The meeting gets awkward fast, actually. So here is the thing, I’ll offer you a piece of advice for it and here is mine. Take it in stride so, “Oh, that’s interesting.” Here is mine. Eric? So Eric says, “You know Rob, if you just double your revenue you’d be more successful.” Thanks, so insightful. So here is my response, “Really, Eric? That’s great. How might you go about doing that?” It’s a conversation. I wanna draw him into a conversation on this, partially to see what he’s poking at, but also partially because it allows me to learn something about him.
But I’m not gonna disagree with him, but let’s use a different piece of advice. They say, “Well, have you thought about getting into the North African market.” I say, “Oh, what is it about the North African market that you think is so interesting for us?” You’re gonna learn a lot about them and why they are investing. And so when you do that follow-on email the next day you say, “Thank you so much for the North African. I noted you said it that it’s because it’s two million untapped users. I did some quick research. It’s actually about 200,000 users based on this report, but it was really a great idea, but we think you know…” Disagreeing? Maybe.
Most of the time, I’ll just send the email saying “Thank you for this. Here’s some stuff.” Be pleasant and nice. But every now and then, I have actually gone back with information and, believe it or not, this is a little weird. If you’re very good about the email, they’re actually thankful because if you give them better like, “Oh, he says about two million. This is a research approach about 200,000. It was a real good idea. Maybe the two million was referencing this other thing.” Give them an out, let them feel smart. But you know the market better than them. You have to be very polite about corrections.
Sean: Yeah, that’s true and it’s funny there’s a company in the next batch that there is an argument going on, and I’m just like, “Well, you’ve lost it. You’re arguing so much and you’re coming off very negative and nasty, and we’re really trying to be helpful and give feedback.” Doesn’t mean you have to do this, but I know when I raise like yeah there is this one fund…I really wanted this fund and he was like, “You should try this different,” it was E-commerce. It’s like “You should try this different type of revenue stream.” And I actually did test it, and I went to him and said, “We tested it. I spent $600 testing it, and got nothing out of it.” And actually he was so impressed that I tested it.
Robert: That’s the…that’s actually really good. If you could test the advice…
Sean: Yeah, to me I was like, okay, really they were gonna write a big check. So I was like $600 I can deal with this test. And I went back with them with the data and I was like “Compared to our other products, the [inaudible 00:26:30] is much less. [inaudible 00:26:30]
Robert: That’s actually an improvement on my answer. I’m gonna take his answer over mine, but I was trying to get at the same concept which is data is really useful. Trying not to be argumentative, but I’m gonna actually take his answer back. If you can actually do a test and show him the results for your company, that’s even better.
Sean: Data all the way. There are two things that don’t lie, hips, which you’ve learned from Shakira and data. Data doesn’t lie.
Robert: By the way I do wanna make an interesting…
Sean: That one took a little while to set in, right, that one works.
Robert: I do wanna make an interesting note for some people. How many people think VCs make decisions in a very logical data driven way? Raise your hand. Logical data-driven way. You’re investing on a logical data driven way.
Sean: Well, let’s talk early stage because I think most folks are there. That’s like pre-series.
Robert: Yeah, pretty much. It doesn’t happen. It doesn’t really. Data justifies the decision they’ve already made in their head, but they needed to convince everybody else in the room that they’re actually using data to make the decision. That’s how data works, especially in early. Fact is, think about yourself, how many times you’ve seen someone you make a very quick snap decision whether you like it or you don’t, or you’re gonna do it or you’re not or are you gonna do parasailing or not or whatever it is and then you look for facts to convince your wife, husband, daughter, whatever that it’s the right decision?
That’s exactly how VCs work. That’s how the brain works. It’s not…nothing to do with VCs, it’s how the brain works. Data helps them support their decisions to their other partners publicly. The fact is, they’ve made their decision emotionally. Emotionally to get to that decision, especially early, they have to be inspired by you. You have to have something great.
This is a problem we have a lot at 500. We get companies where we score them on a score from one to five for all these categories and company is all threes. There is nothing inspiring, there’s nothing great. You have to have something great, something they latch on to you. You say this is why this is awesome and here is the data to prove they’re awesome. You’ve gotta have both the emotional hook that makes you seem great whether it’s your team, whether it’s the market, whether it’s your technology.
Something has to be great and then you have to show some data to prove. They use the data, but the fact is the emotional hook is why they are going.
Sean: Also if you have questions like interrupt us, throw them out there anytime. Raise your hand.
Robert: Good question. “Oh, we’re doing blah, blah, blah, blah, blah, blah.” I don’t ask for money. I say, “We are doing blah, blah, blah, blah, blah. Are you interested in that field?” I ask a question. People engage in questions. Don’t be afraid to ask them. Don’t ask dumb ones. If you’re talking to Fred Wilson, don’t ask if he’s a VC because if you don’t know that, you’re wasting his time.
But say somebody asks you, “What you do? You say, “Oh we do this.” This is…remember I said that short, less than 30 second, that 30 second, use that “Blah, blah, blah, blah is that something you’re interested in? Do you invest in that? What do you do?” Ask them to engage you. Rule of thumb, 3 seconds buys you 30 seconds, 30 seconds buys you 3 minutes. Rule three goes something like this. In the first three seconds, they have to hear something interesting enough to justify 30 seconds of attention.
If they don’t hear it, they are thinking about their email. If in the first 30 seconds the topic is interesting enough, you get the right to talk for 3 minutes. This is why structurally wise, certain types of things work on demo day. So in your opening thing, state clearly what you do and then say, “Is that something interested in?” Because a lot of people say, “No, I’m not really in that field.” The other 2 minutes and 57 seconds you would’ve talked, he would have been completely bored. You’ve saved everybody time, but you also saved your reputation because now if you say, “Oh, well okay, you’re not interested in this field.” Now you can get off the topic. He hasn’t said like, “This is just a rambler.” You haven’t lost anything. Does that make sense?
Sean: I think be venue specific, too so like events, dinner. You’re doing legion and building relationships. Demo days, in the meeting or in a pitch prep thing, in their office, it’s full on. You’re in the war room.
Robert: Yeah, if they’ve invited you come to me, you come into the meeting, and you start chitchat, they are like, “What’s going on here?” They are looking at their watch.
Sean: And you start bullshitting, they are looking their way to get out.
Robert: I mean, once they have invited. Once the thing, “Hey, I wanna hear about this”, that gives you some permission. Just the rule of thumb is 3 seconds get you 30 seconds, 30 seconds gets you 3 minutes, 3 minutes gets you 30 minutes. Basically, you have to qualify past those. So if you first meet someone and give them a 30-minute pitch, it’s unlikely they are listening.
Sean: Let’s talk about things they want to hear. What are the data points that VCs want to hear? Let’s go through the acronyms.
Robert: Oh, okay. Oh, wow. Sounds like we are Bingo.
Sean: Let’s stack rank them. What’s the most important acronym?
Robert: Okay, so here is, I’ll give you my preferences, how’s that? So, if you are an E-commerce company or something like that. Basically you know GMV, Margin, ARR, Churn, you know average revenue per client, things like that.
Sean: ARPU? Yeah
Robert: ARPU, I’m sorry. Running into my acronym.
Sean: I just like it because it sounds dirty.
Robert: Yeah, I know, I know.
Sean: But does everyone know what all those are? Just to be super clear and LTV. Everyone? Okay, just to make sure. It’s okay if you don’t. If you don’t raise your hand we’ll go through.
Robert: Yeah, we’ll go through. If it’s a B2B, there is slightly different ones. Actually, let me separate them very early and slightly later. So very early B2Bs, I wanna see what’s the problem and what are you solving? There’s not a lot of metrics if you haven’t actually shipped anything, but soon as you are, it’s average sale price, time, how long it took you to deploy, how much customization, right, churn rate, resale, things like that. It’s mostly around a lot of revenue once you get going and then things like churn rate, things like that. For consumer products, I’ll leave you to consumers because you probably do…I do mostly B2B.
So, if people are pitching me B2B my first statement, first thing I wanna know is what problem you are solving. Who is this? What the customer looks like, and then from there a lot of it has to do with the structure of the revenue. How you are getting paid? Are you getting paid? Is it booking, is it whatever? And how it’s growing, churn rate, things like that. And who is buying it? That’s for B2B stuff.
Sean: What do you think, though, is the ideal equation where you have one or two sentences and so it’s like, I don’t know. Like let’s figure this out. I’m trying to think but it’s…
Robert: So I think the big one for me, there are two key one’s that’s gonna be your monthly, you MRR, your Monthly Recurring Revenue and your growth rate. Those are the two.
Sean: So yeah, we are doing 10k a month in revenue. I’ll probably say you know we’re growing 25% month over month and yeah.
Robert: Believe it or not, especially early your growth rate is actually more important than the base. The base is like at 4k, it’s not that big deal. What I care about is your growing 40% month over month. So growth…and I actually do a presentation on this in 500. We actually have a ranking system. I actually list in order of precedence things that are valuable, but basically revenue and the growth rate of the revenue, user base and the growth rate of that and then you get to things like downloads, which are not very valuable actually.
Sean: Yeah, I would avoid the vanity stuff, the engagement. Yeah, you never wanna go like “Oh…”
Robert: Yeah, custom metrics. I hate custom metrics, drives me bananas. People coming with these, “This is our GMCCR4.”
Sean: Or, “We have 10,000 kudos a day on the platform,” or something.
Roberto: Yeah. I’m like, “What the heck is this?”
Sean: What’s a Kudo?
Robert: If your mother doesn’t know it…I mean it’s jokingly, but you should never do custom metrics. There’s like…actually Andreessen [SP] published 16 Metrics.
Sean: That was a good post.
Robert: That was a good post. I recommend it. It’s probably better said than I’m saying it. Those are a very good set of metrics.
Sean: Because I think a lot of times these investors are asking because they want to see is this person competent. I can tell you the first time I fundraised, I blew it because a lot of questions were on Churn and it was a subscription business, so I should have known really what it was, but it was early on the business so I didn’t have a lot of data to work on. Completely blew the meeting…First Round Capital which is a great fund. They were ready to invest, and I blew the final meeting basically.
Robert: So did I. I have many a story of me blowing things. We only have a few hours, so I don’t have much time.
Sean: This is a family event so let’s, please, calm down.
Robert: I’m going back to this topic.
Sean: Let’s get back on track. Churn rate…
Sean: Churn rate, I think, is critical and people don’t always understand that. What do you think is healthy churn? What is healthy to you?
Sean: Like broadly.
Robert: Depends a lot on the business. So let’s go through a couple of it. The first thing is let’s assume someone calls me and they say, “We’re going at 30% month over month, we’ve got a 10K MRR.” And then I say, “Okay, is this a subscription business?” “Yeah.” “Yeah, it’s subscription. People subscribe for a year.” I said, “Okay, great.” I said, “What’s your churn rate?” Somebody says to me 20% a month. So, that means every month, you have to get 20% of those customers back again. That’s almost non-viable.
Sean: Yeah, it seems like double digits, you are in trouble and…
Robert: Yeah, very much.
Sean: So think about it like what’s a great a business with low turn like Netflix, they’re 1% to 2% churn. That is perfect. That’s the ideal situation. So if you are 5% turn, you’re probably a little bit more viable.
Robert: You’re struggling. Now the interesting thing is I’ll to explain this to entrepreneurs, if you have high churn, that’s a sign that maybe your products got a problem. You should be thinking about what’s wrong with the product here. It’s good for you to know. If you don’t track these, forget pitching people, you should know these because they help you run your business.
When I get in a conversation and someone doesn’t know their churn, or does not know their burn rate, that to me is a real red flag because how are you running your business if you don’t know this stuff, right? It worries me that it’s sort of randomish. So my statement on churn is single digits, definitely. If you’ve got double digits, you should be looking to change the product, what’s the problem, wrong target market, something’s wrong. But trying to fundraise with a double-digit churn is very difficult.
Sean: Let’s get some more questions. Yeah, go on. It’s a lot of trust. I would say especially the early stage. When you go deeper and you’re doing series A. They would wanna get deeper in the data. It probably depends a lot on the investor, Accelerator we do a shocking lack of due diligence. Although we’re trying to improve now.
Robert: Wild, wild west!
Sean: I mean, we even to the extent of doing background checks, like yes, are you a criminal? We want to find out.
Robert: FYI, We actually…you do know we do all background checks, right?
Sean: What’s that?
Robert: We actually, yeah okay…
Sean: Oh Yeah. But you know…
Robert: All our investments are background checked.
Sean: But not seed investments, I don’t think, though.
Robert: I can’t answer for seed. I don’t do those.
Sean: Yeah. Out of all the money I raised, Google ventures was the only one that did that and I was like, well they’re Google. They’re more conservative. Their joke was “We can actually find out if someone stole your credit and you don’t know.” I’m like, “Yeah, I think I know that.” That was their excuse, but I think it was more liability. But early stage, not a lot of trust. Although you can make me feel more trust if you wanna share analytics with me.
So Fab.com is probably a bad example just because of what happened and it blew up. That dude was so [inaudible 00:37:15] that he had RJ metrics which is a really great dashboard and he didn’t even send dax [SP] I think. He wrote a post about this and he’s like if you are interested, he would just share the dashboard with them, the numbers are there. You can see it all there, too. So I think you can share, but I think you’ll find out like most it’s trust and if you violate that trust, though…that’s the good thing about the valid [inaudible 00:37:36] are pushed out and they’re done pretty quick.
Robert: Once you get burned…you wanna see a fast information flow….fast information flow…if you lie, that investor will make sure that information gets out. It does spread. People do talk about it.
Sean: We’ve certainly had founders that have been like, “Yeah we’re doing 50k a month”, and then we realize that like 45k was because of some weird consulting business or something like…
Robert: Side business.
Sean: Yes they fudge that a little bit.
Robert: We especially start doing a lot more in the interviewing process, a little bit tighter interview. We do background checks, we don’t do a prove that you have 50k run rate. The bigger the check, the more the due diligence that’s there. On an interesting side note, though, there is too much. Let me give you an interesting example. I had investors that wanted my dash, they wanted access to my dashboard. I didn’t really wanna do it, but I had to do it. I spent all my time answering emails explaining what the numbers were on the dashboard for weeks. Like probably 20 hours a week…
Sean: This is true. You could expose a hole or they could try to find a hole.
Robert: Because they were like, why just go down on Friday and I’m like, “Look, you’re not running my business. Please stay out of my…” So I actually stopped the dashboard and what I did was I said, “I’ll send you a weekly summary and a couple of bullet points” because they were trying to run my business and that can be…so be aware. Most investors are too busy but every now and then you run into one that wants to run your business.
Sean: Yeah, I worry about those and those are usually the smaller investors.
Robert: Smaller ones, angels.
Sean: And we talked a little bit. I don’t know if you were here but we talked about the guy or girl that wants to give you five grand and they want all this stuff and my joke was like, “No you can’t even email me.” Like it’s just such as…I’m raising 5k. It’s such a small piece. So that’s what you wanna worry about…it’s up to you. You sound like we are getting a disease. The disease is you. No. Well, I think this is maybe Robert’s point about really knowing where check sizes are. If you get into an in-person meeting, that’s okay to say, “What is your typical check size?” And get the exact figure of what they’re looking for, but this is where you can screw up. You’re raising your [inaudible 00:39:38] on seed round and you go to Sequoia who writes $10 million checks. But I think like Dave said, it’s out there. You can track it down or talk to other founders.
Robert: You should know their check size. Between CrunchBase, AngelList, you look at…by the way I used to do this all the time. Find out companies they’ve investing in and send an email to the CEO…if it’s a smaller company. If it’s a really big company, probably not, but it’s a smaller one, I send the company, “Hey, I’m looking at maybe having these guys as investors. I’d love to take you out to coffee.” They’ll tell me all kinds of dirt. It’s amazing what the information I learned from these guys are. But usually by the time I walk in, I know which partner will write the check and I know how much he is gonna write it for.
Sean: Hello, hello. Yes. So mobile will have high churn. You may lose half of your users every single month, too. So a bit different…I think that’s also to the point, though, if it is B2C, avoid the weird vanity stuff. Nobody cares about the Facebook likes. But what would be great to know is viral coefficient.
We’re a consumer app so actually our growth is dependent on virality to some extent. And if you can sit there and say like, “For every user we can bring in, they bring in another .3.” Yeah. Like you’re showing me that okay, I’m getting less concerned because when I think about B2C maybe we have concerns about scalability. How much money is it gonna take? Which is a big reason why investors get into these unit economics and acquisition costs.
We’re trying, in our mind, to figure out, we’re like “Okay, can this business work on the capital they’re getting? Is it gonna be a money pit? Is it not going to be able to keep growing sustainably?” I think you’re pushing viral coefficient and other good attributes with avoiding some of the vanity type stuff or internal stuff.
Robert: That cost of acquisition is often times a key one and he is more of an expert than me, but I wanted to mention that one. I look at cost of acquisition and his statement about scaling is, if it costs you to bring in a user say a dollar, I’m making this up, and the cost of maintaining users you lose say a dollar per user per month. So I’m thinking to myself, “So if I wanna get to 50 million users, that’s a really big expensive. I gotta put way more money than I could commit to this.” See how that works. That’s what he’s talking about in the unit economics area and that matters a lot to some of the big scaling consumers.
Sean: Let’s talk user acquisition just as well too, and really, really important when an investor he or she is like, “Hey, what does it cost you to acquire a user?” Have a very precise answer. What concerns me is when someone’s like, “Yeah, I don’t know. It’s $20 to $30 to get a user.” That’s a big range. It’s telling me you’re not really metrics focused. So the answer you’d actually say is, “It costs us $33.54.” or $54.5 whatever it is, really super precise. With all of this stuff, do not be using ranges at all because it shows you’re bullshitting a bit.
We like people who are very data driven and you as a founder in the early days, you have to do all this. As time goes on, you build your team, you have a head of marketing and he or she can do that and that’s off your plate. Early days though, it’s all you, and you have to know this stuff. I was telling about that meeting where I was like stumbling because it was like…I was trying to do math in my head as I’m pitching the VC and just you’re already nervous, and you drank too much coffee, and you gotta go to the bathroom. All this stuff’s going on, you will screw up those numbers. But to me the great founders, they are just able to just like bam, bam, bam hit really, really precise numbers. It’s okay if it’s based on small baselines or just like, “Oh, we’ve only brought a 100 users.” It’s something. It’s a start to work with. I want you to talk about this because you are really good on pitch.
So it’s definitely not being shy and not like…a good example is like you don’t have a meeting and then you trail off as you’re talking. That’s what I see out there especially a lot too. So confidence is really important. There definitely is…it’s weird that the valley has this weird forced modesty where it’s like people are the most arrogant ego driven people in the world here, but they do put on a modest face, but they’re not flashy. No, but it’s not even that. No, it’s like they wouldn’t go buy a Ferrari. It was like the second I had a million bucks in the bank, buying a Ferrari, but here it’s like, “No, I’m just gonna get the really nice Prius or a Tesla or something, too.”
So it’s different but that’s a whole another story. I can rant on that. Confidence is important. So there is a great tweet about the three jobs of a founder and it was set and execute vision, recruit and retain talent and don’t run out of money. A lot of those take a lot of confidence to set vision and to keep people and to acquire new people, too. So they’re gonna be looking at that thinking like, “Okay, are you the person that has enough strength and ability to do this?”
When I had trouble fundraising, it was because I was at the tail end of fundraising and I was beat down. One honest VC, there’s few of them out there, was like “I’m not investing because you’re completely beat down.” Hey, what’s up buddy? So this is where you need to find this. So think you need to find this happy medium in there where you are stepping up above your comfort zone. I joked about drinking coffee like you should chug coffee or Coke before you go in there, the drink Coke because it brings the energy up.
It’s just like you should also record yourself on video, and you’ll notice on video if you talk as you normally do. It’s boring, but when you’re on stage and you’re presenting, you actually need to like…and I’m slouching…but you need to step up a little bit and you’re like “I feel like I’m being annoying,” but you’re actually getting a lot more engagement. Let’s talk about this. Confidence in meetings, demo day pitch prep, you’re really good at this stuff.
Robert: I’ll cover this a little bit because I actually do a bunch of training classes on related topics. Why I don’t like mics. You want this one, maybe a better one. All right, there we go. So I’m gonna take his point about confidence. You have to be yourself. You’re not going to be…so I’m born and raised in the New York area. I am aggressive. I’m an asshole. It’s just who I am.
You are not gonna be someone who’s [inaudible 00:45:19] confidence and sure of yourself. That’s different than braggadocio. [inaudible 00:45:25] that technique. Finding the techniques that work for you is important because ultimately they’re investing in you, not the idea of you. So you have to be truthful in how to present yourself because otherwise they get this weird tingling feeling that something’s wrong and they walk. They don’t know why, they just…so that’s why we would pitch completely differently.
Neither one is wrong or right, it’s simply who we are. But the important point he made and I’m gonna stress it. You have to be both confident and you have to be energetic. You have to be excited by what you’re doing. If you’re not excited, sure as crap they’re not.
Sean: Yossi Vardi. Is that his name? The ICQ guy, the Israeli investor. He had this great quote where he’s like, “I only invest in exciting people because I’m probably gonna lose my money. I just wanna have some fun along the way.” It’s a funny quote, but I was like yeah that’s genius and I could do that little bit too. So I think you’ll find it…as he mentioned it’s so critical that you do step it up a little bit. The journey of being a founder is long and hard and fraught with all kinds of stuff. That’s what they’re looking at in you. They’re like, “Okay, are they gonna be able to go the distance and when things go really, really tough are they gonna be strong enough to push through a little bit more. One to be successful and to make money to generate my return.”
Robert: One of things…I’m fortunate. I have near infinite energy. I can do a 12-hour day and still be exciting in a meeting at the end of the day and then go home and crash for a day and a half, but what’s important is if you are excited by your topic and you love your company, let that come out. Don’t try to be analytical or something. Don’t be who you’re not. They’re investing in you and once you find yourself comfortable with yourself, you will find that amount of energy is natural. It’s easy to do. You’re not gonna have it forever. After 20 hours of pitching, yes, you’re going to tired. But it’s much easier to be excited about something you actually are excited about and for that I’ll mention one note for you.
Having a really tough meeting with an employee that’s a problem and then going into a pitch is actually really difficult. So usually, I try to leave a little bit space before I go to these meetings so I have at least some recovery. I don’t drink coffee or Coke because that’s just not my thing, but at least I have some mental…
Sean: You have all this energy naturally?
Robert: Yeah. It’s just natural, yeah.
Sean: That’s scary. Must be all the government work you did.
Robert: Yeah, the government work I didn’t do. The government work I didn’t do. Okay. And the last note is smile. I know this sounds really weird but really just try. Smiling is very contagious, very infectious that people…when people smile at you, it’s really hard not to smile back.
Sean: I think we’ll do one more question and then we’re gonna take a break. We have more investors coming up so we’ll do a lot more questions if you have them. We’re gonna take a break. Now please look up Google Stock, these folks that are coming in. Try and really think about good questions. I don’t wanna be up here peppering with too much. I would love to get you guys to come out. As I mentioned, I brought people who I felt are very honest and candid and, not wanting to scare you, but most VCs are not. They’re very straight and also they don’t wanna be too honest sometimes. They don’t wanna push you away in case they want you later on and they wanna bring you back.
Robert: One of the hard parts about a VC is they really can’t give you honest feedback. It sounds a little [inaudible 00:48:53]. It’s risky to them. Why? It doesn’t benefit them. They might wanna talk to you later, they don’t wanna…they need the network as much as you do. For that reason, oftentimes you get things like, “Well, you’re a little early,” but you know you’re not. There are a handful of people, and I’m in this category, I’ll tell you flat out, “No, I think your idea sucks.” But that’s also why some people don’t talk to me.
Sean: That must have been that one founder that was unhappy.
Robert: One? I think that’s a slight understatement. But that’s just because that is my way of doing it, and I know that that is not optimal, but I believe that this is just who I am.
Sean: All right. Thanks for hanging in there. I know there’s been a lot of info. Thank you, Rob, for everything. That was great.